The Second Circuit has found that an aggregate liability limit in excess insurance policies applied to facultative reinsurance certificates which contained a “follow the form” clause. The parties had a dispute as to how the aggregate limit should be interpreted for purposes of the reinsurance. The Court affirmed a District Court Order ruling that the clear definition of the aggregate limit in the underlying policy controlled, as a matter of contract interpretation. Travelers Casualty & Surety Co. v. ACE American Reinsurance Co., Case No. 05-6189 (2nd Cir. Oct. 18, 2006).
Arbitration / Court Decisions
Court holds that Petition challenging arbitration does not have to be filed in District in which contract states that arbitration shall be held
Argonaut Insurance and Century Indemnity had 19 disputes encompassing multiple reinsurance agreements, which contained different arbitration site provisions. Argonaut filed a Petition in Century's home District challenging, inter alia, Century's attempt to force consolidated arbitration of the disputes. The Court has held that venue for the Petition was appropriate under the general venue statute, 28 U.S.C. section 1392, in the District in which Century maintains its home office, despite a provision in the applicable reinsurance agreement providing that arbitration of disputes under that particular reinsurance agreement should occur in New York City. Argonaut Insur. Co. v. Century Indemnity Co., Case No. 05-5355 (E.D. Pa. Aug. 28, 2006). Century contended that under section 4 of the Federal Arbitration Act, 9 U.S.C. section 4, venue for the action should have been in New York City.
Claims against interpleaded policy limits not subject to arbitration provision
The United States Court of Appeals for the Fifth Circuit has held that the arbitration provision in two fiduciary liability insurance policies issued to Enron Corporation did not apply to require arbitration of competing claims asserted by multiple insureds to the limits of two policies that were interpleaded by the insurers. Tittle v. Enron Corp., Case No. 05-20380 (5th Cir. Sept. 1, 2006).
Court of Appeals affirms decision as to number of occurrences for World Trade Center coverage
The United States Court of Appeals for the Second Circuit has affirmed the District Court's decision with respect to coverage for the September 11 terrorist attacks on the World Trade Center towers. The District Court held that the attack consituted a single occurrence with respect to some of the insurance, and two occurrences with respect to other insurance. SR International Business Insur. Co. v. World Trade Center Properties, LLC, Case No. 04-4500 (2nd Cir. Oct. 18, 2006).
Court enforces agreement regarding appointment of arbitrators
A District Court has entered an Order to enforce the contractually agreed-upon procedure for appointing a third arbitrator in an insurance matter, setting deadlines for each step of the process. The Court also held that whether arbitrations regarding four different insurance agreements should be consolidated was a matter to be decided by the arbitrators. Clearwater Insurance Co. v. Granite State Insurance Co., Case No. 06-4472 (USDC N.D. Cal. Oct. 2, 2006).