May It Please The Court: Weblog of legal news and observations, including a quote of the day and daily updates

Skip To Content

MIPTC Author:

Bookstore:


Listed in Latino Who's Who, June 2014
 Attorney
Categories [more]
General (1982)
Lawyer 2 Lawyer (283)
Latest Blogs
This Month's Posts [more]
S
M
T
W
T
F
S
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Links of Interest [more]
Locations of visitors to this page

Creative Commons License
This work is licensed under a Creative Commons License.


Quote of the Day - Let thy speech be short, comprehending much in a few words. - Aprocrypha
Adjust font size: A A+ A++
Claim Your Profile on Avvo

The Shortest Sentence Introduces The Long Arm Of The Law

"Enter Reliance."  Back in August 2005, MIPTC introduced you to what I thought was the shortest appellate court sentence written.  In an amended opinion first issued six months ago, the Ninth Circuit wrote those words to introduce Reliance Insurance Company's part in a long-running dispute that started with the foreclosure of O.J. Simpson's house, and has now resulted in a nearly million-dollar verdict against Reliance Insurance Company. 

The verdict is most surprising because not only is Reliance in liquidation in Pennsylvania and seemingly immune from judgment, but also for two other reasons:  (1) the plaintiff will actually collect on the judgment; and, (2) Reliance and the Pennsylvania Insurance Commissioner were unsuccessful in both staying the litigation here and and trying to transfer the case to Pennsylvania.  It's the age-old struggle for control between the executive branch and the judicial branch.  You can look for this opinion to be appealed to the Supreme Court, but in the meantime, you can also expect a few changes.

This opinion will certainly have a ripple effect across the insurance laws of the fifty states.  As a consequence, the several Insurance Commissioners might actually have to give up control of their attempts to liquidate insurance companies and move their liquidation cases to bankruptcy court instead, in order to gain control over significant pending litigation.  Otherwise, the consequence of this opinion will mean that insurance companies who deny claims and then end up in liquidation may find themselves litigating cases in every state instead of being able to force unwilling plaintiffs to submit to the jurisdiction of the liquidating state. 

As is the case with most insurance companies wobbling on the brink of liquidation, the plaintiff in this case, Hawthorne Bank (now Commerce Capital Bank), sought and got a bond from Reliance.  The Court ordered Reliance to post a $1.1million-dollar litigation bond because of its precarious financial state.  Reliance then went into liquidation.  Reliance and the Pennsylvania Insurance Commissioner next sought to stay the case in California and then transferred to Pennsylvania, but the Ninth Circuit rebuffed those efforts, and kept the case in California, allowing it to proceed.  The suit between Hawthorne and Reliance went to trial, and Reliance lost.  The bond will now come into play, and Hawthorne will get paid practically all of its $1.2 million verdict.  If you're involved with litigation against an insurance company, the case in the very first link is a must-read.

Podcast 

Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Tuesday, January 17, 2006 at 06:33 Comments Closed (0) |
 
Share Link