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SIGNAL CAPITAL CORP. v. EASTERN MARINE MGMT.

September 15, 1995

SIGNAL CAPITAL CORPORATION, Plaintiff, against EASTERN MARINE MANAGEMENT, INC., GLOBAL INSURANCE COMPANY, S.A., WINDWARD INTERNATIONAL, INC. and JOSEPH CACICI, Defendants.

SONIA SOTOMAYOR, U.S.D.J.


The opinion of the court was delivered by: SONIA SOTOMAYOR

SONIA SOTOMAYOR, U.S.D.J.

 Plaintiff moves for an order pursuant to N.Y. Ins. L. § 1213 ("§ 1213") to strike the Answer of defendant Global Insurance Company, S.A. ("Global") and enter a default judgment for Global's failure to comply with § 1213, or, in the alternative, to require the posting of a bond by Global. For the reasons set forth herein, the motion to secure a bond is GRANTED.

 Background

 This case arises from the sinking of the ocean-going barge Morris J. Berman off the coast of Puerto Rico on or about January 15, 1994. The barge's owner, New England Marine Services, Inc., is bankrupt and plaintiff Signal Capital Corporation ("Signal"), as mortgagee of the barge, was an additional assured of the hull policy covering the barge. The policy was purportedly issued by Global though an underwriter, Eastern Marine Management, Inc. ("Eastern Marine"). Defendant Windward International, Inc. ("Windward") purportedly acted as broker in the transaction. Joseph Cacici is an officer of Windward. All defendants have appeared and interposed Answers. The central issue in the underlying case is whether the barge owner operated the Morris J. Berman knowing it was unseaworthy, thus voiding the contract of insurance.

 Signal now moves, however, to strike Global's Answer and enter a default judgment against Global based on § 1213. Section 1213 requires, in relevant part:

 
(c)(1) Before any unauthorized foreign or alien insurer files any pleading in any proceeding against it, it shall either:
 
(A) deposit with the clerk of the court in which the proceeding is pending, cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure payment of any final judgment which may be rendered in any proceeding. . . ; or
 
(B) procure a license to do an insurance business in this state. . . .
 
(e) This section shall not apply to any proceeding against any unauthorized foreign or alien insurer arising out of any contract of insurance effectuated in accordance with subsection (b) or (c) of section two thousand one hundred seventeen of this chapter . . . .

 Global, which admits its alien status, claims exception under § 2117(b)(3), which provides that alien issuers of marine insurance contracts to New York residents can be excluded from § 1213's bond requirement if they are issuers of

 
marine insurance of the following kind or kinds, where it is reasonable to do so with due regard to the interests of all concerned and whether or not, at the time of such negotiation, the subject matter of such insurance is within or without the state. (emphasis added)

 One of the kinds of marine insurance listed in § 1312(b)(3) is the type of policy at issue here. My inquiry, thus, focuses on whether issuance of the policy at issue here was "reasonable" with "due regard to the interests of all concerned." ...


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