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As to jurisdiction, the non‐resident trustees had minimum contacts with the
insurer to subject the trustees to personal jurisdiction of the rehabilitation
proceeding.
New York Gallin v. Burdick, 152 Misc. 468, 273 N.Y.S. 456 (1934), affirmed, 241 A.D. 271
N.Y.S. 1086, affirmed, 265 N.Y. 492, 193 N.E. 286. A defendant mortgage
guaranty company, in rehabilitation, had issued guaranteed mortgage
participation certificates, and the order appointing the rehabilitator contained
injunctive provisions pursuant to the insurance code. The court held the
bringing of an equity action, without prior leave of court, by one of the holders
of the company's guaranteed mortgage participation certificates violated the
aforementioned injunctive provisions, even though the personal judgment was
demanded against the defendant.
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 Rehab. of Frontier Ins., 813 N.Y.S. 2d 50 (App. Div. 2006). A temporary
restraining order issued in a rehabilitation proceeding, restraining the insolvent
insurer from transacting business and wasting or disposing of property but not
expressly staying litigation did not restrain the insurer from opposing summary
judgment in an action on a performance bond. Thus, by failing to respond, the
insurer defaulted on the summary judgment motion.
In the Matter of the Rehabilitation of United Community Insurance
Company, 226 A.D.2d 948, 641 N.Y. 2d 172 (3 rd Dept. 1996). Home Indemnity
Company was litigating an auto accident arbitration issue with United
Community Insurance Company at the time an Order of Rehabilitation was
issued, placing United Community in rehabilitation. The order contained an
injunction against all actions against United Community. Home Indemnity
attempted to modify the injunction and proceed with the underlying action.
The Home’s motion to modify the injunction was denied on the ground that
the trial court had not abused its discretion in declining to modify the
injunction contained in the Order of Rehabilitation.
Matter of Nemerov, 268 N.Y.S. 588, 149 Misc. 797 (1933). Where an order
which prohibited any interference with the Superintendent's rehabilitation of
mortgage companies was obtained after the companies received proper
notice, lack of notice to certificate holders did not render the order invalid.
Matter of People, 164 A.D. 586, 150 N.Y.S. 398 (1914), appeal dismissed, 214
N.Y. 659, 108 N.E. 1093. Where the insurance commissioner was permitted to
posses an insolvent insurance company's property the New York Supreme
Court could prevent one of the company's creditors from commencing a suit
against the company for the collection of a claim. After the creditor filed the
claim with the insurance commissioner and was served with a copy of the
injunction, the court could assert jurisdiction over the creditor, and if the
creditor filed the claim in another state's court subjecting a deposit made by