Garamendi

This appeal by Morgan Stanley Mortgage Capital, Inc. (Morgan Stanley), involves one component of the immense and complex litigation over the rehabilitation of Executive Life Insurance Company (ELIC). While separate litigation goes forward to determine other important issues such as creditor priorities, this action raises the issue of whether the trial court had jurisdiction, in ELIC’s insolvency proceedings, to make an order relating to the assets of certain partnerships through which ELIC had made investments of its premium income.

We hold that, when an “identity of interest” exists between an insolvent insurance company and a partnership in which the insurance company has a substantial ownership interest, a trial court overseeing the company’s insolvency may validly exercise in rem jurisdiction over such partnership’s assets where reasonably necessary to promote the insolvent company’s rehabilitation. We therefore shall affirm the trial court’s order.

Factual and Procedural Background

1. The Parties and the Relevant Court Orders

ELIC is a California insurance company. Its insolvency proceedings commenced on April 11, 1991. On that date, the trial court issued an…