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against the Wisconsin Insurance Security Fund ("WISF"), Fuhrmann
attempted to opt‐in to the California plan, yet still pursue her claims against
the WISF. The present value of her annuity payments under the plan was
less than the annuity's original value. She asked the WISF to pay to her the
difference between what she received under the plan and the WISF’s
$300,000 limit on claims. The court held that when Fuhrmann opted into a
California court's payment plan for insureds of an insolvent insurer, she
released the WISF from any obligation to respond to her claim, and that she
subjected herself to the California court's jurisdiction; therefore, the Full
Faith and Credit Clause demanded that Wisconsin decline to entertain
Fuhrmann's challenges to her treatment under the California plan. If a
Wisconsin court were to allow Fuhrmann to proceed, that court would
undermine the relief fashioned by the California court, which would violate
the obligation to give the California court's judgment the same credit it
would have in California courts. Fuhrmann's attempts to reserve Wisconsin
as her relevant state for computation of benefits failed, as the WISF had no
notice of her letter to the California liquidator of Executive Life, and her
attempt did not negate her release of the WISF that arose because of her
participation in the California plan. she received under the plan and the
Fund's $300,000 limit on claims.
Iserman v. MBL Life Assurance Corp., 231 Wis.2d 136, 605 N.W.2d 210 (Ct. App.
1999). A Wisconsin insured of a New Jersey insurer in rehabilitation filed suit
against the insurer’s successor to which liabilities and assets were transferred
during rehabilitation. The insured asserted claims for breach of contract and
bad faith, and sought declaratory relief. The circuit court ruled it did not have
jurisdiction because the claim fell within the rehabilitation plan filed in New
Jersey. The appellate court held jurisdiction existed, but affirmed. The court
reasoned that the principle of comity governed because both New Jersey and
Wisconsin enacted very similar insurance rehabilitation and liquidation acts, and
the policy supporting comity outweighed any detriment to policyholders.
Accordingly, the court followed the rehabilitation plan in place in New Jersey
which provided that the rehabilitation court had “exclusive jurisdiction” over
the insurer’s rehabilitation proceedings. While Wisconsin permits residents to
file claims with an ancillary receiver in liquidation proceedings, the court noted
that no ancillary receiver had been appointed. Thus, the insured’s avenue of
relief was with the New Jersey court.
Janak v. Allstate Ins. Co., 319 F. Supp. 215 (W.D. Wis. 1970). In upholding the
restraining order barring persons from obtaining judgments against insolvent
insurer and from interfering with the business of the liquidator issued by the
state court, the federal court noted that full faith and credit must be given to
the Illinois court's order even though the parties alleged they did not receive
notice of the liquidation order.
Sanchez v. Finlay Jewelry Corp., 284 Wis.2d 570, 699 N.W.2d 253 (Wis. Ct. App..
2005) – Court affirmed entry of default judgment against insured, whose insurer
was under order of liquidation in New York state court, where insured did not
respond to complaint. Court rejected comity argument, under which New York
state court injunction against new suits against insurer barred the current suit,
because New York state court injunction was expressly limited to all parties “to
law suits in this state.” The court further reasoned that insured’s failure to act in
light of its knowledge of insurer’s insolvency was not reasonable.
Interaction with Bankruptcy Estates
Tenth Circuit
Strong v. W. United Life Assurance Co. (In re Tri‐Valley Distrib.), BAP No. UT‐05‐
119, BAP No. UT‐06‐048, 2006 Bankr. LEXIS 3252 (B.A.P. 10th Cir. 2006). The
receiver for an insolvent insurance company and a bankruptcy examiner