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In re Lumbermens Mutual Casualty Co.

2018 IL App (1st) 170996 (Ill. App., 2018)

Words & Phrases

Insolvency: In General

Trial Judge

Kathleen M. Pantle

Appellate Judge



California Insurance Guarantee Association (CIGA) was entitled to reimbursement of its administrative expenses out of the “general assets” of the Lumbermens liquidiation estate, and not from the insurance company’s special deposit of funds in California.

Fact Summary

The People of the State of Illinois ex rel. Jennifer Hammer, Director of Insurance (Director), brought this action against the defendants Lumbermens Mutual Casualty Company, American Manufacturers Mutual Insurance Company, and American Motorists Insurance Company (collectively referred to as Lumbermens), seeking to liquidate Lumbermens’ assets. The Director filed a petition for the interim allowance of claims for administrative expenses of certain guaranty associations. The claimant, California Insurance Guarantee Association (CIGA), objected on grounds that the petition improperly required it to reimburse itself from funds held in a special deposit. The circuit court sustained CIGA’s objection, finding that California law prohibited CIGA from using special deposits to pay for general administrative expenses. The Director filed this interlocutory appeal pursuant to Illinois Supreme Court Rule 304(b)(2) (eff. Mar. 8, 2016), seeking reversal of that order. For the reasons that follow, we affirm.