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Reinsurance Claims

REINSURER’S APPEAL OF FAVORABLE ORDER ON CONTRIBUTION CLAIMS DISMISSED AS MOOT

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On May 17, 2012, we reported on a district court decision granting summary judgment to a reinsurer on contribution claims asserted against it by two cedents. The cedents had sought contribution after they faced litigation arising out of their denial of defense and indemnity coverage to their insured under liability insurance policies, related to a government-mandated cleanup of polluted lands. The district court granted summary judgment on the ground that the claim for defense and indemnity, upon which the claim for contribution was based, was barred by limitations. The Eighth Circuit has now affirmed the district court’s order, and dismissed as moot the reinsurer’s appeal, which argued against contribution in the event that the appellate court were to reverse. Land O’ Lakes, Inc. v. Employers Insurance Co. of Wausau, No. 12-1887 (8th Cir. Aug. 29, 2013).

This post written by Michael Wolgin.

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SILENCE ON EXPENSE LIABILITY IN CONTRACT FAVORS REINSURER

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In one of the sister cases previously reported on involving Utica Mutual Insurance Company and one of its reinsurers Munich Reinsurance, a federal district court granted Munich’s motion for summary judgment. Utica sought reimbursement under the reinsurance contract for expenses incurred in litigation with an insured. At issue was whether the reinsurance contract subjected those expenses to Munich’s limit of liability or whether Munich was obligated to pay for those expenses in addition to its $5 million limit of liability. Based on Second Circuit and New York Court of Appeals precedent regarding limit-of-liability provisions in reinsurance contracts, the court held that the limit-of-liability provision applicable to Munich was unambiguously cost-inclusive and that Munich was obligated to Utica for no more than the $5 million. Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc., Case No. 6:12-CV-0196 (N.D.N.Y. Sept. 30, 2013).

This post written by Abigail Kortz.

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DUAL REINSURANCE LAWSUITS ALLOWED TO CONTINUE CONCURRENTLY IN DIFFERENT DISTRICTS

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As previously reported, Utica Mutual Insurance Company was successful in seeking transfer of its dispute against two reinsurers from the Southern District of New York to the Northern District of New York. The insurance company has again succeeded, defeating a motion to dismiss, and alternatively a motion to stay the proceeding in the Northern District of New York in favor of a suit initiated by one of the reinsurers against Utica in Wisconsin. Rejecting defendants’ contention that the “first-file rule” requires a stay of the New York lawsuit, the court determined that the New York suit can proceed along side the Wisconsin dispute because: a) the New York suit involves an additional defendant not present in the Wisconsin proceeding, b) the New York suit involves an additional claim under the Federal Arbitration Act, and c) Utica asserts it is not amenable to personal jurisdiction in Wisconsin. Utica Mutual Insurance Co. v. Employers Insurance Co. of Wausau, Case No. 6:12-CV-1293 (N.D.N.Y. Sept. 26, 2013).

This post written by Abigail Kortz.

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COURT HOLDS LIABILITY LIMITS IN REINSURANCE CERTIFICATES LIMITED AMOUNTS FOR COVERED EXPENSES AS WELL AS COVERED LOSSES

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In a litigation over the extent of liability covered by certain facultative excess general liability reinsurance certificates, a court recently granted a reinsurer’s motion for judgment on the pleadings, dismissing the case. The reinsured sought a declaration that the reinsurance certificates at issue did not contain limits on the reinsurer’s liability for the reinsured’s expenses, and that the reinsurer therefore breached its certificates by failing to pay the full amounts owed for covered expenses under the certificates. The reinsured argued that no limits on liability for expenses were expressly stated in the certificates, and that the certificates’ use of the phrase “in addition thereto” with respect to the reinsurer’s obligation to pay its proportion of expenses, insulated expenses from the certificates’ limits on covered losses. The court rejected the reinsured’s argument, holding there was “nothing in the language of the certificate[s] to suggest that the ‘reinsurance assumed’ amount did not encompass both the ‘reinsurance assumed’ for losses and the ‘reinsurance assumed’ for expenses,” and that this interpretation “is in accord with the majority of cases that have dealt with similar reinsurance certificates.” The court also rejected the reinsured’s alternative argument that the certificates were ambiguous. Continental Casualty Co. v. Midstates Reinsurance Co., Case No. 12 CH 42911 (Ill. Cir. Ct. Aug. 29, 2013).

This post written by Michael Wolgin.

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COURT ADDRESSES PROCEDURAL ISSUES IN CONTENTIOUS REINSURANCE BATTLE OVER REINSURER’S CLAIMS PRACTICES

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Travelers brought a breach of contract action against reinsurer Excalibur, alleging breach of contract due to Excalibur’s alleged failure to pay $1,573,189.58 in claims under a reinsurance contract between the parties’ respective predecessors in interest. In the course of briefing a dispositive motion, Travelers introduced an affidavit on reply, which addressed arguments made by Excalibur in its opposition. Travelers also moved to amend its complaint to add a Connecticut Unfair Trade Practices Act claim. Excalibur objected to the proposed amendment, moved to strike the affidavit, and, in the alternative, moved for permission to file a counter-affidavit. The Court granted leave to amend, and denied Excalibur’s motion to strike the Travelers affidavit, but granted Excalibur’s motion for leave to file a counter-affidavit, finding both affidavits are properly admitted, and could bear on the parties’ claims as the litigation proceeded. Travelers Indemnity Co. v. Excalibur Reinsurance Corp., No. 3:11-cv-1209 (USDC D. Conn. Aug. 5, 2013)

This post written by John Pitblado.

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