The financial collapse of Reciprocal of America, an insurer and reinsurer, resulted in a number of lawsuits, including a series of lawsuits by policyholders and state Insurance Commissioners in Alabama and in other states against the company's officers and directors. When two officers pleaded guilty to criminal charges relating to the operation of the company, the company's D&O insurer filed a declaratory judgment action, seeking rescission of the policies it had issued. While the actions filed by the policyholders and Insurance Commissioners were granted MDL status, the MDL Panel declined to add the D&O insurer's action to that proceeding. The District Court dismissed the D&O insurer's action, on the basis that it would abstain from hearing the claims in deference to the parallel state court actions. The Fourth Circuit reversed, vacating the decision, finding that the requirements for abstention were not present, and that the rescission action should go forward. Great American Ins. Co. v. Gross, Case No. 05-2069 (4th Cir. Oct. 30, 2006).
Jurisdiction Issues
District Court adopts Magistrate Judge's recommendations as to personal jurisdiction
A District Court has entered an Order adopting a Magistrate Judge's Report and Recommendation, denying a motion to dismiss, for lack of personal jurisdiction, filed by a guarantor of a quota share reinsurance agreement. Sirius America Ins. Co. v. SCPIE Indemnity Co., Case no. 05-7923 (USDC S.D.N.Y. Nov. 1, 2006). The Report & Recommendation was the subject of an October 5 posting on this blog. The Order recites that the Court had not received any objections to the Report & Recommendation.
District Court adopts Magistrate Judge’s recommendations as to personal jurisdiction
A District Court has entered an Order adopting a Magistrate Judge's Report and Recommendation, denying a motion to dismiss, for lack of personal jurisdiction, filed by a guarantor of a quota share reinsurance agreement. Sirius America Ins. Co. v. SCPIE Indemnity Co., Case no. 05-7923 (USDC S.D.N.Y. Nov. 1, 2006). The Report & Recommendation was the subject of an October 5 posting on this blog. The Order recites that the Court had not received any objections to the Report & Recommendation.
Court of Appeal holds that California Court had personal jurisdiction over London insurance broker
A California Court of Appeals, reversing a lower court's decision, has held that the state court could exercise personal jurisdiction over Sedgwick Group Ltd., an English insurance broker which had provided brokerage services for a California excess and surplus lines insurance broker for at least 50 years. The Court found that Sedgwick had “enjoyed decades of profit as a result of purposeful and deliberate business practices aimed at California residents.” In finding the exercise of personal jurisdiction over Sedgwick proper, the Court cited, as being of particular relevance, a Ninth Circuit case that dealt with personal jurisdiction over a London-based insurance broker. Harris Rutsky & Co. Ins. Serv., Inc. v. Bell & Clements, 328 F.3d 1122 (9th Cir. 2003). Swett & Crawford v. Sedgwick Group Ltd., Case No. B183940 (Cal.Ct.App. Oct. 11, 2006).
Court denies motion for dismiss for lack of personal jurisdiction
A United States Magistrate Judge has recommended the denial of a motion to dismiss filed by a California reinsurer of the obligations of a New York reinsured under a bond quota share reinsurance agreement. Sirius America Insurance Co. v. SCPIE Indemnity Co., Case no. 05-7923 (S.D. N.Y. Sept. 3, 2006). The Court relied heavily on the fact that payments under the reinsurance agreement would only benefit the New York reinsured.