Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

SUMMARY JUDGMENT DENIED ON ISSUE OF WHETHER COMPANY WAS PARTY TO REINSURANCE AGREEMENT

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In a long running dispute concerning reinsurance, which we posted on in March 2011, a court was asked to find that Guarantee Trust was a party to a reinsurance agreement that it never signed. Acknowledging that it was a well established principle of Illinois contract law that “a party may, by his acts and conduct, assent to contravct terms and become bound by them even though he has not signed the contract, if it is clear that his conduct relates to the specific contract in question,” the cour found that there were disputed issues of material fact as to whether American Medical had demonstrated the types of acts and conduct which would bind Guarantee Trust to a reinsurance agreement it had not signed. The court therefore denied American Medical’s motion for summary judgment. Guarantee Trust Life Ins. Co. v. American Medical and Life Ins. Co., Case No. 10-2125 (USDC N.D. Ill. Mar, 27, 2013).

This post written by Rollie Goss.

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ONLINE ARBITRATION AGREEMENT ROUNDUP

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There are three recent opinions on motions to compel arbitration which illustrate the impact of the Internet in this area of the law.

Guidotti v. Legal Helpers Debt Resolution, L.L.C., No. 12-1170 (3d Cir. May 28, 2013) (reversing lower court’s partial refusal to compel arbitration in putative class action; lower court must permit discovery and make findings whether absence of electronic header associated with third-party document hosting website supported plaintiff’s claim that plaintiff never reviewed arbitration provision nor agreed to arbitrate).

Chatman v. Pizza Hut, Inc., Case No. 1:12-cv-10209 (USDC N.D. Ill. May 23, 2013) (granting motion to compel individual arbitration in case brought as putative employment class action; finding that arbitration provision in online agreement was supported by three forms of consideration: (1) Pizza Hut’s promise to consider the plaintiff for employment; (2) Pizza Hut’s obligation to submit to binding arbitration; and (3) Pizza Hut’s continued employment of the plaintiff).

Dixon v. NBCUniversal Media, LLC, Case No. 2:12-cv-07646 (USDC S.D.N.Y. May 28, 2013) (granting motion to compel individual arbitration in case brought as putative employment class action, notwithstanding employee’s failure to review arbitration agreement in ADR manual; employee completed online PowerPoint training, which disclosed that binding nature of the ADR program, that it applied to employee’s claims, that no collective procedure would be permitted, and that continued employment constituted an agreement).

This post written by Michael Wolgin.

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RES JUDICATA BARRED CLAIMS RESOLVED IN ARBITRATION DESPITE ARBITRATOR’S COMMENTS REGARDING LIMITATIONS ON AUTHORITY

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In a longstanding dispute arising out of an oil development venture, an intermediary seeking additional profits appealed to the Fifth Circuit after the lower court dismissed the intermediary’s RICO claims that had been previously resolved in arbitration. The arbitration award had rejected the intermediary’s claims based on alleged bribes that associated oil companies allegedly paid to foreign officials. Finding that res judicata barred the intermediary’s claims, the Fifth Circuit rejected the intermediary’s argument that the arbitrator had failed to exercise jurisdiction when he stated in the course of dismissing the claims that he lacked authority to determine criminality under RICO. The Fifth Circuit held that the arbitrator’s statement was not indicative of a refusal to consider the intermediary’s claims, that the arbitrator did in fact exercise jurisdiction, and that as a result, the lower court correctly found that res judicata barred the intermediary’s lawsuit. Grynberg v. BP, P.L.C., Case No. 12-20291 (5th Cir. June 7, 2013).

This post written by Michael Wolgin.

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CAPTIVE REINSURANCE LAWSUIT DISMISSED

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A lender defendant successfully moved for the dismissal of a putative class action centered on residential mortgages acquired through National City Mortgage (“National City”). Plaintiffs allege that National City and its reinsurer National City Mortgage Insurance Company conspired with private mortgage insurers to create a “captive reinsurance scheme.” This scheme, with primary insurers paying NCMIC a portion of insurance premiums for the assumption of risk, circumvented the kickback prohibitions of the Real Estate Settlement Procedures Act. These insurance premium payments were allegedly made by the primary insurers for the referral of business. Plaintiffs alleged they were entitled to equitable tolling. The Court rejected this argument holding that the amended complaint contained only general allegations of an agreement between the defendants and contained no tolling date. Plaintiffs also failed to show “an affirmative act of concealment by each defendant.” The Court declined to exercise jurisdiction over a state-law claim for unjust enrichment. White v. PNC Financial Services Group, Inc., Case No. 2:11-cv-07928-LS (USDC E.D. Pa. June, 4, 2013).

This post written by Brian Perryman.

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