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Corporation alleged that, after Union Indemnity was placed in liquidation by
the New York Superintendent of Insurance, Union defaulted on a
performance bond guaranteeing timely completion of work by two
subcontractors hired by a subsidiary of Manitoba. Manitoba named Union
Indemnity’s former officers and directors as defendants, alleging common
law fraud, negligent misrepresentation and claims under RICO for damages
allegedly caused by the default on the bond. The court kept this case on the
suspense docket, finding that a New York State Supreme Court Order of
Liquidation is broad enough to prevent litigation against Hall’s directors in
other courts, particularly because Manitoba had already filed claims in the
liquidation action. The court reached its decision on the basis of Corcoran v.
Frank B. Hall & Co., 149 A.D. 2d 165, 545 N.Y.S. 2d 278 (1 st Dept. 1989), which
held that Union Indemnity’s creditors cannot submit themselves to the
jurisdiction of the liquidation court and thereafter assert claims stemming
from the insolvency against individual defendants, including officers and
directors, outside the jurisdiction of the liquidation court.
Moscow Fire Insurance Co. v. Bank of New York & Trust Co., 280 N.Y. 286, 20
N.E.2d 758 (1939), reargument denied, 280 N.Y. 848, 21 N.E.2d 890, motion
denied, 293 N.Y. 749, 56 N.E.2d 745. The courts were bound to give effect to
Soviet decrees terminating the insurance company in Russia.
Serio v. Black, Davis & Shue Agency, Inc., No. 05 CIV. 15 (MHD), 2005 WL
25600390 (S.D.N.Y. Oct. 11, 2002). In the rehabilitator’s action to recover
premiums from the defendant agency under a brokerage contract, the federal
district court granted the rehabilitator’s motion for stay, citing Burford
abstention.
North Carolina Commonwealth Mutual Fire Ins. Co. v. Edwards, 124 N.C. 116, 32 S.E. 404 (1899).
Where foreign insurer had complied with statutory deposit and other
requirements of North Carolina law, and thereafter became insolvent in its
domiciliary state, North Carolina residents were subject to assessments validly
rendered in the domiciliary state.
North Carolina Life and Accident and Health Insurance Guaranty Association
v. Alcatel, 876 F. Supp. 748 (E.D.N.C. 1995). State insurance guarantee
association sought a declaration of its liability on certain coverage issues
currently pending before the state department of insurance, and
subrogation of certain claims made pursuant to the Employee Retirement
Income Security Act (“ERISA”). The court held that a Burford abstention
applied to bar the claim for declaratory judgment because (1) the state
insurance guarantee association’s complaint raised complex, substantial and
serious issues concerning the state Insurance Guaranty Act, which had yet to
be decided by a state court and (2) issues of the instant matter were
important and could have significant public policy implications for state
insurance law and therefore would interfere with the Commissioner’s ability
to establish coherent policy as to Guaranty Act coverage for Guaranteed
Investment Contracts. Similarly, recognizing that a Brillhart abstention was
appropriate, the court refused to issue a declaratory judgment because a
parallel state proceeding involving the same parties was addressing the
same unsettled issue of state law presented in the Federal action at bar.
Furthermore, the court found that a Colorado River abstention was required
to bar the claim for declaratory judgment. The court noted in particular that
the proceedings before the state department of insurance and this court
involved substantially the same parties and issues and the application of the
Colorado River abstention would avoid duplicity and possible inconsistent
results and more effectively resolve the present matter. In addition, the
court refused to exercise supplemental jurisdiction over the state guaranty
association’s declaratory judgment claim because (1) the claim was based on