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

Mealey's Insurance Insolvency

February 09, 2023
Case Dismissed Upon Settlement In Guaranty Association Construction Bond Row

PHILADELPHIA — A Pennsylvania federal judge dismissed a suit filed by the Kentucky Insurance Guaranty Association (KIGA) against a construction company and its affiliates in a dispute over the association’s payments on surety bonds for the defendants’ construction projects after the parties “reached a mutually agreeable settlement.”
February 09, 2023
Guaranty Association Intervention Denied In Hurricane Coverage Suit

LAKE CHARLES, La. — A Louisiana federal magistrate judge denied the Louisiana Guaranty Association’s (LIGA) motion to intervene as a statutory obliger in a bad faith insurance coverage suit filed against a homeowners insurer over purported hurricane damages, finding that though LIGA claims that it is an intervenor of right because a Florida court found the defendant insurer insolvent, LIGA fails to explain its interest in the current suit.
February 09, 2023
Judge Dismisses Hurricane Coverage Suit, Cites Notice Of Stay And Liquidation

MCALLEN, Texas — A Texas federal judge dismissed a hurricane coverage suit filed by a homeowner against a now-insolvent insurer, finding that pursuant to the consent order appointing the Florida Department of Insurance as the insurer’s receiver and accompanying notice of automatic stay, the federal court should abstain from exercising jurisdiction.
February 08, 2023
Bid And Valuation Production Ordered In DUFTA Suit Concerning LTC Insurer

WILMINGTON, Del. — Finding bid and valuation documents “relevant to Plaintiffs’ claims and proportional to the needs of the case,” a Delaware Chancery Court vice chancellor granted a motion to compel their production in a putative class suit alleging fraudulent transfers from an insurance subsidiary on which more than 1 million policyholders depend for long-term care (LTC) insurance disability benefits.
February 07, 2023
Magistrate Recommends Approving Trustee Request For $24M Insurance Policies Sale

FORT LAUDERDALE, Fla. — A Florida federal magistrate judge issued a report and recommendation to approve a liquidating trustee’s motion for the $24 million sale of trust policies and a settlement between the trust and the trust investment manager Acheron Capital Ltd., finding that if the court does not keep jurisdiction after the sale is finalized, its order should include a provision that the trustee and purchaser must agree on a nonjudicial forum to resolve disputes related to the costs of liquidation.
January 31, 2023
Insurers In Defense Costs Row Argue Reinsurer ‘Is A Financial Institution’

NEW CASTLE, Del. — Arguing in part that reinsurer Alpha Re “is a financial institution,” three insurers filed counterclaims in a defense costs dispute in the Delaware Superior Court that centers on whether Alpha Re’s 2018 liquidation triggered an exclusion.
January 31, 2023
Former Advisory Firm’s Dismissal Bid Fails In SEC Suit Over Alleged Fraud

DURHAM, N.C. — After a North Carolina federal judge denied its dismissal motion in a case over the U.S. Securities and Exchange Commission’s allegations of “a series of fraudulent and improper schemes” that defrauded clients of more than $75 million, a former investment advisory firm filed an answer asserting defenses including that it “complied with the rules and regulations of the SEC at all relevant times.”
January 27, 2023
Panel: Whether Insured Provided Timely Notice Should Have Been Left For Fact Finder

TAMPA, Fla. — A Florida appeals panel on Jan. 27 reversed a lower court’s ruling in favor of a homeowners insurer in a coverage dispute over sinkhole damage, finding the insurer not entitled to summary judgment on the issue of whether its insureds provided timely notice of their sinkhole damage.
January 24, 2023
Florida High Court Grants FIGA’s Dismissal Motion In Hurricane Irma Appraisal Row

TALLAHASSEE, Fla. — The Florida Supreme Court issued an order granting the request of Florida Insurance Guaranty Association (FIGA), as guarantor for a now-insolvent insurer, to dismiss the insurer’s appeal of a trial court order compelling appraisal in a coverage dispute regarding condominiums damaged by Hurricane Irma, finding that because there is no “wholly denied” claim, the “appropriate step is to dismiss the appeal.”
January 24, 2023
Insured’s Remand Motion Granted In Hurricane Damage Suit Against Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted an insured’s motion to remand in a breach of contract suit filed against a now-insolvent insurer, alleging that the insurer failed to provide adequate payment for alleged property damage related to Hurricane Ida, finding that since the amended complaint added Louisiana Insurance Guaranty Association (LIGA) as the successor-in-interest to the insurer and “because complete diversity is lacking, remand in this instance is appropriate.”
January 23, 2023
High Court Won’t Review Prior Exclusive Jurisdiction Ruling In Conservatorship Row

WASHINGTON, D.C. — The U.S. Supreme Court on Jan. 23 denied a certiorari petition in which the petitioners argued that the challenged ruling regarding an insurance conservatorship dispute “conflicts with longstanding precedent of this Court and various circuit courts as to the scope of two judge-made rules governing when federal courts must abstain from adjudicating constitutional claims against state officials under” 42 U.S. Code Section 1983.
January 20, 2023
Judge Issues Case Management Order In Hurricane Irma Coverage Dispute With FIGA

SANFORD, Fla. — A Florida state court judge issued a case management order outlining projected trial dates and discovery requirements in a condominium association’s suit against its now-insolvent commercial property insurer, for which the Florida Insurance Guaranty Association (FIGA) is the receiver, seeking coverage for damage caused by Hurricane Irma.
January 20, 2023
Insurer In Rehab Seeks Damages In D&O Coverage Suit, Argues Claims Not Related

INDIANAPOLIS — An Indiana federal judge ordered an insurer in rehabilitation and primary and excess directors’ and officers’ (D&O) insurers it sued for breach of contract to file a joint jurisdictional statement by Feb. 17, providing each party’s citizenship “and whether the amount in controversy exceeds $75,000.”
January 18, 2023
Conn. Judge Rules On ‘Forum Shopping’ Suit Claiming Receiver’s Wrongful Rejection

HARTFORD, Conn. — A Connecticut judge granted a homeowners insurer’s motion to dismiss a suit alleging that a builder’s insurer in liquidation wrongfully rejected the homeowner’s challenges to settlement of water damage claims against the builder, finding that because the homeowner’s claims have already been tried in California state and federal courts, forum non conveniens requires dismissal.
January 18, 2023
Magistrate Recommends Escrow Payment Per Agreement With Insolvent Insurer

CENTRAL ISLIP, N.Y. — A New York federal magistrate judge recommended that an order be entered to disburse funds in escrow to an insolvent insurer and a law firm in a title insurer’s suit against the insolvent insurer and others seeking to be discharged from liability under an escrow agreement, finding that the title insurer has satisfied the elements of its interpleader action.
January 18, 2023
Hearing Scheduled For Remaining Defendants In Insolvent Health Plan Dispute

CHICAGO — An Illinois federal magistrate judge issued a minute docket entry scheduling an in-person status hearing for the remaining parties in a breach of duty of care suit filed by an independent fiduciary against insurance brokers in connection with the sale of an insolvent health plan.
January 18, 2023
Reinsurer’s Liquidators Report Bermuda Judgment In Favor Of Largest Known Creditor

NEW YORK — The Supreme Court of Bermuda has issued a judgment in favor of the largest known creditor of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA), PBLA’s joint provisional liquidators (JPLs) told a New York federal bankruptcy court.
January 17, 2023
Louisiana Federal Judge Remands In Hurricane Damage Suit Against Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to lift a stay and remand in a suit filed against a now-insolvent insurer over alleged property damage from Hurricane Ida, finding that because the amended complaint added the Louisiana Insurance Guaranty Association (LIGA) as successor-in-interest to the now-insolvent insurer, complete diversity is lacking.
January 11, 2023
Vice Chancellor Applies Freestone To Stay Requests Regarding Rehabilitation

WILMINGTON, Del. — Applying In re Liquidation of Freestone Insurance Co. in a suit over transactions involving reinsurance agreements, a Delaware vice chancellor stayed claims against an insurer that is in rehabilitation in Pennsylvania but not against its wholly owned subsidiary.
January 09, 2023
Piercing Of Corporate Veil Sought In Adversary Complaint In Bankruptcy Court

NEW YORK —The joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors have named PBLA’s former principal and hundreds of entities allegedly affiliated with him as defendants in an adversary proceeding in New York federal bankruptcy court.
January 04, 2023
Panel Says Liquidation Of Insurer Gave Notice For Filing Time Limit In Fraud Suit

LAKE CHARLES, La. — A Louisiana appellate court affirmed a lower court’s dismissal of a surviving spouse’s suit to enforce an Arkansas court’s medical malpractice judgment, finding that the lower court’s decision that the surviving spouse’s fraud claims were prescribed for lack of timely filing “was not manifestly erroneous” because the liquidation of the medical malpractice insurer should have sufficed to begin running of the prescription for filing the fraud claim.
January 03, 2023
Rehabilitator: Independent Auditor Failed Obligation To Run-Off Insurer

MINNEAPOLIS — Alleging that an independent auditor “failed in its obligation to present an accurate picture of” a run-off insurer’s financial condition, the insurer’s statutory rehabilitator asserted claims of professional negligence, breach of fiduciary duty and breach of contract in Minnesota federal court.
January 03, 2023
Former Exec Pleads Guilty To New Criminal Charge Of Conspiracy In Alleged Schemes

CHARLOTTE, N.C. — A former executive entered a guilty plea in North Carolina federal court to a recently revealed criminal charge of conspiracy to commit offenses against the United States over allegations that he took part in schemes to, among other things, “evade regulatory requirements meant to protect policyholders” and conceal the “true use of insurance company funds” for the owner’s benefit.
January 03, 2023
Former Advisory Firm’s Dismissal Bid Disputed In SEC Suit Over Alleged Fraud

DURHAM, N.C. — Wrangling in North Carolina federal court over allegations of “a series of fraudulent and improper schemes” that defrauded clients of more than $75 million, a former investment advisory firm asserts that it “was not meaningfully involved in these transactions,” and the U.S. Securities and Exchange Commission contends that “the acts of its officers and agents constitute the acts of” the firm.
December 23, 2022
Judge Rules On Liquidator’s Motion To Strike Defenses In D&O Coverage Dispute

SIOUX FALLS, S.D. — A South Dakota federal judge granted in part a liquidator’s motion to strike a specialty insurer’s asserted affirmative defenses and for partial summary judgment in the liquidator’s declaratory judgment suit seeking a declaration that coverage exists under a claims-made excess insurance policy above a directors and officers (D&O) policy with regard to a $21 million wrongful acts claim, finding that summary judgment is appropriate for the defense of failure to state a claim.