Jurisdiction Issues

DUAL REINSURANCE LAWSUITS ALLOWED TO CONTINUE CONCURRENTLY IN DIFFERENT DISTRICTS

October 7, 2013 by Carlton Fields

As previously reported, Utica Mutual Insurance Company was successful in seeking transfer of its dispute against two reinsurers from the Southern District of New York to the Northern District of New York. The insurance company has again succeeded, defeating a motion to dismiss, and alternatively a motion to stay the proceeding in the Northern District of New York in favor of a suit initiated by one of the reinsurers against Utica in Wisconsin. Rejecting defendants’ contention that the “first-file rule” requires a stay of the New York lawsuit, the court determined that the New York suit can proceed along side the Wisconsin dispute because: a) the New York suit involves an additional defendant not present in the Wisconsin proceeding, b) the New York suit involves an additional claim under the Federal Arbitration Act, and c) Utica asserts it is not amenable to personal jurisdiction in Wisconsin. Utica Mutual Insurance Co. v. Employers Insurance Co. of Wausau, Case No. 6:12-CV-1293 (N.D.N.Y. Sept. 26, 2013).

This post written by Abigail Kortz.

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SERVICE OF SUIT CLAUSE PRESERVING INSURER’S RIGHT TO “SEEK A TRANSFER” DID NOT PERMIT INSURER’S REMOVAL TO FEDERAL COURT

September 11, 2013 by Carlton Fields

An insurer’s bid to remove a lawsuit to federal court was stymied. The case involved a “service of suit” paragraph in an insurance policy permitting the insured to select the venue and forum of a dispute under the policy. The court found that the insurer waived the right to remove an action from state to federal court, notwithstanding a provision purporting to preserve the insurer’s right to “seek a transfer” of the case. The court interpreted consecutively each sentence of the relevant paragraph “like the concentric rings of a target.” Among other things, the court considered whether the phrase “seek a transfer” contemplated seeking removal of the action to federal court. That phrase did not include seeking removal, notwithstanding caselaw that had reached a different result in the context of a different forum selection clause employing the word “transfer” in a grammatically and substantively different way. Hanover Insurance Group, Inc. v. Chartis Specialty Insurance Co., Case No. 4:12-cv-40156 (USDC D. Mass. Aug. 19, 2013).

This post written by Michael Wolgin.

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UK SUPREME COURT ENJOINS FOREIGN COURT ACTION IN FAVOR OF POSSIBLE LONDON ARBITRATION

August 7, 2013 by Carlton Fields

Since reinsurance disputes are sometimes multi-jurisdictional we occasionally post on appellate UK and US court opinions dealing with the relationship between proceedings in different countries. The latest example of this involves two parties which entered into a contract concerning a hydroelectric plant in Kazakhstan. The contract is governed by Kazakh law but contains a London arbitration clause. When a dispute arose one party filed suit in Kazakhstan and secured a judgment from the Kazakh Supreme Court invalidating the arbitration provision. The other party filed suit in a UK court seeking a declaration that the arbitration provision was valid and enjoining the action in Kazakhstan. The UK trial court and Court of Appeals ruled that the Kazakh judgment was not binding, upheld the validity of the arbitration provision and enjoined the parties from proceeding with the Kazakh action. The UK Supreme Court agreed, and dismissed the appeal (the UK equivalent of affirming). The UK Supreme Court held that the refusal of the Kazakh court to enforce the arbitration provision compelled it to act to preserve the right to arbitrate. It is perhaps notable that no one had sought to commence an arbitration proceeding. The UK courts were acting to preserve the right of the parties to arbitrate, should they desire to do so. Ust-Kamenogorsk Hydropower Pland JSC v. AES Ust-Kamenogorsk Hydropower Pland LLP, [2013] UKSC 35 (June 12, 2013).

This post written by Rollie Goss.

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UK HIGH COURT REFUSES TO STAY PROCEEDINGS DESPITE CONCURRENT ACTION IN TEXAS

July 31, 2013 by Carlton Fields

MacDermid Offshore Solutions LLC (“MacDermid”) sued Niche Products Limited (“Niche”) in Texas for misleading advertising. Soon thereafter, Niche sued MacDermid in the Patents County Court (“PCC”) in England under the British cause of action for malicious falsehood. Both intellectual property proceedings turned on whether a particular type of oil product was different. MacDermid filed an application with the PCC, requesting that the proceedings be heard in Texas. The PCC dismissed the application, and MacDermid appealed.

The High Court of Justice, Chancery Division, dismissed the appeal on the grounds that the judge had applied the correct test in holding that the claim should be heard in the English jurisdiction, despite a concurrent action in Texas. The High Court noted that the test remains whether the foreign jurisdiction is clearly more appropriate. The existence of prior foreign proceedings is not decisive, though it may be a factor to be taken into account, and the weight to be attached to such proceedings is a matter of judgment. MacDermid Offshore Solutions LLC v. Niche Products Ltd, [2013] EWHC 1493 (Ch) (May 6, 2013).

This post written by Brian Perryman.

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MOTIONS TO DISMISS CAPTIVE REINSURANCE LAWSUIT DENIED

July 25, 2013 by Carlton Fields

A federal district court granted in part and denied in part various motions to dismiss filed by defendants HSBC and private insurers Genworth, Republic, and Mortgage Guaranty. Plaintiffs alleged that HSBC Mortgage, through HSBC Reinsurance, conspired with various private mortgage insurers to create a captive reinsurance scheme. The scheme, which involved private insurers paying HSBC reinsurance premiums for little, if any, assumption of risk allegedly circumvented the kickback prohibitions of the Real Estate Settlement Procedures Act. Plaintiffs further alleged that the premium payments were made by the private insurers for business referrals. Though the RESPA allegations would otherwise be barred by the statute of limitations, the court declined to dismiss those claims, citing the doctrine of equitable tolling. The court also declined to dismiss plaintiffs’ additional claim for unjust enrichment. Only United Guaranty’s motion to dismiss was granted, as plaintiffs failed to show that United Guaranty actually insured the mortgages in question. Moriba BA v. HSBC USA, Inc., Case No. 2:13-cv-00072-PD (USDC E.D. Pa. June 27, 2013).

This post written by Brian Perryman.

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