ELNY Appeal - Injunction 2

Eighteen Executive Life of New York (ELNY) structured settlement shortfall payees (shortfall payees), as Objectors and Appellants, have challenged the Order of Liquidation and Approval of the ELNY Restructuring Agreement approved by Judge John M. Galasso on April 16, 2012 by filing an appeal with the Appellate Division of the Supreme Court of the State of New York, Second Department,

In prior blog posts, S2KM:

• Summarized the ELNY shortfall payees' preliminary appellate brief:
  
  • Due process allegations (ELNY Appeal - Due Process 1)
  • Arguments against the judicial immunity granted to the Superintendent of the New York State Department of Financial Services (Superintendent), (ELNY Appeal - Immunity 1)
  • Arguments against the judicial injunctive protection granted to the Superintendent (ELNY Appeal - Injunction 1)
• Provided additional due process analysis (ELNY Due Process Issue);
• Featured analysis of the ELNY Immunity Issue by New York attorney Peter Bickford.
• Summarized arguments in appellate briefs filed by the Superintendent and NOLHGA, as a non-party respondent, as well as the reply brief filed by the ELNY shortfall payees:
  • ELNY Appeal - Due Process 2
  • ELNY Appeal - Immunity 2.

This S2KM blog post summarizes the injunction arguments in the Superintendent's brief and the ELNY shortfall payees' reply brief. NOLHGA's appellate brief was limited to due process issues.

Superintendent

• The Supreme Court properly granted and continued its prior injunctions prohibiting lawsuits against the Superintendent.
• The Supreme Court had jurisdiction to continue and to grant the injunctions.
• New York Insurance Law Section 7419(b) grants trial courts broad discretion to issue anti-suit injunctions during liquidation and rehabilitation proceedings.
• Section 7419(b) does not preclude courts from enjoining claims seeking to hold the Superintendent personally liable for malfeasance or breach of fiduciary duty.
• The ELNY shortfall payees' challenge to the injunctions was not properly preserved in the Supreme Court.
• The injunctions protecting the Superintendent and his agents were first issued in 1991 as part of the ELNY rehabilitation order.
• The ELNY shortfall payees failed to appeal the 1991 and 1992 ELNY orders containing the injunction against the Superintendent and his agents.
• Because those injunctions are final and non-appealable, the shortfall payees are precluded from seeking to overturn those injunctions now.
• The proper avenue for ELNY shortfall payees to challenge the scope of the injunctions is to file a motion to modify with the Supreme Court.
• The shortfall payees never objected to the scope of the injunctions during the ELNY liquidation hearing nor demonstrated that the interests of justice required modification.
• Because the shortfall payees did not seek modification below, their attempt to raise this issue for the first time on appeal is not appropriate.
• The Supreme Court did not abuse its discretion by issuing and continuing its prior injunctions.
• The shortfall payees' assertions are based upon the false premise that the Superintendent and his agents were acting in their individual capacities in the ELNY rehabilitation.
• The ELNY shortfall payees are now asking the Appellate Court to allow ELNY policyholders and creditors to file lawsuits against the Superintendent outside of the receivership court and process.
• This request by the ELNY shortfall payees is directly contrary to the public interest in the single management of a liquidation that New York insurance law is intended to protect.

ELNY Shortfall Payees

• The Supreme Court lacked jurisdiction and statutory authority to permanently enjoin claims against the Superintendent in his personal capacity.
• Without addressing common law, the Superintendent's sole argument supporting subject matter jurisdiction is that New York Insurance Law authorizes the injunction.
• The ELNY shortfall payees agree that, if Section 7419 does authorize an injunction against personal-capacity claims, then the Supreme Court possessed subject matter jurisdiction.
• As a threshold issue, however, the Superintendent argues that the standard for reviewing the injunction order should be "abuse of discretion". That is incorrect.
• The dispositive issue on appeal is statutory interpretation. Can the words "prevents interference with the superintendent" authorize the injunction of claims against the Superintendent in his personal capacity?
• The Supreme Court's exercise of discretion becomes an issue only if the New York statute authorizes such an injunction.
• Section 7419 of the New York Insurance Law does not authorize permanent injunctions against personal-capacity claims.
• The Superintendent claims the statutory reference to injunctions as "the court deems necessary to prevent interference with the superintendent or the proceeding" insulates the Superintendent from liability for his own personal conduct.
• This interpretation is inconsistent with the Insurance Law and requires the Appellate Court to read the words "interferance with the superintendent" in isolation, ignoring all other words in Article 74.
• None of the cases cited by the Superintendent support the proposition that Section 7419 authorizes an injunction against personal-capacity claims - as opposed to official-capacity claims.
• The words and the distinction are taken directly from multiple New York appellate cases, and they are dispositive.
• Even if Article 74 authorized an injunction, it would be an abuse of discretion for Judge Galasso to use that authority to ban claims for which the Superintendent is not immune.
• Because New York law limits the immunity granted to private receivers, it is an abuse of discretion to grant unrestricted immunity in the guise of a blanket injunction.
• The Superintendent's claim that the ELNY shortfall payees are seeking an "unfettered right for all policy holders and creditors of ELNY to commence actions against the [Superintendent] outside of the receivership court" is incorrect.
• The ELNY shortfall payees merely ask that the scope of the injunction be consistent with New York law.
• The shortfall payees could not have appealed the original 1991 ELNY rehabilitation order. They lacked standing because they had not incurred any loss of benefits in 1991.
• Their basis for seeking appellate relief only occurred once Judge Galasso entered the ELNY liquidation order and injunction causing their loss of property.

For S2KM's complete and continuing ELNY reporting, plus copies of the shortfall payees' appellate briefs and an Executive Life timeline, see the structured settlement wiki.

Comments

[ELNY Shortfall Payee]

The truth is the drunk driver who hit the vehicle I was riding in is who I blame. I am certain all of us agree we would give ELNY back every penny if we could turn back time and reverse the injury or wrongful death that got us here in the first place. So the line of blame and injustice is long. We can only fight for what belongs to us including our dignity. But you're right "more to the truth than hate", the attorneys who originally settled our lawsuits got their fees. And let's not forget about the insurance broker who sold the policy. He or she also got their full commission. The blame goes on and on.

[more to the truth than hate]

To the last post. I thought this was all about retaining our money? I do not know about you, but I cannot pay bills with revenge or make my life better by dwelling on getting back a pound of flesh for another pound of flesh. I understand the need for justice, but at the cost of making some homeless out of need for revenge. Like President Nixon said, I will not give them the power of over me by making me hate them. The the truth is your and my attorneys put us into this mess by telling us to invest our settlement with ELNY. What about them and justice? I do not hear from one SSA that they blame their own attorney?

[Anonymous Poster Quote 3]

I am also a shortfall victim and I feel the same way as the poster above.

I suspect there are multiple reasons why others felt it wasn't necessary to join in the fight, but I think the MAIN reason was all about the money.

[(Shortfall Victim)]

As a shortfall payee and one of the 18 in the appeal process I would like to say how sad it is that the rest of you didn't feel the need to join us in this fight. It is important that people, namely, this superintendant and his agents know it is not legal nor alright to handle our monies in the manner they have without being held responsible for their actions not to mention being allowed to open a new business "GABC" with what monies are left to finish off what they started. As for the hardship money I don't know about you but I doubt most of us shortfall victims will see a penny of that money.

[Patrick Hindert]

Assuming the 18 shortfall payees are successful in appealing the immunity and injunction issues, it appears they intend to initiate legal action against the Superintendent and his agents arguing they did not act in good faith and with appropriate care and prudence in managing the ELNY estate and are therefore legally responsible for the losses.

[just wondering]

What do the 18 shortfall payees' hope to gain with this appeal? There will be no more money to gain from ELNY? As I see, more money will go to attorney fees rather than the payees? having a chance at criminal charges brought forth will not return our lost income. I am one of the SSA payees. I just wondered what they hope to gain. Plus, we can loose any hope of funding from the Hardship funds.........Maybe there is something I do not see. Can anyone explain this appeal to me?