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New reinsurance-related and arbitration developments from Carlton Fields

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Week's Best Posts

WITH OR WITHOUT PREJUDICE, THAT IS THE QUESTION

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A California federal court addressed arguments pertaining to whether a dismissal of a third party complaint as part of a settlement agreement between a plaintiff insurer and defendant-third-party-plaintiff reinsurer should be with or without prejudice. The third party plaintiff argued that the nature of the agreements between it and the third party defendant, another pool reinsurer (and no settlement had been reached as between these two parties), as to future indemnification obligations left open questions that could be precluded by dismissal with prejudice. The court ordered the dismissal without prejudice, invoking its broad discretion under Rule 41, and citing a failure by the third party defendant to identify a concrete harm it would suffer from a dismissal without prejudice. Eagle Star Ins. Co., Ltd. v. Highland Ins. Co., No. 02-cv-2165 (USDC S.D. Cal. July 22, 2010).

This post written by John Pitblado.

EIGHTH CIRCUIT HOLDS THAT HALL STREET ELIMINATED MANIFEST DISREGARD OF LAW DOCTRINE; AFFIRMS ARBITRATION AWARD

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Following an arbitration award and district court confirmation granting Medicine Shoppe International lost future profits and future license fees, defendants/appellants Turner Investments and Donnie Turner (President of Turner Investment) appealed to the Eighth Circuit arguing that the district court erred in confirming the award because the arbitrator showed a manifest disregard for the law. Specifically, Turner Investments assert that Medicine Shoppe failed to demonstrate future profits with reasonable certainty as required by Missouri law, that Medicine Shoppe failed to mitigate damages, and that the award of future fees to a franchisor hampered the growth of important franchise markets contrary to public policy. The Eighth Circuit affirmed the award, citing Hall Street Assoc. LLC v. Mattel, Inc., 552 U.S. 576 (2008) for the proposition that only the enumerated reasons listed in the FAA justify vacatur of an arbitration award. Having found that none of the enumerated reasons existed, the Court affirmed the judgment of the district court. The Eighth Circuit therefore joins the list of Circuit Courts of Appeal which have held that the doctrine of manifest disregard of law did not survive Hall Street. Medicine Shoppe Int’l, Inc. v. Turner Investments, Inc., Case No. 09-2179 (8th Cir. July 21, 2010).

This post written by John Black.

WEBINAR ON THE REINSURANCE IMPLICATIONS OF THE DODD-FRANK ACT

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The staff of Reinsurance Focus and Carlton Fields’s Reinsurance Industry Group are producing a webinar on the reinsurance implications of the Dodd-Frank Act (the financial regulatory reform act signed by President Obama last week) which is complimentary for Reinsurance Focus subscribers. The webinar will occur this Thursday, July 29 at 3:00pm Eastern time. Subscribers should go to the Subscribers Only area – Webinars – for further information. E-mail the blogmaster, Rollie Goss, if you are a subscriber but have misplaced your Subscriber Only area access password.

This post written by Rollie Goss.

Protected: Webinars

ANOTHER NAME AT LLOYDS’ MOUNTS AN UNSUCCESSFUL ENFORCEABILITY CHALLENGE TO A JUDGMENT AGAINST HIM

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The Second Circuit has affirmed the dismissal of another of a rash of lawsuits by Names at Lloyd’s challenging the enforceability of judgments obtained against them by Lloyd’s in the United Kingdom. The plaintiff Richard A. Tropp, a Name at Lloyd’s, brought a suit in federal district court to declare that a judgment obtained against him by Lloyd’s was unenforceable, as well as for an accounting from Lloyd’s. Tropp invested $160,000 of his retirement savings in the market but, due to its collapse, became liable to Lloyd’s on a $900,000 judgment entered by a UK court. Lloyd’s moved to dismiss for improper venue, since Tropp agreed in the “Choice Clause” of his contract with Lloyd’s to litigate all disputes in England, and for failure to state a claim. Tropp’s primary argument was that this forum selection clause is unenforceable because UK law deprived him of any remedy. The district court rejected this, because a “close reading” of the UK litigation revealed Tropp was not denied any remedy, but “simply was not victorious on the merits of his claims.” The UK courts provided due process. Tropp v. Corporation of Lloyd’s, Case No. 07 Civ. 414 (USDC S.D.N.Y. Mar. 26, 2008).

In a summary order, the Second Circuit affirmed, principally reasoning that, although Tropp was unsuccessful in his attempts to assert defenses and counterclaims against Lloyd’s in the UK courts, “his experiences do not cause us to revisit our holding that the Lloyd’s forum selection clauses (of which this is one) are valid because UK remedies are available.” Tropp v. Corporation of Lloyd’s, No. 08-2332 (2d Cir. July 19, 2010).

This post written by Brian Perryman.

SPECIAL FOCUS: DODD-FRANK REGULATORY MODERNIZATION ACT

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On July 15, 2010, the Senate passed the Dodd-Frank Act (“DFA”), the financial regulatory modernization act that has been in the process of development and consideration by the Congress for over a year. Rollie Goss presents a Special Focus analysis of the potential impact of the DFA on the insurance and reinsurance industries and markets.

Carlton Fields will present a free webinar for Reinsurance Focus subscribers and Carlton Fields clients on the DFA’s potential impact on the insurance and reinsurance industries and markets. The webinar also will cover the potential impact of the DFA on actions by New York, Florida and potentially other states with respect to the requirement of collateral for reinsurance transactions, and the NAIC’s proposals for the regulation of reinsurance. Webinar login information will be sent to Reinsurance Focus subscribers by e-mail. To subscribe and participate in this webinar, go to our subscription page.

This post written by Rollie Goss.