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Decided on October 20, 2008
Supreme Court, New York County

602635-2008

APPEARANCES:
For Plaintiff:
Butler, Fitzgerald, Fiveson &
McCarthy
36 West 44th Street, Suite 816
New York, New York, 10036

Timothy Butler, Esq.
David J. McCarthy, Esq.
Mario D. Cometti, Esq.
For Defendants:
Cahill Gordon & Reindel, LLP
Eighty Pine Street
New York, New York 10005
Edward P. Krugman, Esq.
David G. Januszewski, Esq.
Bernard J. Fried, J.

Before me is plaintiff's motion by Order to Show Cause for a preliminary injunction and temporary restraining order ("TRO") against American International Group, Inc. ("AIG"), Lexington Insurance Company ("Lexington"), and Commerce Bank, N.A. (the "Bank"), as follows: (a) enjoining Lexington and AIG from seeking any increased premium from Lenox under its 2004 insurance policy; (b) enjoining the Bank from honoring any sight draft against a $2 million letter of credit established by Lenox in favor of Lexington; and (c) enjoining Lexington and AIG from submitting to the Bank any further sight draft against the letter of credit and requiring Lexington to withdraw its present draft demand.
The parties consented to maintain the status quo i.e., defendants agreed not to draw down the letter of credit, until I rendered my decision on the preliminary injunction, so it was not necessary [*2]to rule on the motion for a TRO. Having reviewed the parties' submissions carefully and heard oral argument, I now render my decision.
By way of background: it appears that Lenox entered into two excess insurance contracts with Lexington, a subsidiary of AIG [FN1] one policy covering insured events during 2004, and the other covering 2005.[FN2] Only the 2004 policy is at issue in this motion.
Lenox's premium under the policy consisted of the amounts paid out by AIG, plus a 5% fee, and any extra costs incurred by AIG. (Fajardo Aff.

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