time their automobile was repaired. During AMC's two years in business, it sold approximately 40,000 service contracts.
Responding to consumer complaints that AMC had denied valid claims by contract holders, unreasonably delayed repairs and failed to repair vehicles in a workmanlike manner, the state commenced a proceeding against AMC and an individual defendant named John Senise in the Supreme Court, New York County, alleging that AMC and Senise were selling insurance in contravention of New York Insurance Law §§ 1102 and 2117. Neu was not initially named as a defendant in the state court proceedings.
On or about January 14, 1986, the state Supreme Court determined that AMC's prepaid service contracts were insurance contracts but denied the state's motion for sanctions as well as its motion to add Neu as a defendant. On April 8, 1986, however, the Supreme Court issued an Order and Judgment which granted the state leave to amend its petition to include Neu as a defendant and, at the same time, held Neu and Senise liable for multiple violations of Insurance Law §§ 1102 and 2117, for which they and AMC were jointly and severally liable together with AMC for an amount in excess of $ 5,000,000.
On October 29, 1987, the Appellate Division reversed the Supreme Court's order as to the imposition of sanctions against Neu. People by Abrams v. American Motor Club, Inc., 133 A.D.2d 593, 520 N.Y.S.2d 383 (1st Dep't 1987). The court found that Neu had not received adequate notice of the state' allegations and accordingly had been deprived of an opportunity to oppose the imposition of sanctions. Id. at 385.
After further proceedings on remand, the Supreme Court found Neu liable for civil penalties under § 2117, issued a permanent injunction against his further aiding and abetting the unauthorized sale of insurance and set down for a hearing the issue of Neu's liability under Insurance Law § 1102.
The Appellate Division again reversed in part on April 9, 1992, holding that no questions of fact existed as to whether Neu violated Insurance Law § 1102. People by Abrams v. American Motor Club, Inc., 179 A.D.2d 277, 582 N.Y.S.2d 688 (1st Dep't 1992). The court wrote:
On the prior appeal we indicated Neu could be held personally liable for violating both Insurance Law § 2117 and § 1102. Given Neu's prior admissions in this proceeding, it is clear, from the record herein, that he was intimately involved in AMC operations between March 1985 and March 1987 and there is no need for . . . a hearing.