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and, because of the guarantees, foreclosure would trigger deficiency
judgments directly against the insurer.
As to jurisdiction, the non‐resident trustees had minimum contacts with the
insurer to subject the trustees to personal jurisdiction of the rehabilitation
proceeding.
Motor Club of Am. v. Weatherford, 841 F. Supp. 610 (D.N.J. 1994). A New Jersey
holding company and New Jersey insurance company sued the Oklahoma
Commissioner of Insurance seeking to prevent the Commissioner from
awarding the transfer of the New Jersey insurer from an insolvent Oklahoma
insurer to its parent company in New Jersey. The Federal District Court first held
that the Oklahoma Liquidation Act, and not the New Jersey Holding Company
Act, controlled for purposes of any abstention analysis. Further, the Court
deemed Burford abstention appropriate, despite the fact that the claims
concerned the Oklahoma Commissioner's compliance with the New Jersey
Holding Company Act. The Court reasoned that abstention was appropriate as
Oklahoma, like New Jersey, has formulated a detailed, specialized and complex
scheme to oversee the liquidation of insolvent insurers. Moreover, provisions of
the Oklahoma Liquidation Act mandate that the venue of any delinquency
proceedings must be in Oklahoma and that the Oklahoma Court be the
"exclusive original jurisdiction of delinquency proceedings."
Venetsanos v. Zucker, Facher & Zucker, 271 N.J. Super. 459 (App. Div.), certif.
denied, 1994 N.J. LEXIS 535 (N.J. 1994). The New Jersey Appellate Division
rejected the argument that it lacked jurisdiction to determine obligations as
between a reinsurer and an insurer where the insurer had been placed in
rehabilitation by the Pennsylvania Department of Insurance. Because the issue
presented was the ultimate liability of the reinsurer, and not the insurer in
rehabilitation, the Court held that the Uniform Liquidation of Insurers Act was
inapplicable.
New Mexico
Benham v. Forest Prod. Co., 101 N.M. 119, 679 P.2d 261. Out‐of‐state insurers
transacted business and insured risks in Colorado and were required to
deposit, through their attorney‐in‐fact in Denver, money or securities with
the Colorado Insurance Commissioner as security for the performance of all
reciprocal contracts and as security for any act or omission of the attorneyin‐fact.
These activities fell within the coverage of the Colorado long‐arm
statute. Therefore, the exercise of jurisdiction in Colorado over insurers who,
for over 20 years, were subscribers of an insurance exchange governed by
and regulated under Colorado law did not offend due process.
Craft v. Sunwest Bank of Albuquerque, N.A., 84 F. Supp. 2d 1226 (D. N.M. 1999).
Meadowlark Insurance Company (“Meadowlark”) was an off‐shore insurer
desiring to sell surplus lines of insurance in the United States. To that end,
Meadowlark contacted Sunwest Bank, N.A. (“Sunwest”) to establish a trust
fund required to sell insurance legally in many states, including New Mexico.
The trust fund provided regulators with, inter alia, assurance that Meadowlark
would not just withdraw from these markets without paying claims incurred.
Meadowlark’s principals were not, however, engaged in the business of
insurance, but rather a money making scheme. A Missouri court ordered
Meadowlark into liquidation, and appointed Craft as Special Deputy Liquidator
(“SDL”). Upon discovery of the trust in New Mexico, the SDL moved to
participate in state court proceedings initiated by Sunwest and gained control of
the trust assets. After evaluating the status of the trust assets, the SDL
determined that the value was, after subtracting expenses, actually only
$206,000 rather than the $2,500,000 claimed and sued Sunwest for the
difference between that amount and the $1,500,000 which the SDL asserted
would have been in the fund but for Sunwest’s breach of the trust agreement.