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Corcoran v. Ardra Ins. Co., Ltd., 176 A.D.2d 508, 574 N.Y.S.2d 702 (1st Dep't
1991). There is no statutory or common law requirement prohibiting counsel
for the Liquidator of Nassau Insurance Company from also representing the
Liquidator in other civil actions against the same defendant.
In re Concord Casualty & Surety Co., 163 Misc. 596, 297 N.Y.S. 583 (1937),
affirmed, 254 A.D. 721, 4 N.Y.S.2d 1004. The statute governing remedies
against insurers in liquidation must be construed consistently with the section
covering remedies against solvent insurers.
In re Liquidation of Midland Ins. Co., 861 N.Y.S. 2d 922 (Sup. Ct. 2008). The
liquidator argued that application of New York law to every claim in the
liquidation would be efficient and cost effective because the law of other states
would not need to be researched and applied. The Court found that the
application of any particular state law would undermine the purpose of UILA by
causing havoc instead of promoting coordination of liquidation proceedings.
Thus, where previously‐denied claims presented a choice of law issue, the
liquidator was required to apply the “grouping of contacts” approach set forth
in the Restatement (Second), Conflict of Laws and determine whether denial of
policyholder claims was appropriate.
In re Liquidation of Midland Ins. Co., No. 4294/1986 2007 WL 2362567 (N.Y. Sup.
Ct. Jan. 30, 2007 ). In a liquidation proceeding, a reinsurer argued that claims
processing by the Liquidator of the insolvent insurer had not complied with
terms of the reinsurer’s reinsurance agreement with the insolvent insurer, and
moved to disqualify outside counsel retained by the liquidator to provide legal
services regarding the liquidation on conflict of interest grounds. The court
denied the motion to disqualify, as the reinsurer failed to show that counsel had
in its previous representation of the reinsurer received specific confidential
information related to the liquidation proceedings.
Morgan v. American Risk Management, Inc., No. 89 Civ. 2999 (JSM), 1990 U.S.
Dist. LEXIS 9037 (S.D.N.Y. July 20, 1990). Defendants, reinsurers of a cedent
insurance company in liquidation, contended that the pre‐answer security
requirement of section 1213(c)(1) of the New York Insurance Law did not apply
to reinsurers. The Court disagreed, noting that section 1101(b)(2)(G) of the
New York Insurance Law expressly makes section 1213 applicable to reinsurers.
The Court further declared that the retrocessionaires were responsible to post
a bond for an amount proportionate to their share of the cedent's losses minus
the amount of money that the liquidator had already drawn down from letters
of credit that the reinsurers had posted.
Stephen v. American Home Assurance Company, 91 Civ. 2898 (JSM) (KAR), 89
Civ. 2999 (JSM) (KAR), 91 Civ. 2901 (JSM) (KAR), 91 Civ. 6245 (JSM) (KAR) 1993
U.S. Dist. LEXIS 843 (S.D.N.Y. Jan. 27, 1993). The District Court for the Southern
District of New York considered motions in four matters arising out of the
liquidation of Delta America Re Insurance Company in Kentucky. The New
York federal court ruled that the remedy of fraud and the defense of rescission
for fraudulent inducement "are not rendered unavailable as a matter of New
York law by the mere fact of insolvency proceedings."
In addition to denying several cross‐motions for summary judgment due to the
existence of genuine issues of material fact, the Court dismissed third‐party
claims sounding in negligence against Kentucky insurance department officials.
The Court's ruling was based on its determination that, under Kentucky law,