Beyond Structured Settlements: ELNY Appeal - Injunction 1

As reported earlier by S2KM, attorney Edward Stone filed a Notice of Appeal May 30, 2012 with the Appellate Division of the Supreme Court of the State of New York, Second Department, on behalf of 18 Executive Life of New York (ELNY) structured settlement shortfall payees, as Objectors and Appellants, challenging the Order of Liquidation and Approval of the ELNY Restructuring Agreement approved by Judge John M. Galasso on April 16, 2012.

The Superintendent of the New York State Department of Financial Services (Superintendent), as ELNY Receiver and Respondent, and attorney Stone, on behalf of Appellant/Objector ELNY shortfall payees, subsequently and jointly agreed to and requested calendar preference and an accelerated briefing schedule for this Appeal.

Status of Appeal:

• The Appellant/Objectors' served and filed their brief and the record on appeal on Friday, August 17, 2012. For S2KM's summary, see: ELNY Appeal - Objectors' Brief.
• The Superintendent/Respondent served and filed its brief on Friday, September 7 ,2012. In addition, the National Association of Life and Health Guaranty Associations (NOLHGA) also served and filed a supporting brief the same day.
• Appellant/Objectors are expected to serve and file a reply brief on Friday September 14, 2012.
• The Appellate Court is expected to schedule oral argument "as soon as practicable".

Copies of all briefs filed to date in the ELNY appeal will be posted on the structured settlement wiki.

In prior blog posts, S2KM:

This blog post summarizes the Appellant/Objectors' allegations that no statutory or common law basis existed for Judge John Galasso's "extraordinarily broad grant of injunctive relief" to protect the Superintendent and his agents, including the New York Liquidation Bureau (NYLB).

The objecting structured settlement shortfall payees have requested the Appellate Court to reverse the following sentence contained in the ELNY liquidation order:

"All persons are enjoined and restrained from commencing or further prosecuting any actions at law or other proceedings against ELNY or its assets, the Receiver or the New York Liquidation Bureau, or their present or former employees, attorneys, or agents, with respect to this proceeding or the discharge of their duties under Insurance Law Article 74.

To support their objection and request, the Appellant/Objectors maintain:

• The liquidation court lacked subject matter jurisdiction to enter an injunction unrelated to the collection or disposition of ELNY assets.
• The injunction is not authorized by Article 74 of the New York Insurance Law.
• The injunction is not supportable on any non-statutory basis.

Subject matter jurisdiction

• Subject matter jurisdiction is ?the authority of the courts to adjudicate classes of cases.?
• Subject matter jurisdiction may be limited by statute (e.g. Article 74 of the New York Insurance Law).
• A court cannot entertain actions in which it lacks subject matter jurisdiction.
• In this case, the New York Supreme Court had before it the ELNY estate ? and only the ELNY estate.
• Under Article 74, subject matter jurisdiction in a liquidation proceeding is limited to the collection and disposition of the insurer?s assets.
• As a liquidation court, the New York Supreme Court does not have jurisdiction to prospectively adjudicate claims or issue orders not involving the estate?s assets.
• During the ELNY liquidation hearing, the Superintendent incorrectly suggested that all claims against him and/or against his agents, regardless of capacity, constituted claims against the estate.
• Injunctions granted to the Superintendent as regulator, however, do not apply to his role as Receiver where he stands in the shoes of management and should be subject to the same standard of care and responsibility.
• Claims against the Superintendent and/or his agents acting in their personal capacities as ELNY's Receiver, therefore, are not claims against the ELNY estate.
• The Superintendent also argued that similar injunctions were included in interim orders during the rehabilitation proceeding.
• However, the same rationale upon which the injunctive provision is void and unauthorized by law should also invalidate similar provisions in interlocutory orders.
• Because Judge Galasso's injunctive protection for the Superintendent, as ELNY's Receiver, and for his agents, in their personal capacities extends beyond ELNY's assets in liquidation, it exceeds the New York Supreme Court?s subject matter jurisdiction and should be void.

Article 74

• Unlike immunity, Article 74 of the New York Insurance Law contains a provision involving injunctions. However, it is inapplicable to the Receiver?s request.
• The injunctive provision are concerned with enjoining actions against the assets of ELNY, not those of the Superintendent, as ELNY's Receiver.
• Article 74 Subsection (a) limits injunctions to those which prohibit persons other than the Receiver ?from the transaction of its [the insurer?s] business or the waste or disposition of its [the insurer?s] property.?
• Article 74 Subsection (b) permits injunctions as necessary to prevent ?waste of the assets of the insurer, or the commencement or prosecution of any actions . . . against the insurer, its assets or any part thereof.?
• An action against the Receiver in his personal capacity is not the same as an action against the insurer or the insurer?s assets.
• Barring all claims against the Receiver is inconsistent with Article 74?s express purpose of protecting policyholders.
• A Receiver is judicially immune from liability if he acts in good faith and with appropriate care and prudence.
• Therefore, the only actions that are effectively enjoined by Judge Galasso's liquidation order are those where the Superintendent, as ELNY's Receiver, breached fiduciary or other duties.
• As a result, Judge Galasso's broad injunction is unsupported by, and inconsistent with, New York Insurance Law.

Non-Statutory Basis

• The Superintendent did not present any evidence that his property rights would be irreparably harmed absent the injunction.
• Instead, without evidence or argument, the Superintendent simply asked for unlimited injunctive relief, and Judge Galasso granted the request.
• As argued above, a lawsuit against the Superintendent in his personal capacity is not the same as a claim against ELNY or its assets.
• Even if the Superintendent might be inconvenienced by claims against him in his personal capacity, mere annoyance and litigation expense, even substantial and unrecoverable cost, does not constitute "irreparable injury? sufficient to authorize an injunction.
• The Superintendent also argued that interlocutory orders issued in 1991 and 1992 as part of ELNY's rehabilitation proceeding contained similar language.
• Those injunctions, however, were by definition temporary, not permanent.
• Any past bar to the filing of claims by ELNY shortfall payees is immaterial where such claims did not accrue until Judge Galasso's liquidation order resulted in a loss of benefits
• Regardless, prior injunctive provisions possess the same jurisdictional and statutory defects as the injunctive provision in the ELNY liquidation order.

For S2KM's complete and ELNY reporting, see the structured settlement wiki.

Source: http://s2kmblog.typepad.com/rethinking_structured_set/2012/09/elny-appeal-injunction-1.html

arizona governor seal team 6 patrick witt leprosy tampa bay buccaneers birdman whip it