Reinsurance Claims

CATASTROPHIC CLAIMS COVERAGE DENIED WHERE INSURER FAILED TO PROVE IT PAID PREMIUMS TO ITS REINSURER FOR THE ALLEGEDLY COVERED VEHICLE

November 4, 2009 by Carlton Fields

A court granted summary judgment to the Michigan Catastrophic Claims Association, a reinsurer for statutorily mandated no-fault personal injury protection benefits, where the plaintiff, an insurer authorized to write automobile insurance and member of the Association, failed to present evidence that it had paid premiums to the Association. The court therefore declined to address what it considered to be a question of first impression: whether the Association’s obligation to reimburse its member-insurers for no-fault personal injury protection benefits paid in excess of the statutory threshold applied when the insurer’s policy requires its insureds to share financial responsibility for the claim. The Association argued that under Michigan’s no-fault statute, failure to pay a premium to the Association disqualifies the member-insurer from receiving indemnification. Examining the record, the court concluded that the insurer could not establish entitlement to indemnification as it had not provided admissible evidentiary support that it paid the Association a premium on the vehicle involved in the underlying accident. Old Republic Insurance Co. v. Michigan Catastrophic Claims Association, Case No. 08-12522 (USDC E.D. Mich. Sept. 29, 2009).

This post written by Brian Perryman.

FEDERAL COURT REFUSES TO ENJOIN LATER STATE COURT CLAIMS RELATING TO PREVIOUSLY LITIGATED REINSURANCE TREATIES

October 27, 2009 by Carlton Fields

A federal court in Texas denied Aon Re’s motion for preliminary injunction against the defendant TIG Insurance Company. Aon Re moved to enjoin TIG from bringing claims arising out of two reinsurance treaties entered into in the late 1990’s that had been the subject of prior litigation, also in federal court in Texas, and which was resolved on summary judgment in Aon Re’s favor on statute of limitation grounds in 2005. However, TIG subsequently brought claims against Aon Re, based at least in part on issues pertaining to the two treaties, in federal court in Texas, which it withdrew, and then re-filed in state court in California.

Aon Re sought an injunction from the Texas federal court to enjoin TIG from prosecuting any further claims arising from the treaties, as it contended those issues had all been resolved. TIG cited the Anti-Injunction Act, which generally disfavors a federal court’s injunction preventing a state court from exercising its jurisdiction. Aon Re cited the “relitigation” exception to the Anti-Injunction Act, but the Court held that Aon Re failed to demonstrate, under the more strict standards required to obtain injunctive relief, that the prior judgment rendered based on statute of limitations grounds was a judgment “on the merits,” entitling it to the preclusive effect. The court essentially left it to the state court in California to decide for itself whether Aon Re was entitled to preclusion, based on the prior judgment in its favor. Aon RE, Inc. v. TIG Ins. Co., No. 3:09-cv-0300-B (USDC N.D. Tex. Sept. 28, 2009).

This post written by John Pitblado.

DISTRICT COURT FINDS NO SUBJECT MATTER JURISDICTION IN AIG SUIT

October 6, 2009 by Carlton Fields

The District Court for the District of New Jersey recently granted defendant AIG’s motion to dismiss Robert Plan Corporation’s claims arising out of a series of reinsurance agreements between the parties. The procedural history of the action is complex, and it involves underlying state court action, financial rehabilitation and bankruptcy proceedings. Robert Plan filed a Notice of Removal in January, 2009, and AIG subsequently moved to dismiss for lack of subject matter jurisdiction. The court granted the motion to dismiss, finding that that there was no case or controversy for the court to decide because the underlying state court action had been dismissed by the time plaintiffs filed their notice of removal. Additionally, because the Court found subject matter jurisdiction lacking, it denied as moot Robert Plan’s Motion to Transfer Venue. The Robert Plan Corp. v. American Int’l Group, Case No. 09-200 (D.N.J. Aug. 10, 2009).

This post written by John Black.

SETTLEMENT REACHED IN REINSURANCE FRAUD DISPUTE

September 30, 2009 by Carlton Fields

In a December 22, 2008 post, we reported on a group of litigants in two related lawsuits voluntarily withdrawing motions and claims against each other. In one of the lawsuits, the plaintiff, National Indemnity Company (“NIC”), alleged that the defendants schemed to coerce NIC into relinquishing certain contractual rights and the defendants counterclaimed that NIC schemed to defraud the defendants into purchasing certain stock. The judge in this case has since issued an order removing the motion to dismiss and summary judgment motion from the court’s calendar, stating that the parties reached an agreement to settle the claims and counterclaims. National Indem. Co. v. Greenwich St. Invs. II, LLC, Case No. 08-4067 (USDC S.D.N.Y. Aug. 26, 2009).

This post written by Dan Crisp.

DISTRICT COURT FINDS CONTRACTING PARTIES IN PRIVITY, DISMISSES THIRD PARTY COMPLAINT

September 22, 2009 by Carlton Fields

In the latest development of Guaranteed Trust Life’s (“GTL”) suit for reinsurance benefits from First Student Programs, the Northern District of Illinois granted in full third party defendant American United Life’s (“AUL”) motion to dismiss. After previously granting in part and denying in part AUL’s motion to dismiss, the court invited the parties to readdress the issues of res judicata. In fully granting AUL’s motion in the instant order, the court determined that, even though First Student Programs was not a party to the arbitration between GTL and AUL, it was in privity with GTL. The court concluded that because the two companies’ claims against AUL arose out of the same alleged breach of contract, were based on the same legal and factual arguments, and rested on a contractual relationship between the two companies, Illinois’ privity test was met. Accordingly, First Student Programs’ claim agasint AUL was precluded by the arbitration award against AUL. Guarantee Trust Life Ins. v. First Student Programs, LLC, Case No. 05 C 1261 (N.D. Ill Sept. 9, 2009).

This post written by John Black.