Brokers / Underwriters

On April 24, 2008, we reported on a reinsurance broker’s failed bid to take an interlocutory appeal from a federal district court’s denial of its motion for summary judgment in a case alleging that the broker negligently presented misinformation to the plaintiff reinsurer. Since that time, the parties filed, and the court ruled on, a number of motions in limine to exclude certain evidence at trial:

(1) The broker’s motion to preclude evidence of “pure omissions” and evidence of alleged misrepresentations not presented at a prior arbitration was denied. Among other things, the court rejected the argument that the information supplied by the broker was necessarily complete in itself. It was for the jury to decide whether the information was misleadingly incomplete.

(2) The broker’s motion to preclude the use of an expert’s supplemental report as untimely disclosing all the expert’s underlying data was also denied. The court, however, did allow the broker the opportunity to allow a supplemental deposition on the new data.

(3) The record of a prior arbitration between the plaintiff and a non-party, including the reports of two experts submitted in the arbitration, was precluded in part because it appeared to be hearsay not covered by an exception.

(4) The plaintiff’s motion to preclude the testimony of an expert who intended to ruminate on what the arbitral panel might have been thinking was excluded as purely speculative.

(5) A motion to exclude two English legal decisions as inadmissible hearsay was denied. The broker successfully argued that its expert properly referenced the foreign decisions as establishing the basis of industry practices and was therefore admissible under Federal Rule of Evidence 703.

United National Insurance Co. v. Aon Ltd., Case No. 04-539 (USDC E.D. Pa. Aug. 7, 2008).

This post written by Brian Perryman.

Brown and Brown, Inc., an independent insurance and reinsurance broker, brought suit against Connecticut’s Attorney General in an attempt to resist the Attorney General’s subpoena seeking documents relating to an ongoing investigation into certain insurance practices under investigation for violation of the Connecticut Antitrust Act. Brown & Brown filed the action seeking to protect trade secrets and other confidential commercial and financial information. The trial court denied Brown & Brown’s motion for summary judgment, rejecting its claim that Connecticut General Statutes §35-42 allows a party to restrict disclosure of information to any person outside the Attorney General’s office.

Brown & Brown appealed the ruling, and the Attorney General’s office successfully sought transfer of the appeal to Connecticut’s Supreme Court. Finding that the trial court’s ruling denying summary judgment did not constitute a final judgment, the Court dismissed the appeal for lack of appellate jurisdiction, without addressing the merits of the parties’ arguments. Brown & Brown, Inc. v. Blumenthal, SC 17920, — A.2d — (Conn. 2008).

This post written by John Pitblado.

The Marsh & McLennan companies have reached a settlement agreement in a class action relating to allegations of improper “contingent commissions.” The proposed settlement is described in a Memorandum of Law in support of the preliminary approval of the proposed settlement. The court has entered an Order of preliminary approval, setting a a hearing on the final approval of the proposed settlement on December 15, 2008. The proposed settlement provides for a fund in the amount of $69 million, which will be distributed to class members. Marsh may use up to $5 million of the fund to resolve and settle claims of state officials representing policyholders who are potential members of the settlement class. In addition, Marsh may use up to $7 million of the fund to resolve and settle claims of individual plaintiffs in pending actions relating to the same matters that are at issue in the class action. Class counsel will apply to the court for fees and expenses of $14.5 million. In re Insurance Brokerage Antitrust Litigation, Case No. MDL 1663 (USDC D.N.J. Aug. 21, 2008).

This post written by Rollie Goss.

An Illinois district court judge has granted a group of reinsurance administrators’ motion to dismiss a complaint filed by Swiss Re. The Complaint alleged that the defendants (“Access Entities”), who managed and administered several reinsurance programs, breached the contracts by mishandling the claims they were responsible for administering, and that Swiss Re’s predecessors suffered losses as a result.

While the Court found meritless defendant’s arguments based on statutes of limitations and failure to join an indispensable party, the Court agreed that plaintiffs improperly “lumped together” three separate entities. Plaintiffs recognized that not all of the defendants were parties to each agreement, however, they argued that because the Access Entites were mere ‘alter egos’ of one another, they could appropriately be held liable for the acts of the others. The court disagreed, concluding that the Complaint did not adequately allege facts to support a finding of contract liability based on corporate veil piercing. As such, the Complaint was dismissed with leave to file an Amended Complaint. Swiss Reinsurance America Corp. v. Access General Agency, Inc., Case No. 07 C 3954 (N.D. Ill. Aug. 1, 2008).

This post written by Lynn Hawkins.