good morning we'll call the first matter on the calendar hawthorne savings versus reliance insurance illinois within the broader reversed preemption issue and the orders of the trial court i don't see how that can possibly be the overriding issue of course is the jurisdiction of the trial court to do anything with this case  the appleby's of argued standard intervention along saying that there was not a basis for intervention of right there was perhaps a product get to deny intervention under discretionary basis but our contest right is we have no free thing  issue but the broader issue of course being jurisdiction is what is before the court today of course there was a bomb the court ordered a bond realized insurance company approached bonny company that bonding company required that cash be pledged there were no other assets and because of the meeting one passed along to reliance insurance company essentially the surety was permitted to collect directly against the impounded funds so i think what happened reliance it offered to pay the money into the registry of the court court is denied that said no you need a post  bonding company but that doesn't have any crisis and they can by saying what that has to do with the liquidation proceedings is an extremely unclear on this record the the connection between the bombing order as well as it's gotten their money from the bonding company right now what do we know anything about how that is going to affect the liquidation proceeding where where is the money right is the status of the one point one million will endeavor to dig into the record a little further and say precisely what the out believes actually executed against whether in fact the bombing company paid over the pledged assets  particular party reliant and only if there was a judgment and it was going to come from the bonding company that was his understanding and we don't know anything else about it it's hard to dispute that but i'm kin honor i would just say that the bonding mechanism here was essentially a fiction at the end of the day the only money that was going to be available to satisfy a judgment was going to come from elias and sure his company whether the bali company diction to reflected lead impound reliance insurance company's assets force it to expend limited resources to defend federal proceedings and then proceeding to educate the bank's claims against reliance even after the pennsylvania court specifically ordered reliance into rehabilitation and later liquidation under the intricate framework of pennsylvania and acted specifically for the purpose of regulating insurance companies answered fairly and if they should in any liquidate insurers for the benefit of all policyholders creditors and the public every single insurance case removed to federal court because the key here as the united states supreme court pointed out in the davis asian in one nine hundred ninety three is whether or not we're dealing with the business of insurance the relationship between policyholders and claimants and the insurance mission but it's not apparent that that is the situation where mccarrick and mccarran ferguson has been brought to bear where we're dealing with complex regulatory statutes as in the fate case dealing with the some cases also describing what constitutes or the circle state being a state that in acts similar liquidation rehabilitation proceedings and in some of the california cases there under which would specifically do what they want to in large measure certainly the framework has been implemented in pennsylvania there is california authority unfortunately unpublished which is very recent that says because of the similarities between the california statutes and the pennsylvania statutes appropriate course is to respect the decision in the jurisdiction of that court so while under the uniform national california thorium that's right now california president i disagree here all respectfully why is that and that is because we are in federal court and the laws of the united states congress are what govern here and the decisions of the united states supreme court are what you have are here and so it's not simply your honor certainly the u s supreme court's decision in quackenbush i think resolves the issue of whether or not buffered abstention is going to be available and it's going to be available any time there's discretionary releases being sought from the trial  you your honor tucker case of course is not an insurance liquidation or rehabilitation case it was a federal savings are different factual circumstances additionally the most important point about tucker is the court noted that there was not an attempt there to have a lawsuit between claimants against the bank's assets the posit or assets it was a collateral litigation between the bank and other claimants that would not affect the crocus that would be available for distribution the state savings and loan here we have the quintessential case for extension because we have claimants directly against reliance insurance company whatever monies they recover whatever claimants against the banks were not hostetter they were trying but they it's not it's not that that he trusts company came back and said we can't pay you because we have any money and he said we're not going to pay him because we don't think you're entitled to them and that entitled to be paying so it's come it's in that sense of simply it's not a case about the liquidation itself case certainly did start long before the liquidation rehabilitation but rehabilitation liquidation had to be in order and that was the circumstance that was presented to the trial court before any final order had been entered before  under pennsylvania law and we've cited the authorities they most definitely are and there was no final judgment and piled any berkeley's of the fact in the california action as a court as of course in california you don't even get reclusive a fact after a jury trial it's only until all pills have been exhausted and no longer can the judge of the appeal they're going to close the facts so that's another independent reason why we don't get to think about the issues and what we might or might not do but we would suggest the way to forty in the interest of comedy deposit or may or may not be at one point one million dollars perhaps a terminally injured workers compensation claimant might get money before they do but that's an issue for the state policymakers and unfortunately this case it never got it never got to the point and the parties here and it is not in the record there are two things that are on the record one is that the bonding company did pay hotter'n savings one point one million dollars on the part the other thing that's in the record is judge  issue that was raised in terms of abstention or whether this is just a state to state case of preference rules well the the issue would be whether in fact it was a payment made within a certain is evidence in the record that they took one hundred percent has collateral obviously they took a premium premium for whatever risk they knew that reliance insurance company was likely headed into liquidation when they posed with them i don't know it was never not something my client would know and it's not in the record as far as i can tell but whatever the premium was insurance companies and bonding companies take the premium for whatever risk with the navy that they will not be able to recover on the collateral and seven issues for the court the first five of which assume exclusive jurisdiction of pennsylvania the pennsylvania statute itself doesn't even assume exclusive jurisdiction and i think the issue here is that we're sitting just like the court said we're sitting in a diversity case on a basic california state reaching contract it's a question of what we californians had a lot do we know about what california wanted to mean well first of all maybe we ought to be looking at it that way but they never do they don't your honor i think tucker does come as close as i was able to find but i think it's consistent with the spirit of me here is british because i don't see how  diversity statute possibly an act of congress that interferes with the regulation of the insurance business and if you take that out of the equation here the issue is how the fornia has a state policy when it reason i was raising the bond is that i think the issues are interrelated the fact that the bond was posted and that author was only going to collect against the reason why the case was allowed and should have been allowed to proceed because we're one bankruptcy reporter six thirty eight a tentative settlement involving reliance insurance company and the parties essentially entered into a contract that said we'll put that's the amount of money into the court registry if the bankruptcy court approves the settlement it's paid over if but i think the fact of the bond means that the california legislature has said that if there's a strong public purpose or strong public policy of trying to prove california in shirts from out of state insurers who may not plaything it talks about the insurance the insurer at the time the district court held we disagree that the district court found it was the admitted carrier fifteen twenty as different language it talks about in any action suit or proceeding arising out of any such contract of insurance the contract of insurance was issued by a non admitted carrier it was a policy written by a surplus lines carrier and i think that difference in language is what problem here is that sixteen sixteen is sixteen twenty can't be read in a vacuum these are the protections for those policyholders in california who don't fall within the guaranteed f just a few comments the record is very clear that in one thousand nine hundred nine reliance insurance company and admitted california insurer became the insurer under the contract at issue in this case that was the insurance company operation of that indorsement the record is also clear that effective january two thousand and one reliance insurance company was the only surviving in a date because the illinois carrier was m the basic principles of business law the reliance insurance company the illinois which is not in the picture anymore and so it really is a red herring a diversion but that isn't the problem that the california for fall through the cracks the protections that accurate i would say it's not accurate your honor because of the interstate relationship that exists relative to the regulation of insurance companies earlier we were talking about the uniform insurance liquidation act if pennsylvania was in fact a signatory to that act as is california the case law is very clear that a california state court would have to defer to the i think that's right i think the answer is we look at the status of the parties at the time of the motion and that's how we determine that we do not do historical archeological analysis of all the policies all the prior insurers who was or who wasn't admitted the california legislature could have very easily decided to cover our situation but they didn't the trial court here thankfully wrote his own statute and for the very clear purpose of ensuring that these particular it may have been delisted at some point but the statute talks in terms of those discrete categories understand a remedy is to seek a preference action in pennsylvania and what the palace council whether he's accurate in terms of what the record shows or doesn't show i think underscores the error of the trial court it shouldn't be the commissioner of insurance in pennsylvania trying to do something that's already happened it should be the plaintiffs in the first instance following the same procedures that are political to all insurers and all claimants all across the country that are seeking assets of this particular one is actually secured by the cash of the party that that is going to be considered an asset of the debtors state importantly the orders of the pennsylvania that we had specific orders and how the full faith and credit which the trial court here simply refused to give credence to those most definitely embraced the issues here we also have on the record a very clear case where real life insurance record expert to seventy two record excerpt to seventy two that if he didn't permit that bond to remain they would have to go collect try to collect in liquidation perceives exactly exactly what should have happened in this case there has been no explanation for a broader policy reason why california banks accused of intentional fraud and missed the should be permitted to jump ahead in line against all the other claims at the un at the end of the day if we prevail in this case it's not one point one million dollars it's going to go to a rich reliance insurance company it's insolvent it's going to be dispersed in accordance with that statutory scheme and i think the u s supreme court as well as the circuit courts have been clear that insurance regulation is a special area and it's an area where we should defer to the states the villa still here court here is a commonwealth temple that pennsylvania the california authorities suggest that they would defer as well and someone think present a problem and most other states would not it's not accurate i don't know the status of other states or how they would be viewed in this context your honor so i would really wouldn't venture an opinion but certainly we don't have the day we shouldn't be concerned so much with the result as we should be with the process because that is what mclaren ferguson and reversed preemption was aimed at otherwise the situation will repeat itself and federal circuits across the protecting complex state administrative processes from un do federal influence that's the specific holding of burford and that's exactly what we have here we have a case in equity important point that i'll also request for declaratory relief declar dollars one point one million is gone is collected by the bombing company and as i understand it the bombing company essentially used the money reliance had pledged in one in his right pocket and  the situation we would create if we have a pennsylvania court trying to do undo a federal district court order ordering a bond after it's been paid upon i think that's why i think this court is going to have to fashion relief for