Safeguard MI Co. v. Commonwealth of Pa. ex rel. Maxwell, Civ. A. No. 42510.

• Decision Date: 05 June 1970
• Docket Number: Civ. A. No. 42510.
• Citation: 313 F. Supp. 888
• Parties: SAFEGUARD MUTUAL INSURANCE CO. v. COMMONWEALTH OF PENNSYLVANIA ex rel. David O. MAXWELL, Insurance Commissioner.
• Court: U.S. District Court — Eastern District of Pennsylvania

313 F. Supp. 888

SAFEGUARD MUTUAL INSURANCE CO. v. COMMONWEALTH OF PENNSYLVANIA ex rel. David O. MAXWELL, Insurance Commissioner.

Civ. A. No. 42510.

United States District Court, E. D. Pennsylvania.

June 5, 1970.

Malcolm W. Berkowitz, Malcolm H. Waldron, Jr., Philadelphia, Pa., for plaintiff.

Frederick G. Antoun, George F. Reed, Dept. of Justice, Harrisburg, Pa., for defendants.

Before FREEDMAN, Circuit Judge, and LORD and FULLAM, District Judges.

OPINION OF THE COURT

PER CURIAM.

On April 12, 1967, the Insurance Commissioner of Pennsylvania, acting under § 502 of the Insurance Department Act of 1921 as amended¹ ordered the suspension of Safeguard Mutual Insurance Company and applied to the Common Pleas Court of Dauphin County for liquidation of the company. In the same proceeding the company filed a petition to vacate the suspension order.²

While the state court action was pending, the company brought the present action claiming that § 502 violates its right to due process under the Fourteenth Amendment because it authorizes the Insurance Commissioner to suspend the company's business without advance notice or hearing, is void for vagueness, and constitutes an unlawful delegation of power to the Insurance Commissioner. This three-judge court was accordingly constituted.

On May 31, 1967, we entered an order staying proceedings in this case "until the final determination of the proceedings" in the Common Pleas Court of Dauphin County, considering that such an important question involving state regulation of insurance should preferably be decided by the courts of the state which adopted the statute, in the proceeding then pending, in which factual elements might play an important role. Unfortunately, it has taken three years for the decision of the case in the trial court. The history of the litigation in the state court and related actions in the Supreme Court of Pennsylvania and the Supreme Court of the United States is complex and its recital is not necessary at this time.

In any event, the proceedings in the Common Pleas Court of Dauphin County were concluded by a nisi order entered September 25, 1969,³ and the dismissal of exceptions thereto on April 14, 1970. The Common Pleas Court denied the Commonwealth's petition for the appointment of a statutory liquidator and granted the company's petition to vacate the suspension order.

The decision, however, has not brought complete satisfaction to the company, first because it is still subject to appeal and also because the company claims that it was based on factual issues and did not decide the constitutional validity of § 502. It is agreed that the time for appeal is not yet expired and the Commonwealth stated at bar that it has not yet decided whether it will appeal because it is still studying the very detailed and voluminous opinion and findings of fact and conclusions of law of the Common Pleas Court.

During the course of these proceedings in the state court, the plaintiff, dissatisfied with the delay in the state court, has sought from time to time to have us dissolve our stay order. This we have refused to do in the early applications because of the paramount desirability of a state...