New reinsurance-related and arbitration developments from Carlton Fields
The concept of “storm warnings” triggering a duty to inquire and the starting of the running of statute of limitation periods has been prevalent in securities and other financial fraud litigation. Carlton Fields associate Paul Williams explores the application of this doctrine to reinsurance disputes in a Special Focus article.
This post written by Rollie Goss.
AIG insureds were directed to arbitrate their breach of contract, tortious breach of the covenant of good faith and fair dealing, unfair competition, and other causes of action based on AIG’s alleged misconduct in denying their claims for benefits. AIG moved to compel arbitration, citing a provision in the insurance contracts requiring any controversy to be settled by binding arbitration. Plaintiffs opposed, pointing to what they argued was a conflicting provision, which stated that “in the event of [the insurer’s] failure to pay any amount claimed to be due hereunder, we, at your request, will submit to the jurisdiction of a court of competent jurisdiction within the United States.” Relying on the presumption favoring arbitration, the court held that the contractual provisions were harmonious–all disputes were required to be resolved through arbitration but the insureds could bring suit in a court of their choice to enforce compliance with an arbitration award. The court also held that AIG could compel arbitration under an equitable estoppel theory, notwithstanding that it was not a signatory to the arbitration agreement. NS Holdings LLC v. Am. Int’l Group, Inc., Case No. 10-1132 (U.S.D.C. C.D. Cal. Nov. 15, 2010).
This post written by Ben Seessel.
In a dispute involving the interpretation of an excess policy issued by TIG Insurance Company, insured Grinnell Corporation moved to compel TIG to produce underwriting manuals, information relating to its reinsurance agreements, and reserve information. The court granted Grinnell’s request with respect to TIG’s underwriting manuals but rejected the insured’s request for information relating to TIG’s reinsurance agreements as irrelevant. The court held that “what TIG and its reinsurers may agree a term means . . . is not, ipso facto, probative of what that term means in the subject policy” and TIG’s coverage with its insureds was not necessarily co-extensive with the coverage TIG secured from reinsurers. The court also denied Grinnell’s request for reserve information, finding that TIG’s consideration of possible policy interpretations in setting reserves “is of little value in determining the meaning of a policy term or terms.” TIG Ins. Co. v. Tyco Int’l, LTD., Case No. 3:08-1584 (U.S.D.C. M.D. Pa. Nov. 12, 2010).
This post written by Ben Seessel.
In a dispute between reinsurance brokers, Guy Carpenter sued its competitor, Lockton, arising from broker fees alleged owed to Guy Carpenter as a result of its placement of reinsurance on behalf of two reinsurers, whose business went (after placement) to Lockton when one of Carpenter’s brokers switched his employment to Lockton. Carpenter asserted that the broker fees, which were established and became payable upon placement of the reinsurance at issue, were improperly withheld by Lockton after they were received from the reinsurers. Lockton moved to dismiss all three claims asserted by Carpenter, including conversion, tortious interference with contract, and unjust enrichment. The court denied the motion (save for its dismissal of the unjust enrichment claim), notably holding that the monies owed to Carpenter constitute an “identifiable chattel” and thus supported the conversion claim. The court also held that Lockton’s alleged withholding of money owed pursuant to the broker agreement between the reinsurers and Carpenter adequately stated a tortious interference with contract claim. Guy Carpenter & Co., LLC v. Lockton Re, LP, No. 10-Civ-4932 (USDC S.D.N.Y. Nov. 4, 2010)
This post written by John Pitblado.
There has been a flurry of activity on the regulatory front on a variety of issues that the Dodd-Frank Act deferred to the states:
This post written by Rollie Goss.