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COURT COMPELS PRODUCTION OF INFORMATION EXCHANGED BETWEEN INSURER AND REINSURER AS RELEVANT TO CONSTRUCTION OF POLICY

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In a declaratory relief action brought against the FDIC by the liability insurer for the directors and officers of a bank in receivership, the court resolved a discovery dispute that included a contested request for information exchanged between the insurer and its reinsurer. In compelling the production of the reinsurance information, the court adopted a prior case’s articulation of seven reasons why reinsurance information might be relevant to assist with the construction of policy language: to determine (1) how the insurer has interpreted the provisions in the current lawsuit; (2) whether the insurer’s interpretation has been consistent with the positions taken with insureds; (3) whether the insurer and reinsurer discussed whether the type of claims in dispute would be covered; (4) whether the insurer and reinsurer discussed the insureds’ expectations on the scope of coverage; (5) when the insurer received notice of claims; (6) if the insureds’ claims were untimely, whether the insurer claimed it was prejudiced as a result; and (7) whether the reinsurer was involved in the sales and marketing of the policies in dispute, and if so, what those efforts reflect in terms of the reasonable expectations of the insureds concerning the scope of coverage. Progressive Casualty Insurance Co. v. FDIC, Case No. 5:12-cv-04041 (USDC N.D. Iowa Mar. 10, 2014).

This post written by Michael Wolgin.

See our disclaimer.

REINSURANCE ARBITRATION DISPUTE TRANSFERRED TO VENUES IN WHICH ARBITRATIONS WERE PENDING

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National Indemnity Company (NICO) sought an injunction in a Nebraska federal district court to prevent Transatlantic Reinsurance Company and its subsidiary (collectively, Transatlantic Re) from commencing arbitration against NICO in Chicago and New York under various reinsurance agreements. Both arbitrations involved asbestos liability transferred to NICO, and separately reinsured by Transatlantic Re. Transatlantic Re had commenced arbitrations in Illinois and New York (and initiated actions in those jurisdictions to compel NICO’s participation), pursuant to applicable forum selection clauses contained in Transatlantic Re’s reinsurance agreements with cedents. The Nebraska court elected not to adjudicate NICO’s injunction claim, but instead decided to sever it into two, and transfer the resulting two claims to Illinois and New York. The court analyzed venue provisions in the Federal Arbitration Act and different judicial approaches thereto, and concluded that Nebraska was limited in its jurisdiction over the claim. Illinois and New York were authorized under the FAA to compel arbitration if necessary, whereas Nebraska possessed jurisdiction only to enjoin NICO’s participation. Transfer, the court concluded, would promote judicial economy. National Indemnity Co. v. Transatlantic Reinsurance Co., Case No. 8:14-cv-00074 (USDC D. Neb. Mar. 31, 2014).

This post written by Michael Wolgin.

See our disclaimer.

COURT AWARDS DAMAGES AND PREJUDGMENT INTEREST IN LONG-RUNNING RETROCESSION DISPUTE

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Republic Insurance was a fronting company for a syndicate of reinsurers which obtained retrocessional coverage from Group Des Assurance Nationales under LMX quota share contracts over a number of years. As we reported in an August 20, 2013 post, the Court granted summary judgment in Republic’s favor. Thereafter, the parties disputed the damages, offset, and method of prejudgment interest calculation. The Court has now ruled on those issues, awarding Republic the full amount of damages claimed, declining to award Group Des Assurance Nationales an offset against premiums paid, and awarding prejudgment interest dating back to the contract years at issue, which roughly doubled the award. Republic Insurance Co. v. Banco De Seguros Del Estado, No. 10-C-5039 (USDC N.D. Ill. March 20, 2014).

This post written by John Pitblado.

See our disclaimer.

ARBITRATION ROUND-UP

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Arbitration Procedure

Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund v. Alliance Workroom Corp., No. 13-Civ-5096 (USDC S.D.N.Y. Dec. 11, 2013) (arbitration award confirmed, treating unopposed petition to confirm as summary judgment motion based on unopposed record, granting attorneys fees incurred in unopposed action to confirm arbitration award).

Thai-Lao Lignite (Thailand) Co., Ltd. v. Government of the Lao People’s Democratic Republic, No. 10-CV-5256 (USDC S.D.N.Y. Feb. 6, 2014) (vacating award based on ruling in parallel action in Malaysian Court of Appeal, based on New York Convention for the Enforcement of Foreign Arbitral Awards).

McAlpine v. Priddle, No. S-14891 (Alaska Feb. 21, 2014) (affirming confirmation of award in criminal defense attorney fee agreement, agreement not procured by fraud, not barred by public policy)

Lakeshore Engineering Services, Inc. v. Target Construction, Inc., No. 13-14498 (USDC E.D. Mich. Feb. 27, 2014) (no waiver, contract and arbitration agreement binding and enforceable)

Exceeding Powers

Renard v. Ameriprise Fin. Svcs., Inc., No. 13-CV-555 (USDC E.D. Wis. Mar. 6, 2014) (arbitrators did not exceed powers, award not procured by fraud, no failure to hear pertinent evidence)

Manifest Disregard

Schafer v. Multiband Corp., No. 13-1316 (6th Cir. Jan. 6, 2014) (reversing district court’s order granting vacatur of award, where award was contrary to precedent, but nevertheless “reasoned” and therefore not in manifest disregard of the law).

Abu Dhabi Investment Authority v. Citigroup, Inc., No. 13-1068-cv (2d Cir. Feb. 19, 2014) (no manifest disregard in application of New York law in choice-of-law dispute)

Evident Partiality

Ometto v. ASA Bioenergy Holding A.G., Nos. 12-4022, 13-225 (2d Cir. Jan 7, 2014) (affirming denial of petition to vacate award, no evident partiality based on claim of arbitrator’s failure to disclose information; no manifest disregard of law)

Scope of Arbitration Agreement

Aetrex Worldwide, Inc. v. Sourcing For You Limited, No. 13-3933 (3d Cir. Jan. 23, 2014) (denying motion to compel arbitration where arbitration agreement contained exception for injunction actions, which applied even after injunction request denied and withdrawn)

Neuronetics, Inc. v. Fuzzi, No. 13-1506 (3d Cir. Jan. 24, 2014) (affirming grant of motion to confirm, issue regarding non-payment of contract for sale of healthcare products within scope of arbitration agreement).

Unconscionability

Kirby v. Lion Enterprises, Inc., No. 12-C-47 (W. Va. Mar. 7, 2014) (reversing decision affirming confirmation of award and remanding with instructions to develop record on issue of unconscionability)

This post written by John Pitblado.

See our disclaimer.

SUMMARY JUDGMENT IN FAVOR OF BROKER IN MALPRACTICE CASE REVERSED, WHERE SPECIAL RELATIONSHIP WITH INSURED MAY HAVE EXISTED

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In a case involving alleged broker malpractice with respect to certain underinsured business interruption losses under a commercial property insurance policy, the New York high court reversed a lower appellate court’s affirmance of summary judgment in favor of the insurance broker. The court found that the evidence suggested that “there was some interaction regarding a question of business interruption coverage, with the insured relying on the expertise of the agent,” where the insured testified that (1) she and the broker discussed the coverage, (2) the broker requested sales figures and other data, (3) the broker assured the insured that the coverage was adequate, and (4) the broker repeatedly pledged to review coverage annually and recommend adjustments as the insured’s businesses grew. The court also reversed the intermediate court’s majority view that the insured’s knowledge of the coverage limits warranted dismissal. The court explained that, where a special relationship existed, “it is wholly irrelevant whether [the insured was] aware of the limits that were actually procured.” Voss v. Netherlands Insurance Co., Case No. 11 (N.Y. Ct. App. Feb. 25, 2014).

This post written by Michael Wolgin.

See our disclaimer.