of the estate. See id.; In re Consolidated Welfare Fund "ERISA"
Litigation, 798 F. Supp. 125, 128 (S.D.N.Y. 1992). Such efforts
would be "rendered meaningless" if third parties are permitted
to obtain judgments against the estate and thereby deplete its
assets. Consolidated Welfare Fund, 798 F. Supp. at 128; see also
Cutler v. 65 Security Plan, 831 F. Supp. 1008, 1014
Moreover, where a court has appointed a receiver and obtained
jurisdiction over the receivership estate, as here, the power to
stay competing actions falls within the court's inherent power to
prevent interference with the administration of that estate. See
SEC v. Wencke, 622 F.2d 1363, 1370 (9th Cir. 1980); Eller
Industries, Inc. v. Indian Motorcycle Manufacturing, Inc.,
929 F. Supp. 369, 372 (D. Colo. 1995). The power of a receivership court
to prevent the commencement, prosecution, continuation, or
enforcement of such actions has been recognized specifically in
the context of securities fraud cases. See Wencke, 622 F.2d at
1370; SEC v. An-Car Oil Co., 604 F.2d 114, 117 (1st Cir. 1979);
Lankenau v. Coggeshall & Hicks, 350 F.2d 61, 63 (2d Cir. 1965).
If Brandon were to prevail in the Kentucky Action, under the
policy's Aggregate Limit provision any payment to him would serve
to reduce the total estate assets — specifically, insurance
monies — available to other claimants, including Credit
Bancorp's customers. Thus, permitting Brandon to continue
prosecuting his action would thwart this Court's January 21 order
directed at obtaining an orderly and equitable administration of
Furthermore, because the factual and legal issues at issue in
the Kentucky Action will be raised in the action before this
Court, allowing Brandon to pursue his claim in the Kentucky forum
poses a clear risk of duplicative discovery and inconsistent
rulings. See Pinto v. Doskocil, No. 91 Civ. 1518, 1992 WL 111344,
at *2 (S.D.N.Y. May 8, 1992); see also Baldwin-United Corp., 770
F.2d at 336. Finally, the action before this Court is a
comprehensive one, whereas the Kentucky Action is not, and the
risk of piecemeal litigation over the availability and extent of
insurance coverage should be avoided. See General Reinsurance
Corp. v. Ciba-Geigy Corp., 853 F.2d 78, 81 (2d Cir. 1988).
Brandon fails to raise any viable argument to the contrary.
First, his contention that for this Court to enjoin his action
would contravene its duty to exercise "caution and restraint" in
these matters is without merit. Under the circumstances,
enjoinment of the Kentucky Action is not incautious but, rather,
is entirely appropriate and necessary to allow this Court to
exercise its jurisdiction over the receivership estate and
resolve the merits of the Enforcement Action. Moreover, none of
the cases cited by Brandon are on point. They do not concern
actions involving a limited res, receivership, or estate that is
to be distributed among multiple claimants. See, e.g., Peters v.
Brandt Grocery, 990 F. Supp. 1337, (M.D. Ala. 1998). Nor do they
address the issue of when one federal court may stay proceedings
in another federal court. See, e.g., Atlantic Coast Line Railroad
Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 285-86
(1970). Instead, they either concern the question of when a
federal court may stay a state court proceeding under the
Anti-Injunction Act, 28 U.S.C. § 2238, which implicates federalism
concerns not at issue here, see id., or scenarios other than the
enjoinment of proceedings, see ITT Community Development Corp. v.
Barton, 569 F.2d 1351, 1360-61 (5th Cir. 1978).
Second, Brandon's contention that this Court's February 25,
2000 order "specifically protect[s]" his continued litigation of
the Kentucky action is inaccurate. The February 25 order did not
address whether Brandon could prosecute a separate declaratory
judgment action in Kentucky, but instead merely clarified that
the January 21, 2000 Receivership order does not
preclude Brandon from making a claim in his own name under the
policies at issue.
Finally, Brandon's conclusory assertion that enjoinment of the
Kentucky Action would deprive him of rights under an alleged
forum selection clause in the Lloyds policy cannot outweigh the
interests at stake in protecting the exercise of this Court's
jurisdiction and preventing the purposes of the receivership from
Brandon is therefore stayed from proceeding in the Kentucky
It is so ordered.
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