Plaintiff, Kentucky oil-and-gas developer Martin Ray Twist, sought an order compelling the defendant Investors to arbitrate separately their state law claims of securities violations, fraud, and other wrongs. Plaintiff’s motion was filed in federal court only weeks after a party-appointed arbitrator issued an order denying this identical request. The United States District Court for the Southern District of Indiana denied Plaintiff’s motion reasoning that “…Twist freely elected to let the arbitrator tackle the question.” The Court concluded that “[h]aving allowed the arbitrator to decide the issue, Twist cannot ask the court to overturn the ruling.” Martin Ray Twist v. Arbusto, Case No. 05-0187 (USDC S.D. Ind. June 8, 2007).
Arbitration / Court Decisions
Reinsurance Company’s Claims Not Barred by FAA’s 90-Day Deadline
Pursuant to the terms of a settlement agreement arising out of a personal injury claim, Plaintiff, R&Q Reinsurance Company (“R&Q”), was obligated to make periodic payments to defendant Gwendolyn Sands Brown (“Brown”). Despite the fact that the settlement agreement prohibited Brown from transferring her rights to a third party, Brown entered into an agreement to transfer her interest in the payments to co-defendant, Rapid Settlements (“Rapid”). When Brown sought to cancel the Transfer Agreement, Rapid filed a demand for arbitration and ultimately succeeded. Upon receiving notice of the arbitration award, R&Q filed this action seeking declaratory and injunctive relief. Rapid sought to dismiss the complaint based upon R&Q’s alleged failure to comply with the timing provisions of the Federal Arbitration Act.
The U.S. District Court for the Southern District of Florida disagreed with Rapid and denied its motion to dismiss. The court explained that the FAA did not apply because R&Q was not a party to the arbitration proceedings and did not directly attack the quality of the arbitration proceedings. The court concluded that the declaratory judgment action was properly before the court. R&Q Reinsurance Co. v. Rapid Settlements, Ltd. and Gwendolyn Sands Brown, Case No. 06-14329 (USDC S.D. Fla., May 14, 2007).
Benfield sues Aon over unpaid commissions for reinsurance placements
Benfield, a reinsurance broker/intermediary, has sued Aon Re, seeking over $2.4 million in damages for unpaid commissions for the placement of five reinsurance treaties for St. Paul Companies. The Complaint alleges that St. Paul moved its brokerage business from Benfield to Aon during the term of the reinsurance placed by Benfield, and that after the move, Benfield did not receive any further commission payments, even though Aon collected premiums under the treates that Benfield had placed. The Complaint alleges that regardless of how premiums are paid, the commission is earned upon the placement of the treaties. Benfield v. Aon Re, Case No. 07-2218 (USDC D. Minn. May 8, 2007).
Court Sanctions Zurich and law firms in September 11 coverage case
In a 35 page opinion, a district court judge has entered an Order imposing $1.25 million in sanctions, jointly and severally, upon Zurich American Insurance Company and two law firms, Wiley Rein and Coughlin Duffy, for concealing a 62 page insurance policy that was relevant to insurance coverage for the World Trace Center Towers in the September 11th insurance coverage cases. Although the policy was created after the insurance binders at issue, the court found that “it shows Zurich's knowledge and intent, and how Zurich's customary forms gave meaning to the terms of the policy binder.” A portion of the sanctions, in the amount of $750,000, were imposed pursuant to Fed. R. Civ. Pro. 11, while the remaining $500,000 was imposed as a discovery sanction pursuant to Rule 37, awarding $250,000 in attorneys' fees to each of two Plaintiffs in the actions “to defray the costs they unreasonably incurred in the wasted discovery proceedings.” The result was a total sanctions award of $1.25 million. In re September 11th Liability Insurance Coverage Cases, Case No. 03-332 (USDC SD NY June 18, 2007).
District Court Denies Motion To Exclude Reinsurance Expert Testimony In Trademark Infringement Case
In this trademark infringement case, a federal judge denied the defendants’ motion to exclude the proposed testimony of the plaintiffs’ two expert witnesses – a linguist and an insurance executive. The plaintiff, Alfa Corporation, is a financial services company based in Alabama that operates throughout the United States. The defendants, Alfa Bank and Alfa Capital Markets are components of a Russia-based financial services group. Plaintiffs alleged that the defendants’ use of the name Alfa Bank would harm its business and was likely to cause confusion, mistake, or deception of the trade and public.
The insurance expert’s testimony concerned the operation of the insurance and reinsurance industry. Defendants argued that: (1) the expert, Mr. Sweitzer, was not qualified to offer an opinion with regard to two of topics covered in his report; (2) that his opinions are not sufficiently supported; (3) that he did not adequately apply his opinions to the facts of the case; and (4) that his opinions on reinsurance were not relevant to the issues presented in the case. The court disagreed and denied defendants’ motion to exclude the testimony. Alfa Corp. v. OAO Alfa Bank and Alfa Capital Markets, Case No. 04-8968 (S.D.N.Y., Feb. 21, 2007).