Rehabilitation proceeding under Chapter 81 of the Insurance Code; MCL 500.8106(1) & (3); Motion for specific performance of a stock purchase agreement (SPA); Contractual right to terminate the SPA; The Ingham Circuit Court’s exclusive subject-matter jurisdiction over the supervision & rehabilitation of insurers; MCL 500.8104(3) & (4); The power of the Director (or rehabilitator) of the Michigan Department of Insurance & Financial Services (DIFS) to act on its own; MCL 500.8121(1)(g) & (s); MCL 500.8114(2); MCL 500.8113(1); Ripeness of constitutional issues

The court held that the trial court erred as a matter of law in ruling that petitioner-DIFS Director (the director or rehabilitator) could stand in the shoes of appellant-GBIG Holdings and force a sale in this rehabilitation proceeding under Insurance Code Chapter 81. It further erred in failing “to determine under MCL 500.8104(4) whether substantial justice required a New York court to decide matters concerning the effectiveness of GBIG’s notice of termination and questions” about breach of the SPA incorporated into the rehabilitation plan. Thus, the court reversed the trial court’s grant of specific performance of the SPA, and remanded for it to resolve the jurisdictional issue. By consent, the director initiated the court-supervised rehabilitation proceeding over respondent-Pavonia to separate and disassociate it from “financially-troubled North Carolina insurer affiliates, and the legal and financial issues generated by the actions of its ‘upstream owner’” and his holding company, GBIG. The rehabilitation plan incorporated the SPA, under which GBIG agreed to sell its stock in Pavonia to appellee-Aspida Holdco. GBIG appealed the trial court’s order granting Aspida’s motions for specific performance of the SPA and moving up the closing date. It asserted that it contracted in the SPA to have certain issues “addressed by the courts of New York and that the trial court usurped the jurisdiction of these courts.” Pursuant to MCL 500.8104(3), the trial court (the Ingham Circuit Court) has “exclusive subject-matter jurisdiction over the supervision and rehabilitation of insurers.” MCL 500.8104(4) provides that if it finds on a party’s motion “that any action should as a matter of substantial justice be tried in a forum outside this state, the court may enter an appropriate order to stay further proceedings on the action in this state.” The plain language of this statute “leaves it to the trial court to make the determination in the first instance regarding whether substantial justice requires another court to decide a matter in the midst of rehabilitation proceedings. The trial court did not make this ‘substantial justice’ determination.” Further, under the circumstances, “the rehabilitator did not have the authority to sell the Pavonia shares on its own.” Holding otherwise would essentially “nullify the SPA, which was entered into by GBIG and Aspida, not by the rehabilitator and Aspida.”