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Contract Interpretation

BRITISH COURT REFUSES TO ENJOIN U.S. REINSURANCE LAWSUIT, OR STAY BRITISH SUIT, BETWEEN SAME PARTIES REGARDING SAME ISSUES.

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The claimant, the Insurance Company of the State of Pennsylvania, sued Equitas under certain reinsurance contracts that provided cover of $15 million, excess of $5 million in underlying insurance for ICP-issued policies covering the Dole Food Co. Dole faced more than $30 million in liabilities arising from alleged personal injuries caused by its use of certain pesticides in its fruit farming operations. Equitas claimed that ICP failed to timely notify Equitas of the claims, barring coverage under the reinsurance contracts. ICP brought suit first in New York, and Equitas filed its own later action in London, arguing that venue in the U.S. was improper, and seeking to enjoin the U.S. action. The English court declined to enjoin the U.S. action. However, it also denied ICP’s motion to stay the English proceeding, leaving the litigation proceeding on parallel tracks in New York and London. Insurance Co. of Pa. v. Equitas, [2013] EWHC 3713 (U.K. High Court of Justice, Comm. Div. Nov. 29, 2013)

This post written by John Pitblado.

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RESPA CLAIMS BARRED BY STATUTE OF LIMITATIONS IN PRIVATE MORTGAGE INSURANCE KICKBACK CASE

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In a case we have posted on before, plaintiffs lost the battle over whether their RESPA claims alleging a kickback scheme against private mortgage insurers and mortgage lenders’ captive insurers were equitably tolled. The court concluded, in a summary judgment setting, that plaintiffs did not diligently pursue their claims because they did not decide to engage in litigation until they were approached by attorneys who believed they had claims. Additionally, there was no reason plaintiffs could not have earlier discovered their claims because there were a number of cases alleging identical schemes filed years prior to plaintiffs’ closings. The court also concluded that defendants did not actively mislead plaintiffs because “[p]laintiffs’ argument – that the statute of limitations should be equitably tolled because Defendants failed to disclose they were violating RESPA – is unpersuasive” and “circular.” Riddle v. Bank of America Corporation, Case No. 12-1740 (E.D. Pa. Nov. 18, 2013).

This post written by Abigail Kortz.

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DESIGNATION OF SPECIFIC ARBITRATOR NOT INTEGRAL TO ARBITRATION AGREEMENT

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In Virginia, defendant’s employment of plaintiff for house cleaning services became messy when plaintiff sued her employer for numerous torts, statutory violations and breach of contract. With foresight, defendant had required plaintiff to sign a one-page Arbitration Agreement requiring resolution of “any and all claims, disputes, or controversies arising out of” plaintiff’s employment exclusively by the National Arbitration Forum (“NAF”) and sought to enforce that Agreement. The NAF was no longer available to administer the arbitration. Plaintiff argued that designation of the NAF as exclusive arbitrator was integral to the Agreement and the NAF’s unavailability rendered the Agreement unenforceable. The lower court agreed, but the matter was ultimately tidied up in defendant’s favor. On appeal, the supreme court found the NAF designation was not integral to the agreement because: (1) the Agreement included a severability provision, (2) the sole object of the Agreement was to require arbitration, (3) the parties were presumed to know the courts are directed by statute to appoint an arbitrator when an arbitration agreement fails to appoint one, and (4) nothing indicated that the parties considered the contingency that the NAF might not be available. Schuiling v. Harris, slip op (Va. Sept. 12, 2013).

This post written by Abigail Kortz.

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PLAINTIFFS JUMP MOTION TO DISMISS HURDLE IN A PMI CAPTIVE REINSURANCE DISPUTE

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A federal district court in Pennsylvania sided with plaintiffs on motions to dismiss filed by the lender, private insurers, and captive reinsurance company in a dispute over premiums charged for private mortgage insurance. Although plaintiffs’ claims were outside the statute of limitations window, the court concluded that equitable tolling applies to RESPA claims, denying defendants’ motions on that issue and allowing plaintiffs to conduct limited discovery on statute of limitations and equitable tolling issues. The court also denied defendants’ motions on the merits of the RESPA and unjust enrichment claims, finding plaintiffs’ argument that the reinsurance relationships are “shams” to be persuasive. Defendants did secure the dismissal of N.Y. Gen. Bus. Law § 349 claims brought by non-New York plaintiffs, however. Cunningham v. M&T Bank Corp., No. 12-1238 (USDC M.D. Pa. Oct. 30, 2013).

This post written by Abigail Kortz.

See our disclaimer.

UK COURT HOLDS THAT REINSURANCE BROKERS OWE A CONTINUING DUTY TO THEIR REINSUREDS; TIME-BARRED DEFENSE NO LONGER PACKS A PUNCH

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Resolving a dispute between a reinsured and its reinsurance broker, the UK Commercial Court has held that reinsurance brokers owe a continuing duty to remit money received from reinsurers to their reinsureds. The reinsurance broker conceded that it breached its duty, but argued that the first breach was more than six years (the limitations period) before the litigation was commenced and that the claims are time-barred. The reinsured argued, and the High Court agreed, that the reinsurance broker’s duty is continuous, such that a “fresh cause of action arose on each day when [the broker] failed to make a remittance which it ought to have made.” Equitas Ltd. v. Walsham Bros. & Co., [2013] EWHC (Comm) 3264 (Eng.).

This post written by Abigail Kortz.

See our disclaimer.