Jurisdiction Issues

DISPUTE RELATING TO REINSURANCE IN SALE OF INSURANCE COMPANY TRANSFERRED TO COURT HEARING RELATED MATTER

November 28, 2007 by Carlton Fields

Conseco Insurance Company sold two insurance subsidiaries to JC Penney, and under the terms of the sale Conseco retained a certain portion of contingent indemnity liability on policies issued prior to the sale. A condition precedent to Conseco’s reimbursement obligation was the submission by Penney of claims on such policies to Transit Casualty Company under a reinsurance agreement. Disputes arose related to the sale and were heavily litigated in the United States District Court for the Central District of California and the Ninth Circuit. When certain claims were dismissed, with the suggestion that they be refilled by Conseco as a separate suit, Conseco refilled them in Indiana state court. After the claims were removed, Penney moved to dismiss, in part based upon the doctrine of forum non conveniens. The court treated the motion as a motion to transfer and transferred the case to the court in California, which is still hearing other claims relating to the sale. Conseco Insur. Co. v. J. C. Penney Life Ins. Co., Case No. 06-1229 (USDC S.D.Ind. Sept. 27, 2007).

This post written by Rollie Goss.

COURT HOLDS THAT FEDERAL ARBITRATION ACT IS NOT A SOURCE OF SUBJECT MATTER JURISDICTION

November 20, 2007 by Carlton Fields

The United States Court of Appeals for the Fifth Circuit recently dismissed an appeal of an Order which addressed venue and transfer issues in a matter filed seeking to vacate an arbitration award under the Federal Arbitration Act (“FAA”). The Court held that since the FAA can not itself be a basis for federal question jurisdiction, and there were insufficient jurisdictional allegations to establish diversity jurisdiction, the federal courts lacked jurisdiction of the matter, and remanded the case with instructions that it be dismissed for lack of subject matter jurisdiction. Other courts have also held that the FAA does not itself confer subject matter jurisdiction upon a federal court. Oteeva, LP v. X-Concepts LLC, No. 06-11181 (5th Cir. Nov. 2, 2007).

This post written by Rollie Goss.

UK Court of Appeal Grants Injunction to Restrain Proceedings in a United States District Court

August 1, 2007 by Carlton Fields

On July 20, 2007, this blog reported on a dispute relating to the mass defection of fourteen facultative reinsurance brokers from the U.K. based Marsh Services Limited to Integro, a competitor. A suite was filed in US District Court in New York, which the Court declined to dismiss on jurisdiction grounds. In a parallel suit in the UK, a judge declined to enjoin the prosecution of the US action, but the UK Court of Appeals has allowed an emergency appeal, entering an injunction to restrain the US proceedings. This opinion contains an interesting discussion of the relationships between the UK and US courts, as influenced by an EU regulation relating to employment contracts. Samengo-Turner v. J & H Marsh & McLennan (Services) Limited, [2007] EWCA Civ 723 (July 12, 2007).

District Court Denies U.K. Defendant’s Motion to Dismiss For Lack of Personal Jurisdiction

July 20, 2007 by Carlton Fields

Defendants, employees of the U.K. based Marsh Services Limited, provided services to plaintiff Guy Carpenter & Company (“Guy Carpenter”) in the field of facultative reinsurance. In April 2007, the Defendants resigned from Marsh Services to join Integro, a competitor of plaintiffs. By doing so, Plaintiffs allege that defendants breached a non-solicitation provision of their contract. This contract contained two forum selection clauses.

One of the defendants, Ron Whyte, moved to dismiss on the basis that the court lacked personal jurisdiction over him and on based upon the doctrine of forum non conveniens. Whyte argued that the existence of a second forum selection clause in “Schedule II.D” of the contract created an ambiguity which rendered the forum selection clause in the body of the Agreement unenforceable. The court disagreed, denying the motion to dismiss, and holding that the forum selection clause in Schedule II.D did not apply to the issue, and was, in any event, non-exclusive. Guy Carpenter & Co. v. Julian Samengo-Turner, Ron Whyte, and Marcus Hopkins, Case No. 07 Civ. 3580 (USDC S.D. N.Y. June 29,2007).

Court Resolves Service Issue and Stays US Action Pending Prior-Filed Canadian Action

July 13, 2007 by Carlton Fields

Canada Life Assurance and Converium Ruckversicherung were parties to a reinsurance agreement that experienced losses as a result of the September 11 attack on the World Trade Centers. A dispute led to an arbitration in Canada and a lawsuit in Canada to vacate the award. Due to a concern as to whether the Canadian Court had jurisdiction, Canada Life filed an action in United States District Court in New Jersey, purporting to make service on Converium’s US counsel in the arbitration. The district court found the service insufficient and quashed it, but declined to dismiss, ordering Canada Life to effectuate service in compliance with the Federal Rules of Civil Procedure rather than the Federal Arbitration Act, which the Court held did not apply to service of a motion to vacate upon a non-US corporation. Applying principles of international comity, the Court stayed the action pending the resolution of the prior-filed Canadian lawsuit. Canada Life Assur. Co. v. Converium Ruckversicherung AG, Case No. 06-3800 (USDC D.N.J. June 13, 2007).