Download PDF - Goodmans

other claimants, and "encroach" into the Commissioner's exclusive power as
liquidator.
Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 204 (5th Cir. 2003). The court
of appeals found that a summary judgment enforcing the collection of a bond
from an insolvent insurer was valid despite an out‐of‐state receiver’s subject
matter jurisdiction argument. The court stated that the insolvent insurer’s entry
into rehabilitation in another state did not automatically strip subject matter
jurisdiction. Furthermore, diversity jurisdiction was sound. The insolvent
insurer’s rehabilitator had failed to respond to the motion for summary
judgment and over a year later, moved to have the adverse judgment vacated.
The court stated the receiver’s due process argument was unpersuasive. The
court relied on the fact that the receiver was given three notices of the
judgment and had failed to act for 14 months.
Fla. Dep’t of Ins. v. Chase Bank of Tex., N.A., 274 F.3d 924 (5th Cir. 2001).
Florida’s receiver of an insolvent insurer lacked standing in Texas to bring suit on
behalf of policyholders for fraud and breach of fiduciary duty against a bank.
Policyholders had not assigned their claims to the receiver. Accordingly, the
court stated there was an absence of facts to support any acceptable basis of
representation.
Martin Insurance Agency, Inc. v. Prudential Reinsurance Company, 910 F.2d
249 (5th Cir. 1990). After the insolvency of Transit Casualty Insurance
Company, a Missouri domiciliary, the plaintiff insurance agency paid the
policyholder/claimants and sought reimbursement directly from reinsurers.
The reinsurance certificates at issue contained standard insolvency clauses,
requiring payment to the receiver in the event of insolvency of Transit; thus,
the reinsurance proceeds could be considered assets of the estate. Further,
the reinsurers were exposed to double liability because claims to the
reinsurance would likely be asserted both by plaintiff and by the receiver.
Although the court found that it had subject matter jurisdiction, it found that
the action should nevertheless be dismissed based on the abstention
doctrine of Burford v. Sun Oil, 319 U.S. 315, 63 S. Ct. 1098 (1943), without
prejudice to plaintiff's right to re‐assert the claim in the Missouri liquidation
court.
Tenn. ex rel. Sizemore v. Surety Bank, 200 F.3d 373 (5th Cir. 2000). The Fifth
Circuit Court of Appeals held that an out‐of‐state insurance receiver lacked
standing in Texas. The receiver sought to obtain control of the insolvent
insurer’s Texas assets through the Tennessee courts. When the Tennessee
receiver tried to enforce his state’s liquidation order in Texas, the district court
there granted summary judgment in favor of defendant, declaring that the
Tennessee court lacked jurisdiction over assets outside of Tennessee.
Furthermore, receivership proceedings had likewise begun in Texas, and a Texas
receiver had already been designated. The court of appeals affirmed the district
court’s decision.
Seventh Circuit
Property & Casualty Ins. Ltd. v. Central National Ins. Co. of Omaha, 936 F.2d
319 (7th Cir. 1991). Plaintiff sought amounts allegedly owed under a
reinsurance agreement and damages arising out of the failure to pay those
amounts. While plaintiff and defendant were litigating their action in Illinois,
Nebraska's director of insurance placed defendant insurance company under
supervision. In 1990, a Nebraska state court appointed the state's director
of insurance as rehabilitator of defendant insurance company. One portion
of the rehabilitation order instructed the rehabilitator to consider
immediately all litigation involving defendant insurance company that was
pending outside of the Nebraska and to petition the courts having