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Fifth Circuit
Texas Life, Accident, Health & Hosp. Serv. Ins. Guar. Ass'n v. Gaylord
Entertainment Co., 105 F.3d 210 (5th Cir. 1997). Guaranty association sued
pension plan administrators for breach of fiduciary duty for impudently
investing in the GICs of a failing company. Court held the guaranty association
lacked standing to sue because, while assignment of breach of fiduciary duty
claims under pension plans is not prohibited by ERISA’s pension benefits antiassignment
provision, the association’s assignment of claims was invalid.
Maryland Maryland Life & Health Ins. Guar. Ass'n v. Perrott, 301 Md. 78, 482 A.2d 9 (1984).
Guaranty association has standing to intervene of right in receivership
proceedings to protect its rights; association must have access to information
necessary to fulfill its statutory duties.
Washington Washington Life & Disability Ins. Guar. Ass’n v. Adams, 47 Wash. App. 213, 734
P.2d 932 (1987). State Life and Disability Insurance Guaranty Association, which
was creditor of the insolvent insurer, had standing to maintain action against
individual shareholders of the insurer for superadded liability under state law in
an amount equal to the par value of their shares. The shareholders contended
that the association was nothing more than an estate creditor and, as such, had
no authority to seek enforcement of the state law remedy. Court rejected
standing challenge relying upon the subrogation rights acquired by the
association under state law and the duty of the association to marshal assets.
Subrogation
Fourth Circuit
North Carolina Life & Accident & Health Ins. Guar. Ass'n v. Alcatel Network
Systems, Inc., 876 F. Supp. 748 (E.D.N.C.), aff'd, 72 F.3d 127 (4th Cir. 1995) (Table
Decision). North Carolina Guaranty Association had no standing to assert ERISA
claims against pension plan trustees because it had not yet paid any benefits to
plan participants. Subrogation claim was not yet ripe.
Delaware In re Liquidation of National Heritage Life Ins. Co., 728 A.2d 52 (Del. Ch. 1998).
Having transferred to acquiring insurer cash and promissory notes to assume
the statutorily covered contractual obligations owed to insolvent insurer’s
policyholders, the affected guaranty associations became subrogated to by
statute to the rights of the policyholders against the estate.
Washington Washington Life & Disability Ins. Guar. Ass’n v. Adams, 47 Wash. App. 213, 734
P.2d 932 (1987). Guaranty association is subrogated to rights of policyholders
and has standing to bring the action.
Vesting of Rights Against Guaranty Association
Texas
Messagephone, Inc., et al v. Texas Life, Accident, Health & Hospital Serv. Ins.
Guar. Ass’n, 966 S.W.2d 133 (Tex. Ct. App. 1998). Messagephone Inc. (“MPI”)
purchased unallocated annuity contracts from insurer, and assigned those
annuity contracts to a trust using them as collateral for several non‐recourse
loans. MPI filed a proof of claim after insurer was placed in receivership in 1989,
but did not disclose the existence of the trust. The Guaranty Association, having
elected to handle insurer’s claims, denied coverage for the annuity contracts
based on exclusions in 1991 amendments. Statutory amendments can be
retroactively applied without constitutional defect unless vested rights are
destroyed or impaired. There is no vested right to guaranty fund coverage.
Moreover, the annuity contracts were GICs containing no mortality guarantees,
and would have excluded form coverage under the 1989 statute.