## Facts

- Ambassador Insurance Company, a Vermont insurer, did business in multiple states and issued policies in Texas through a correspondent agreement with Charles R. Myers Insurance Agency.
- In 1983, a Vermont court placed Ambassador in receivership and enjoined actions that would interfere with the receiver’s administration.
- In 1984, the receiver sought liquidation after concluding rehabilitation was not feasible; in 1987, the Vermont court entered a final liquidation order.
- The 1987 liquidation order enjoined (1) suits against Ambassador or the liquidator in any forum and (2) counterclaims or set-offs in actions brought by the liquidator.
- In 1985, the Vermont receiver sued Myers in Texas to recover alleged unpaid premiums owed under the correspondent agreement.
- In 1986, Myers filed a Texas counterclaim alleging a pre-receivership conspiracy by Ambassador’s management to interfere with Myers’s business.
- After the 1987 Vermont order, the receiver sought summary judgment in Texas to bar the counterclaim based on full faith and credit (and alternatively comity), but the Texas trial court refused and entered judgment for Myers on the counterclaim.
- The court of appeals affirmed, reasoning the Vermont orders lacked sufficient finality.

## Issues

1. Whether Texas courts were constitutionally required to give full faith and credit to the Vermont court’s final liquidation order, including its injunction barring suits, counterclaims, and set-offs against the insurer or liquidator.
2. Whether the Vermont liquidation order was sufficiently final to bind Texas courts even though the liquidation administration continued.
3. Whether Myers’s Texas counterclaim fell within the scope of the Vermont injunction and therefore could not be adjudicated in Texas.

## Decision

- The Texas Supreme Court reversed the court of appeals.
- The Court held Texas courts were required to give full faith and credit to the Vermont final liquidation order and its injunction provisions.
- The Court concluded the Vermont liquidation order was final for full-faith-and-credit purposes despite ongoing estate administration.
- The Court held Myers’s counterclaim was barred because it was a counterclaim and potential set-off against the liquidator’s action.
- The case was remanded with instructions to dismiss Myers’s counterclaim without prejudice to pursuing rights in the Vermont liquidation proceeding.

## Legal Principles

- Under the Full Faith and Credit Clause and its implementing statute, a forum state must recognize and enforce a valid, final sister-state judgment unless a recognized exception applies.
- A final liquidation order in a statutory insurer delinquency proceeding may be entitled to full faith and credit even though the receivership entails continuing supervision and administration.
- An injunction contained in a sister-state liquidation order that centralizes claims in the domiciliary liquidation court, including prohibitions on suits, counterclaims, and set-offs against the insurer or liquidator, must be enforced by courts of another state.
- Claims against an insolvent insurer’s estate should be asserted in the domiciliary liquidation proceeding to preserve orderly, centralized administration and avoid inconsistent adjudications or preferential recoveries.

## Conclusion

Texas courts were constitutionally required to enforce Vermont’s final liquidation order and its anti-suit and anti-counterclaim injunction, so Myers’s Texas counterclaim could not proceed and had to be dismissed without prejudice to presentation in the Vermont liquidation forum.


Bard v. Charles R. Myers Ins. Agency, Inc., 839 S.W.2d 791 (Tex. 1992)