HOME INSURANCE COMPANY v. OLYMPIA YORK MAIDEN LANE COMPANY (1997)

A. ISSUE

Whether, absent reciprocity or an ancillary receiver's proceeding in New York an administrative Order from a foreign state's (New Hampshire Department of Insurance) administrative agency requires full faith and credit or comity by a New York Court?   Not in New York.

B. PROCEDURAL HISTORY & FACTS

The Home Insurance Company (hereinafter “Home”) moves, under CPLR 2221, for leave to renew its opposition to Olympia & York Maiden Lane Company's (“O/YMLC”) CPLR 3212 motion for partial summary judgment, which this Court by Order, dated June 13, 1997, partly granted (by vacating its stay of December 30, 1996 Order covering 6/96-8/31/96 rent) and partly denied (12/1/96 to date except directing Home to deposit same to the Temporary Receiver within ten (10) days thereof or as due and owing).   For the reasons set forth hereinbelow, Home's CPLR 2221 motion for leave to renew is granted (see, Lambert v. Williams, 218 A.D.2d 618, 631 N.Y.S.2d 31 [1st Dept.1995] ) and, upon renewal, is partly granted and partly denied.

Following this Court's Order, dated June 13, 1997, Home requested compliance permission, under the New Hampshire (state of plaintiff's incorporation) Insurance Department's Order of Supervision, dated March 3, 1997 (see, Exh. C.-Aff. of Charles E. Callahan, Home's Pres. & C.E.O., dated June 25, 1997), which requires same for payments over $500,000.00.   The June 13, 1997 Order requires, absent a stay thereof, an initial payment of $20,423,132.03 ($18,998,262.35 plus 9% statutory interest [CPLR 5001] of $1,424,869.68 to June 30, 1997) together with costs and disbursements of this action, plus deposit with the Temporary Receiver of an approximately claimed additional $21,600,000.00 covering rent, owed under subject lease, subject to Home's claims thereon, due and owing under the parties' lease from December 1, 1996 through June 30, 1997.  (See, Exh. B-Aff. Charles E. Callahan, Home's Pres. & C.E.O., dated June 25, 1997).   Home's said request for such payment and deposit permission was denied by New Hampshire Insurance Commissioner Charles N. Blossom's “Order”, dated June 24, 1997, directing Home not to make such payment or deposit.   The proverbial ‘rock v. hard place’ is the dilemma issue of this CPLR 2221 motion by Home.

C. APPLICABLE LAW & FINDINGS

1. The New Hampshire Insurance Department Order

 In New York, such foreign state administrative “Order”, neither a Court judgment nor Court Order, does not require judicial comity, full faith and credit, absent reciprocity or an ancillary receiver's proceeding under Ins.L. 7412(a).   See, U.S. Constitution Art. 4;  City of Philadelphia v. Cohen, 15 A.D.2d 464, 222 N.Y.S.2d 226 (1961), cert. den. 371 U.S. 934, 83 S.Ct. 306, 9 L.E.2d 270 (1962);  Kelly v. Overseas Investors Inc., 18 N.Y.2d 622, 624, 272 N.Y.S.2d 773, 219 N.E.2d 288 (1966);  Cynthia Maleski, etc. v. William Landberg, No. 93 CIV 5318 (JSM), 1995 WL 10838 (S.D.N.Y.1995), citing Martyne v. Am. Union Fire Ins., 216 N.Y. 183, 110 N.E. 502 (1915);  see also, G.C. Murphy Co. v. Reserve Insurance Co., 54 N.Y.2d 69, 444 N.Y.S.2d 592, 429 N.E.2d 111 (1981).   This Court further notes that New Hampshire has not yet adopted the Uniform Insurers Liquidation Act-See UILA Table in Ins. L. Art. 74 (McKinney's Cons.Laws of N.Y., Book 27, 1997 Cum. Ann. Pocket Pt., at 129-130) nor is there any pending ancillary receiver's proceeding in New York.   However, this Court in the interest of justice and equity is quite sensitive and aware of both the interests of Home's innocent policyholders and O/YMLC's innocent bondholders, which cannot indefinitely subsidize Home.   They are the true victims.   The priority of the New Hampshire Insurance Commissioner is to the policyholders triggering the above Supervision Order, a prelude to a possible delinquency proceeding triggering an Order of Distribution, which places unsecured or judgment creditors' (as O/YMLC herein) claims after policyholders' claims.   See, N.H.Ins.Code R.S.A. 402-C:3-402-C:44.

This Court's initial response since September, 1996 until July, 1997, in the midst of the highly motional paper bombardments by, and balanced ‘Solomonic’ Decisions/Orders to these highly competent and technological commercial law firms was to initiate and pursue direct and indirect (through an excellent mediator and hearing examiner, Harry Levinson, Esq.) intensive settlement negotiations.   This provided, together with Home's claims, the equitable basis for the prior stay.   These negotiations were, and still are, on the brink of final successful fruition, with the framework and basic arithmetic having been agreed upon, with the differences less than the probable future collective legal fees and disbursements.   Each party, as this Court noted in its June 13, 1997 Decision/Order has “MAD” (power of ‘mutual assured destruction’ in liquidation and/or bankruptcy) engaging in fiscal brinkmanship and ‘on-off the table’ offers, maximum/minimum demand tactics (i.e. with one party accepting the other's offer which was then taken ‘off the table’ then increased) and using the Trial Court and appellate process.   Inevitably, mutual survival mandates settlement at the appropriate time at the I.A.S. or appellate level.

2. Injunctive Relief

 Home's belated request for additional injunctive relief, citing W.T. Grant & Co. v. Srogi, 52 N.Y.2d 496, 438 N.Y.S.2d 761, 420 N.E.2d 953 (1981) is denied, without prejudice, for insufficient showing of a reasonable likelihood of success on the merits and balancing of the equities in its favor, in the absence of even tendering any rent for payment and deposit of the demised space it allegedly actually occupies (200,000 sq. feet) even at what it claims is market ($19.50 per square foot) rent v. lease ($68.00 per square foot) rent rates.   There is apparently irreparable harm (i.e. liquidation) absent such relief.  (See, Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 552 N.Y.S.2d 918, 552 N.E.2d 166 (1990);  Amarant v. D'Antonio, 197 A.D.2d 432, 434-5, 602 N.Y.S.2d 837 (1st Dept.1993)).   However, this Court, in the interest of justice, opts to maintain the status quo at this time, pending appellate review.   See, Residential Board of Managers of Columbia Condominium v. Alden, 178 A.D.2d 121, 122, 576 N.Y.S.2d 859 (1st Dept.1991).

D. CONCLUSION

Accordingly, this Court grants Home's CPLR 2221 motion only to the extent of temporarily extending the stay of entry and execution of the judgment up until, and including July 7, 1997, unless an undertaking under CPLR 5519(a)(2) & (3) is duly given and filed with the Court on or before July 7, 1997 or such is further extended by a Justice of the Appellate Division:  First Judicial Department.

NORMAN C. RYP, Justice.