Moore v. Aegon Reinsurance Co. of America

• Decision Date: 24 February 1994
• Citation: 196 A.D.2d 250,608 N.Y.S.2d 166
• Parties: Ronnie C. MOORE, Commissioner of Insurance of the Commonwealth of Kentucky, etc., Plaintiff-Respondent, v. AEGON REINSURANCE COMPANY OF AMERICA, et al., Defendants, Instituto De Resseguros Do Brasil (IRB), Defendant-Appellant. Ronnie C. MOORE, Commissioner of Insurance of the Commonwealth of Kentucky, etc., Plaintiff-Respondent, v. AA MUTUAL INSURANCE ASSOC. LTD, et al., Defendants, Instituto De Resseguros Do Brasil (IRB), Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 166

608 N.Y.S.2d 166

196 A.D.2d 250

Ronnie C. MOORE, Commissioner of Insurance of the

Commonwealth of Kentucky, etc., Plaintiff-Respondent, v. AEGON REINSURANCE COMPANY OF AMERICA, et al., Defendants, Instituto De Resseguros Do Brasil (IRB), Defendant-Appellant.

Ronnie C. MOORE, Commissioner of Insurance of the

Commonwealth of Kentucky, etc., Plaintiff-Respondent, v. AA MUTUAL INSURANCE ASSOC. LTD, et al., Defendants, Instituto De Resseguros Do Brasil (IRB), Defendant-Appellant.

Supreme Court, Appellate Division First Department.

Feb. 24, 1994.

Howard R. Reiss, New York City, of counsel (Shatzkin & Reiss, attorneys) for defendant-appellant.

William F. Costigan, New York City, of counsel (W. Henry Jernigan, Jr., Lexington, KY, and John P. McConnell, New York City, with him on the brief, Jackson & Kelly, Lexington, KY, and Costigan & Berns, New York City, attorneys) for plaintiff-respondent.

Before SULLIVAN, J.P., and CARRO, ROSENBERGER, ROSS and ASCH, JJ.

ROSS, Justice.

The issue presented by these appeals is whether the defendant-appellant, Instituto De Resseguros Do Brasil (IRB), is required by New York State Insurance Law § 1213(c)(1) to post a pre-answer security. In a decision dated October 6, 1992, the IAS court consolidated two separate motions for determination and found, inter alia, that while the Foreign Sovereign Immunities Act of 1976 (FSIA; 28 U.S.C. § 1602 et seq.) renders foreign states and their agencies and instrumentalities immune from the pre-answer security requirement, IRB was not an instrumentality of the government of Brazil and was therefore required by Insurance Law § 1213(c)(1) to post a pre-answer security ¹. In the order appealed, entered February 8, 1993, the IAS court granted IRB's motions to renew the prior motions but adhered to its prior decision. We agree with the court at IAS that, as determined in a related federal matter involving identical parties and the identical issue (Moore v. National Distillers & Chemical Corporation, 143 F.R.D. 526 [SDNY], the Foreign Sovereign Immunities Act (FSIA) § 1609 (28 U.S.C. § 1609) renders foreign states and political subdivisions, agencies or instrumentalities of foreign states, immune from the pre-answer security requirement of Insurance Law § 1213(c)(1). However, we disagree with the trial court's determination that the aforesaid decision (143 F.R.D. 526) does not collaterally estop the Commissioner from raising the issue concerning whether or not IRB is an instrumentality of the Brazilian government in this action. Moreover, based upon our own review we find, in any event, that IRB is an instrumentality of the Brazilian government immune from the requirements of Insurance Law § 1213(c)(1) and dispose of these appeals accordingly.

Plaintiff, the Commissioner of Insurance of the Commonwealth of Kentucky (Commissioner), commenced two separate actions in this state, against IRB and various other retrocessionaire insurance companies ², in connection with the liquidation of Delta America Re Insurance Company (Delta). Delta is an insolvent reinsurance company chartered under the laws of Kentucky and authorized to do business in New York. The two actions commenced by the Commissioner in New York State were based upon alleged breaches by the defendant retrocessionaires of various retrocessional insurance contracts (called treaties) with Delta Re. The actions originally commenced by the Commissioner in United States District Court in Kentucky, which were then transferred to United States District Court for the Southern District of New York, were based on similar breaches in other retrocessional insurance contracts between Delta and the same group of defendants including IRB. The plaintiff Commissioner moved in both state actions to, inter alia, strike the answers of several of the foreign defendant retrocessionaire companies based on their failure to post a pre-answer security pursuant to New York State Insurance Law § 1213(c)(1). In the above referenced federal action the issue arose in the procedural context of motions, by several of the foreign defendant retrocessionaires, to be relieved of the requirement that they post a pre-answer security pursuant to Insurance Law § 1213(c)(1) based on their status as instrumentalities of foreign states.

Insurance Law § 1213(c)(1)(A) requires any foreign or alien insurer not authorized to do business in New York either to obtain a license to conduct insurance business here or to post a security, "in an amount to be fixed by the court sufficient to secure payment of any final judgment which may be rendered" against such insurer, before said insurer may file any pleading in any proceeding against it.

Defendant-appellant IRB was the only insurer to appear in opposition to the motions in the New York State actions. IRB contended, inter alia, that as an instrumentality of the sovereign state of Brazil it was immune from the requirements of Insurance Law § 1213(c)(1) pursuant to the Foreign Sovereign Immunities Act § 1609 (28 U.S.C. § 1609). 28 U.S.C. § 1609 generally provides foreign states and agencies or instrumentalities of foreign states with immunity from attachment, arrest and execution except as provided in 28 U.S.C. §§ 1610 and 1611. ³ The plaintiff Commissioner maintained that IRB was not an instrumentality of the Brazilian government entitled to the protection of the FSIA. In addition the Commissioner contended that even if IRB is to be considered an instrumentality of a foreign state, the McCarran-Ferguson Act (15 U.S.C. §§ 1011, 1012[b], which provides that the business of insurance is subject to the laws of the states and prohibits federal regulation thereof, preempts the FSIA with respect to Insurance Law § 1213(c)(1). The Commissioner also contended that so called "Service of Suit Clauses" in the retrocessional insurance contracts entered into by IRB contained waivers of the immunity IRB might claim pursuant to the FSIA.

The IAS court acknowledged the pendency of the above referenced federal action as well as the identity of the issues raised with respect to Insurance Law § 1213(c)(1). The trial court concluded that, inasmuch as the FSIA is a comprehensive statutory plan regulating a matter of legitimate national concern, the uniform federal law interpreting its terms should control (see, Flanagan v. Prudential-Bache Securities, Inc., 67 N.Y.2d 500, 505-506, 504 N.Y.S.2d 82, 495 N.E.2d 345, cert. denied, 479 U.S. 931, 107 S.Ct. 402, 93 L.Ed.2d 355 citing Alvez v. American Export Lines, Inc., 46 N.Y.2d 634, 639, 415 N.Y.S.2d 979, 389 N.E.2d 461 aff'd 446 U.S. 274, 100 S.Ct. 1673, 64 L.Ed.2d 284). Thus the IAS Court determined that it was bound by Federal Magistrate Kathleen A. Roberts' determinations in Moore v. National Distillers & Chemical Corporation, 143 F.R.D. 526, dated August 14, 1992 and entered August 18, 1992, that the posting of a pre-answer security is the equivalent of an "attachment" for the purposes of the FSIA and that the McCarran-Ferguson Act does not preempt the FSIA and that consequently, the FSIA prohibits the imposition of the Insurance Law § 1213(c)(1) pre-answer security requirement on foreign states and their agencies.

The IAS court in its October 6, 1992 decision concluded that the District Court failed to make any determination concerning IRB's status under the FSIA because the plaintiff Commissioner failed to contest the issue in that action. Additionally, the IAS court concluded that the Commissioner's failure to contest IRB's foreign agency status in the federal action is not binding on the Commissioner in the state actions. In the order appealed, entered February 8, 1993, which determined IRB's motions to reargue and/or renew the motions disposed of in the October 6, 1992 decision, the court at IAS acknowledged that IRB brought to its attention for the first time on that motion, the fact that the Commissioner moved to reargue Magistrate Roberts' determination in the federal action and raised the issue of IRB's status as an instrumentality of the Brazilian government. The IAS court noted that Magistrate Roberts denied the motion to reargue "for substantially the reasons set forth in the 'Memorandum of Law in Opposition to Plaintiff's Motion to Reargue' submitted by IRB".

The IAS Court stated however, that it did not believe that either of the decisions rendered by the federal magistrate, which it viewed as federal "interlocutory orders" not subject to appeal, served to collaterally estop the plaintiff from disputing IRB's status, even if the Commissioner's submissions on reargument amounted to a full and fair opportunity to litigate the matter. The IAS Court's determination was based on its conclusion that federal law, which delineates the scope given to a federal determination, requires that for the purposes of either collateral estoppel or res judicata the issue must be raised, litigated and actually decided by a judgment. The IAS court acknowledged that under New York Law, an order deciding a motion may provide a basis for collateral estoppel (see, Vavolizza v. Krieger, 33 N.Y.2d 351, 356, 352 N.Y.S.2d 919, 308 N.E.2d 439). However, the IAS Court cited Interconnect Planning Corporation v. Feil, 774 F.2d 1132, 1135-1136 and concluded that federal law requires that the "judgment" must be final and that an interlocutory order is not entitled to conclusive effect. Consequently, in the February 8, 1993 order the court granted renewal and adhered to its prior determination.

Under New York law, collateral estoppel is based upon the general principle that a party, or one in privity with a party, should not be permitted to relitigate an issue decided against it (D'Arata v. New York Cent. Mutual Fire Ins., 76 N.Y.2d 659, 664, 563 N.Y.S.2d 24, 564 N.E.2d 634). The party seeking the benefit of collateral estoppel must prove that the identical issue was necessarily decided in the prior action and is decisive in the present action. The party to...