Opinion
C.A. No. 99C-11-263
Date Submitted: September 20, 2001
Date Decided: September 26, 2001
Upon Plaintiff's Motion To Stay Denied In Part, Granted In Part.
ORDER
On this 26th day of September 2001, upon consideration of Plaintiff's Motion to Stay filed by Reliance Insurance Company ("Reliance"), the Opposition filed by Plum Creek Timber Company, L.P., et al. ("Plum Creek"), oral argument heard by the Court on August 31, 2001, and supplemental briefs submitted by the parties, it appears to the Court that:
(1) On November 30, 1999, Reliance filed this action for declaratory judgment against Plum Creek. This action was instituted to determine what, if any, insurance coverage exists for insurance claims Plum Creek made to Reliance. Subsequent to the filing of this action, Reliance was placed into rehabilitation by the Pennsylvania Insurance Commissioner. On May 29, 2001, the Honorable James Gardner Colins in the Commonwealth Court of Pennsylvania entered a broad order directing all lawsuits involving Reliance to be stayed during the period of rehabilitation. Reliance now brings this Motion to Stay Proceedings before this Court.
(2) Reliance first argues that this litigation should be stayed as Pennsylvania qualifies as a "reciprocal state" under the Uniform Insurers' Liquidation Act ("UILA"). Thus, Reliance argues that this Court should follow the order from the Pennsylvania court and stay this litigation. Plum Creek counter argues that since Pennsylvania has not adopted the UILA the Pennsylvania court order should not be given reciprocity. In the alternative, Plum Creek argues that since Delaware law would not allow a stay of this litigation under the pending circumstances, force and effect should not be given to the Pennsylvania court order.
See 18 Del. C. § 5920.
(3) Delaware has adopted the UILA, which was created "to establish a uniform method for processing claims against, and distributing assets of, distressed insurance companies." It has a "policy of avoiding the dissipation of an insurer's assets by reason of its having to defend disparate litigations throughout the country." A "`[r]eciprocal state' means any state other than this State in which in substance and effect the provisions of the Uniform Insurers' Liquidation Act, as defined in §§ 5920 of this title, are in force, including the provisions requiring that the Commissioner of Insurance or equivalent insurance supervisory official be the receiver of a delinquent insurer." Under Delaware's UILA there is no provision allowing for a stay of this action under the present circumstances. Under Delaware's UILA, a stay of litigation is confined to actions for attachment, garnishment, or execution of a judgment.
Checker Motors Corp. v. Executive Life Ins. Co., Del. Ch., C.A. No. 12183, Jacobs, V.C. (Feb. 13, 1992).
Id.
18 Del. C. § 5901(2)-(13), 5902, 5903, 5913-5920
(4) Under Delaware's UILA, the Pennsylvania court order should not be followed. A stay of the proceedings as broad as the Pennsylvania order is not available under Delaware's UILA. Under Delaware's UILA, a stay is limited to actions for attachment, garnishment, or execution of a judgment. The Court notes that New York found Pennsylvania to be a reciprocal state; however, the facts of that case distinguish it from the case sub judice. In Twin City Bank, the suit was seeking to enforce a judgment, whereas here the suit is seeking only a declaratory judgment. Thus, in Twin City Bank, the New York court would have had the authority to grant a similar stay of the action if rehabilitation was instituted in their jurisdiction; thus, a finding that Pennsylvania was a reciprocal state was proper.
See 18 Del. C. § 5919.
Twin City Bank v. Mutual Fire Marine Inland Ins. Co., S.D.N.Y., 646 F. Supp. 1139, 1140 (1986).
(5) Reliance's argument that the principles of comity require a stay of litigation also fails. The principles of comity and the efficient administration of justice allow the Court discretion to exercise a stay of proceedings when a prior action is pending elsewhere, which will do "prompt and complete justice, involving the same parties and the same issues." The principles of comity avoid the following:
McWane Cast Iron Pipe Corporation v. McDowell-Welman Engineering, Del. Supr., 263 A.2d 281, 283 (1970).
. . . the wasteful duplication of time, effort and expense that occurs when judges, lawyers, parties and witnesses are simultaneously engaged in the adjudication of the same cause of action in two courts. Also to be avoided is the possibility of inconsistent and conflicting rulings and judgments and an unseemly race by each party to trial and judgment in the forum of its choice.
Id.
Reliance argues that since the purpose of Pennsylvania's statute is similar to Delaware's UILA, comity should apply. The similar Pennsylvania purpose is to "lessen the problems of interstate rehabilitation and liquidation by facilitating cooperation between states in the liquidation process, and by extending the scope of personal jurisdiction over debtors of the insurer outside this Commonwealth." Plum Creek counter argues that comity should not permit a stay of the proceedings, as this case has been ongoing for about a year and a half, discovery has been conducted, trial is rapidly approaching and prejudice will result if it is not allowed to reduce its claim to a judgment. The Court agrees with Plum Creek that the principles of comity should not allow a stay of these proceedings. Prejudice will result to Plum Creek in delaying this action. Trial is scheduled in January and discovery has already been taken, at this point there is no persuasive reason for granting a stay of proceedings under the principles of comity.
40 P.S. § 221.1(c).
(6) Reliance further argues that a stay of proceedings is appropriate because a stay could be issued by this Court pursuant to 18 Del. C. § 5904. Under that section, this Court has the authority to issue injunctions for the following reasons:
. . . as may be deemed necessary to prevent interference with the Commissioner or the proceeding or waste of the assets of the insurer or the commencement or prosecution of any actions or the obtaining of preferences, judgments, attachments or other liens or the making of any levy against the insurer or against its assets or any part thereof.
Plum Creek is correct in its assertion that this section is not part of the UILA; however, as it does not conflict with the UILA is remains as part of the Rehabilitation and Liquidation Chapter of the Delaware Code. This section does not persuade the Court to issue a stay of proceedings. This action is a declaratory judgment action whose current resolution will not waste the assets of the insurer nor does the Court believe that it will interfere with Reliance's rehabilitation. As this Court would not deem an injunction necessary under the current circumstances, a stay is not appropriate.
See generally 18 Del. C. § 5920.
For the aforementioned reasons, Reliance's Motion to Stay Proceedings is DENIED.
(7) It has come to the Court's attention that the company in charge of Reliance's rehabilitation lost its offices in the terrorist attacks on New York City. In light of this tragedy, a thirty (30) day stay of proceedings is hereby GRANTED.
IT IS SO ORDERED.