New reinsurance-related and arbitration developments from Carlton Fields
Did you know that the notice/prejudice rules vary from state to state, and may be different for direct insurance and reinsurance claims? These rules may lead to unexpected burdens of proof and unexpected results. Special Focus Editor John Pitblado sorts out the rules in this area in a Special Focus article that recently appeared in Mealey’s Reinsurance titled: Pride and Prejudice: Prompt Notice in Reinsurance Claims.
This post written by John Pitblado.
The US District Court for the District of Columbia recently held an evidentiary hearing on two actions initiated by Lloyd’s against the Syrian Arab Republic, the Syrian Air Force Intelligence Agency, and Syria’s Director of Military Intelligence (the claims against the named Libyan defendants having been dismissed pursuant to the enactment of the Libya Claims Resolution Act). Lloyd’s seeks judgment and an award of damages for acts of state-sponsored terrorism that resulted in the hijacking and destruction of the aircraft of EgyptAir Flight 648 in 1985. The US Magistrate Judge ruled that the Syrian defendants provided material support and resources to and conspired with the terrorists in the hijacking of Egypt Air Flight 648, and that the Syrian defendants intended that their support would promote and cause extrajudicial killings of American citizens and the destruction of the EgyptAir aircraft. The Court additionally found that the actions could not have occurred without the explicit authorization of then-Syrian President Hafiz al-Asad. Accordingly, the Court will enter judgment and grant an award of damages on behalf of the plaintiffs against the Syrian defendants in a separate order. Certain Underwriters at Lloyd’s London v. Great Socialist People’s Libyan Arab Jamahiriya, No. 06-cv-731 (USDC D.D.C. Sept. 2, 2011).
This post written by John Black.
OneBeacon sued Commercial Union of Canada, based on its contention that Commercial Union agreed to reinsure successive renewals of a primary policy issued by OneBeacon to Harrisons & Crossfield (America) Inc. and affiliates. Harrisons faced lawsuits for asbestos-based personal injury claims. One of the OneBeacon primary policies at issue was renewed for three successive one-year terms in 1980, 1981, and 1982. Commercial Union issued a Facultative Certificate covering the policy period from March 28, 1980 through April 1, 1981. OneBeacon took the position that the parties intended for the reinsurance cover to be renewed as well. The court disagreed, finding as a matter of law that the Facultative Certificate was unambiguous, covered only the single year described in the contract, and that OneBeacon had not demonstrated with competent evidence any intent on the part of Commercial Union to extend the reinsurance cover beyond its stated term. The Court granted both parties’ motions to strike certain evidence (including a so-called “sham affidavit” proferred by OneBeacon that contradicted sworn testimony), denied OneBeacon’s motion for summary judgment, and granted Commercial Union’s motion for summary judgment. OneBeacon America Insurance Co. v. Commercial Union Assurance Co. of Canada, Case No. 10-10164 (USDC D. Mass. Aug. 18, 2011).
This post written by John Pitblado.
A court granted in part and denied in part a motion to dismiss in a case involving the alleged miscalculation and underpayment of amounts owed to plaintiff Lincoln General Insurance Company by defendant U.S. Auto Insurance Services, Inc. We covered this litigation in a May 11, 2009 post. Lincoln General was the reinsurer of a variety of auto insurance policies sold by U.S. Auto, as managing general agent for State and County Mutual Fire Insurance Company. U.S. Auto sought dismissal on variety of grounds, including that a memorandum of understanding entered by the parties in a 2007 lawsuit between the parties necessitated dismissal of claims not raised in that earlier suit. The court, however, found that the memorandum did not limit the available causes of action in the later suit to those delineated in the 2007 suit, so the motion to dismiss on this ground was denied. Defendants also claimed that an “Assignment of Rights” between State and County and Lincoln General was invalid because it contained a “revocability clause.” The court noted, however, the absence of any case or statute saying a court must ignore the manifested intent of the parties in declaring the assignment void on revocability grounds. The court did dismiss Lincoln General’s claims of alter ego liability against others for U.S. Auto’s breaches of contract, fiduciary duty, and conversion because Lincoln General voluntarily withdrew these claims. Lincoln General Insurance Co. v. U.S. Auto Insurance Services, Inc., No. 10-CV-2307-B (USDC N.D. Tex. Aug. 18, 2011).
This post written by Brian Perryman.
Employers Reinsurance Corporation was denied a request to correct “imprecise” language in its answer and counterclaim in a suit brought against it by a medical malpractice insurer for failing to fund a settlement of a lawsuit against one of the malpractice insurer’s covered physicians. ERC’s answer included a defense of “setoff” for a sum that it had paid allegedly in error in connection with the underlying malpractice lawsuit. After the court’s deadline for amending pleadings expired, ERC sought to amend its answer to seek “recoupment” in addition to “setoff” in order “to make the terminology of its pleadings more precisely fit” the facts of the case. The court held that ERC’s belated attempt to make its answer more precise showed a “lack of diligence.” The court denied ERC’s proposed amendment for failure to show the requisite good cause. Ohio Insurance Co. v. Employers Reinsurance Corp., Case No. 2:08-cv-83 (USDC S.D. Ohio July 15, 2011).
This post written by Michael Wolgin.