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United States Court of Appeals, Fifth Circuit

The United States Court of Appeals granted a stay of the appeal brought by M. Electric & Construction Co. against Market Insurance Co. pending the liquidation proceedings of Market Insurance in state court. The court recognized that federal policy defers to state control over the insurance industry. Granting a stay, rather than dismissing the appeal, avoids implicating the merits of the case and allows the state liquidation proceedings to resolve without interference from the federal court.

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17 views2 pages

United States Court of Appeals, Fifth Circuit

The United States Court of Appeals granted a stay of the appeal brought by M. Electric & Construction Co. against Market Insurance Co. pending the liquidation proceedings of Market Insurance in state court. The court recognized that federal policy defers to state control over the insurance industry. Granting a stay, rather than dismissing the appeal, avoids implicating the merits of the case and allows the state liquidation proceedings to resolve without interference from the federal court.

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642 F.

2d 94

Jack C. ANSHUTZ, Plaintiff,


v.
J. RAY McDERMOTT COMPANY, INC., et al., Defendants.
M. ELECTRIC AND CONSTRUCTION COMPANY, INC.,
Third-Party
Plaintiff-Appellant,
v.
MARKET INSURANCE COMPANY, Third-Party DefendantAppellee.
No. 80-3744.

United States Court of Appeals,


Fifth Circuit.
Unit A
March 23, 1981.
Bruce A. North, New Orleans, La., for plaintiff.
Adams & Reese, Robert A. Vosbein and Thomas G. O'Brien, New
Orleans, La., for defendants.
Appeal from the United States District Court for the Eastern District of
Louisiana.
Before CHARLES CLARK, REAVLEY and WILLIAMS, Circuit Judges.

BY THE COURT:
1

As one aspect of this litigation involving several parties, M. Electric &


Construction Co., Inc. sought recovery from Market Insurance Co., its insuror.
The district court granted summary judgment in favor of Market on the ground
that the insurance policy held by M. Electric did not cover the particular claim.
M. Electric appealed. While this appeal has been pending, Market Insurance
has been placed under a Final Order of Liquidation by the Circuit Court of

Cook County, Illinois. As is typical in such situations, to avoid preferences the


Court has enjoined the pursuit of any claims against Market Insurance except
through the Director of Insurance and has enjoined the obtaining of any
judgments, attachments or liens against the company.
2

Recognition by this Court of the effectuation of the liquidation of this insurance


company by the State of Illinois is in accordance with federal policy which
directs that the control over the insurance business remain in the hands of the
states. 15 U.S.C. 1012; Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 66
S.Ct. 1142, 90 L.Ed. 1342 (1946). An orderly liquidation requires that this
Court not interfere with the order of the Circuit Court of Cook County. Clark v.
Williard, 292 U.S. 112, 54 S.Ct. 615, 78 L.Ed. 1160 (1934).

Market Insurance moves to dismiss the appeal or in the alternative for a stay of
the appeal. Since the dismissal of the appeal would implicate the merits, a stay
pending actions of the state court such as dissolution of the injunction is the
proper course. Hemmerle Industries, Inc. v. Kassuba, 575 F.2d 513 (5th Cir.
1978) (stay of litigation of a claim pending completion of bankruptcy
proceedings).

It is ORDERED that the motion for a stay of the appeal of Market Insurance
Co. is GRANTED, pending further order of the Court.

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