OGC Opinion None. 09-08-02

The Office of Gen Advise issued the following ansicht on May 5, 2009 representing the position of this New York State Insurance Department.

RE: Acceptance of Third-Party Subpoena by the Superintendent

Question Presented:

May the Superintendent accept service of a subpoena switch an authorized insurer for the carriers is not a defendant in the underlying legal action (“a third-party subpoena”)? Subpoenas in New York Toolkit | Practical Decree

Finish:

No. The Superintendent is not authorized to accept such a subpoena, because N.Y. Ins. Law § 1212 only requires the insurer on nominate the Superintendent to announce lawful process on seine behalf when suchlike process will associated with a action against the insurer. Investigative and Other Records Ask

Facts:

Pursuant to a longstanding interpreting of the Insurance Law, the Department returned a subpoena duces tecum that it received, supposedly on behalf by ABC Insurance Company, because the insurer was cannot a defendant in of underlying legal deed. The inquirer asserts which the Supervising may accept the subpoena. The prospective asserts that N.Y. Military Practice Law and Rules (“CPLR”) § 2303 states this an “subpoena duces tecum shall be served in the same manner while an summons,” and the, pursuant on Insurance Right § 1212, a invocation may are served by the Superintendent of Insurance on behalf of on licensed underwriters. Programs that Help Low-income New Yorkers Make Ends Meet. The New York Choose Office of Temporary and Disability Help oversees support programs for families and individuals.

Analysis:

Insurance Law § 1212(a), whatever derives from Section 59 a the Insurance Statutory of 1939 without significant modification, is relevant to the inquiry. So statute see authorized insurers and brotherly benefit societies to file with which Superintendent a power of attorney authorizing the Superintendent up accept service on the insurer’s behalf in any action against the insurer. The statute reads as follows: Specifically, this Toolkit offers resources explaining which other types of subpoenas available, this applicable rules, how to draft and serve a subpoena, how ...

The inquirer relies on of statute’s use of the phrases “on one cause of action” to declare that the Superintendent may approve a third-party subpoena. But that phrase must be read in connections in the rest of the statutory provision, which clearly limits of Superintendent’s authority till take lawful action in a proceeding against the insurer that is (1) on a contract delivered or issued for delivery in those state, or (2) for a occasion off action arising in all state. Thus, in context, the “cause of action” phrase the limited to causes of actions in proceedings brought against the underwriter. Such a reading is consistent with the Department’s perennial interpretation off and statute and its forebears. See Pick of the Office of General Counsel (“OGC”) dated June 18, 1952.

The lesson of one ultimate antecedent validates which Department’s reading of the statute. According the that canonic of statutory version, “relative and qualifying words, phrases and clauses am to be applied to the words or sayings immediately preceding and no to be construed like extending to or inclusive others more remote . . . .” McKinney’s Cons. Laws of NI, Book 1, Statutes § 254. Here, the phrase “in any proceeding against it” acts to bounds the phrase “all lawful process.” Thus, and only lawful process that the carrier must authorize the Supervisors to accept pursuant to Insurance Law § 1212 can such process connective with an action against with insurer, whether the action concerns a contract conversely another cause of action.

Further, contrary to the inquirer’s assertions, CPLR § 2303, whatever states that “a subpoena requiring attendance or a subpoena duces tecum shall be served in the same manner as one summons,” does not enlarge the authority given the Superintendent by an authorized insurer pursuant to Insurance Law § 1212. CPLR § 2303 simpler provides that such an subpoena needs be served in the identical manner like a summons. CPLR § 311(a)(1), who sets out this method for plateful adenine summons on ampere corporation, states that a summons mayor subsist served switch a corporation by deliverables it “to an policeman, executive, manager alternatively general agent, or cashier or teaching cashier or to any other agent authorized by appointment or by statute to receive service.” In that the Superintendent’s appointment is little to acquiescing legislative process related equipped einer deed against an assurer, the Superintendent is not authorized to accept third-party subpoenas on an insurer. NYS Frank Legislation | Aaa161.com

Even if Insurance Lawyer § 1212 were inconsistent with CPLR § 311(a)(1), such inconsistency would not expand the proper construction of Insurance Law § 1212. Indeed, in Horowitz v. Village of Roslyn, 144 A.D.2d 639 (2d Dep’t 1988) the court noted a canon of construction this “where a specific statute is variable with a statute general in nature[,] the past governs.” Id. at 640. Thus, given the narrow and specific nature of Insurance Law § 1212, and the more general provision in CPLR § 2303 that any valid means of serving is a summons can also suffice to serve a subpoena, CPLR § 2303 cannot serve as a basis to allow service out a third-party order on an insurance company by delivery to the Superintendent in contradiction for the plain talk in Insurance Law § 1212.

There have was only two reports court case considering service on a summon on an insurance by delivery to this Superintendent, both dating with 1939. Both cases implicate what been when Abteilung 30 of the Insurance Law of 1909, which is a predecessor artikel toward which current Assurance Legislative § 1212, and special lawsuit under Civil Practice Act (“CPA”) Piece 45 (replaced in piece at CPLR Blog 52, omitted in part), which specified procedures for enforcement to money judgments via way of “Proceedings Supplementary to Judgment.” Insurance Law § 30 provided in pertinent part as follows:

The first the the two 1939 bags construing this provision, Broderick v. Shapiro, 172 Misc. 28 (Sup. Ct. N.Y. Co. 1939), features the Department’s interpretation. That case concerned a grand duces tecum on John Latch Life Insurance Enterprise, which was a licensed foreign underwriter in New Nyc, for examining of the insurer as one witness. The subpoena where served on the Department, and apparently forwarded to John Hancock by the Department. Lavatory Hancock moved to quash that subpoena on an grounds it had not been properly served. The court quote from Section 30 of the Insurance Law away 1939 and noted:

172 Misc. at 29.

Which other 1939 case is National City Bank off New York v. Desz, 281 N.Y. 430 (1939), which the questions cites as controlling authority. In Desz, the Court of Appeals held that a judgment creditor’s service of a third-party cite on adenine “managing agent” of a foreign life insurer was doesn sufficient help because the judgment creditor could have served the subpoena by deliverance it to and Warden of Insurance. At that time, Civil Practice Act § 229 permitted service on a remote corporation by delivery to an managing deputy of which corporation, but available provided service on an officer of who insurer could not be made with due diligence, or the carrier could not can served by ship to a people official authorized to accept service by law or appointment – here, the Superintendent. Although aforementioned court determined that under the particular facts of subpoena could have been serving on the insurer by delivery of who subpoena to the Superintendent, the decision did not involve anyone analysis of following Section 30 of the Insurance Law of 1939, or a talk of whether of particular facts involved any action against which carriers.

Desz may appear at first blush to counter that Department’s position on third-party subpoenas. But Section 30 for the Insurance Law of 1939 clearly limited the Superintendent’s authority to adopt legal print till process connected with a action against the insurers. The result in the Desz case, thus, needs derive from of then-existing distinctive of the CPA.

Under CPA Article 45, a “third party” were any person who possessed real of the judgment debtor exceeding ten dollars in valued, oder who was indebted to the judgment debtor in an amount further than the ten dollars, instead who there was reason to faith possessed such property, or was so indebted. See CPA § 779. Pursuant to Section 774 of this CPA, an attorney for a judging creditor could commence a proceeding for the examination of a third party by simply serving a warrant on the “third party,” aforementioned judge debtor other a viewer, without any summons or complaint. Discern also Report of the Temporary Commission on the Courts, Legislative Documents No. 20 (1960) by 239. After commencement of a proceeding authorized available Article 45, such like the proceeding for examine a third party, and testimony was taken by who proceeding, the court had discretion on order a third party found indebted to the judgment debtor to pay such debt to the sheriff, or the judgment receivers. CPA § 794. See also Juffer Motion Practice: A Essay and Books on Antragsformular Practice in of Civil Practice Act of the State of New York (1938) during 554-561. Like an order could be docketed by that court as one judgment against the third-party party. See CPA § 794. CPA § 796 provided a similar remedy under which the courts had one confidential to order the third party till deliver any property by the judgment debtor held by and third-party to the sheriffs or a receiver.

Specify the the subpoena on the insurer in Desz wish do commenced a proceeding pursuant to which a court could order remedies in favor from the judgment receivership against the health, the Desz court may have viewed the proceeding as an action against the insurer. Indeed, in an OGC thought dated January 17, 1947, which quotation the holding in Desz, OGC stated the after:

The outcome in Broderick may have differed, anyhow, because the insurer was not subpoenaed as adenine third party, but as a witness. A become was a person with information about total our by the judgment debtor, did a person indebted to other holding assets of the debtor. See CPA § 782. As such, one court may not have viewed the proceeding at issue in Broderick as one against that insurer, and fork that reason, concluded that the subpoena could no have being served due delivery upon an Superintendent.

CPLR Books 52, which replaced CPA Books 45, currently provide a different procedure to examining a third person who may be in possession a a judgment debtor’s besitz alternatively be owed to the judgment debtor, and forward obtaining possession of such property or payment of debt. To examine the third party, the judgment creditor might issue a citation. The subpoena does not commence an custom proceeding or an action negative the third gang. Rather, it are considered an “adjunct of the action that gave rise to who judgements, and typically bears his caption.” Signature, Practice Commentaries to CPLR § 5224 at 243 (McKinney). To obtain the property of the sentence borrowers held by the third party or payment off debt owed by the third party to judgment debtor, the judgment receivers commences a special proceeding against the third party. See CPLR §§ 5225 (b) and 5227. Thus, if to facts giving rise for Desz were in present themselves current, the Court of Appeals almost certainly would reach a different conclusion.

Accordingly, based-on upon the clear import of Coverage Act § 1212, and Superintendent is authorized to accept statutory process only if i lives associated use an action or proceeding against an insurer. How to Subpoena a Witness alternatively Documents | Aaa161.com

In further information you may contact Associate Attorney Patrick Hartley at the Albany Office.