IN THE SUPREME COURT OF THE STATE OF DELAWARE

PROTECTIVE LIFE INSURANCE COMPANY, PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY, WEST COAST LIFE INSURANCE COMPANY, and MONY LIFE INSURANCE COMPANY , Interested Parties Below , Appellants,

v.
THE HONORABLE TRINIDAD NAVARRO, Insurance Commissioner of the State of Delaware, in his capacity as Receiver for SCOTTISH RE (U.S.), INC. , Petitioner Below, Appellee. § § § No. 217, 2020 § § Court Below

— Court of Chancery § of the State of Delaware § § C.A. N o. 2019

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PROTECTIVE LIFE INSURANCE COMPANY, PROTECTIVE LIFE AND ANNUITY INSURANCE COMPANY, WEST COAST LIFE INSURANCE COMPANY, and MONY LIFE INSURANCE COMPANY , Interested Parties Below , Appellants, § § § No. 218, 2020 § § Court Below

— Court of Chancery § of the State of Delaware § § C

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v.
THE HONORABLE TRINIDAD NAVARRO, Insurance Commissioner of the State of Delaware, in his capacity as Receiver for SCOTTISH RE (U.S.), INC. , Petitioner Below, Appellee. § § § § § § § § § § § §

Submitted: July 27, 2020 Decided: S eptember 4 , 2020
Before SEITZ , Chief Justice; TRAYNOR and MONTGOMERY
- REEVES , Justices. ORDER
After consideration of the notices to show cause , the responses, the notice of interlocutory appeal , and the supplemental notice of interlocutory appeal, it appears
to the Court that: (1) The appellants, Protective Life Insurance Company, Protective Life and Annuity Insurance Company, West Coast Life Insurance Company, and MONY Life Insurance Company (collectively, “the Protective Entities”) , filed these appeals from a Court of Chancery order (“the Order”) dismissing their petition in the rehabilitation3

proceeding of Scottish R e (U.S.), Inc. 1 The events leading to these appeals are
described below. (2) Beginning in the 1970s , t he Protective Entities e ntered into or assumed reinsurance agreements under which Scottish Re reinsure d a portion of their life insurance policies. The Protective Entities also entered into agreements with third

p arty life insurers under which the Protective Entities coinsure d and administer ed
third

- party business reinsured with Scottish Re. In January 2018 , Scottish Re and
each of the Protective Entities entered into a global settlement resolving rate disputes
and other issues that had arisen between the parties (“Settlement Agreement”)

. The Settlement Agreement included an offset provision , which the Protective Entities

a rgue authorizes a group offsetting methodology to calculate offsets

. 2 (3) On March 6, 2019, the Court of Chancery entered a Rehabilitation and Injunction Order (“the Rehabilitation Order”) pursuant to the Delaware Uniform
Insurers Liquidation Act (“DUILA”), 18 Del. C. § 5901 et seq. The Rehabilitation Order placed Scottish Re i n rehabilitation, appointed the Honorable Trinidad
Na varro , Insurance Commissioner of the State of Delaware as Receiver for Scottish

1 In re Scottish Re (U.S.), Inc. , 2020 WL 2549288 (Del. Ch. May 19, 2020). 2 Under the group offsetting methodology, premium amounts owed by one Protective Entity are offset against reimbursed claims owed to a different Protective Entity. Id. at *1.4

Re (“the Receiver”) , and enjoined the ability of cedents like the Protective Entities to offset obligations owed to Scottish Re

. (4) On June 20, 2019, the Court of Chancery approved the Receiver’s p lan for addressing contractual offset rights during the rehabilitation proceeding (“the Offset Plan”). The Off set Plan provided that , in the event of a dispute concerning
offsets , the Receiver or offset claimant could file a petition with the Court of Chancery for a determination of the offset amount or other appropriate relief

. On July 10, 2019, the Court of Cha ncery approved a stipulation between the Receiver and Protective Entities under which the Receiver agreed to certain offsets, but objected to others. (5) On August 5, 2019, the Protective Entities filed a petition, which they amended on October 28, 2019 (“ the Petition”) , under the Offset Plan. In the Petition, the Protective Entities sought an order directing the Receiver to honor Scottish Re’s obligations under the Settlement Ag reement by allowing the Protective Entities to

use a group offsetting methodology for calculating offsets. On December 13, 2019,
the Receiver filed a motion to dismiss the Petition for failure to state a claim under Court of Chancery Rule 12(b)(6). (6) On May 19, 2020, the Court of Chancery dismissed the pe tition. First,
the Court of C hancery held that the Settlement Agreement did not create the mutuality required by 18 Del. C. § 5927 for offsets during rehabilitation or5

liquidation proceedings

. 3 S econd, the Court of Chancery concluded that the
Settlement Agreement did not satisfy the single integrated transaction requirement for recoupment

. 4 T hird, the Court of Chancery held that the Receiver was not obligated to accept or reject an executory contract before providing a final rehabilitation plan for appro val

. 5 (7) On Ju ne 30, 2020, 6 t he Protective Entities filed an application for certification of an interlocutory appeal. The Receiver took no position on the application. On July 20, 2020, the Court of Chancery denied the application for
certification. 7 (8) In denying the application for certification, the Court of Chancery
found that the Order decided three issues (described in ¶ 6) of material importance

. 8 As to the Rule 42(b)(iii) criteria, the Court of Chancery concluded that the three
issues were a matt er of first impression in Delaware (Rule 42(b)(iii)(A)). In addition,

3 Id. at * 3

- 4. 4 Id. at * 5. 5 Id. at * 5

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. 6 Under Supreme Court Rule 42, an application for certification of an interlocutory appeal must be filed within ten days of the entry of the interlocutory order and the notice of appeal must be filed in this Court within thirty days of the entry of the inte rlocutory order. Supr. Ct. 42(c)(i), (d)(i). Rule deadlines were extended under the judicial emergency declared by the Chief Justice in response to the COVID

- 19 pandemic. Administrative Order No. 7 ¶ 7 (Del. June 5, 2020) (extending deadlines that expir ed between March 23, 2020 and June 30, 2020 through July 1, 2020), available at https://courts.delaware.gov/rules/pdf/COVID

19AdminOrderNo7.pdf. 7 In re Scottish Re (U.S.), Inc. , 2020 WL 4048289 (Del. Ch. July 7, 2020). 8 Id. at *4.6

the first issue

— the mutuality required by § 5927 for offsets

— related to the construction or application of a statute that has not been settled by this Court (Rule 42(b)(iii)(C))

. 9 Considering the most efficient and just schedule for resolving the case, the Court of Chancery noted that it would soon be considering the Rec e iver’s proposed plan of rehabilitation

. 10 The Court of Chancery recognized the possibility that the plan confirma tion process could result in the parties settling their disputes (making appellate review unnecessary) as well as the possibility the Protective
Entities or other objectors might wish to appeal different aspects of the final rehabilitation plan. 11 Given the possibility of piecemeal appeals in a complex insurance receivership proceeding, the Court of Chancery conclude d that the balance of the likely benefits and probable costs of an interlocutory appeal was uncer tain and required denial of the application for certification. 12 (9) T he Protective Entities filed two appeals from the Order in this Court

— interlocutory Appeal No. 217, 2020 and Appeal No. 218, 2020. According to the
Protective E ntities, they filed two appeals from the same Order because there is limited guidance concerning whether the Order is interlocutory or final. T he Senior

9 Id. 10 Id. 11 Id. 12 Id. at *5.7

Court Clerk issued a notice directing the Protective Entities to show cause why Appeal No. 218, 2020 should not be dismissed as interlocutory. (10) In res ponse to the notice to show cause, the Protective Entities argue that the Order is final because the dismissal of the petition for failure to state a claim under Rule 12(b)(6) was similar to the dismissal of a complaint, which is generally appealable as a final judgment. Th e Protective E ntities acknowledge the conflicting case law in other jurisdictions regarding what constitutes an appealable final order
under statutes similar to D UILA, but r ely on language in the U.S. Supreme Court’s
recent decision in Ritzen Group, Inc. v. Jackson Masonry, LLC 13 to argue that the Order is final and appealable. In Ritzen , the U.S. Supreme Court recognized that “[o]rders in bankruptcy cases qualify as ‘final’ when they definitively dispose of discrete disputes within the overarching bankrup tcy case” and concluded that a bankruptcy court order conclusively denying a motion for relief from the automatic stay constitutes a final, appealable order. 14 (11) At the Court’s request, the Receiver filed a reply to the Protective
Entit i es’ response to the n otice to show cause. The Receiver argues that the Order does not have the characteristics of a final order because it does not finally determine
the Protective Entities’ right to recover. The Receiver distinguishes the cases

13 140 S.Ct. 582 (2020) 14 Id. at 586

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discussing statutory provisio ns similar to § 5902(e) that the Protective Entities relies
upon
. (12) We first address whether the Order is final. If the Order is final, then it is unnecessary to address interlocutory Appeal No. 217, 2020 and that appeal will
be dismissed. Under the DUILA, “[a]n appeal shall lie to the Supreme Court from an order granting or refusing rehabilitation, liquidation or conservation and from every order in delinquency proceedings having the character of a final order as to the particular portion of the proceedings embraced therein.” 15 (13) This Court has not addressed the meaning of an “order in delinquency proceedings having the character of a final order” under § 5902(e)

. 16 In other contexts, we ha ve held that an order constitutes a final judgment when “it leaves nothing for future determination or consideration .” 17 As the Protective Entities note,
the dismissal of a complaint is generally appealable as a final order. 18 (14) “Cases from other jurisdictions provide persuasive guidance about how

to interpret the Insurers Liquidation Act.” 19 The case law from other jurisdictions

15 18 Del. C. § 5902(e). 16 In Cohen v. State ex rel. Stewart , we concluded that it was unnecessary to address whether three orders, which imposed sanctions for violation of an injunction, were appealable under § 5902(e) because we found those orders appealable under the collateral order doctrine. No. 545, 2013, Or der ¶ 4 (Del. Nov. 12, 2013). 17 Showell Poultry, Inc. v. Delmarva Poultry Corp. , 146 A.2d 794, 796 (Del. 1958). 18 Braddock v. Zimmerman , 906 A.2d 776, 784 (Del. 2006). 19 Cohen v. State ex rel. Stewart , 89 A.3d 65, 93 (Del. 2014).9

addressing what constitutes a final order under statutes like § 5902(e) is limited and
somewhat conflicting

. 20 After considering those cases and the nature of the Order,

we co nclude that the Order does not have the characteristics of a final , appealable order under § 5902 (e)

. (15) T he process leading to a court

- approved rehabilitation plan remains ongoing. As the Court of Chancery noted in denying the application for certification of an interlocutory appeal, it is possible that the Protective Entities could recover on their unpaid claims as part of this process

. The Protective Entities may also raise the issues decided in the Order (as well as other issues) in an appe al of the Court of Chancery’s approval of a final rehabilitation plan. The Protective Entities’ suggestion that the Order is analogous to the denial of a motion for relief from the automatic stay under the federal Bankruptcy Code is unpersuasive. The Ord er, which involved the application of state law and determined offset rights that would also be addressed in the final rehabilitation plan , is not analogous to a bankruptcy

20 Compare In re Pac. Marine Ins. Co. of Alaska in Liquidation , 877 P.2d 264, 268 (Alaska 1994) (holding that no orders in a liquidation or receivership have the character of a final order until the receivership action is terminated or the trial court certifies the order under Rule 54(b) ) and PrimeHealth Corp. v. Ins. Comm’r of State , 758 A.2d 539, 547

- 48 (Md. Ct. Spec. App. 2000) (describing process that leads to approved rehabilitation plan as one proceeding and finding that order authorizing the Insurance Commissioner as reha bilitator to withdraw HMO’s demand for an administrative hearing was not a final, appealable order) with Fewell v. Pickens , 57 S.W.3d 144, 150

- 52 (A rk. 2001 ) (holding that trial court was not divested of subject matter jurisdiction to hear liquidation peti tion while an appeal was pending on the order appointing a receiver because the appeal provision of the Arkansas Uniform Insurers Liquidation Act contemplated that appeals would arise piecemeal )

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court ’s ruling on a stay

- relief motion , which the U.S. Supreme C o urt has described

as occurring apart from proceedings on the merits of creditors’ claims and apart from the adversary claims

- adjudication process that is typically governed by state law

. 21 We therefore conclude that the Order is interlocutory and that Appeal No. 218, 2020
must be dismissed. (16) Finally, we address whether interlocutory Appeal No. 21 7 , 2020 should be accepted

. Applications for interlocutory review are addressed to the sound
discretion of the Court. 22 In the exercise of our discretion and giving great weight to the Court of Chancery’s thoughtful analysis in denying the application for certification, this Court has concluded that the application for interlocutory review does not meet the strict standards for certification under Supreme Court Rule 42(b). The case is not exceptional, 23 and the potential benefits of interlocutory review do not outweigh the inefficiency, disruption, and probable costs caused by an interlocutory appeal. 24 We therefore refuse interlocutory Appeal No. 217, 2020

. NOW, THEREFORE, IT IS ORDERED that Appeal No. 218, 2020 is
DISMISSED and interlocutory Appeal No. 217, 2020 is REFUSED. The filing fee paid by the appellants shall be applied to any future appeal they file from an

21 Ritzen , 140 S. Ct. at 589.

22 Supr. Ct. R. 42(d)(v). 23 Supr. Ct. R. 42(b)(ii). 24 Supr. Ct. R. 42(b)(iii).11

interlocutory appeal that is certified by the Court of Chancery or a final order entered
in the case.

BY THE COURT: /s/ Tamika R. Montgomery

- Reeves

Justice