NEW YORK MARINE AND GENERAL INSURANCE COMPANY v. American Property Casualty Insurance Association, Amicus Curiae. (2025)

Order, Supreme Court, New York County (Barry R. Ostrager, J.), entered December 7, 2023, which denied the motion of plaintiff New York Marine and General Insurance Company for a preliminary injunction, without prejudice to a motion for summary judgment or plaintiff demonstrating that it is unable to pay a claim, unanimously reversed, on the law, with costs, the motion for a preliminary injunction granted and defendant directed to deposit $4,753,758.02 into the trust account, without prejudice to the defendant moving before the motion court to determine the appropriate amount of any undertaking pursuant to CPLR 6312(b).

In seeking a mandatory injunction requiring defendant to deposit collateral, plaintiff has demonstrated that it is likely to succeed on the merits (see Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 840, 800 N.Y.S.2d 48, 833 N.E.2d 191 [2005]).  Proof establishing the entitlement to a preliminary injunction “must be by affidavit and other competent proof, with evidentiary detail” (Faberge Intl. v. Di Pino, 109 A.D.2d 235, 240, 491 N.Y.S.2d 345 [1st Dept. 1985]) and “likelihood of success on the merits may be sufficiently established even where the facts are in dispute and the evidence is inconclusive” (Four Times Sq. Assoc. v. Cigna Invs., 306 A.D.2d 4, 5, 764 N.Y.S.2d 1 [1st Dept. 2003]).  Here, plaintiff submitted the affidavit of the vice president of Coaction Management, the servicer for plaintiff.  The affidavit explained that plaintiff incurred a statutory Schedule F penalty in 2022 from the state regulator for not having sufficient collateral, resulting in a reduction to its total policyholder surplus and undermining its ability to issue or reinsure federal bonds.  The attached “collateral review statement” also shows a deficiency of $4,753,758.02.

Additionally, plaintiff has established the element of irreparable harm (see Nobu Next Door, LLC, 4 N.Y.3d at 840, 800 N.Y.S.2d 48, 833 N.E.2d 191).  This Court has previously affirmed the grant of a preliminary injunction requiring the defendant to give the plaintiff funds for collateral where the indemnitor defaulted on its obligation to deposit collateral security (see Atlantic Specialty Ins. Co. v. Landmark Unlimited, Inc., 214 A.D.3d 472, 473, 186 N.Y.S.3d 14 [1st Dept. 2023];  see also BIB Constr. Co. v. Fireman's Ins. Co. of Newark, N.J., 214 A.D.2d 521, 523, 625 N.Y.S.2d 550 [1st Dept. 1995] [“The damage resulting from the failure to give security is not ascertainable, and the legal remedy is therefore inadequate”] [internal quotation marks omitted]).  Although defendant argues that plaintiff is not at risk of being unable to pay claims on the policies ceded to defendant due to plaintiff's abundant surplus, plaintiff's affidavit sufficiently demonstrates that any surplus diminution caused by insufficient collateral has cascading impacts that are difficult to ascertain.  Where “calculation of future damages would be unreliable and risky ․ there is the potential for irreparable harm” (Penstraw, Inc. v. Metropolitan Transp. Auth., 200 A.D.2d 442, 442, 608 N.Y.S.2d 807 [1st Dept. 1994]).

We have considered defendant's remaining contentions and find them unavailing.

The Decision and Order of this Court entered herein on May 29, 2025 is hereby recalled and vacated (see M-3654 decided simultaneously herewith).