Jurisdiction Issues

COURT DISMISSES CASE AGAINST FOREIGN REINSURER FOR LACK OF PERSONAL JURISDICTION

May 24, 2011 by Carlton Fields

Pacific Employers Insurance Company entered into a quota share reinsurance agreement with AXA Belgium in the 1970s, when Pacific was a California domiciliary. The agreement was never formalized so it included no terms concerning exclusive jurisdiction, service of suit, choice of law or forum selection. Pacific moved its offices to Pennsylvania in the early 1990s. Pacific continued to bill AXA on occasion, and AXA paid claims and submitted billings to Pacific at its Pennsylvania office. The parties then became engaged in dispute over AXA’s continuing obligations. Pacific brought suit in Pennsylvania federal court. AXA challenged personal jurisdiction. Pacific produced evidence in support of its claim of jurisdiction, including billings AXA sent to it in Pennsylvania, and the fact that AXA representatives had conducted an audit of Pacific at its Pennsylvania offices. It also contended that AXA directed numerous written and telephone communications to Pacific in Pennsylvania. Finally, Pacific argued that AXA did other substantial business in Pennsylvania, in support of its “general jurisdiction” claim. The Court rejected all of Pacific’s claims, and granted AXA’s Rule 12(b)(2) motion to dismiss. Pacific Employers Ins. Co. v. AXA Belgium, S.A., No. 09-5211 (USDC E.D. Pa. April 27, 2011).

This post written by John Pitblado.

MOTION TO TRANSFER REINSURANCE MATTER TO DISTRICT HEARING RELATED CASES INVOLVING DIFFERENT REINSURERS DENIED

May 18, 2011 by Carlton Fields

Plaintiff White Mountains Re, successor in interest to MONY Re, filed an action in the New York Supreme Court against Travelers asserting claims for declaratory judgment and breach of contract arising out of a dispute concerning certain reinsurance contracts. Travelers removed the action to the US District Court for the Southern District of New York and subsequently filed a motion to transfer this action to the District of Connecticut. There are a number of related cases concerning the reinsurance contracts pending in the US District Court for the District of Connecticut, although White Mountains Re is not a party in any of the Connecticut actions. The District Court denied Travelers’ motion, concluding that although the action could have been filed in the District of Connecticut originally, White Mountain Re’s choice of forum is “given great weight.” Further, the Court concluded that while the current action is related to those in the District of Connecticut, White Mountain Re’s suit was not filed in response to a direct threat of litigation in the other forum. Accordingly, Travelers failed to show that transfer was appropriate. White Mountains Reinsurance Co. of Am. v. Travelers Casualty and Surety Co., Case No. 11-390 (S.D. N.Y. Apr. 13, 2011).

This post written by John Black.

INTERPRETATION OF TREATY’S “ACT-AS-ONE” PROVISION HELD TO BE A PROCEDURAL ISSUE FOR ARBITRATORS TO DECIDE

May 11, 2011 by Carlton Fields

National Casualty is one of several reinsurers providing reinsurance to Munich Re under a single treaty. Munich Re submitted claims under the treaty that were denied by National Casualty and another reinsurer, Wasau. The treaty provided disputes would be submitted to arbitration and that if more than one reinsurer was involved in the same dispute, all the reinsurers would constitute and act as one party. Wasau refused to submit to the arbitration, however, and National Casualty refused to proceed without Wasau, taking the position that the treaty’s “act-as-one” clause prohibited the arbitration from going forward without Wasau as a party. Munich Re successfully moved to compel. The district court held that whether the “act-as-one” provision prohibited a separate arbitration against National Casualty was a threshold procedural issue for the arbitrators to decide. Munich Reinsurance America, Inc. v. National Casualty Co., Case No. 10 Civ. 5782 (USDC S.D.N.Y. April 26, 2011).

This post written by Ben Seessel.

SECOND CIRCUIT REMANDS FOR CONSIDERATION OF PERSONAL JURISDICTION ISSUES WITH RESPECT TO ORDER CONFIRMING CHINESE ARBITRATION AWARD

April 27, 2011 by Carlton Fields

Last year, we reported that the Southern District of New York had confirmed an arbitration award made by the China Maritime Arbitration Commission against Pactrans Air & Sea, Inc. (“Pactrans”), notwithstanding Pactrans’ argument that the award was being challenged before the proper authorities in China. The judgment recognizing the award was subsequently appealed by Pactrans on jurisdictional grounds. The Second Circuit Court of Appeals remanded the case, instructing the district court to determine whether it decided the issue of its personal jurisdiction over Pactrans, and, if not, to enter an order to show cause why it should not dismiss the case for lack of personal jurisdiction. China Nat’l Chartering Corp. v. Pactrans Air & Sea, Inc., No. 09-4956 (2d. Cir. Jan. 19, 2011).

This post written by Ben Seessel.

COURT STANDS BY “NERVE CENTER” DETERMINATION IN REINSURANCE DISPUTE

April 21, 2011 by Carlton Fields

On January 27, 2011, we reported on a court’s application of the “nerve center” test to dismiss for lack of diversity of citizenship a case seeking the return of excess reinsurance deposit. The insurer alleged its domicile in the complaint, but failed to allege the location of its principal place of business. The nerve center was the “single place” where direction, control and coordination originated. The court earlier found that to be the state where the insurer’s president, secretary, and director were located, and not the state where most of the insurer’s board of directors and board meetings were located. The court has now denied the plaintiff’s motion to reconsider that finding, holding that plaintiff’s motion was “nothing more than a request for a second bite at the apple.” Health Facilities of California Mutual Insurance Co., Inc. v. British American Insurance Group, Ltd., Case No. CV 10-3736 (USDC C.D. Cal. April 5, 2011).

This post written by Michael Wolgin.