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Absent a Private Right of Action Expressly Granted by Statute, An Association Created by Statute Does Not Have the Capacity to Sue

The Second Department determined a nonprofit association created by statute (Insurance Law 2130), the Excess Line Association of New York (ELANY), did not have the capacity to sue based upon the defendants’ alleged failure to comply with the Insurance Law. Only the Superintendent of Insurance can enforce the Insurance Law.  Because the legislature did not provide ELANY with a statutory private right of action, the association did not have the capacity to bring the suit:

… ELANY both lacked capacity to commence this action and failed to state a cause of action. Capacity to sue “concerns a litigant’s power to appear and bring its grievance before the court” … . Entities created by statute “have neither an inherent nor a common-law right to sue. Rather, their right to sue, if it exists at all, must be derived from the relevant enabling legislation or some other concrete statutory predicate” … Such an entity ” has no power other than that given it by the Legislature, either explicitly or by necessary implication'” … .

ELANY was created by Insurance Law § 2130. The statute gives ELANY certain duties, mostly relating to receipt of records and preparation of reports, and provides that the services ELANY performs are to be funded by a stamping fee assessed for premium bearing documents submitted to it in accordance with Insurance Law § 2118 (see Insurance Law § 2130[a], [f]). Brokers’ records are to be open to examination by ELANY and the Superintendent of Insurance (now the Deputy for Insurance; hereinafter the Superintendent) (see Insurance Law § 2118[c]; Financial Services Law § 203). ELANY must perform its functions under the plan of operation established and approved by the Superintendent and “shall be supervised by the superintendent” (Insurance Law § 2130[a]; see Insurance Law § 2130[c]). The Superintendent may impose fines and may suspend or revoke an excess line broker’s license for noncompliance with the Insurance Law (see Insurance Law §§ 109, 2105[a]). Contrary to ELANY’s contention, none of the provisions of the statute confers upon it by necessary implication the capacity to sue to enforce the provisions of the Insurance Law. Rather, the broad enforcement powers of the Superintendent, the lack of enforcement powers granted to ELANY, and the requirement that ELANY function under the supervision of the Superintendent “negate[ ] any inference of a legislative intent to confer that power” … . Excess Line Assn. of N.Y. (ELANY) v Waldorf & Assoc., 2015 NY Slip Op 05637, 2nd Dept 7-1-15

 

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