Opinion ID: 2631019
Heading Depth: 4
Heading Rank: 1

Heading: In re Edgeworth

Text: ¶ 23 Relying on In re Edgeworth, [19] a Fifth Circuit case involving the proceeds of a malpractice liability insurance policy, Anchor Wate argues that the proceeds of the reinsurance contracts never became the property of SAIC. Because the proceeds of many liability policies are payable only for the benefit of those harmed by the debtor under the terms of the insurance contract, the Edgeworth court reasoned that the debtor does not have a cognizable interest in the proceeds and, therefore, the proceeds do not become part of the debtor's estate. [20] ¶ 24 We decline to apply Edgeworth's rationale here because we disagree with its premise. Rather, we align ourselves with those courts holding that the proceeds of insurance policies are part of the property of the debtor's estate. [21] Indeed, subsequent cases from the Fifth Circuit have characterized Edgeworth as an outlier to this general line of jurisprudence. [22] ¶ 25 Moreover, were we inclined to agree with Edgeworth's reasoning, it simply does not apply here. In concluding that the insurance proceeds at issue never became part of the debtor's estate, the Edgeworth court relied on the fact that the policy at issue was a liability policy. In Edgeworth, the proceeds were made payable to a third party; the debtor was not a beneficiary of the policy and had no cognizable interest in it. [23] Neither of these facts is present in this case, which involves an indemnity policy that does give the debtor an interest in the proceeds and, in fact, specifically disclaims any interest in the original insured.