New York State Court of Claims

New York State Court of Claims

RODGERS v. THE STATE OF NEW YORK, #2002-030-038, Claim No. 101505


Ninety (90) stay of already comenced trial of Claim by widow alleging violation of Labor Law §241(6) granted pursuant to an Order of Rehabilitation from Pennsylvania Court enjoining all actions against Legion Insuance Company and its insureds, based upon comity principles and Uniform Insurer's Liquidation Act (UILA). New York State is a named additional insured

Case Information

JESSICA M. RODGERS, Individually and as Administratrix of the Estate of IAN BASIL DELONG RODGERS, Deceased
Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):

Cross-motion number(s):

Claimant's attorney:
Defendant's attorney:
Third-party defendant's attorney:

Signature date:
May 13, 2002
White Plains

Official citation:

Appellate results:

See also (multicaptioned case)


This is a claim against the Defendant State for the pain, suffering and wrongful death of Claimant's decedent, Ian Basil Delong Rodgers, who died on September 15, 1999. The claim is based upon the Defendant's alleged violation of § 241(6) Labor Law, and 12 NYCRR § 23-9.7(d). The widow's derivative claim is also pled. Trial commenced on the liability phase on February 11, 2002, and continued through February 15, 2002. After Claimant rested on February 15, 2002, the trial was adjourned to April 22, 2002.

On March 28, 2002, the Commonwealth Court of Pennsylvania granted the Petition of the Insurance Commissioner of the Commonwealth of Pennsylvania placing Legion Insurance Company (hereafter Legion), the Protective Liability and Commercial General Liability carrier for the general contractor, A. Servidone, Inc. (hereafter Servidone), and the entity paying for the defense of the State of New York, in rehabilitation, effective April 1, 2002 pursuant to 40 P. S. § 221.1 et seq.

On April 16, 2002, Counsel for the Defendant brought this information to the attention of the Court, and asked that the trial of the within action be stayed for the period directed in the Pennsylvania Court's order. In lieu of a motion the court scheduled a conference, after which the Court directed that the attorneys for the Claimant and the Defendant brief the issue as to whether this court should, under principles of comity, or for other reasons, stay the trial of this claim pursuant to the terms of the Pennsylvania Court's Order for a period of ninety (90) days .

After carefully reviewing the arguments presented, and the applicable law, the Court finds as follows:
As noted above, in the present case the general contractor hired by the State of New York for the project, Servidone, obtained its Protective Liability and Commercial General Liability policy through Legion Insurance Company, as required by its contract with the State. Under the terms of the policy, the New York State Thruway Authority is named as an additional insured. Legion Insurance therefore pays for the defense of the State of New York and is the entity responsible for tender of any settlement or judgment monies.

The Order from the Pennsylvania Court enjoins any person, " the Commonwealth or elsewhere...from...instituting or further prosecuting any court action....against Legion...obtaining preferences, judgments, attachments, garnishments or liens, including obtaining collateral in any litigation, mediation, or arbitration involving Legion....or Legion's assets and property...levying any execution process against Legion...Legion's assets and property...." [Affirmation of Brian Colistra, Esq., Attorney for Defendant, Exhibit "A" Order of Commonwealth Court of Pennsylvania, Paragraph 22 ]. In addition to staying "all court actions...currently or hereafter pending against Legion....", the Order further stays "....[a]ll court actions, arbitrations and mediations currently or hereafter pending against an insured of Legion in the Commonwealth of Pennsylvania or elsewhere...for ninety (90) days from the effective date of this Order or such additional time as the Rehabilitator may request." [Id, Exhibit "A", Paragraph 24]. It also provides that ".... [n]o judgment, order or arbitration award against Legion or an insured of Legion entered after the date of filing of the Petition for Rehabilitation....need be considered as evidence of liability or quantum of damages by the Rehabilitator." [Id, Exhibit "A", Paragraph 25].

The Insurance company is a national one, that has pending either against it or any number of its insureds "lawsuits in virtually every state in the United States." [Affirmation of Brian W. Colistra, Paragraph 8].
§ 2201 Civil Practice Law and Rules, applicable in the Court of Claims pursuant to Court of Claims Act § 9(9), provides that "...[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just." The party seeking the stay must show "good cause."

Defendant proposes two rationales for directing a stay of the present claim. First, it argues that because Pennsylvania is a "reciprocal" state under the Uniform Insurers Liquidation Act (hereafter UILA) its Order should be honored as provided in the statute. See, generally, §§7409-7415 Insurance Law. Second, it argues that general principles of comity support granting a stay, out of respect for the Pennsylvania Court's determination concerning the orderly rehabilitation of the insurer. Within the second argument are also the principles underlying the Full Faith and Credit Clause (US Const. Art. IV, § 1).[1]

Claimant does not address the broader second argument, but rather picks up the reasoning of a case emanating from an intermediate appellate court in Illinois, that discusses due process concerns vis a vis its plaintiff's lack of contacts with an Indiana Court that had issued a stay with respect to the defendant's insolvent insurer. Mahan v Gunther, 278 Ill. App.3d 1108 (5th District 1996).

Under the UILA - adopted in New York but not in Pennsylvania - all claims against an insurer that is in the midst of a "delinquency proceeding" in a "reciprocal state" are to be submitted and determined in the defendant insurer's "domiciliary state"[2], or in ancillary proceedings[3] in an "ancillary state."[4] A "delinquency proceeding" means "...any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or conserving such insurer." §7408(b)(2) Insurance Law.

Most importantly, a "reciprocal state" is "...any which in substance and effect the provisions of this act are in force, including the provisions requiring that the insurance commissioner or equivalent insurance supervisory official be the receiver of a delinquent insurer." § 7408(b)(6) Insurance Law.

In Kelly v Overseas Investors, Inc., 24 AD2d 157, 160 (1st Dep. 1965,), revd on other grounds, 18 NY2d 622 (1966), the First Department set forth a six (6) factor test to determine whether a state should be considered a reciprocal state for the purposes of the UILA. The Court must determine whether the other state's statutory scheme contains "...central remedies supplied by the uniform law to control...past embarrassments...[including]:
(1) ab [A] provision that the Insurance Commissioner shall serve as receiver...;
(2) ab [A]uthority for domiciliary receivers to proceed in nondomiciliary States...;
(3) ab [V]esting of title to assets in the domiciliary receiver...;
(4) ab [P]rovision for nondomiciliary creditors to have the option to proceed with claims before local ancillary receivers...;
(5) ab [U]niform application of the laws of the domiciliary State to the allowance of preferences among claims....; and
(6) ab [P]revention of preferences for diligent nondomiciliary creditors with advance information."

When the Appellate Division applied its test at the time, however, it determined that the Pennsylvania statutes extant incorporated only three (3) of the six (6) requirements, and thus Pennsylvania could not be considered a reciprocal state under the UILA.[5] The court nonetheless stated that under comity principles the Pennsylvania Insurance Commissioner should be able to maintain its action in the New York Courts.

More recently, the United States District Court for the Southern District of New York interpreted New York case law to find that Pennsylvania was, indeed, a reciprocal state under the UILA. Twin City Bank v Mutual Fire Marine & Inland Insurance Co., 646 F.Supp. 1139,1140-1141 (SDNY 1986), affd, 812 F.2d 713 (2d Cir 1987). The Court said that the state statute at issue and the UILA need not be identical, and that although the New York courts had not ruled specifically on Pennsylvania's status, the most recent incarnation of Pennsylvania's statute was "in substance and effect" similar enough to the provisions of UILA that the statutory comity created by the act should be extended. The court noted the changes in the law since Kelly, supra, had been decided, and said that under the new version the Kelly criteria would qualify Pennsylvania as a reciprocal state.

The criteria enunciated in Kelly, supra, has been used to find that Vermont is a reciprocal state under the UILA despite not having enacted the uniform law. See, Public Service Truck Renting, Inc. v Ambassador Insurance Co., 175 AD2d 632 (4th Dept. 1991). Indeed, Pennsylvania's reciprocity appears to have been assumed, when one Appellate Division indicated it was lifting a stay it had imposed two (2) years earlier on the prosecution of a legal malpractice claim based upon the Defendant's insurer's having been placed under the supervision of the Pennsylvania Department of Insurance. Haenel v November & November, 144 AD2d 298,300 (1st Dept. 1988). It is noted that the court found that the imposition of the stay was " longer predicated ‘upon such terms as may be just', (CPLR § 2201)....", in that the underlying malpractice claim concerned events of ten (10) years past, and the stay had operated to foreclose discovery and the preservation of documents and witnesses' recollections essential to pursue the lawsuit.[6]

In comparing New York's and Pennsylvania's statutes, Pennsylvania meets the factors specified in Kelly, supra, in that Pennsylvania's Insurance act has substantially similar provisions. C.f., 40 PS § 221.15(c) and § 7403(a) Insurance Law (Commissioner of Insurance as rehabilitator or liquidator); 40 PS § 221.15(c) and § 7410(b)-(c) (Out-of-State domiciliary receiver authorized to proceed in Pennsylvania Courts); 40 PS § 221.15(c) and §§ 7409(b), 7410(b) Insurance Law (Title to the assets of an insurer in delinquency proceeding is vested in the receiver in the insurer's state of domicile); 40 PS §221.58 and §§ 7411(a), 7412(a) Insurance Law (Non-domiciliary creditors may proceed with claims before either the domiciliary receiver or an ancillary receiver, if any); 40 PS § 221.61 and § 7413(a)-(b) Insurance law (Uniform application of the domiciliary state's laws regarding priorities of payment required); and 40 PS § 221.44 and § 7414 Insurance Law (Avoidance of preferential liens acquired by creditors prior to the commencement of the proceeding provided for).

In G.C. Murphy Co. v Reserve Insurance Co., 54 NY2d 69 (1981), the New York Court of Appeals held that absent appointment of an ancillary receiver in New York State, the plaintiff in a lawsuit to recover unearned premiums against an unauthorized foreign insurer placed in liquidation by Order of an Illinois Court, had to proceed against the insurer in Illinois under the UILA, even though its claim had been secured by an undertaking filed by the defendant pursuant to § 59-a of the Insurance Law, and the plaintiff wanted to proceed against this security in a New York action. The Court noted: "We are not unmindful that the purpose of section 59-a of the Insurance Law is to provide New York residents with meaningful recourse to the courts of this State without having to pursue their claims against foreign unauthorized insurers in distant forums. Nonetheless, the Legislature has specifically provided that to the extent that provisions of the Uniform Insurers Liquidation Act, when applicable, conflict with other provisions of the Insurance Law, the provisions of the uniform act control....We are also cognizant of the individual hardship suffered by the present plaintiff, who has been in the throes of litigation for the past seven years and now must pursue its claim in the distant forum of Illinois. By enacting the Uniform Insurers Liquidation Act, our Legislature has determined that such occasional instances of adversity are outweighed by the paramount interest of the various States in seeing that insurance companies domiciled within their respective boundaries are liquidated in a uniform, orderly and equitable manner without interference from external tribunals." G.C.Murphy Co. v Reserve Ins. Co, supra, at 80-81.

Finally, even if a state is not a reciprocal state under the UILA , the long standing recognition by New York Courts of the principle of comity suggests that the stay directed by the Pennsylvania Court in the case at bar be honored. See, generally, Martyne v American Union Fire Ins Co, 216 NY 183,193-194 (1915).

The unusual circumstances here, of course, are that Claimant has rested with respect to the liability portion of her claim - the first phase of this bifurcated trial - but no finding of liability has been made because the Defendant's application comes just at the point where it would put on its case, presumably rest, and this Court would be put to the task of reviewing the evidence and determining the issues. Just as the Illinois court in Mahan v Gunther, supra, was disturbed by the notion that an alleged tort victim would be prevented from pursuing her claim in Illinois simply because her named defendant picked a now insolvent out-of-state insurer to defend it, this Court, too, finds it more than disconcerting that a defendant such as the State of New York could avoid indefinitely adjudication of its potential liability because the general contractor it hired picked a similarly situated out-of-state insurer.

For all the foregoing reasons the Court finds that although it will grant a stay out of deference to the Commonwealth of Pennsylvania's Order directing that all proceedings against Legion and its insureds be stayed, at the close of that period this Court expects that some action by the Defendant State or the Claimant herein further clarify how matters should proceed, in that imposition of a stay may no longer be "just" within the meaning of §2201 Civil Practice Law and Rules. See, e.g., Haenel v November & November, supra.

For example, have ancillary proceedings been commenced or contemplated? See, G.C. Murphy Company v Reserve Insurance Co, supra, at 78[7]. Could the issues between the insurance company and the Defendant be determined in another forum while this Claimant pursues her remedy against the Defendant State in this one?[8] Should the Attorney General now appear and defend? See, generally, § 63 Executive Law; Beedenbender v State of New York, 100 Misc 2d 482, 483 (NY Ct Cl 1979).[9] What mechanisms have been seized upon whereby the Pennsylvania Court would lift its stay with respect to this particular insured: the State of New York?

Accordingly, based upon the Order of Rehabilitation issued by the Commonwealth Court of Pennsylvania, it is hereby

ORDERED, that all proceedings in this claim are stayed effective April 2, 2002 for a period of ninety (90) days, to expire on July 2, 2002; and it is further

ORDERED, that upon completion of the stay, the parties are directed to report to the court, in writing, the status of all proceedings.

May 13, 2002
White Plains, New York

Judge of the Court of Claims

[1]Section 1. Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.
[2] Defined as "...the state in which an insurer is incorporated or organized...." §7408(4) Insurance Law
[3] See,§ 7412(a) and (b) Insurance Law. § 7412(b) Insurance Law concerns "controverted claims", not defined in the statute, but presumably those such as the one at issue here wherein liability has not been established or judgment been entered.
[4] Defined as "...any state except a domiciliary state." § 7408(b)(5) Insurance Law.
[5] Under a narrower rationale the Second Department ruled that since Pennsylvania had not adopted the uniform law it was not a reciprocal state, in an action filed in New York against a Pennsylvania insurer, thus the common-law rule of abatement of all claims against a foreign insurer when it was dissolved did not apply. Dean Construction Co. v Agricultural Insurance Co., 22 AD2d 82 (2d Dept. 1964).
[6] More recently, the Court of Claims granted a stay of all proceedings for a period of ninety (90) days based upon an Order of Liquidation issued by a Pennsylvania Court staying all proceedings involving Defendant's insurer, even after an initial stay had been granted for sixty (60) days based upon an Order of Rehabilitation issued by the same court. It is noted that the Court of Claims Order directed that at the conclusion of the stay a conference to schedule a discovery timetable - delayed by the earlier stay - would be had. Duncan v State of New York, Claim No. 101552, M-63818 (Midey, Jr., J., October 11, 2001).
[7]"...[T]he statute confers upon the [NY] Superintendent of Insurance the exclusive right to act as an ancillary receiver in the State, provided that he determines that there are sufficient assets of the defunct insurer located within New York to justify the ancillary receivership or 10 or more residents of this State having claims against the nondomiciliary insurer petition the Superintendent requesting the appointment of an ancillary receiver..."
[8] This course of action would seem to be implied in a civil law suit against a roller skating rink wherein the law firm assigned to represent a defendant by an insurance company placed in receivership under Vermont law sought to withdraw as counsel, having notified the defendant roller skating rink that it was no longer getting paid, and having asked for payment directly from the rink. Dordal v Laces Roller Corp., 143 AD2d 727 (2d Dept. 1988).
[9] "...section 63 of the Executive Law...provides that ‘[t]he attorney-general shall: 1. Prosecute and defend all actions and proceedings in which the state is interested.'...The Attorney-General, therefore, must be the attorney of record in all claims against the State, and other attorneys to whom the defense or prosecution of a particular action may be delegated appear ‘of counsel.' Regardless of any changes in trial counsel, the State is assured of representation since the ultimate responsibility for defending the State reposes solely in the Attorney-General from whom it never departs....." (Emphasis in original).