Two UK-based insurance companies, collectively known as Eagle Star, served as lead underwriter for a quota share reinsurance program reinsuring Legion Indemnity and Legion Insurance. A dispute arose over monies owed under the quota share reinsurance agreements. Legion Insurance was placed in rehabilitation in Pennsylvania, and an Illinois court placed Legion Indemnity under the control of the Illinois Commissioner of Insurance. Eagle Star filed an action against Legion in federal court. The Illinois court granted Eagle Star summary judgment, finding that the Pennsylvania court had determined the issue in Eagle Star's favor as to Legion Insurance, and that Legion Indemnity was bound by the decision based upon its privity with Legion Insurance and the doctrine of res judicata. The Court of Appeals affirmed. In re Liquidation of Legion Indemnity Company, Case No. 02-6695 (Ill. Ct.App. Mar. 29, 2007).
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