The Appellate Division of the Supreme Court of the State of New York, Second Department, has denied an appeal challenging the Executive Life of New York (ELNY) Order of Liquidation and Approval of the ELNY Restructuring Agreement signed by New York State Supreme Court Judge John M. Galasso on April 16, 2012.
The unanimous February 6, 2013 appellate decision:
- Dismissed the appeal;
- Affirmed Judge Galasso's order; and
- Awarded costs to Benjamin M. Lawsky, Superintendent of New York's Department of Financial Services (petitioner-respondent) and NOLHGA (nonparty-respondent).
The appeal, filed May 30, 2012 on behalf of 18 ELNY structured settlement shortfall victims as objectors:
- Alleged Judge Galasso "erroneously denied objectors' request to reject the proposed agreement of restructuring in connection with the [ELNY] liquidation";
- Further alleged Judge Galasso's order:
- "[I]mproperly grants and/or continues certain injunctions and immunities and discriminates against the objectors";
- "[C]reates impermissible sub-classes of claimants"; and
- "[R]eflects the courts erroneous denial of objectors' requests to adjourn the hearing ... due to a lack of proper notice of such hearing."
- Sought to compel:
- The Superintendent, as ELNY's Rehabilitator, "to provide certain discovery necessary to, among other things, allow objectors to demonstrate why the plan should not be approved and submit a viable competing restructuring plan";
- Judge Galasso "to unseal certain documents submitted to the court by the rehabilitator"; and
- Further sought to allow the objectors "to present evidence (in the form of live testimony by certain witnesses) rebutting the receiver's experts and otherwise showing that the proposed-liquidation plan should not have been approved."
The Appellate Court rejected all of these allegations and denied further relief.
The brief appellate opinion focused primary on due process issue. The Appellate Court stated: "[t]he fundamental requisite of due process of law is the opportunity to be heard" and concluded the ELNY shortfall payees had not been denied due process "either in the manner in which the notice was provided to them or in the conduct of the hearing."
Concerning due process, the Appellate Court reasoned: "The notice mailed to the last known addresses of the ELNY annuity payees was reasonably calculated to apprise them of the pendency of the liquidation proceeding and the execution of the proposed agreement, and to afford them an opportunity to be heard, and, thus, satisfied due process.... Moreover, the record does not support the contention that the hearing was "an unfair proceeding."
The appellate opinion summarily dismissed the immunity and injunction issues. "There is no merit to the contention that the Supreme Court lacked subject matter jurisdiction to include, in the order approving the agreement, provisions which granted the receiver for ELNY judicial immunity and preliminary injunctive relief," the Appellate Court stated. "Furthermore, such relief was appropriately granted in the order."
Additional ELNY Developments
The ELNY appellate court decision follows a civil contempt order issued by Judge Galasso January 25, 2013 in which he sanctioned legal counsel for three ELNY structured settlement shortfall payees for filing an ELNY class action lawsuit in the United States District Court Southern District of New York. The attorneys issued a press release January 28, 2013 announcing their plan to appeal the contempt order. The ELNY class action lawsuit is still pending despite arguments on behalf of Superintendent Lawsky seeking dismissal.
Addendum: subsequent to publishing this blog post, S2KM learned the ELNY class action lawsuit has been voluntarily dismissed without prejudice. Please see this S2KM blog post for details.For S2KM's complete reporting about the ELNY liquidation and related litigation, see the structured settlement wiki.