American Ins. Ass'n v. Chu
| Citation | 487 N.Y.S.2d 311,476 N.E.2d 637,64 N.Y.2d 379 |
| Parties | , 476 N.E.2d 637 AMERICAN INSURANCE ASSOCIATION et al., Appellants, v. Roderick CHU, as Commissioner of Taxation and Finance of the State of New York, et al., Respondents. |
| Decision Date | 21 February 1985 |
| Court | New York Court of Appeals |
The "justiciable controversy" upon which a declaratory judgment may be rendered requires not only that the plaintiffs in such an action have an interest sufficient to constitute standing to maintain the action but also that the controversy involve present, rather than hypothetical, contingent or remote, prejudice to plaintiffs. Because the controversies involved in the present action are not ripe for determination, the order of the Appellate Division should be modified by striking the declaration and dismissing the complaint and, as so modified, should be affirmed, without costs.
The purpose of the present action is to obtain judgment declaring unconstitutional section 92 of chapter 55 of the Laws of 1982, insofar as it directs transfer into the State's general fund of $50 million from the Aggregate Trust Fund (ATF), $67 million from the Stock Workers' Compensation Security Fund (SWCF) and $87 million from the Property and Liability Insurance Security Fund (PLIS) and enjoining such transfers or requiring return of the funds if transferred. The ATF, established by Workers' Compensation Law § 27, is a fund into which an employer or compensation carrier may (in some cases must) pay the present value of future periodic benefits payable to compensation claimants and be thereby discharged from further liability to the claimant. Workers' Compensation Law § 27(6) provides that the fund "shall be kept separate and apart from all other moneys of the state fund". The SWCF, established by article 6-A of the Workers' Compensation Law, was created to protect those entitled to compensation benefits against the insolvency of a stock insurer. It is funded by payments from stock carriers, which are, however, suspended once the fund reaches $84 million (Workers' Compensation Law § 109). The PLIS, created by Insurance Law § 334, serves a similar function with respect to specified types of property and liability insurers, is funded by payments from such carriers, and contains a similar provision suspending carrier payments. As to both the SWCF and the PLIS, the governing statute directs that the fund "shall be separate and apart from any other fund so created and from all other state moneys, and the faith and credit of the state of New York is pledged for its safekeeping" (Workers' Compensation Law § 109-b[1]: Insurance Law § 333[6] ).
Sections 84, 88 and 90 of chapter 55 make "dry appropriations" to each of the three funds equal to or greater than the amount transferred under section 92 and provide in each case that the appropriation thus made "shall be deemed an asset" of the fund and that the transfer from the fund to the State's general fund shall be deemed a prudent investment. The "dry appropriation" requires inclusion in each year's budget bill for the next fiscal year of an amount equal to the amount transferred by each fund to the State's general fund and provides that if in any year the Governor fails to do so or the Legislature fails to appropriate the specified amount, the amount appropriated for the preceding fiscal year be paid forthwith to the fund. Section 93 of the act requires that any action relative to the foregoing be brought against the State and holds harmless every State officer, as well as persons employed by or who advise such an officer, from liability by reason of the transfers directed or actions mandated by other provisions of the act. Chapter 404 of the Laws of 1982 made the necessary appropriations to each of the three funds for 1982, but provided as to the SWCF and PLIS that no expenditure be made from the appropriation if other assets of the fund are available, and as to the ATF that no expenditure be made if other assets not part of reserves for claims or losses are available.
The plaintiffs are three trade associations of insurance companies, 13 property and casualty insurers, two policyholders of such insurers, and three beneficiaries of the ATF. The defendants are the Commissioner of Taxation and Finance, custodian of the PLIS and SWCF, the Superintendent of Insurance, who is charged with administering those two funds, and the Commissioners of the State Insurance Fund (SIF), who are custodians of and charged with administration of the ATF. The SIF Commissioners served an answer containing a cross claim asking that the court declare whether chapter 55 as it relates to the ATF is constitutional. The other two defendants served a separate answer alleging a number of affirmative defenses, including that the complaint lacked specificity as to the nature and extent of plaintiffs' injury.
Plaintiffs moved for summary judgment and defendants other than the SIF Commissioners cross-moved for like relief. The papers on the cross...
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