Notice of Stay

Notice of Stay (California)

Click here for a Word Version: Notice of Stay (Liquidation)

Cynthia Coulter Mulvihill, Esq. SBN 171909
Sheral A. Hyde, Esq. SBN 131452
LAW OFFICES OF CYNTHIA COULTER MULVIHILL, APC
150 South Los Robles, Sixth Floor
Pasadena, California 91101
(626) 584-3663 Fax (626) 584-3662
Cmulvihill@cmsynergy.com

Attorneys for Cross-Defendants and
Cross-Complainants, THE WALTON ASSOCIATED COMPANIES dba THE WALTON COMPANY

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES, CENTRAL DISTRICT

SHERMAN OAKS SENIOR CITIZEN HOUSING CORPORATION, et al.,

Plaintiffs,

THE WALTON ASSOCIATED COMPANIES, et al.,

Defendants.

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AND RELATED CROSS ACTIONS.

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CASE NO.: BC 228212

NOTICE OF AUTOMATIC STAY OF THIS ACTION PURSUANT TO INSURANCE CODE § 1063.6 AND CALIFORNIA RULES OF COURT RULE 225.

[DUE TO THE LIQUIDATION OF RELIANCE INSURANCE COMPANY ]

TO THE COURT AND TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE that on October 3, 2001, the Commonwealth Court of Pennsylvania declared that RELIANCE INSURANCE COMPANY is INSOLVENT, as that term is defined in 40 P.S. §§ 221.3, and as provided in 40 P.S. §§ 221.14(1) and 221.19. This Order supersedes the May 29, 2001 Order of Rehabilitation. A true and correct copy of the Petition and Order of Liquidation is attached hereto as Exhibit “1” and incorporated herein by reference.

The Pennsylvania Insurance Commissioner was appointed Liquidator “LIQUIDATOR” of RELIANCE INSURANCE COMPANY and was directed to immediately take possession of RELIANCE INSURANCE COMPANY’s property, business and affairs, and to liquidate Reliance in accordance with Article V of the Insurance Department Act of 1921, as amended (40 P.S. §§211 et seq.) and to take such action as the interest of the policy holders, creditors or the public may require. The LIQUIDATOR issued an order staying all litigation against RELIANCE INSURANCE COMPANY’S insureds for a period of 90 (ninety) days.

California Rules of Court Rule 225 provides in pertinent part:

“(d) [Filing notice of stay] This subdivision applies to cases stayed for the following reasons:

(1) Order of a federal court or a higher state court

. . .

(4) Automatic stay caused by a filing in another court.

The party that requested or caused the stay shall immediately file a notice of the stay and attach a copy of the order or other document staying the proceedings….”

In this action, defendant, cross-defendant and cross-complainant THE WALTON COMPANY was insured by RELIANCE INSURANCE COMPANY from June 26, 1996 to June 26, 1998 and as such is an insured of RELIANCE INSURANCE COMPANY affected by this Order. This Order is enforceable in California pursuant to California Insurance Code §1063.6 which provides in pertinent part:

“All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court in the state shall, subject to waiver by the association in specific cases involving covered claims and subject to waiver by the commissioner as to matters that are not covered claims, be stayed for 60 days from the date that an order of liquidation or an order of receivership with a finding of insolvency has been entered by a superior court in this state or by a court in the state of domicile of the insurer, and an additional time thereafter as may be determined necessary by the court to permit proper defense or conduct of all pending causes of action by the association or the commissioner, as applicable. The stay as to matters to which the insolvent insurer is a party shall be superseded by and when an injunction or stay order is entered by the court in this state having jurisdiction of the liquidation or the ancillary liquidation. [Emphasis added].

In addition, the Pennsylvania Court’s Order provides:

“With respect to suits and other proceedings in which Reliance is obligated to defend a party, pending outside the Commonwealth of Pennsylvania and in federal courts of the United States, this Order constitutes the request of this Court for comity in the imposition of a 90-day stay by such courts or tribunals, and that those courts afford this order deference by reason of this Court’s responsibility for and supervisory authority over the rehabilitation of Reliance, as vested in this Court by the Pennsylvania Legislature. The Liquidator is authorized to cooperate in assisting any guaranty association in any jurisdiction to enforce any stay of any action provided for in any relevant law of another state. Any person that fails to honor a stay ordered by this Court or violates any provision of this Order, where such a person has a claim against Reliance, shall have their claim subordinated to all other claims in the same class, with no payment being made with respect to such claim until all others in the same class have been paid in full, in addition to any other remedies available at law or in equity.” (Petition, paragraph 23., pages 10-11, Exhibit 1).

Under California statute, this matter must be stayed until December 3, 2001. As a matter of comity, this court should extend the stay until January 2, 2002.

/s/