Beyond Structured Settlements

Attorneys to Appeal ELNY Contempt Order

Attorney Edward Stone and representatives of the Christensen & Jensen law firm, who are representing Executive Life of New York (ELNY) structured settlement shortfall payees in multiple legal actions, have responded to a contempt order issued January 25, 2013 by New York State Supreme Court Judge John M. Galasso with a press release announcing their plan to pursue an appeal with the Appellate Division of the Supreme Court of the State of New York.

Judge Galasso's contempt order against the ELNY shortfall payee attorneys followed their filing of an ELNY class action lawsuit in the United States District Court Southern District of New York (federal court) which Judge Galasso ruled was a violation of existing ELNY anti-lawsuit injunction orders.

Stone and Christensen & Jensen filed the ELNY class action November 8, 2012 against Benjamin M. Lawsky, Superintendent of the New York Department of Financial Services, (Superintendent) and his predecessors, in their “non-regulatory” capacities as ELNY receivers, claiming breach of fiduciary duty and fraudulent omission among other allegations. The class action complaint also named Metropolitan Life Insurance Company and Credit Suisse Group, AG as defendants.

Judge Galasso's contempt order also included a fine, payable by the ELNY shortfall payee attorneys to the Superintendent, for costs, disbursements and reasonable attorney’s fees the Superintendent has incurred defending the federal class action and for pursuing the contempt application plus potential additional legal expenses if the Superintendent achieves a favorable result in the ELNY appeal. For purposes of the fine, the Superintendent's attorney fees are capped at $5000.

Representing 18 ELNY shortfall payees, Stone and Christensen & Jensen have also appealed Judge Galasso's April 16, 2012 ELNY Liquidation Order. Oral arguments in the ELNY appeal have concluded and a decision is expected shortly.

Press Release - distributed by Stone and Christensen & Jensen on January 28, 2013: 

"GALASSO CONTEMPT DECISION - VIOLATES UNITED STATES CONSTITUTION; PUNISHES VICTIMS; WASTES ELNY ASSETS

New York State Supreme Court Judge John M. Galasso decided to hold attorneys for structured settlement victims in civil contempt for filing a class action lawsuit in the United States District Court for the Southern District of New York despite acknowledging that "This Court is not empowered to dismiss the federal complaint outright".

We are disappointed that Judge Galasso interprets the injunctions as broader in scope than the immunity provisions contained in the various orders issued in connection with the failed rehabilitation of The Executive Life Insurance Company of New York dating back to 1991. On the other hand, we agree that Galasso is not empowered to dismiss the federal complaint and we look forward to the day when the victims of this tragedy will have a chance to shed light on what actually transpired with ELNY over the past 21 years. We intend to do everything we can to shed light on what led to this insurance industry failure of epic proportions.

For more than 21 years, victims have been kept in the dark while assets set aside to provide for their long term needs were squandered on the Superintendent's watch. We asked the Superintendent to look into the single largest failed effort at "Rehabilitation" in the history of the State of New York and he refused. We regret Superintendent Lawsky's decision to pursue contempt sanctions and we obviously interpret the injunctions differently than Judge Galasso does. We plan on pursuing an appeal on substantive and constitutional grounds with the Appellate Division."

Additional Resources

For additional S2KM reporting about the ELNY contempt proceeding, see:

• Superintendent Seeks ELNY Contempt Order
• ELNY Payees' Attorneys Respond to Contempt Motion
• ELNY Contempt Order Issued

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

ELNY Contempt Order Issued

New York Supreme Court Judge John M. Galasso has ordered legal counsel for three Executive Life of New York (ELNY) structured settlement shortfall payees in civil contempt for filing an ELNY class action lawsuit in the United States District Court Southern District of New York (federal court) in violation of existing ELNY anti-lawsuit injunction orders.

Despite issuing the contempt order, Judge Galasso acknowledged:

• "This Court is not empowered to dismiss the federal complaint outright"; and
• "The results of the pending [s]tate appeal may also impact the viability of the federal action."

ELNY Class Action and Appeal

Attorney Edward Stone and representatives of the Christensen & Jensen law firm, the attorneys subject to the contempt order, filed the ELNY class action lawsuit November 8, 2012 in federal court against the Superintendent and his predecessors,  in their “non-regulatory” capacities as ELNY Receivers, claiming breach of fiduciary duty and fraudulent omission among other allegations. The class action complaint also named Metropolitan Life Insurance Company and Credit Suisse Group, AG as defendants.

Attorneys for the Superintendent filed a Notice of Motion January 18, 2013 with the United States District Court to:

• Stay the ELNY class action lawsuit pursuant to the Burford abstention doctrine; or, alternatively,
• Dismiss the ELNY class action complaint in its entirety with prejudice pursuant to Federal Rule of Civil Procedure (FRCP) 12(b)(6).

Questions concerning immunity and due process, which are also raised in the pending ELNY appeal, were not subjects of the contempt proceeding. Oral arguments in the ELNY appeal have concluded and a decision is expected shortly.

Fine Imposed

Judge Galasso's January 25, 2013 contempt order also imposes a fine, payable by the ELNY shortfall payees’ legal counsel to Benjamin M. Lawsky, Superintendent of New York's Department of Financial Services (Superintendent), for costs, disbursements and reasonable attorney’s fees the Superintendent has incurred defending the federal class action and for pursuing the contempt application plus potential additional legal expenses if the Superintendent achieves a favorable result in the ELNY appeal.

The ELNY contempt order indicates Judge Galasso will determine the amount of the fine without a hearing upon receipt of an affidavit in support of the Superintendent's attorney’s fees, costs and disbursements along with a proposed judgment. For purposes of the ELNY contempt fine, the Superintendent's attorney fees will be capped at $5000.

Three Injunctions

Three ELNY injunctions were at issue in the contempt proceeding: injunctions contained in the ELNY Rehabilitation Order (1991) and the ELNY Rehabilitation Plan Approval (1992) as well as an injunction in Judge Galasso's April 16, 2012 ELNY Liquidation Order. The injunction in the Liquidation Order states:

"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."

The ELNY Liquidation Order also discharged the Superintendent, as Rehabilitator, and his agents, employees, etc., from any liability for their acts prior to the approval of the ELNY Rehabilitation Plan in the performance of their duties related to the ELNY rehabilitation. That discharge was in addition to any statutory or other immunity to which they might be entitled.

Judge Galasso's Reasoning

• The Superintendent's motion for contempt must be considered within the context of the Court enforcing its own directives.
• Counsel for plaintiffs should to be held in contempt if, by commencing the federal lawsuit against the Superintendent, an order has been disobeyed.
• New York insurance law permits a judge to issue injunctions or orders during an Article 74 rehabilitation or liquidation to prevent interference with the Receiver or the plan.
• The ELNY orders are a matter of public record, clearly expressed and unequivocal.
• The Superintendent, and his predecessors are prejudiced by being sued.
• The ELNY class action contention that no harm or waste will inure to the ELNY estate as a result of the federal action is not supported by the ELNY shortfall payees' arguments that:
  • The federal claims are against the Superintendent and his predecessors in their personal capacity; and/or
  • The federal complaint does not seek damages payable from the ELNY estate assets or prevent the ELNY Liquidation Order from proceeding as directed.
• On their face, the allegations in the federal complaint are neither "ultra vires" nor illegal.
• Naming the Superintendent and his predecessors, in their non-regulatory capacity, as defendants in the federal complaint without clearly prosecuting them in their individual capacities "appears to be a deliberate obfuscation in an effort to avoid a charge of violating the mandates of the state injunctions still in force." (emphasis added)

Additional Resources

For additional S2KM reporting about the ELNY contempt proceeding, see:

• Superintendent Seeks ELNY Contempt Order
• ELNY Payees' Attorneys Respond to Contempt Motion

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

Superintendent Argues for ELNY Class Action Dismissal

Attorneys for Benjamin M. Lawsky, Superintendent of Financial Services of the State of New York, in his capacity as Receiver of Executive Life Insurance Company of New York (ELNY), filed a Notice of Motion January 18, 2013 with the United States District Court Southern District of New York to:

• Stay the ELNY class action lawsuit pursuant to the Burford abstention doctrine; or, alternatively,
• Dismiss the ELNY class action complaint in its entirety with prejudice pursuant to Federal Rule of Civil Procedure (FRCP) 12(b)(6).

The Notice of Motion also states:

• In response to a letter and phone call from Superintendent Lawsky's attorneys setting forth reasons why the class action lawsuit should be dismissed, plaintiffs' attorneys communicated they would not amend their complaint prior to the filing of the motion; and
• Court rules require plaintiffs to file opposing affidavits or memoranda by February 1, 2013 and Superintendent Lawsky to file any replies by February 8, 2013.

Background and Related Legal Actions

• New York State Supreme Court Judge John M. Galasso approved an Order of Liquidation and Restructuring Agreement for ELNY  on April 16, 2012 which were subsequently appealed by 18 ELNY structured settlement shortfall payees. Oral arguments in the appeal have been concluded and a decision is expected shortly.

• The ELNY class action, which was filed November 15, 2012, alleges mismanagement of ELNY during its 21 year rehabilitation by Superintendent Lawsky in his non-regulatory capacity as ELNY's Receiver, including predecessor ELNY Receivers, Metropolitan Life Insurance Company and Credit Suisse Group, AG as defendants.

• For S2KM's re-configuration of selected allegations from the ELNY class action complaint, see the "ELNY Allegation Timeline".

• In a related legal action, attorneys for Superintendent Lawsky have filed a separate Notice of a Motion with the Nassau County New York State Supreme Court to enjoin the ELNY structured settlement shortfall payees and their legal counsel from proceeding with their class action lawsuit and to hold the shortfall payees' legal counsel in contempt.

Supporting Legal Memorandum

In support of Superintendent Lawsky's motion to stay or dismiss the ELNY class action lawsuit, his attorneys also filed an accompanying memorandum of law (legal memorandum) plus a declaration with exhibits.

The legal memorandum filed with the Superintendent's Notice of Motion characterizes the class action complaint as:

• Seeking "to circumvent ongoing proceedings in the New York Supreme Court that are subject to New York’s comprehensive Insurance Law, and thereby make an end run around that court’s anti-suit injunctions and other rulings" and
• "[A]n attempt to obtain a preference over other ELNY creditors, which New York law prohibits and they and their counsel were unsuccessful in obtaining from the Receivership Court."

Burford Abstention Argument

Superintendent Lawsky's legal memoradum argues that a Burford abstention is warranted as "the Second Circuit repeatedly has held in suits involving the Superintendent during pending Article 74 proceedings." This case, according to the Superintendent's attorneys, satisfies four factors the Second Circuit has previously recognized in determining whether a Burford abstention is appropriate:

1. Specificity - New York Insurance Law Article 74 is specific and comprehensive and has “particularly detailed provisions concerning [insurance company] rehabilitation and liquidation.”
2. Substantial state concern - New York Insurance Law’s rehabilitation and liquidation provisions constitute “a matter of special state concern.” Continuation of the ELNY class action lawsuit "would disrupt New York’s unified administrative and judicial framework for the administration of the estates of insolvent insurance companies.”
3. Debatable construction - Continuation of the ELNY class action lawsuit would require the U.S. District Court to determine how Article 74's priority rule "requires any recovery to be apportioned." It would undoubtedly result in plaintiffs seeking "to collaterally litigate and debate issues related to Article 74 (some of which the Receivership Court already has ruled upon.)"
4. Minimal federal interests - The ELNY rehabilitation has been ongoing for a long time and presents no issues of federal law while there has been no "relative progress of the federal action."

FRCP 12(b)(6) Argument

As an alternative argument, the Superintendent's legal memorandum maintains the plaintiffs' class action claims should be dismissed pursuant to FRCP 12(b)(6) "because they lack standing to assert their claims and, even if they had standing, the claims would fail for [four] additional reasons."

1. Any alleged financial harm was sustained by the ELNY estate, and thus any claim belongs to the ELNY estate and not to individual creditors of the ELNY estate.
2. Plaintiffs "fail to plead either a fraudulent omission claim with particularity or a plausible breach of fiduciary duty claim against Superintendent Lawsky." The class action complaint only mentions Superintendent Lawsky twice and neither allegation states a claim.
3. Plaintiffs Jeanice Dolan’s and Keith Vincent’s claims are time-barred and plaintiff Daniel Malin’s fiduciary duty claim is not timely.
4. The Receivership Court discharged Superintendent Lawsky from liability for the conduct plaintiffs alleged caused them harm.

For S2KM's complete and continuing coverage of the ELNY liquidation and related legal actions, see the structured settlement wiki.

Secondary Market Update

DBRS 2013 Outlook

DBRS, a rating agency that covers various structured finance product groups including structured settlement payment rights, has published its 2013 Outlook for commercial asset-backed securities. Among DBRS' observations and projections for the structured settlement secondary market:

• "From the structural and rating perspective, implementation of the restructuring plan for Executive Life Insurance Company of New York provides a rare and valuable glimpse into the insurer liquidation process and adds evidence to the expected recovery proceeds assumptions in case of default by an insurer in the future."
• "Based on the estimated 15% increase in issuance in 2012 to $630 million, DBRS expects further 10%+ increase in issuance in 2013 amid the continuing popularity of the asset class among certain investors."
• "Expected steady collateral performance in 2013 will be supported by low delinquencies and improving condition of the insurance industry."

Based upon interviews with industry experts, S2KM previously estimated total 2012 structured settlement secondary market profit of $120 million calculated as follows:

• $1 billion received from investors;
• Less: $360 million paid to transferors;
• Equals: $640 million of revenue;
• Less: $520 million of expenses;
• Equals: $120 million of profits.

The difference between S2KM's estimated "$1 billion received from investors" and DBRS' estimated $630 million of "issuance" (meaning presumably "total face amount of structured settlement collateral debt obligations sold to investors") can be explained by two factors according to industry experts:

• Except for J.G. Wentworth (JGW) and Peachtree Settlement Funding (Peachtree), most structured settlement factoring companies and brokers currently do not obtain financial ratings when they re-sell structured settlement payment rights.
• JGW, Peachtree and other issuers of rated bonds backed by structured settlement payment rights in 2012 may receive as much as $50 million of additional income from investors in the form of residuals, servicing rights and other income over time.

Drinker Biddle Structured Settlement Alert 

Drinker Biddle's website features summaries of two recent cases where state court judges in Florida and California have denied proposed transfers of structured settlement payments rights paid pursuant to awards under the Longshore Act and the California workers compensation statute, respectively.

In each case, the objecting structured settlement annuity issuer was represented by Drinker Biddle attorneys.

In the Florida case (In Re: Approval for Transfer of Structured Settlement Proceeds by Derrick Robotham), Circuit Court Judge Michelle Morley held the proposed transfer would contravene Federal law which prohibits assignment of Longshore Act payments. It would not, therefore, satisfy the requirements of the Florida structured settlement protection act which prohibits transfers that would violate or conflict with any applicable law.

In the California case (In Re Rudy Andrade), Superior Court Judge Amy D. Hogue applied similar reasoning in denying a petition seeking court approval for the transfer of a payee’s rights to payments under a workers’ compensation settlement. Among other findings, Judge Hogue held that the California structured settlement statute does not apply to transfers of workers' compensation payments. In addition, according to the Judge, the proposed transfer contravened: 1) the California Labor Code which prohibits assignment of workers' compensation payments; 2) California common law because the release agreement signed by the payee prohibited assignment of payments; and 3) a prior order of the California Workers' Compensation Appeals Board that also expressly prohibited assignment of the payments.

Additional Resources

For S2KM's complete reporting about the structured settlement secondary market, see the structured settlement wiki.

For more comprehensive legal analysis about transfers of structured settlement payment rights, see Chapter 16 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).

J.G. Wentworth Abandons Sale Plan

Bloomberg News reported earlier this week that JLL Partners, owners of J.G. Wentworth (JGW), have abandoned plans to sell the company after bids failed to meet expectations and may now consider a dividend recapitalization or an initial public offering instead.

Earlier reports had indicated that JLL Partners was seeking a $1 billion purchase price for JGW from private-equity firms with Moelis & Co. and Deutsche Bank AG acting as investment bankers.

JGW, which was founded in 1995, has experienced a tumultuous recent history:

• On June 1, 2009, JGW and two affiliated companies entered Chapter 11 bankruptcy protection after the company "encountered liquidity problems amid a tightening credit market".
• Standard & Poor's Rating Services had earlier announced, at JGW's request, that it would no longer rate JGW's counterparty credit and senior secured debt.
• During this period, JGW laid off 120 of its 200 employees and closed its office in Las Vegas.
• According to industry sources at that time, JGW's $325 million of general corporate bonds were "almost worthless" and were trading, if at all, for pennies on the dollar.
• Less than six months later, JGW emerged from bankruptcy with an announcement that owner JLL Partners had invested an additional $100 million in the company.
• By 2011, JGW had re-entered the asset-backed structured settlement securitization market.
• A June 2011 DBRS report, published prior to JGW's 23rd asset-backed structured settlement securitization, stated that JGW had previously consummated 59.000 structured settlement factoring transactions with aggregate payment streams of $4.5 billion and 0.11% of losses.
• Also in 2011, JGW merged with Peachtree Settlement Funding (Peachtree) in a stock swap, with JLL Partners retaining control of the merged companies which have each continued to participate in the secondary market.
• Industry estimates obtained by S2KM of the post-merger 2012 market share (revenue and sales) of the now-combined JGW/Peachtree vary from a low of 50% to a high of 75%.
• Some industry experts believe JGW/Peachtree's share of the estimated 2012 industry profits of $120 million was $100 million, or 83%.

For S2KM's summary evaluation of the structured settlement secondary market in 2012, see this prior blog post.

For S2KM's complete reporting about the structured settlement secondary market, see the structured settlement wiki.

For more comprehensive legal analysis about transfers of structured settlement payment rights, see Chapter 16 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).

ELNY Victims Hold Press Conference

Responding to injustices they attribute to Benjamin M. Lawsky, Superintendent of Financial Services for the State of New York (Superintendent), in his capacity as Receiver of Executive Life Insurance Company of New York (ELNY), and his predecessors and their agents, a group of ELNY structured settlement shortfall payees and their attorneys held a press conference today at the Hotel Pennsylvania in New York City.

Added January 9, 2013: Among several news organizations that attended the press conference, the New York Daily News has now published its first ELNY article.

Added January 13, 2013: See also this ELNY article from the Courthouse News Service.

Contempt Motion

The alleged injustices include a recent Motion filed by the Superintendent's attorneys with the Nassau County New York State Supreme Court to:

• Enjoin three ELNY structured settlement shortfall payees and their legal counsel from proceeding with a class action lawsuit in the United States District Court Southern District of New York;
• Hold in contempt of court the shortfall payees' legal counsel; and
• Require their payment of the related costs and attorney's fees incurred by the Superintendent.

The stated purpose of the Superintendent's motion is "to punish the accused for a contempt of court, and such punishment may consist of fine or imprisonment, or both, according to the law."

S2KM Summaries

• For the structured settlement shortfall payees' legal response to the Superintendents' contempt motion, see this prior blog post.

• For ELNY class action allegations of post-1991 ELNY mismanagement and non-disclosure set forth in the ELNY class action, see this prior blog post.

• For 2012 ELNY retrospective summary, see this prior blog post.

Press Conference Comments

In addition to the structured settlement shortfall payees, two of their attorneys, Edward Stone and Roger Christensen, spoke during the press conference.

“What is most shocking to victims", Stone stated, "is that the structured settlement funds set aside for future medical expenses and care were wasted by folks charged with protecting their interests. When New York State took over ELNY in 1991, the company was financially in the black, but decades of neglect and fiscal mismanagement by the NYLB led to this horrible scenario for victims. For the state to give these suffering victims a legal ultimatum and then sue them for asking for justice is unconscionable in my view. Billion dollar deficits are not created overnight.”

Christensen, whose law firm Christensen & Jensen has previously secured major victories against insurance companies, added: “The wasting of ELNY assets that has been perpetrated here in New York State against these victims and the legal intimidation the superintendent is now seeking to impose upon them must not be tolerated in a democratic and supposedly moral society. If we must, we will take this fight to the highest levels of our nation’s legal systems to obtain justice for nearly 1,500 ELNY victims scattered across all 50 states and three foreign nations. The superintendent is now asking us to be held in contempt for what he and his predecessors should have been doing all along, protecting these good people. They put their trust in the leadership of New York State and were betrayed.”

There are a total of 1,457 ELNY shortfall victims across all 50 states, the District of Columbia, and three countries. The largest proportion of victims hail from: California, New York, Florida, New Jersey, Texas, Pennsylvania, Ohio, Washington, Nevada, North Carolina, Michigan, Arizona, Louisiana, Maryland, Illinois, Georgia and Connecticut.

Complete ELNY Coverage

For S2KM's complete and continuing reporting about the ELNY liquidation, including an Executive Life timeline, see the structured settlement wiki.

ELNY Payees' Attorneys Respond to Contempt Motion

Should Benjamin M. Lawsky, Superintendent of New York's Department of Financial Services, acting as Receiver for Executive Life of New York, (Superintendent) receive a "free pass" for all actions taken by Lawsky, his predecessor Superintendents and their agents during the past 21 years with respect to the Executive Life of New York (ELNY) rehabilitation and liquidation no matter how egregious and regardless of whether or not those actions were taken in good faith and/or constituted illegal conduct under Article 74 of New York's insurance law?

Motion for Contempt Order

That is the central strategic question posed by attorney Edward Stone and the Christensen & Jensen law firm (ELNY shortfall attorneys) in their Memorandum of Law responding to a Motion filed last month by attorneys representing the Superintendent with the Nassau County New York State Supreme Court to:

• Enjoin three ELNY structured settlement shortfall payees and their legal counsel from proceeding with a class action lawsuit filed November 8, 2012 in the United States District Court Southern District of New York;
• Hold in contempt of court the shortfall payees' legal counsel; and
• Require their payment of the related costs and attorney's fees incurred by the Superintendent.

Characterizing the Superintendent's Motion for a Contempt Order as a "SLAPP" ("strategic lawsuit against public participation"), the ELNY shortfall attorneys argue in their Memorandum of Law that the Superintendent's Motion should not be condoned and that the Superintendent "is presumably wasting estate assets to avoid a proper inquiry into malfeasance by his predecessors and agents,continuing a disturbing pattern."

ELNY Class Action

In their class action Complaint, the named ELNY shortfall payees and their attorneys assert causes of action against the Superintendent and his predecessors, in their personal capacity: 1) for breach of fiduciary duty and fraudulent concealment in not conducting the rehabilitation of ELNY in good faith; 2) for self-dealing; 3) for material misstatements; and 4) for fraudulently concealing and failing to disclose material information regarding ELNY’s financial status. See the ELNY Allegation Timeline for S2KM's re-configuration of selected allegations of malfeasance from the class action complaint.

Superintendent's Contempt Argument

In their Memoradum of Law supporting their Motion for Contempt, the Superintendent's attorneys argue:

• The ELNY class action lawsuit violates an injunction provision in the ELNY Liquidation Order signed by New York State Supreme Court Judge John M. Galasso on April 16, 2012; and
• "It is literally hornbook law that [a] violation of an injunction constitutes a contempt.'”

The ELNY Liquidation Order injunction: “enjoins and restrains [all persons] 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 [NYLB], 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.”

ELNY Shortfall Payees' Argument - In their Memorandum of Law Responding to the Motion for Contempt

The ELNY class action lawsuit does not violate the ELNY Liquidation Order injunction because:

• The ELNY payees' attorneys "tailored their Complaint specifically and conservatively to avoid any claim against ELNY or its assets and any claim properly precluded by the injunction or immunity provisions of the April 16th Order of this Court, acting within its subject matter jurisdiction."
• Their Federal class action lawsuit:
  • "[I]s not an in rem suit against the ELNY estate or its assets;
  • "[D]oes not concern how ELNY was run prior to being placed into rehabilitation or seek any damages payable from estate assets;
  • "[D]oes not affect or even seek to prevent the Court’s Order of Liquidation and Restructuring Agreement from proceeding;
  • "[D]oes not seek to hold the Receiver liable for any conduct of administering the business and assets of ELNY while acting in good faith with appropriate care in compliance with the Court’s prior Order of Rehabilitation."

The Superintendent's Motion for a Contempt Order should be denied because:

• The ELNY class action lawsuit is outside the scope of the ELNY liquidation.
• The ELNY liquidation court's subject matter jurisdiction is limited to administration of the ELNY estate.
• The ELNY Liquidation Order's injunction provision cannot be broader than the scope of judicial immunity.
• The injunction provision should be interpreted and enforced consistent with the purpose and provisions of New York insurance law Article 74.
• The claims made in the ELNY class action lawsuit seek to hold the Superintendent and his agents liable in their personal capacities for bad faith conduct.
• The ELNY liquidation court should not hold the plaintiffs in the class action lawsuit or their attorneys in civil contempt.
• The injunction does not clearly and unequivocally bar suits against the Superintendent in his personal capacity.
• Positions taken by the ELNY shortfall payees in the ELNY appeal are not admissions, but rather the proper way to protect their rights.

ELNY Appeal

The ELNY Order's injunction, and its related grant of immunity, are simultaneously being contested in an ELNY appeal filed May 30, 2012 with the Appellate Division of the Supreme Court of the State of New York, Second Department. Oral arguments for the ELNY appeal occurred November 15, 2012 but no decision has been announced. This S2KM blog post summarizes the injunction arguments in the Superintendent's appellate brief and the ELNY shortfall payees' appellate reply brief.

Continuing ELNY Coverage

For S2KM's complete and continuing coverage of the ELNY liquidation and related lawsuits, see the structured settlement wiki.