The Commonwealth Court of Pennsylvania issued an Order on March 28, 2002
granting the Petition of the Insurance Commissioner of the Commonwealth of
Pennsylvania to place Legion Insurance Company (hereafter Legion) - the
Protective Liability and Commercial General Liability carrier for the general
contractor, A. Servidone, Inc., and the entity paying for the defense of the
State of New York - in "rehabilitation", effective April 1, 2002, pursuant to
that state's laws. 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
Out of deference to the Pennsylvania
Court, this Court had granted an initial ninety (90) day stay and subsequent
In the Interim Decision and Order containing this Court's initial determination
granting a stay of the half-completed liability trial of this Claim -
incorporated herein by reference - the Court noted that there would come a time
when the imposition of a stay would no longer be just. [See
, Rodgers v
State of New York
, Claim No. 101505, Interim Decision and Order, UID No.
2002-030-038 (Scuccimarra, J., May 13, 2002) ;
Exhibit C; Affirmation of Brian W. Colistra]. Thereafter, the Court determined
that the imposition of a stay was no longer just, lifted the stay, and directed
that the trial of the matter commence on May 19, 2003. [See, Rodgers v
State of New York
, Claim No. 101505; Motion No. M-66007, Decision and Order,
UID #2003-030-508, (Scuccimarra, J., January 16, 2003); Exhibit F, Affirmation
of Brian W. Colistra].
Defendant served and filed a Notice of Appeal, with a Request for Appellate
Division Intervention, with regard to this Court's January 16, 2003 Decision and
Order, and had until September 15, 2003 to perfect the appeal. [Exhibit F,
Affirmation of Brian W. Colistra].
This Court's January, 2003 decision to lift the stay was effectively reversed
by the Appellate Division, when that Court determined that the Defendant's
application for a stay of all trial proceedings pending its appeal of this
Court's determination was "unnecessary," presumably because the provisions of
the automatic stay contained in Civil Practice Law and Rules §5519(a)(1)
applied. [Rodgers v State of New York, Claim No. 101505; 2003-02344,
Appellate Division, Second Department May 14, 2003].
In the meantime, on July 25, 2003 the Commonwealth Court of Pennsylvania
declared Legion insolvent, lifted the Rehabilitation stay, and ordered
liquidation. [Exhibit G, Affirmation of Brian W. Colistra]. All assets of
Legion were to be placed in the custody of the Liquidator and all litigation was
stayed absent the consent of the Liquidator. [id].
The appeal of this Court's Decision and Order to the Appellate Division was
still pending when, in an Order dated August 22, 2003, the Honorable Nicholas
Figueroa of New York County Supreme Court granted the petition of the New York
State Superintendent of Insurance and appointed an Ancillary Receiver of Legion.
[Exhibits A and H, Affirmation of Brian W. Colistra, dated September 11, 2003].
See Insurance Law Article 74.
CURRENT APPLICATION FOR A STAY
When Justice Figueroa appointed an Ancillary Receiver, he also imposed a stay
for a period of one hundred eighty (180) days from the date of entry of his
order. The language in the Order provides: "All parties to lawsuits, in which
LEGION is obligated to defend a party pursuant to or by virtue of an insurance
policy or in which LEGION is the excess or umbrella layer of insurance and the
primary or other underlying insurer has tendered or offered its full policy
limits or where said policy limits have been exhausted by payment of the
underlying insurer's aggregate, are enjoined and restrained from proceeding in
all actions at law, suits in equity, special, or other proceeding for 180
days from the date of entry of this order, including, but not limited to,
proceedings with any discovery, pre-trial conference, trial, application for
judgment, or proceedings on judgment or settlement." [Ibid, page 3,
¶6]. The Order was entered on August 23, 2003. The stay imposed therein
is due to expire on February 19, 2004.
The present Order to Show Cause, asks for a stay of the trial of this matter
based on the New York County Supreme Court Order, noting that the more elusive
balancing concerns of comity required by deference to the Pennsylvania Court
Order no longer apply, and this Court can simply determine whether Justice
Figueroa intended to address claims such as the one before this Court. This
Court cannot help but agree that the intent of the Order is to avoid any
preference being given over one claim concerning Legion over any other, and to
provide for the orderly administration of Legion's assets. To that end, the
Ancillary Receiver should not be divested of the statutory powers called for in
§§7407 and 7410 Insurance Law.
The Court notes that the Claimant did not address the State Supreme Court Order
and instead served and filed a cross-motion to be addressed below. Accordingly,
and as troubling as it is to this Court, it is hereby
ADJUDGED, the Defendant's motion number M-67421 is granted in part and it is
ORDERED, that all proceedings and the continued trial of the present claim is
hereby stayed until March 26, 2004; and it is further
ORDERED, that in the interim, should the stay imposed by Justice Figueroa be
continued or expire without renewal, or should any other activity occur with
respect to the proceedings by the Ancillary Receiver, the parties are directed
to immediately advise the Court, in writing, of the status, and to make whatever
further application is warranted under the circumstances.
Claimant cross-moves for an Order "vacating the stay with respect to the
resumption of the continuation of the liability phase of the trial . . . "
[Notice of Cross-Motion]. Claimant argues that the Defendant's failure to
perfect its appeal of this Court's January, 2003 Decision and Order lifting any
stay and scheduling the trial results in the abandonment of the appeal,
precluding Defendant from now seeking any further stay. Defendant states that
it did not "abandon" the appeal, but rather withdrew it, although at the time of
the submission of the motion the Defendant did not know whether the withdrawal
had been countenanced by the Appellate Division.
More pertinently, Defendant argues that the application for the stay at this
juncture is based on different facts, namely the appointment of the Ancillary
Receiver by a New York State Court on August 22, 2003. This Court agrees with
Defendant that Stinson v Hance, 2002 WL 31834464 (US Dist Ct, SD NY, Dec.
17, 2002, Pitman, J.), a case relied upon by Claimant herein, concerning the
denial of an application for a stay of a federal court negligence action based
upon the defendant's insurer's reorganization proceedings in Pennsylvania does
not apply here, where federalism concerns are not implicated.
Accordingly, Claimant's cross-motion number CM-67483 is in all respects denied.