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Appendix A to the Association's Class I Rules
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Procedures for Board Adjudication of Differences or Disputes

If a Member disagrees with the Manager’s decision regarding any difference or dispute with the Association and/or its agents under or related to the Member’s insurance contract or otherwise, the Member has the right to ask the Association’s Board of Directors to adjudicate such difference or dispute, provided the Member submits to the Manager a written Notice of Appeal addressed to the Board of Directors no later than sixty days after the date the Manager has provided its final decision to the Member.  (See Rule 1.4.48 a.) 

The Member shall promptly prosecute its appeal in accordance with the following procedures and any orders of the Board of Directors.  It is expected and required that the Member and Manager shall clearly and concisely state their respective positions and also fully comply with these procedures and all orders of the Board, including without limitation those regarding scheduling and production of documents relevant to the adjudication. 
The Member, as the party seeking modification of the Manager’s decision, has the burden of proving by a preponderance of credible evidence that it is entitled to such modification.

Adjudication Procedures

  1. The Member’s Notice of Appeal, which shall not exceed two pages, shall clearly and explicitly (a) identify each difference or dispute with the Manager’s decision, (b) state the specific relief it seeks from the Board, and (c) state the reasons why the Board should grant such relief, including identifying each provision of the insurance contract the Member deems relevant to its appeal.

  2. The Association’s Board of Directors meets four times each year, usually in the second week of March, June, September and November.

  3. After submitting its Notice of Appeal, the Member shall promptly ascertain the Board’s meeting schedule from the Manager and, allowing time to comply with the submission schedule in paragraphs 4 – 7 below, request in writing that the Board adjudicate each difference or dispute during a specified scheduled meeting.

  4. The Member’s and Manager’s written submissions referred to herein shall be addressed to the Board of Directors and submitted through the Manager, as described below.

  5. At least eight weeks before the specified Board meeting, the Member or its authorized agent or attorney shall submit the Member’s appeal in writing to the Manager by (a) stating in a letter or brief of no more than 20 pages, double spaced typed, all the Member’s reasons why the Manager’s decision regarding each difference or dispute should be modified by the Board and (b) submitting as lettered exhibits all evidentiary materials on which the Member relies for its position, including without limitation proof of the nature and amount of any loss, damage, or expense in dispute following the Manager’s decision.

  6. At least four weeks before the Board meeting, the Manager shall submit to the Member or its authorized agent or attorney the Manager’s written opposition to the Member’s appeal (a) stating in a letter or brief of no more than 20 pages, double spaced typed, all the reasons why the Manager’s decision should be affirmed and (b) submitting as numbered exhibits all evidentiary materials on which the Manager relies for its position.

  7. At least two weeks before the Board meeting, the Member or its authorized agent may submit to the Manager a written reply to the Manager’s opposition.  Any reply shall be in the form of a letter or brief not exceeding 10 pages, double spaced typed and may include additional exhibits.

  8. Upon receipt of the Member’s reply, if any, the Manager shall promptly deliver the Member’s and Manager’s written submissions (including exhibits) to each Director, with notice of such delivery being sent to the Member or its agent or attorney.

  9. Each Director shall review the Member’s and Manager’s written submissions.

  10. For the purposes of adjudication, the Directors shall proceed in executive session. The Directors, having considered the submissions by the Member and the Manager and having conducted such discussions among themselves as they deem necessary, shall either (a) adjudicate the difference or dispute on the basis of the Member’s and Manager’s written submissions or (b) order the Member and/or the Manager to make further written submissions and/or provide relevant documents and/or information in writing to clarify any issues in dispute within times and page limits set by the Directors.  Within times and page limits set by the Directors, the Member and Manager may reply to each other’s additional written submissions.  If necessary, the Directors may extend the schedule originally adopted pursuant to paragraphs 4 – 7, above, to allow additional time for these purposes.  Failure to comply with any Directors’ orders may be taken into account by the Directors in reaching their decision.

  11. The written submissions including any exhibits shall constitute the record upon which the Directors’ adjudicatory decision shall be based.

  12. As soon as reasonably possible, and no later than six months after receipt of the last written submission, the Directors shall adjudicate the dispute and issue a written opinion stating the reasons for their decision. (See Rule 1.4.48 c.) The decision of a majority of Directors participating in the adjudication shall be the Board's final decision. In the event of a tie vote, the Chairman of the Board shall have a second vote or two votes, in total. Any dissents shall express the reasons therefor in writing, upon which the majority may comment. The Board's final decision and any dissents shall promptly be provided to the Member and the Manager.

Further Appeal

The decision of the Board of Directors is final and binding.  (See Rule 1.4.48 d.)

The Member’s attention is invited to the following:

  1. Under the contract of insurance, it is a condition precedent to commencing suit against the Association and/or its agents that the Member first appeal any difference or dispute between it and the Association and/or its agents to the Association’s Board of Directors.  (See Rule 1.4.48 c.)

  2. Under the contract of insurance, a Member may appeal the Board’s decision only by suit against the Association in the United States District Court for the Southern District of New York.  (See Rule 1.4.48 d.)

  3. Only New York law is applicable. (See Rule 1.4.49.)

  4. Such suit, if any, must be filed within sixty days after the date the Board’s decision is provided to the Member.  (See Rule 1.4.48 d.)

  5. As the Board decision is final, it may be modified by a court only upon a finding that the decision was arbitrary and capricious, that is, without reason, an issue on which the Member shall have the burden of proof.