Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05214/USCOURTS-cand-3_07-cv-05214-11/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

INSURANCE CORPORATION OF NEW

YORK,

Plaintiff,

 v.

H&H PLASTERING INC., CONCRETE

SHELL STRUCTURES, INC., and DOES

1 through 10, inclusive,

Defendants. /

No. C 07-5214 WHA

ORDER DENYING FURTHER

EXTENSION OF STAY

In this long-running insurance contract action, plaintiff Insurance Corporation of New

York seeks reformation of its insurance policies with claimants, and a declaration that it not be

held responsible for their legal defense in an underlying arbitration. In June 2009, plaintiff was

placed in rehabilitation proceedings in New York (where it is domiciled) due to its insolvency. 

On February 4, 2010, this action was stayed for 60 days pursuant to California Insurance Code

§ 1063.6. Plaintiff was subsequently placed in liquidation proceedings and the stay was

extended an additional 60 days. Now plaintiff moves to extend the stay for another 45 days. 

For the following reasons, the motion is DENIED.

California Insurance Code § 1063.6 states that California courts must automatically stay

any legal action in which an insolvent insurer is a party for 60 days after an order of

receivership with a finding of insolvency, and for 60 days after an order of liquidation is

entered. This stay may be extended “to permit proper defense or conduct” of the pending

Case 3:07-cv-05214-WHA Document 101 Filed 06/04/10 Page 1 of 2
United States District Court

For the Northern District of California

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action, but there is no requirement that such an extension be granted. See Superior Dispatch,

Inc. v. Insurance Corp. of New York, 2010 WL 187957 (Cal. App. 2 Dist., Jan. 21, 2010). 

Plaintiff has not shown good cause for another extension of the stay in this action.

Pursuant to California Insurance Code § 1064.10, “[t]he domiciliary receiver of an

insurer domiciled in a reciprocal state may sue in this state to recover any assets of that insurer

to which he or she may be entitled under the laws of this state.” In other words, no further stay

is required because the Superintendent of Insurance of the State of New York acting as

plaintiff’s liquidator is explicitly empowered to pursue this action on plaintiff’s behalf. 

Moreover, plaintiff was slow to assert any right to a stay in this matter. Plaintiff was put

in rehabilitation proceedings in June 2009 but did not apply for any stay until seven months

later, just one week before the final pretrial conference. The claimants (via the arbitration) have

been trying to collect on the insurance policy since 2004 and plaintiff, through the rehabilitator,

is using the New York proceeding as a vehicle to deny that claim. 

The final pretrial conference in this matter is scheduled for June 21, 2010, at 2:00 p.m. 

The trial scheduled for July 26, 2010, at 7:30 a.m. Plaintiff has been ordered to notify the Court

in writing by June 7, 2010, whether it intends to abandon this action. Plaintiff’s counsel has

submitted a sworn declaration stating that plaintiff is still deciding whether to do so (Fama

Decl. at 3). Nonetheless, no further extensions shall be granted and plaintiff’s motion is

DENIED.

IT IS SO ORDERED.

Dated: June 4, 2010. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-05214-WHA Document 101 Filed 06/04/10 Page 2 of 2