On June 15, 2007, we reported on a ruling by a United States Magistrate Judge compelling the production of a reinsurance agreement and communications with reinsurers in a coverage action. The district court has entered a fairly detailed Order denying motions seeking to vacate the Magistrate Judge's decision. The Court rejected a strict rule against the production of such information, holding that discoverability and relevance should be evaluated based upon the facts of each case. United States Fire Insurance Co. v. Bunge North America, Inc., Case No., 05-2192 (USDC D. Kansas July 23, 2007).
Arbitration / Court Decisions
DISTRICT COURT DISMISSES REINSURER’S DEFAMATION COUNTERCLAIM
Plaintiff, Missouri Professional Mutual (“MPM”) filed this suit alleging that the defendant, MRC Reinsurance (“MRC”), breached a broker agreement with the plaintiff in connection with defendant’s procurement of reinsurance on MPM’s behalf. MRC filed a counterclaim for defamation. The allegedly defamatory statements were said to assert that MRC was improperly and unethically withholding information from plaintiff. One of the allegedly defamatory statements cited in the opinion stated “…the unprofessional manner in which the MPM account has been handled clearly rests with you and ultimately your firm[.]”
The district court found that the statements, which conveyed “complaints of dissatisfaction with the handling of plaintiff’s file” were clearly capable of a meaning that was not defamatory. As such, the court “readily conclude[d] that the statements are not defamatory as a matter of law” Missouri Professionals Mutual v. MRC Reinsurance Services, Case No. 07-739 (E.D. Mo. July 12, 2007).
COURT OF APPEALS REVERSES DISMISSAL OF REINSURANCE CONTRACT DISPUTE
AXA Corporate Solutions sued Lumbermens Mutual for indemnity under bonds and other reinsurance agreements. After the district court dismissed the claims asserted in both the Amended Complaint and the Second Amended Complaint, the Second Circuit Court of Appeals reversed. The court of appeals found that dismisssal was inappropriate since the agreements were ambiguous as to whether they created a reinsurance obligation between the parties, and the scope of any reinsurance obligation. Such heavily fact dependent issues precluded dismissal. AXA Corporate Solutions Insurance Co. v. Lumbermens Mutual Casualty Co., Case No. 06-2923 (2d Cir. July 11, 2007).
Court Approves Settlement of Coverage Dispute Involving Asbestos Liabilities and UK Scheme of Arrangement
A US Bankruptcy Court has approved a settlement with a London market insurer that includes that insurer in an earlier approved settlement with insurers providing a bankrupt copper company with coverage for asbestos-related claims. The London market insurer is itself a party to a scheme of arrangement being administered in London. This opinion is an interesting intersection of the UK scheme of arrangement process and US bankruptcy laws. The motion seeking approval of the settlement contains details of the settlement and attaches copies of pertinent documents. In re ASARCO LLC, Case No. 05-21207 (US Bank. Ct. S.D. Tex. Mar. 23, 2007).
Court Finds Dispute As To Payment Of Claim Is Arbitrable
A reinsurance contract had what is termed a narrow arbitration provision, requiring arbitration only of disputes relating to the interpretation of the contracts. The service of suit clause provided for the resolution by a court of the failure to pay an amount claimed to be due. A dispute arose as to a claim submitted under the contract, specifically whether payment should be made to the insolvent claimant or its liquidator. A US District Court has determined that since the resolution of that question requires interpreting provisions of the reinsurance contract, the dispute is arbitrable. Railroad Insurance Underwriters v. Certain Underwriters at Lloyd’s London, Case No. 07-3071 (USDC S.D.N.Y. June 4, 2007).