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COURT ENFORCES ARBITRATION AGREEMENT AGAINST INSURER AND ITS SUBSIDIARY DESPITE THRESHOLD CONTRACTUAL DEFENSES

October 24, 2013 by Carlton Fields

The court compelled arbitration in a dispute over asbestos insurance coverage that had reached an impasse after six years of mediation. The insured sought to compel arbitration against the insurer and the insurer’s nonsignatory subsidiary, which had purportedly separately contracted with the insurer to reimburse a portion of the risk. The court compelled arbitration against the subsidiary because the insured had entered into a broad agreement with the subsidiary to arbitrate disputes related to asbestos claims, and the threshold question of whether the subsidiary agreed to provide insurance coverage was subject to arbitration. The court also compelled arbitration against the signatory insurer over the insurer’s objection that it had a separate written agreement with the insured to resolve disputes only through litigation. The court found that although the insurer never agreed to arbitrate, the insurer had “exploited” the arbitration agreement of its subsidiary by mediating the dispute for six years. The insurer was estopped from avoiding arbitration because the insured had relied on the insurer’s “exploit[s]” to its detriment, having “lost the time value of money” and “spent six years attempting to reach resolution through mediation.” Fintkote Co. v. Indemnity Marine Assurance Co., Case No. 1:13-cv-00935 (USDC D. Del. Sept. 30, 2013).

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Arbitration Process Issues

REINSURER’S APPEAL OF FAVORABLE ORDER ON CONTRIBUTION CLAIMS DISMISSED AS MOOT

October 23, 2013 by Carlton Fields

On May 17, 2012, we reported on a district court decision granting summary judgment to a reinsurer on contribution claims asserted against it by two cedents. The cedents had sought contribution after they faced litigation arising out of their denial of defense and indemnity coverage to their insured under liability insurance policies, related to a government-mandated cleanup of polluted lands. The district court granted summary judgment on the ground that the claim for defense and indemnity, upon which the claim for contribution was based, was barred by limitations. The Eighth Circuit has now affirmed the district court’s order, and dismissed as moot the reinsurer’s appeal, which argued against contribution in the event that the appellate court were to reverse. Land O’ Lakes, Inc. v. Employers Insurance Co. of Wausau, No. 12-1887 (8th Cir. Aug. 29, 2013).

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Reinsurance Claims

TREATY TIPS: THE SCOURGE OF MULTIPLE DISPUTE PROCEEDINGS

October 22, 2013 by Carlton Fields

Continuing our series of reinsurance Treaty Tips, Rollie Goss writes about how to try to manage the risks of multiple disputes concerning one reinsurance contract or a reinsurance program in The Scourge of Multiple Dispute Proceedings.

Filed Under: Contract Formation, Week's Best Posts

SILENCE ON EXPENSE LIABILITY IN CONTRACT FAVORS REINSURER

October 21, 2013 by Carlton Fields

In one of the sister cases previously reported on involving Utica Mutual Insurance Company and one of its reinsurers Munich Reinsurance, a federal district court granted Munich’s motion for summary judgment. Utica sought reimbursement under the reinsurance contract for expenses incurred in litigation with an insured. At issue was whether the reinsurance contract subjected those expenses to Munich’s limit of liability or whether Munich was obligated to pay for those expenses in addition to its $5 million limit of liability. Based on Second Circuit and New York Court of Appeals precedent regarding limit-of-liability provisions in reinsurance contracts, the court held that the limit-of-liability provision applicable to Munich was unambiguously cost-inclusive and that Munich was obligated to Utica for no more than the $5 million. Utica Mutual Insurance Co. v. Munich Reinsurance America, Inc., Case No. 6:12-CV-0196 (N.D.N.Y. Sept. 30, 2013).

This post written by Abigail Kortz.

See our disclaimer.

Filed Under: Contract Interpretation, Reinsurance Claims, Week's Best Posts

ARBITRATION AWARD INTEREST WHEN THE AWARD IS PARTIALLY SILENT

October 17, 2013 by Carlton Fields

In Lagstein v. Certain Underwriters at Lloyd’s of London, No. 03-01075 (9th Cir. June 10, 2010), a $900,000 insurance bad faith case, the Ninth Circuit reversed the vacatur of an arbitration award of over $6 million, including hefty punitive damages, holding that the award was not excessive and that the vacator was not supported by the Federal Arbitration Act. Recently revisiting the issue of the proper interest to be awarded, the Ninth Circuit held that an explicit award of interest on the award’s contract damages “d[id] not foreclose … awarding interest on the remaining portions of the arbitration award.” Applying state law for post-award, pre-judgment interest and federal law for post-judgment interest, the court then ordered Lloyd’s (1) to pay interest on all of the damage awards from award date until judgment satisfaction and (2) to pay interest on post-award, pre-judgment interest from the date of the court’s opinion until satisfaction. Lagstein v. Certain Underwriters at Lloyd’s of London, No. 2:03–01075 (9th Cir. Aug. 5, 2013).

This post written by Kyle Whitehead.

See our disclaimer.

Filed Under: Confirmation / Vacation of Arbitration Awards

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