Opinion ID: 2054217
Heading Depth: 1
Heading Rank: 5

Heading: CUIC'S POLICY ARGUMENT FOR REJECTING HERMAN v. SINEY IN FAVOR OF ADOPTING PRINCIPLES OF UNIFORM INSURER LIQUIDATION ACT

Text: CUIC contends that, as a matter of policy in interpreting District of Columbia common law, see supra note 27, this court should reject Herman and adopt the principles of Delaware law, specifically Delaware's version of the UILA, see supra note 24, which would give priority to CUIC's receiver over Smith's postjudgment liens. CUIC claims that the UILA was intended to provide a comprehensive scheme to govern insurer insolvency, including the provisions for a stay (like the automatic stay under the United States Bankruptcy Code), during the pendency of delinquency proceedings in Delaware or in any `reciprocal state.' According to CUIC, the Delaware Insurance Code provides that any lien obtained . . . within four months prior to the commencement of the delinquency proceedings shall be void and that any transfer of or lien on property of an insurer made or created within four months of the entry of an order to show cause and with intent to give any creditor a preference may be voided. (Emphasis added.) CUIC argues that we should give effect to this aspect of Delaware's insurance law and void Smith's postjudgment liens, since they were obtained within four months of the Delaware court's Seizure and Injunction Order. We cannot agree. See Martin, 76 So.2d at 541-42 (provision of UILAthat liens obtained within four months of commencement of delinquency proceeding are voidapplies only when the domiciliary state (in this case Texas) and the ancillary state (in this case Louisiana) are reciprocal states, as defined in  the Louisiana statutes); Dean Constr., 254 N.Y.S.2d at 198 (the State of New York, by its adoption of the [UILA], in which it expressly confined to reciprocal states the operation of its common-law rule [that dissolution of a foreign insurer served to abate all actions pending against it], effectively limited the rule's operation to such reciprocal states). Putting aside the fact that M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C.1971), binds this division of the court to apply Herman, and acknowledging that CUIC advances several important policy considerations in favor of its argument, [42] we would nonetheless decline to adopt those principles of Delaware law for the District of Columbia, because the legislature for the District has not adopted the UILA or its reciprocality provisions. It is true that, as of 1991, thirty jurisdictions had adopted some form of the UILA. Stephen W. Schwab et al., Cross Border Insurance Insolvencies: The Search for a Forum Concursus, 12 U.PA.J.INT'L Bus.L. 303, 310 (1991). But this very fact demonstrates that legislatures consider insurer liquidation policy to be their business.