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In re Application for an Order Staying Arbitration, No. 24632, slip op. (N.Y. App.
Div. 1st Dep't: Dec. 3, 1985). When an insurance company is in liquidation and a
court order prohibits any action or proceeding from being brought against it, a
preliminary trial to determine whether coverage by the liquidated company
existed should be assigned to the court supervising the liquidation. An insurer,
from whom uninsured motorist coverage was sought, applied for a preliminary
trial to determine whether the company in liquidation had in fact covered any of
the parties to the accident. The trial, however, should not be assigned to the
trial term court because the insurance law provides for the exclusive operation
and procedure of companies in liquidation.
In re Manhattan Casualty Co., 75 Misc.2d 357, 346 N.Y.S.2d 911 (1973). The state
court did not lack jurisdiction to pass on the proposal of the insurance
commissioner, as the liquidator of a New York insurance company, to settle a
suit brought by the commissioner in federal district court in which there were
no actual federal claims present. The court found that the descriptions of the
claims asserted by the commissioner were insufficient to find the proposed
settlement adequate.
In the Matter of the Attorney‐General v. The North America Life Ins. Co., 92 N.Y.
654 (1883). The New York Supreme Court issued an order directing the
insurance commissioner as to the distribution of a fund deposited as security for
the policyholders of the insolvent insurer. More than two years later, a motion
was made for an order changing the distribution of the fund. The court held
that the Supreme Court had obtained jurisdiction over the fund and refused to
disturb the original order.
In re National Surety Co., 176 Misc. 53, 26 N.Y.S.2d (1941). When an order for the
liquidation of an insolvent insurance company is entered, the court making such
an order is vested with exclusive jurisdiction to determine every issue in the
case. Another court issued an order nunc pro tunc changing the date of entry of
a judgment upon which a contingent claim against the insolvent insurance
company was based so as to make the claim absolute before the expiration of
the filing period. That order was found to be ineffective.
In re Serio, 769 N.Y.S.2d 530 (App. Div. 2003). The court granted the reinsurer’s
motion for permission to bring an action against the Superintendent of
Insurance as rehabilitator of the insolvent insurer, holding that by consenting to
an evidentiary hearing and discovery in the reinsurer’s action to require the
rehabilitator to segregate funds, the rehabilitator waived argument that the
liquidation court should not have permitted the reinsurer to bring a separate
action.
Knickerbocker Agency, Inc. v. Holz, 4 A.D.2d 71, 162 N.Y.S.2d 822 (1957),
affirmed, 4 N.Y.2d 245, 173 N.Y.S.2d 602, 149 N.E.2d 885. The insurance code
vests exclusive jurisdiction over all claims against an insolvent insurer in one
count. This prevails over a claimant's contractual right to arbitration. The court
was not moved by the fact that arbitration was sought as a defense and not to
establish a claim. The court also found unpersuasive the fact that the claimant
instituted arbitration proceedings after the insurance commissioner and
commenced an action against the claimant, which was separate from the
liquidation proceedings.
Ohio
Fabe v. Farm & Ranch Life Ins., No. 88AP‐1027, 1989 Ohio App. LEXIS 3748 (Ohio
Ct. App. Sept. 26, 1989). In Farm & Ranch Life Ins., plaintiff was appointed as
the Ohio ancillary receiver of an insolvent insurance company. Plaintiff brought