This matter is before the court on motion of defendant Summit Insurance Company of New York (SICONY), a New York corporation currently in liquidation, seeking an order staying or abating the proceedings in a number of consolidated cases pending in Camden County arising out of the construction of the "Mansions" housing project in Pine Hill. The motion was filed pursuant to R. 1:6-2. However, defendant Housing Finance Agency of the State of New Jersey (HFA), requested oral argument pursuant to R. 1:6-2 and filed papers in opposition to SICONY's motion. Plaintiff Quikset Frame Corp. filed a brief in opposition to the stay, but did not request oral argument. No other party to the litigation filed a brief or requested oral argument pursuant to R. 1:6-2.
Subsequent to the filing of the above motion, but prior to oral argument, HFA obtained an order to show cause, returnable November 29, 1976, requiring SICONY, among other things, to show cause why it should not be enjoined and restrained from prosecuting or assisting in the prosecution
of liquidation proceedings in the State of New York insofar as it sought relief against the HFA and a resolution of the controversy between HFA and SICONY in the New York proceeding.
A review of the pleadings and documents in the instant matter reveals the following:
On or about December 21, 1973 HFA granted a mortgage of $7,110,000.00 to Pine Hill Mansions Ltd. for the completion of "Mansions" project. Pursuant to state law the HFA demanded payment and performance bonds of the general contractor, which was defendant Alkon Industries, Inc. These bonds were issued on behalf of SICONY in May 1974 by defendant Daniel J. Culnen, t/a the C. & H. Agency. The agency relationship between C. & H. and SICONY and the validity of the bonds is the subject of a dispute not pertinent to the instant motion. In December 1974 the financial status of Alkon Industries was critical and it informed HFA of its inability to complete the "Mansions" project, whereupon HFA served a notice of default upon SICONY which denied liability in January 1975. On January 25, 1975 Alkon Industries filed a petition in bankruptcy on its own behalf and on April 2, 1975 on behalf of Pine Hill Mansions, Ltd. On February 4, 1975 the New York Department of Insurance began an attempt to rehabilitate SICONY, which was a New York Corporation, and on May 28, 1975, SICONY was dissolved by order of the New York Supreme Court. This order provided, among other things, that
Commencing in January 1975 four separate suits were instituted in New Jersey arising from the "Mansions" project: Zullo Lumber v. King Construction, et al. , (L-17219-74, Camden County, filed January 16, 1975); Red Lion Contracting Co. v. Alkon Industries, Inc. et al. (L-24451-74, Camden County, filed March 10, 1975); Excel Wood Products Co., Inc. v. Alkon Industries, Inc., et al. , (L-24992-74, Ocean County, filed March 12, 1975) and Quikset Frame Corp. v. Summit Ins. Co. of New York (L-27325-74, Essex County, filed March 31, 1975). By correspondence dated June 11, 1975, notice of the New York liquidation proceeding was sent to all counsel. On February 27, 1976 an order was entered consolidating the above four cases and laying venue in Camden County pursuant to R. 4:38-1.
On October 20, 1976 the Superintendent of Insurance of the State of New York obtained an order to show cause returnable November 1, 1976 requiring the various "Mansions" project claimants to show cause why their claims
against SICONY should not be disallowed, and further ordering that
Shortly thereafter, on October 25, 1976, the HFA obtained the aforementioned order to show cause which was heard, together with SICONY's motion for abatement or a stay by this court on November 29, 1976.
In support of its application for a stay or abatement SICONY relies upon the provisions of the Uniform Insurer's Liquidation Act (herein, uniform act), which has been adopted by both New Jersey (N.J.S.A. 17B:32-1 et seq.) and New York (New York Insurance Law, § 517 et seq.). Basically, SICONY argues that the provisions of the uniform act require that all New Jersey claimants present their claims before the New York Supreme Court and that by operation of the uniform act the claimants are bound by the restraints imposed by the October 20, 1976 order of the New ...