State of Mich. Workers' Comp. Ins. Agency v. ACE Am. Ins. Co. (In re DPH Holdings Corp.)

Summarized by Weston Eguchi , Willkie Farr & Gallagher LLP
11 years 5 months ago

Citation:

No. 13-3305-bk (Summary Order)

Tag(s):

Ruling:

Second Circuit did not have jurisdiction to review the district court's permissive abstention decision. Regarding mandatory abstention, there was no evidence of abuse of discretion to require abstention under Buford v. Sun Oil Co., 319 U.S. 315 (1943). The Court agreed with the Plaintiffs-Appellees that, under Michigan law, their insurance contracts did not apply to the debtors or the debtors' self-insured policies. The Michigan Workers' Disability Compensation Act is not contrary to the contractual provisions regarding which debtor-related entities are provided coverage, and does not render the parties' intent irrelevant. Lastly, the insurer's suit does not violate sovereign immunity because it is an in rem proceeding.

Procedural context:

Delphi Corp. (reorganized as DPH Holdings Corp.) filed for bankruptcy in 2005. Plaintiffs commenced an adversary proceeding, and the bankruptcy court granted summary judgment to the plaintiffs. The district court affirmed.

Facts:

Plaintiff-Appellees were insurance companies and sought a declaration that their insurance policies did not obligate them to assume Delphi's workers' compensation liabilities arising from the company's self-insured entities in Michigan. Defendants-Appellants - the State of Michigan Funds Administration and State of Michigan Workers' Compensation Agency answered.

Judge(s):

Livingston, Droney and Nathan (S.D.N.Y. sitting by designation).

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