Opinion
Civil Action 7:22-cv-00290
08-14-2023
VICTOR PALACIOS, Plaintiff, v. UNITED PROPERTY & CASUALTY INSURANCE COMPANY, Defendant.
OPINION & ORDER
Micaela Alvarez Senior United States District Judge.
The Court now considers this case.
I. Factual and Procedural History
Plaintiff initiated this suit in Texas state court on June 30, 2022, alleging that Defendant United Property & Casualty Insurance Company underpaid him for damage to his property caused by a windstorm. Defendant removed the case to this Court on August 19, 2022, on the basis of diversity.
Dkt. No. 1-3 at 4-5.
Dkt. No. 1.
On February 16, 2023, the Florida Office of Insurance Regulation determined that grounds existed to initiate receivership proceedings against Defendant. On February 20th, the Florida Department of Financial Services petitioned to be appointed as receiver for purposes of Defendant's liquidation and to have the court sign a consent order already executed by Defendant.
Dkt. No. 7-1 at 4.
Id. at 1.
Dkt. No. 7.
The Department's filing of the petition for receivership operates as an automatic stay under Florida law that prohibits the continuation of judicial proceedings against Defendant.
Dkt. No. 7-1 at 1 (citing FL. STAT. § 631.041(1)(a)).
II. Discussion
Under the doctrine of Burford abstention, a “federal court should abstain from exercising jurisdiction where to do so would interfere with a specialized, unified state court system of adjudication designed to avoid inconsistent adjudication of claims arising from a comprehensive, detailed, and complex regulatory scheme in a subject area involving state law.” Insurance is a field typically reserved for the states, and states have enacted comprensive and reciprocal schemes for liquidation of insolvent insurers and the treatment of their policyholders and claimants. “This doctrine has typically been applied where a suit for money damages is filed against an insurance company in receivership, on the ground that states have primary responsibility for regulating the insurance industry and have comprehensive receivership and liquidation regulations.”
Martin Ins. Agency, Inc. v. Prudential Reinsurance Co., 910 F.2d 249, 254 (5th Cir. 1990) (citing Burford v. Sun Oil Co., 319 U.S. 315 (1943)).
See Munich Am. Reinsurance Co. v. Crawford, 141 F.3d 585, 591 (5th Cir. 1998).
Health Net, Inc. v. Wooley, 534 F.3d 487, 496 (5th Cir. 2008).
Florida is no exception to this general rule. FL. STAT. § 631.192 ALLOWS CLAIMS WHEN “[T]HE EVENT, WHETHER AN ACT OR OMISSION, OCCURRED PRIOR TO THE DATE OF THE ORDER OF LIQUIDATION,” AND §631.161 SPECIFICALLY PROVIDES FOR THE HANDLING OF CLAIMS OF NONRESIDENTS AGAINST INSOLVENT FLORIDA INSURERS. THE REMAINDER OF THAT CHAPTER COVERS THE MECHANISM, PROOF, TIME TO FILE, AND THE RECIEVER'S RELATIONSHIP WITH GUARANTEE ASSOCIATIONS TO HANDLE CLAIMS LIKE THOSE BROUGHT BY PLAINTIFF.Therefore, the Court finds Burford abstention is appropriate.
See generally FL. STAT. § 631.
While courts sitting in equity may dismiss a case on Burford grounds, the Supreme Court has “permitted federal courts applying abstention principles in damages actions to enter a stay, but . . . not . . . to dismiss the action altogether.” In situations such as these, “[s]ince the dismissal of the [action] would implicate the merits, a stay pending actions of the state court such as dissolution of the injunction is the proper course.”
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 730 (1996).
Anshutz v. J. Ray McDermott Co., 642 F.2d 94, 95 (5th Cir. 1981).
III. Conclusion
For the foregoing reasons, the Court STAYS all deadlines and settings in this case and SETS a STATUS CONFERENCE for September 19, 2023, at 9:00 a.m. The parties shall file a STATUS REPORT by September 12, 2023. Therein, Plaintiff's counsel shall inform the Court of how they intends to proceed, the steps taken to that end, and whether voluntary dismissal of the action in this Court will be appropriate. Defendant's counsel shall inform the Court about the status of their employment by Defendant in light of the receivership.
IT IS SO ORDERED.