562 B.R. 55
Bankr. S.D.N.Y.2017Background
- Plaintiffs (MFGH as Plan Administrator and MFGAA) sued Bermuda-based insurers in the SDNY adversary proceeding seeking coverage under policies governed by New York law; the insurers moved to compel arbitration and filed other defenses in that proceeding.
- This Court issued a Temporary Restraining Order (TRO) enjoining the Bermuda Insurers from enforcing certain provisions of ex parte anti-suit injunctions issued by the Supreme Court of Bermuda (Nov. 8 and Dec. 22, 2016) that sought to force Plaintiffs to dismiss the SDNY adversary and to prevent U.S. litigation relating to the policy.
- After the TRO, the Bermuda Court entered December 22, 2016 Orders granting leave to amend and issuing interlocutory injunctions requiring Plaintiffs to dismiss the U.S. adversary within 28 days and limiting Plaintiffs’ ability to respond in SDNY.
- The SDNY Court found those Bermuda orders interfered with its jurisdiction and ability to adjudicate motions (including to compel arbitration) and set further briefing and a hearing on whether the Bar Order or the Barton doctrine barred the Bermuda actions.
- Plaintiffs sought a preliminary injunction under 11 U.S.C. § 105(a) to enjoin the Bermuda Insurers from enforcing the Bermuda Court’s injunctive provisions and from impeding the adversary; the Court extended the TRO and held a preliminary injunction hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bermuda Insurers’ Bermuda actions violated the SDNY Bar Order and/or Barton doctrine | Bermuda Insurers breached the Bar Order and Barton by initiating Bermuda proceedings against estate claims without leave, so the Bermuda actions are barred | Bermuda Insurers contend the Bar Order does not prohibit their Bermuda filing and Barton is inapplicable; they assert Bermuda is a proper forum | Court found there are sufficiently serious questions on these merits to warrant preliminary relief and set further briefing/argument; did not finally decide merits but enjoined enforcement of Bermuda orders pending resolution |
| Whether the Bermuda Court’s December 22 injunctions improperly prevented Plaintiffs from litigating in SDNY | The Bermuda orders improperly restrained Plaintiffs from defending motions (e.g., to compel arbitration) and thus irreparably harmed Plaintiffs’ ability to proceed in chosen forum | Bermuda Insurers argue comity and arbitration policy favor Bermuda proceedings and anti-suit relief; arbitration clause should be enforced | Court held Bermuda orders unduly interfered with its jurisdiction and adversarial process and granted preliminary injunction restraining enforcement of those injunctive provisions |
| Whether Plaintiffs face irreparable harm absent injunction | Plaintiffs: inability to respond or participate in SDNY adversary, incur expense, and lose chosen forum constitutes irreparable harm | Insurers: no irreparable harm because arbitration is available and Plaintiffs knew arbitration was invoked; alleged harm to insurers’ contractual arbitration rights | Court held Plaintiffs demonstrated irreparable harm sufficient for preliminary injunction |
| Balance of equities and public interest in granting injunctive relief | Plaintiffs: equities and public policy favor protecting court’s jurisdiction and fair adversarial process | Insurers: equities favor enforcing arbitration agreements and comity with Bermuda court | Court held balance, including public-interest considerations, favors Plaintiffs; preliminary injunction warranted |
Key Cases Cited
- In re U.S. Lines, Inc., 197 F.3d 631 (2d Cir.) (framework for core/non-core analysis in bankruptcy arbitration disputes)
- Barton v. Barbour, 104 U.S. 126 (U.S. 1881) (establishes Barton doctrine requiring leave to sue officers/trustees appointed by a court for acts within official capacity)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (U.S. 2008) (standard for preliminary injunction requires likelihood of success, irreparable harm, balance of equities, and public interest)
- Am. Civil Liberties Union v. Clapper, 785 F.3d 787 (2d Cir. 2015) (articulates alternate preliminary injunction formulations used in the Second Circuit)
- Christian Louboutin S.A. v. Yves Saint Laurent Am. Holdings, Inc., 696 F.3d 206 (2d Cir.) (discusses preliminary injunction standard and ‘‘serious questions’’ alternative)