Kentucky Central Life Insurance Company (Ky.)
Webbs Assert New Judicial Authority for Oral Promises Overriding Written Guarantees
Counsel for the Webbs filed a motion on January 4, 2003, with the Kentucky Supreme Court asking it to follow a new Kentucky Court of Appeals decision that the Webbs contend permits defendants to avoid their obligations under written contracts on the basis of oral understandings. In July 2002, the Kentucky Court of Appeals sided with the liquidator and reversed a trial court decision that permitted the Webbs to avoid liability under their written personal guarantees because of an alleged unwritten agreement with Kentucky Central's former (and now-deceased) president that those guarantees would never be enforced. On December 20, the Kentucky Court of Appeals handed down a decision in an unrelated liquidation that the Webbs contend is contrary to its ruling in the Webb case. The Kentucky Supreme Court has yet to accept transfer of the Webb case.
Task Force Chair - John Colpean; Staff Contact - Joni Forsythe National Heritage Life Insurance Company (Del.)Court of Appeals Denies Motion to Reconsider
In January, NOLHGA learned that the U.S. Second Circuit Court of Appeals denied the liquidator's motion to reconsider an unfavorable decision in the UFH Apartments/Tudor City case. At the liquidator's request, NOLHGA filed an amicus in December to support the estate's efforts in the lawsuit to recover approximately 300 Manhattan co-op apartments. The case involved allegations that various co-ops and co-op mortgages were fraudulently purchased with NHL money and placed in the name of entities other than NHL. Although the court failed to address all of the liquidator's claims for relief, the court of appeals summarily declined to rehear the matter.
Task Force Chair - Dan Orth; Staff Contact -Legal Seminar Planning Begins
Planning has begun for the 12th Annual NOLHGA Legal Seminar, which will take place August 21-22, 2003, at The Palace Hotel in San Francisco. The seminar will be held in conjunction with the MPC meeting scheduled for August 19 and 20.
On January 24, the Legal Seminar Planning Committee held its initial teleconference to develop the agenda for the seminar. The committee, which is chaired by Noreen Parrett and Tad Rhodes and includes John Colpean, Jack Falkenbach, David Martin, Jim Mumford, Frank O'Loughlin, and Charlie Richardson, welcomes suggestions for speakers and topic ideas; please call Aimee Frye at 703.787.4115 or e-mail Meg Melusen at [email protected] if you have any questions or suggestions for speakers and presentation topics.
Staff Contact -Receiver Asks U.S. Supreme Court to Hear Federal Superpriority Case
On January 27, the Massachusetts receiver for American Mutual Liability Insurance Company and American Mutual Insurance Company of Boston filed a Petition for Writ of Certiorari with the United States Supreme Court seeking review of a September 2002 decision by the First Circuit Court of Appeals finding that the statutory bar date for filing claims in insurance insolvencies under Massachusetts law does not apply to claims of the federal government.
The court of appeals concluded that the claims bar date is neither directed at nor necessary for the protection of policyholders and is not therefore shielded from preemption under the McCarran-Ferguson Act as construed in Fabe. This decision appears to have been based on the court's conclusion that the state bar date for filing claims has only a limited effect on policyholders because they have priority and can be paid ahead of government claims.
In October, the receiver filed a petition for rehearing seeking full panel review of that decision by the First Circuit on the grounds that the court misunderstood the effect of the bar date on policyholders and therefore misapplied the Fabe standards. In the petition, the receiver explained that claims of the federal government include policyholder claims, and that without a claims bar deadline enforceable against the federal government, the receiver would be prevented from paying policyholder claims. Accordingly, the receiver urged the court to recognize that the claims bar date directly benefits policyholders and is therefore shielded from federal preemption because it permits the receiver to make a final determination of policyholder claims so that policyholders can be paid. Statements issued by the Maine, New Hampshire, and Rhode Island Insurance Departments were filed in support of the receiver's petition. The property and casualty guaranty funds also sought rehearing of the September decision. Both requests for rehearing were denied in November.
Accordingly, the receiver has proceeded with the filing of a Petition for Writ of Certiorari asking for review of this decision by the United States Supreme Court. NOLHGA, among others, has provided amicus support for the receiver's efforts in this case before the federal district court and the court of appeals. The receiver has similarly requested that NOLHGA provide amicus support for the pending petition to the United States Supreme Court. That request is being considered by the Legal Committee's amicus subgroup.
For further information, contact Joni Forsythe at 703.787.4103.
Staff Contact - Joni Forsythe