Mealey's Insurance Insolvency : Mealey's : Legal News & Analysis

Mealey's Insurance Insolvency

September 19, 2023
Dismissal Granted In Multiple Hurricane Damage Suit Against Insolvent Insurer

LAKE CHARLES, La. — A Louisiana federal judge dismissed a homeowner’s breach of contract suit against a now-insolvent insurer over its failure to compensate for damages caused by two hurricanes, finding that the magistrate judge correctly determined in a report and recommendation that because the homeowner amended her complaint to add the Louisiana Insurance Guaranty Association (LIGA) as a defendant, the court lacks subject matter jurisdiction.
September 18, 2023
Justice Denies Protective Order, Disqualification Bid In Reinsurance Row

NEW YORK — Addressing two motions relating to an audit agreement, a New York justice denied both a liquidator’s request for a protective order regarding certain previously produced documents and reinsurers’ bid to disqualify the liquidator’s counsel.
September 18, 2023
Judge Dismisses Hurricane Coverage Suit Against Insolvent Insurer

RALEIGH, N.C. — A North Carolina federal judge lifted a stay and dismissed a breach of contract suit filed by a homeowner against his now-insolvent insurer over failing to fully compensate for damages related to Hurricane Florence, finding that dismissal is appropriate because the homeowner and the North Carolina Insurance Guaranty Association (NCIGA), as statutory obligor, have resolved the claims in the suit.
September 15, 2023
Unsecured Creditors In Vesttoo Chapter 11 Case Want To Conduct Discovery

WILMINGTON, Del. — Arguing that it “is the only independent fiduciary capable of conducting a thorough and conflict-free investigation,” the Committee of Unsecured Creditors in the jointly administered Chapter 11 case of Vesttoo Ltd. and 48 affiliated entities on Sept. 14 asked a Delaware federal bankruptcy court for leave to conduct discovery.
September 15, 2023
Motion To Add Guaranty Association Granted, Case Remanded In Hurricane Ida Suit

NEW ORLEANS — A Louisiana federal judge granted insured homeowners’ motion to file a supplemental complaint to add the Louisiana Insurance Guaranty Association (LIGA) as a defendant in a Hurricane Ida coverage suit against their now-insolvent insurer, finding a lack of evidence that the homeowners sought to amend their complaint to defeat diversity jurisdiction but that because it is defeated by adding LIGA, the case must be remanded to state court.
September 13, 2023
Judge Remands Hurricane Coverage Dispute After Joinder Of Guaranty Association

NEW ORLEANS — A Louisiana federal judge remanded to state court an insurance coverage suit against a mortgage company and an insolvent homeowners insurer over alleged failure to fully compensate an insured for purported damages related to Hurricane Ida, finding that the court lacks subject matter jurisdiction after the Louisiana Insurance Guaranty Association (LIGA) was added as a defendant.
September 12, 2023
Case Management Ordered In Breach Of Contract Suit Against Guaranty Association

SARASOTA, Fla. — A Florida state court judge on Sept. 11 entered a case management order setting an initial hearing in a breach of contract suit filed against the Florida Insurance Guaranty Association (FIGA) as successor in interest to a now-insolvent homeowners insurer that purportedly failed to provide coverage for damage allegedly caused by a hurricane.
September 12, 2023
Magistrate: Producing Documents Doesn’t Limit Review In Row With Insurer In Rehab

INDIANAPOLIS — An Indiana federal magistrate judge ruled that disclosing privileged documents does not constitute a waiver of privilege or limit the parties’ right to review in a breach of contract suit filed by an insurer in rehabilitation against primary and excess directors and officers (D&O) insurers.
September 12, 2023
Judge Remands Bad Faith Homeowners Insurance Suit Against Insolvent Insurer

BATON ROUGE, La. — A Louisiana federal judge remanded to state court a bad faith homeowners insurance coverage suit over purported water damage from a plumbing leak, finding that remand is appropriate for lack of subject matter jurisdiction due to the Louisiana Insurance Guaranty Association (LIGA) being added as a defendant after the insurer was placed into liquidation.
September 12, 2023
Justice Alito Grants Insurance Regulators’ Request To Extend Time To File Cert

WASHINGTON, D.C. — In a docket-only entry, Justice Samuel A. Alito Jr. granted a request filed by state insurance regulators for Maine, Massachusetts and Washington to extend the time to file a petition for writ of certiorari with the U.S. Supreme Court in response to the regulators’ argument that they “cannot reasonably frame a petition for writ of certiorari” to appeal the Pennsylvania Supreme Court’s judgment affirming an appellate court’s approval of a plan of rehabilitation for the Senior Health Insurance Company of Pennsylvania (SHIP) because the Pennsylvania Supreme Court did not yet issue an opinion.
September 11, 2023
Georgia Insurance Commissioner Joins Motion To Dismiss Liquidation Proceeding

WILMINGTON, Del. — The Georgia insurance commissioner on Sept. 8 filed with a Delaware state court chancellor a joinder to the motion filed by special deputy receiver of Friday Health Insurance Co. Inc. to dismiss or stay the assignment for the benefit of creditors (ABC) proceeding to liquidate the assets of (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC), asserting that the Delaware Chancery Court should not allow ABC proceedings to “circumvent” state court orders related to rehabilitation or liquidation.
August 31, 2023
Insolvent Insurer’s State Plans Notify Delaware Chancellor Of Joinder

WILMINGTON, Del. — State plans affiliated with Friday Health Plans Inc. (FHP) notified a Delaware state court chancellor that they filed a joinder to the motion filed by special deputy receiver of Friday Health Insurance Co. Inc. to dismiss or stay the assignment for the benefit of creditors (ABC) proceeding to liquidate the assets of (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC), asserting that each state has its own pending receivership proceedings.
August 31, 2023
Wrangling Over Automatic Bankruptcy Stay Continues In Letter Of Credit Fallout

WILMINGTON, Del. — Arguing that the filing of a Chapter 15 case violates a consent order, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated entities on Aug. 30 asked a Delaware federal bankruptcy court to issue a contempt order and sanctions against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 24, 2023
Enforcement Of Automatic Bankruptcy Stay Sought For Foreign Proceedings

WILMINGTON, Del. — Citing reports of litigation in Bermuda and Israel, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated debtors moved in Delaware federal bankruptcy court for enforcement of the automatic stay against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 23, 2023
Homeowner Seeks Video Conference In Hail Damage Suit Against Insolvent Insurer

GALVESTON, Texas — A Texas homeowner filed a motion in Texas state court asking for a scheduled status conference to be held via video in his breach of contract suit against a now-insolvent insurer over its purported failure to cover hail damage, asserting that remote conferencing would be appropriate due to the “unnecessary travel time” needed for legal counsel to appear in person.
August 23, 2023
Guaranty Association Seeks Stay In Breach Of Contract Suit Over Windstorm Damages

SARASOTA, Fla. — The Florida Guaranty Association (FIGA) moved to enforce a mandatory six-month stay in a homeowner’s breach of contract suit filed against FIGA and a now-insolvent insurer for failure to adequately compensate for a wind damage claim, arguing that pursuant to Florida law, proceedings involving an insolvent insurer shall be stayed for six months.
August 22, 2023
Judge Grants Remand After Guaranty Association Added To Hurricane Coverage Row

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to remand in a breach of contract and bad faith suit filed against a now-insolvent insurer over its purported failure to cover damages related to Hurricane Ida, finding that because the homeowner added the Louisiana Guaranty Association (LIGA) as a defendant, diversity jurisdiction is defeated.
August 22, 2023
Hurricane Ida Coverage Suit Against Insolvent Insurer Dismissed By Property Owner

NEW ORLEANS — The owner of a New Orleans multifamily dwelling allegedly damaged by Hurricane Ida voluntarily dismissed his breach of contract and breach of the duty of good faith and fair dealing suit filed in a Louisiana federal court against his insurer, a Florida company that was placed into receivership by a Florida court.
August 18, 2023
Hurricane Coverage Suit Dismissed After Guaranty Association Added As Defendant

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to add the Louisiana Insurance Guaranty Association (LIGA) as a defendant and dismissed the homeowner’s breach of contract suit against LIGA and a now-insolvent insurer, finding that the court no longer has subject matter jurisdiction because the homeowner and LIGA are both citizens of Louisiana.
August 17, 2023
Insurer Seeks Distribution Of $100M To Subclass Member In ACA Risk-Corridor Row

WASHINGTON, D.C — An insolvent health insurer that sued the federal government alleging that the government failed to pay money owed under the Patient Protection and Affordable Care Act (ACA) for the ACA risk-corridor program filed a motion in a District of Columbia federal court seeking to distribute more than $100 million of a judgment entered for a subclass member.
August 15, 2023
Judge Stays Wind Damage Case Against Homeowners Insurer, Cites Receivership Filing

McALLEN, Texas — A Texas federal judge on Aug. 14 stayed a breach of contract case against a homeowners insurer related to its purported failure to adequately cover a claim for wind damages, finding that a stay is merited because the Florida Department of Financial Services’ (DFS) “filing of the petition for receivership operates as an automatic stay under Florida law.”
August 15, 2023
Under Stipulation, Reinsurer May Intervene In California Liquidation Proceeding

LOS ANGELES — Following a stipulation by a liquidator and a reinsurer who had a dispute playing out in two jurisdictions, a California judge has ruled that the reinsurer may intervene in the state court action.
August 15, 2023
Appellees To Court: Uphold Adversary Proceeding Ruling Under McCarran–Ferguson

NEW YORK — Urging a New York federal court to uphold a bankruptcy judge’s order partially staying an adversary proceeding in an expansive dispute involving a reinsurer, four entities collectively referred to as the NC Insurance Cos. argue in their appellees’ brief that the adversary proceeding is reverse-preempted under the McCarran–Ferguson Act (MFA).
August 11, 2023
Judge Compels Arbitration, Grants Dismissal In Fraud Suit Involving Reinsurance

GREENSBORO, N.C. — Compelling arbitration and granting dismissal without prejudice in a suit over an alleged scheme involving reinsurance, a North Carolina federal judge on Aug. 10 said in part that the plaintiff’s consent to arbitrate all claims means “there is no reason for this case to remain on this Court’s docket.”
August 09, 2023
Justice Seals Communications With Liquidated Insurer, But Not Asbestos Settlement

NEW YORK — A New York justice found no good reason to seal or redact the amount a liquidator settled asbestos claims for, but said communications among the liquidator, counsel and the referee who oversaw the settlements included discussion of litigation strategy and would be sealed.