[Bankr. No. 94-13602; Adversary Nos. 94-1325 and 96-1410]
The opinion of the court was delivered by: Jerome B. Simandle, U.S. District Judge.
ON APPEAL FROM AN ORDER OF THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW JERSEY DATED JULY 6, 2001
This matter came before the Court upon the interlocutory appeal of Harleysville Mutual Insurance Company [Civ. No. 01-3211 (JBS)], subsequently joined by appellant Ohio Casualty Group [Civ. No. 01-3246 (JBS)], upon a controlling question of law defined in the Court's Order filed July 24, 2001, namely:
Whether, under New Jersey's law of primary jurisdiction, an administrative agency (here, the Department of Banking and Insurance) to which the trial court has previously entrusted a dispute for administrative determination of facts (here, whether the appellant carriers violated FAIRA in terminating the debtor's agency contracts), and which failed to take even preliminary action for one year upon the matter, can be held to have waived or relinquished its primary jurisdiction by such inaction so that the trial court may proceed to adjudicate the entire cause of action (here, the debtor's claim for the breach of the implied duty of good faith and fair dealing), such that a second referral of the matter to the agency is not required by the Gaydos decision of the New Jersey Supreme Court.
And the Court further having jurisdiction over the appeal of Ohio Casualty Group [Civ. No. 01-3246 (JBS)] appealing the Bankruptcy Court's Order of July 6, 2001, denying a stay of the bankruptcy trial in light of the decision of the Supreme Court of New Jersey in R. J. Gaydos Agency, Inc. v. National Consumer Insurance Co., 168 N.J. 255 (2001); and
The Court having considered the submissions, supplemental submissions, and oral arguments of counsel, and finding, for reasons stated in the Opinion of today's date, that the interlocutory question should be answered in the negative, and that this Court should stay the Bankruptcy Court's adversary proceeding upon the claim of debtor/appellee Professional insurance Management for defendants/appellants' breach of the implied duty of good faith and fair dealing under FAIRA, pending referral of that claim to the Commissioner of the Department of Banking and Insurance for adjudicative fact-finding consistent with Gaydos;
IT IS, this 30th day of November, 2001, hereby
ORDERED that the Order of the Bankruptcy Court filed July 6, 2001 is REVERSED and these appeals are REMANDED to the Bankruptcy Court; and
IT IS FURTHER ORDERED that, upon remand, the Bankruptcy Court's adversary proceeding with respect to debtor's claim of breach of implied duty of good faith and fair dealing shall be STAYED, and the Bankruptcy Court shall refer the parties to the Department of Banking and Insurance for a complete investigation and administrative determination of the issue whether Ohio Casualty and Harleysville violated FAIRA by terminating PIM's agency agreements, with the Bankruptcy Court retaining jurisdiction over the said adversary action pending completion of such administrative fact-finding;
IT IS FURTHER ORDERED that the parties and the Commissioner of Banking and Insurance shall cooperate to assure that all administrative fact- finding by the Commissioner is complete, and that any hearing has been concluded, within six (6) months of today's date, and that the Bankruptcy Court retains jurisdiction to assure compliance with this Order, including modifications thereof for good cause shown; and
IT IS FURTHER ORDERED that counsel for PIM, Ohio Casualty Group, and Harleysville Mutual Insurance Company shall furnish status reports to the Bankruptcy Court on the dates that are two months, four months, and six months from today's date, or such other procedure as the Bankruptcy Court may devise.