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Florida
Dilme v. SBP Serv., Inc. and First S. Ins. Co., 649 So. 2d 934 (Fla. Dist. Ct. App.
1995). An award of attorneys’ fees to a workers’ compensation claimant is
part of a covered claim for which the Florida Insurance Guaranty Association
may be responsible.
Haag v. State, 699 So. 2d 738 (Fla. Dist. Ct. App. 1997). The Department of
Insurance, acting as a receiver in a delinquency proceeding, entered into a
fee agreement with its attorneys. The attorneys were to be paid out of the
insurer’s assets, subject to court approval of the fee agreement pursuant to
Fla. Stat. § 631.141(6). The Court held that the approval of fees is determined
by their reasonableness and that it could not disregard the agreement
required by statute and adopt the lodestar approach.
Urich & Schenkman, P.A. v. Horton Insurance Co., 491 So. 2d 1195 (Fla. Dist. Ct.
App. 1986). The trial court held that an attorney's retaining lien is not a
secured claim and not subject to foreclosure by setoff under the liquidation
provisions of the Florida Statutes. The court reversed the lower court's
holding than an attorney's lien could not be offset against funds of an
insolvent insurer which were in the attorney's possession, but certified the
issue to the Supreme Court of Florida.
Illinois
General Railway Signal Company v. Corcoran, 748 F. Supp. 639 (N.D. Ill.
1990), reversed in part by General Railway Signal Company v. Corcoran, 921
F.2d 70 (7th Cir. 1991). American Fidelity Fire Insurance (AFFI) was a surety
on two performance bonds given by Transit Systems Technology, Inc. in
favor of a public transit agency in California and a private bus company in
New York. The United States Small Business Association (SBA) issued Surety
Bond Guarantee Agreements in connection with these performance bonds.
AFFI sued General Railway, alleging that it had breached obligations to
perform on the California and New York contracts, causing AFFI to pay out
on its bonds. AFFI was successful in these claims in the Illinois state court. In
the meantime, AFFI became insolvent, and liquidation proceedings were
initiated in New York. Joseph Corcoran, the Superintendent of Insurance of
the State of New York, was named Liquidator. The SBA notified General
Railway that it was making a claim to the proceeds of the Illinois state
judgment. General Railway filed an interpleader action, claiming that it was
subject to multiple liability on the same funds.
The Liquidator moved to dismiss the interpleader action, arguing that
diversity jurisdiction did not exist because the Liquidator (i.e., the
Superintendent) was not a citizen of any state. The court disagreed, and
held that it could exercise diversity jurisdiction over the case. The court held
that the Superintendent was also not eligible for sovereign immunity under
the 11th amendment, as he was not a real party in interest. In making these
rulings, the court was persuaded by the body of case law holding that where
a state insurance officer is a party only because of his status as receiver or
liquidator of an insolvent insurance company, the state is not the real party
in interest. Furthermore, the court determined that abstention was not
appropriate after examining three factors: (1) the case involved federal law;
(2) the interpleader action had little effect upon the state liquidation
proceedings; and (3) no other forum could adequately protect the rights of
all parties. In addition, the law firm representing the insolvent insurer could
intervene as of right because it held an attorneys' fee lien against the
proceeds for judgment in the state court. Finally, the court held that
because the SBA paid out on a guaranty agreement upon the default of a
contractor and became subrogated to the rights of AFFI, it had become the
equitable owner of AFFI's rights against General Railway, and thus could
collect directly.