The District Court Judge in the Insurance Brokerage Antitrust Litigation MDL action has again dismissed the RICO and Sherman Act claims asserted by the Plaintiffs. Separate opinions were issued with respect to the antitrust claims and the RICO claims. Both types of claims have been dismissed, before, and in both of the recent opinions, the Court stated that it would give the Plaintiffs “one final opportunity” to amend their claims. In re Insurance Brokerage Antitrust Litigation, MDL Docket No. 1663 (USDC D.N.J. April 5, 2007). There are prior posts to this blog with respect to this action, dated September 14, 2006 and October 16, 2006.
Brokers / Underwriters
Broker Not Liable for Contingent Expenses Resulting from Insurer’s Downgraded Financial Rating
Aon Risk is a commercial insurance broker that served as the broker of record for Synagro, a Texas-based waste management company. Aon Risk obtained insurance from Reliance National Indemnity Company for Synagro in 1998 and 1999. Synagro filed suit against Aon Risk in 2001, asserting that Aon was responsible for contingent expenses that Synagro might incur as a result of Reliance’s downgraded financial rating and its liquidation. A jury found that Aon Risk was not responsible for Synagro’s alleged damages, and a judgment was entered in favor of Aon.
Aon Risk filed a counterclaim against Synagro seeking payment for the cost of the insurance plus its commission. A Texas Court of Appeals recently affirmed an award of $316,000 to Aon Risk, finding that there was sufficient evidence for a jury to conclude that Synagro breached its contract with Aon Risk. Synagro of Texas-CDR v. Aon Risk Services, Case No. 13-04-663 (Tex. Ct. App. Jan. 4, 2007).
Summary judgment denied against parent of reinsured
Guy Carpenter provided reinsurance intermediary and placement services for General Fire & Casualty. When a dispute arose as to those services, General Fire and its parent holding company sued Guy Carpenter. Guy Carpenter moved for summary judgment as to the claims of the parent, contending that it did not have a relationship with the parent. The USDC for Idaho denied the motion, finding that disputed issues of material fact existed with respect to such claims. General Fire & Casualty Co. v. Guy Carpenter & Co., Case No. 05-251 (USDC Idaho Nov. 7, 2006).
UK court rejects claims against reinsurance broker relating to film financing and production
The UK Commercial Court has rejected a claim against a reinsurance broker which placed reinsurance for coverage of risks relating to the financing and production of motion pictures. When the reinsurers successfully contested claims, the reinsured sued the broker, alleging negligence in the placement of the reinsurance. The Court rejected the claims, holding that the reinsured had failed to prove, inter alia, that the loss for which it sought compensation had been caused by a breach of duty by the reinsurance broker. HIH Cas. and General Ins. Ltd. v. JLT Risk Solutions Ltd., [2006] EWHC 485 (Comm. Ct. Mar. 15, 2006).
Court finds pleading insufficiencies in Insurance Brokerage Antitrust litigation
In the massive MDL proceeding relating to alleged bid rigging and kickbacks in the insurance brokerage area, the Court has ruled on a motion to dismiss, holding as follows: (1) the McCarran-Ferguson Act exemption does not apply: (2) the antitrust claims are inadequately pled; (3) the RICO claims are inadequately pled; (4) the ERISA claims state a cause of action (although the Court found the facts to be sparse); and (5) the Court reserved ruling as to state law claims, until it decided which federal claims survived motion practice. The Court directed the plaintiffs to file more particular statements as to the antitrust and RICO claims, instead of requiring a further amended pleading. In re Insurance Brokerage Antitrust Litigation, Case No. MDL 1663 (D. N.J. Oct. 3, 2006).