National Indemnity Company provided reinsurance to Seaton Insurance Company and Stonewall Insurance Company, both of which were in run-off. Castlewood, Inc. entered into an agreement with Seaton and Stonewall to provide administratrive services for the run-off of their business. When arbitrations commenced between NICO and Seaton and Stonewall on their reinsurance agreements, NICO sought to add Castlewood to the arbitrations, despite the lack of an arbitration agreement in Castlewood's agreements with Seaton and Stonewall. The Court granted Castlewood's request for a preliminary injunction preventing its addition to the arbitrations, subject to a $1 million injunction bond. Castlwood, Inc., v. National Indemnity Co., Case No. 06-6842 (USDC S. D. N.Y. Oct. 24, 2006). NICO sought to compel Castlewood to arbitrate based upon theories of assumption and estoppel, and because Castlewood's agreement provided that its administration of the run-off would not conflict with the reinsurance obligations of Seaton and Stonewall. The Court found this an insufficient basis to compel Castlewood's participation in arbitration.
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