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In re Bond & Mortgage Guarantee Co., 39 N.Y.S.2d 760 (1942). The court held
that when an insurance company guaranteeing mortgages enters liquidation
or rehabilitation, the cost of administering either certified or whole mortgages
for the benefit of the holders is chargeable to each particular fund, not the
assets of the company, notwithstanding provisions in the insurance code.
In re Concord Casualty & Surety Co., 171 Misc. 893, 14 N.Y.S.2d 94 (1939). The
court held that social security taxes are deemed expenses of the liquidation
proceeding and as such must be approved by the Supreme Court. They are
payable subsequent to the appointment of the liquidator and the dissolution
of the company.
In re Lawyers Mortgage Company, 158 A.D. 579, 287 N.Y.S. 625 (1936). The
expenses incurred in printing and mailing proposed plans for the
reorganization of a mortgage guaranty company is rehabilitation were allowed
to be paid from the assets in the hands of the rehabilitator.
Oklahoma
Oklahoma ex rel. Holland v. Heritage Nat’l Ins. Co., 184 P.3d 1093 (Okla. Civ. App.
2008). The court held that OKLA. STAT. tit. 36, § 1938 (2001), provided the right
for shareholders of an insolvent insurance company to file written objections at
a compensation approval hearing for attorney fees to be paid to counsel
engaged to assist the Insurance Department with the delinquency proceeding.
The appointed receiver argued that the shareholder should not be allowed to
object due to his lack of financial stake in the liquidation, his ulterior motives in
appearing, and his bad acts leading to the delinquency proceeding. The court,
however, held that OKLA. STAT. tit. 36, § 1938(C) (2001) expressed no such
exceptions to the shareholder’s right to object.
Washington Marquardt v. Federal Old Line Ins. Co., 33 Wash. App. 685, 658 P.2d 20 (1983).
The Washington life and health guaranty fund appealed from a determination
that "fringe benefits" are part of the 'compensation' paid to special deputy
insurance commissioners acting as receivers for insolvent insurance
companies. The appellate court noted that Washington public policy dictated
that the compensation of special deputies, and all expenses of the insurer and
of conducting the delinquency proceeding, should be borne by the insurance
industry, not by the public. The court held, therefore, that the term
"compensation" includes the cost of employee fringe benefits attributable to
services rendered by special deputy insurance commissioners.
Attorney's Fees
Alaska White v. Alaska Insurance Guaranty Association, 592 P.2d 367 (Alaska 1979).
Law firms, attorneys and insurance claims adjusters who were retained by an
insolvent insurance company to adjust, settle, and defend the claims and
lawsuits against policyholders sought declaratory judgment that they were
entitled to reimbursement for their professional fees from the insurance
guaranty fund. The Alaska Supreme Court held that claims for professional
services rendered to insolvent insurance companies were not compensable
from offers of guaranty fund.
California
McConnell v. All‐Coverage Insurance Exchange Auto and Fire, 229 Cal. App. 2d
735, 40 Cal. Rptr 587 (1964). The appellate court affirmed the decision to
award attorneys' fees, expenses and costs to the respondents from the assets
of the respondent Exchange's estate. The court wrote that affirmation of the
commissioner's contention that the court lacked jurisdiction would result in a
deprivation of property without due process of law.