Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

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Week's Best Posts

COURT COMPELS ARBITRATION OF PAST DISPUTE UNDER ARBITRATION CLAUSE COVERING FUTURE TRANSACTIONS

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In a suit over an energy developer’s alleged failure to pay for energy services, a court has granted a motion to compel arbitration based on an arbitration clause in a contract that was made after the transaction in dispute, and despite the contract’s express application to future transactions between the parties. The court reasoned that, despite the bulk of the agreement’s application to future contingencies and dealings, some of the agreement’s provisions, including the arbitration clause, evidenced a present agreement that would take effect immediately. The court further held that, given that the arbitration clause at issue was a broad one and that federal and Oklahoma policies favor arbitration, the clause would apply “despite the fact that the dealings giving rise to the dispute occurred prior to the execution of the agreement.” Warrior Energy Services Corp. v. Last Run, LLC, Case No. CIV-10-0961 (USDC W.D. Okla. Dec. 1, 2010).

This post written by Michael Wolgin.

REINSURANCE DISPUTE DISMISSED FOR LACK OF PERSONAL JURISDICTION

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A federal district court recently granted two individual corporate officer defendants’ motion to dismiss against plaintiff Capitol Insurance. Capitol sued a number of individuals and corporations for alleged losses arising from a reinsurance agreement Capitol entered into with Aldrostar, S.A. The defendants included, among others, Alison Dvorak and Charles Dvorak who allegedly represented themselves as “officers, employees, agents, or servants of the corporate defendants.” The court found that Capitol failed to establish the court’s personal jurisdiction over the Dvoraks. The court held that Alison did not have the requisite minimum contacts with Pennsylvania and that the action against Richard did not arise out of his contracts with the state. Capitol also failed to demonstrate why the corporate shield would not protect the Dvoraks in their individual capacities. Accordingly, Capitol’s assorted claims were dismissed. Capitol Ins. Co. v. Dvorak, Case No. 10-01195 (USDC E.D. Pa. Oct. 29, 2010).

This post written by John Black.

HAPPY HOLIDAYS FROM THE STAFF OF REINSURANCE FOCUS

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As 2010 comes to a close, the staff of Reinsurance Focus wishes to thank our readers for their interest in and support of our blog. Our readership has grown this year, both in numbers and in the variety of the occupation of our readers. We passed the 1,000 post mark and expanded our content, including our first webinar. This has been a good year for us, and we hope that it has been a good year for you too. We look forward to sharing more developments with you in 2011. Happy Holidays!

Rollie Goss
Brian Perryman
Karen Benson
John Black
Anthony Cicchetti
John Pitblado
Ben Seessel
Michael Wolgin

NAIC ADOPTS REINSURANCE AND SURPLUS LINES PROPOSALS; NCOIL ALTERNATIVE GAINS SUPPORT

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On December 16, 2010, the NAIC adopted the proposed Reinsurance Collateral Reduction & Accreditation Recommendations and the Nonadmitted Insurance Multistate Agreement (“NIMA”), which were profiled in our December 6, 2010 post. The broader surplus lines proposal adopted by the National Conference of Insurance Legislators, profiled in the same post, now has the support of both the Council of State Governments and the National Conference of State Legislatures. The open question is how the states will react to these non-binding proposals.

This post written by Rollie Goss.

APPEALS COURT DERAILS ATTEMPT TO VACATE ARBITRATION AWARD

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Burlington Northern and Santa Fe Railway Company (BNSF) and the Public Service Company of Oklahoma (PSO) entered into a long-term agreement in 1985 pertaining to the transport of coal. A dispute about rates arose and the matter was submitted to arbitration, as per the parties’ agreement. The arbitration provision was limited to rate disputes. The panel awarded PSO the rate decrease it sought, and BNSF thereafter moved to vacate the award in federal district court, arguing the panel (1) exceeded its authority by deciding matters outside the scope of the submission; and (2) incorrectly interpreted the contract in manifest disregard of the law. The district court ultimately confirmed the award, and BNSF revived its arguments on appeal to the Tenth Circuit Court of Appeals. The Tenth Circuit affirmed, finding that BNSF was merely seeking to alter its burden by disguising the issue as one of arbitrability, when really it was seeking review of the decision on the merits. Applying the correct standard of “extreme deference” to the panel’s decision on the merits, the court affirmed the district court’s ruling confirming the panel’s award. Burlington Northern and Santa Fe Railway Co. v. Public Service Company of Oklahoma, No. 09-5133 (10th Cir. Dec. 10, 2010).

This post written by John Pitblado.