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judgment against a building transferred post‐judgment from CUIC to its
parent in return for a note against cash in a bank account. The Court of
Appeals posed the question presented as: “To what extent does the
appointment of a receiver for a Delaware insurance company by a chancery
court in Delaware – a state which has enacted the Uniform Insurers’
Liquidation Act…prevent a judgment creditor from executing on the
insurance company’s property located in the District of Columbia?” Prior to
the appointment of the receiver in Delaware, the landlord had served an
attachment on CUIC’s bank; a later attachment suggested additional funds
had been received by the bank. Held, landlord was entitled to those funds in
the bank at the time of the first attachment; additional cash collected after
the appointment of the receiver could not be attached by the landlord. The
transfer of the building to the parent company to protect it from attachment
was a fraudulent conveyance as a matter of law and thus ineffective. The
landlord’s lien, since it predated the receivership, could not be enforced by
foreclosure. Further, because the District of Columbia (unlike Delaware) had
not adopted the Uniform Liquidation of Insurers Act, the Delaware receiver
was not vested with title to the assets in question. The court further
declined to adopt the ULIA’s scheme of priorities as a matter of D.C.
common law.
Florida Colburn v. Highland Realty Co., 153 So.2d 731 (Fla. App. 1963). A Florida
purchaser of Florida real estate from Michigan insurance corporation vendor
brought action for specific performance, and a judgment for the purchaser
was appealed by the Michigan insurance commissioner, as receiver of the
vendor. The appellate court held that the lower court's order that liens against
property be paid from proceeds of sale was invalid because this was in the
nature of an attachment, garnishment, or execution, contrary to the Florida
law.
Kansas
Michigan
Universe Life Ins. Co. v. Centennial Life Ins. Co., 35 F. Supp. 2d 1297 (D. Kan.
1999). Finding that exercise of federal jurisdiction would be disruptive to state
liquidation proceedings of an insolvent insurer, the court found that abstention
under Burford principles was proper. The court found, however, that a stay of
proceedings rather than a dismissal was appropriate for a garnishment action
brought before the federal court as this would retain plaintiff’s right to litigate
its claim in the federal forum should the state court fail to adjudicate the claim.
This would ensure plaintiff’s claim would not become time‐barred should
jurisdiction be lacking in the state court.
American Druggists' Insurance Company v. Carlson, Circuit No. G85‐340 CA7,
1989 U.S. Dist. LEXIS 17719 (W.D. Mich. 1989). The Court of Common Pleas of
Franklin County, Ohio issued an order declaring: (1) an insurer insolvent, (2)
appointing the Ohio Superintendent of Insurance to liquidate the insurer, (3)
named the Attorney General as counsel of record for the insurer, (4) gave
notice to all attorneys previously representing the insurer that their authority
to represent the insurer was terminated and (5) ordered former counsel to
return all files, documents, fees and other assets and properties of the insurer
to the liquidator. The insurer brought the case in diversity; a Magistrate's
Order denied the insurer's motion for an order requiring predecessor counsel
to turn over files in its possession and granted the predecessor counsel a lien
on any original documents. Insurer appealed, arguing that the Magistrate
erred in not enforcing the Ohio court order and that the grant of lien was
improper since Michigan law provides that the proper forum for the attorneys
to assert a claim against the insurer is in the Ohio court which is liquidating the
insurer. On appeal, this court held that since the files were located outside of
Ohio, they were located outside the liquidation court's in rem jurisdiction and
thus the Ohio liquidation court's order is not entitled to full faith and credit by a
Michigan court. It was concluded that the liquidation court lacked personal