Mauriello v. Great American E and S Insurance Company

Summarized by Laura Bartell , Wayne State University Law School
12 years 1 month ago

Citation:

No. 13-5469 (6th Cir. Jan. 30, 2014)

Tag(s):

Ruling:

Affirming decision of district court for the E.D. Tenn., court of appeals held that Tennessee prohibition of direct actions against insurer before insured is held liable bars creditor from suing debtor's insurer before creditor obtained relief from stay and successfully pursued claim against debtor. The court held that the creditor court get relief from the stay and sue the debtor to the extent of insurance coverage and, if the creditor prevailed, then sue the insurer.

Procedural context:

State court action against debtor's insurer was removed to federal district court, where the magistrate judge granted summary judgment in favor of the insurer, holding that the suit was barred because creditor had not obtained judgment against debtor. On appeal, the Sixth Circuit Court of Appeals affirmed.

Facts:

Creditor sued debtors in federal district court, alleging fraud in connection with the sale of property. Debtors then filed for bankruptcy protection. Creditor obtained relief from the stay to sue the debtors, but only to the extent of available insurance coverage. After creditor became aware of potential insurance coverage, creditor dismissed the pending action and later filed a new action against the insurance company in state court, claiming to be a third party beneficiary of the insurance policy. The insurance company removed the case to federal court and sought summary judgment, which was granted.

Judge(s):

Batchelder and Griffin, circuit judges, and Bell, district court judge sitting by designation.

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