Summary:
A South Carolina court-appointed receiver for Payne & Keller Co, a defunct construction company facing asbestos litigation, brought an action against Travelers Casualty and Surety Company and other insurers, alleging breaches of insurance policies issued to a defunct company within a state receivership. Travelers removed the action to federal court, asserting diversity jurisdiction, but the district court granted the receiver’s motion to remand the case back to state court holding that it lacked subject-matter jurisdiction because
- The case involved property of a state receivership exclusively under the jurisdiction of the state court (based on the doctrine articulated in Barton v. Barbour), and
- The removal lacked unanimous consent of all defendants due to a forum selection clause in some of the insurance policies issued to the defunct company.
Upon appeal, the United States Court of Appeals for the Fourth Circuit affirmed.
Commentary:
Again, another in the recent trend of cases that were placed in state court receivership rather than filing a bankruptcy, involuntary or otherwise. Since Payne & Keller was actually a Texas corporation, it is disappointing that it failed to dance the Texas Two-Step like most other companies seem to do when facing this type of litigation, especially since Charlotte, the Queen City of Asbestos Bankruptcy, was barely a stone's throw away from Columbia.
To read a copy of the transcript, please see:
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