New reinsurance-related and arbitration developments from Carlton Fields
We previously reported on Utica Mutual Insurance Company and R & Q Reinsurance Company’s dispute arising out of the alleged breach of three confidentiality agreements, including one entered as an order in the parties’ pending reinsurance arbitration. By Order dated February 27, 2013, the case is reported as settled, though none of the terms were disclosed. Utica Mut. Ins. Co. v. INA Reinsurance Co., No. 6:12-cv-194 (USDC N.D.N.Y. Feb. 27, 2013).
This post written by John Pitblado.
First State Insurance Company and National Casualty Company arbitrated a reinsurance dispute in which the panel issued a confidentiality order prohibiting disclosure of confidential arbitration information. First State sought confirmation of an arbitration award in its favor by filing a petition in federal district court attaching the arbitration award to its moving papers. National Casualty moved to seal the record, including the award itself, arguing that public interest in access to the documents was low but an affiliate of National Casualty and third-parties could be injured if the award was made public because the award could be used to their disadvantage in other pending arbitration proceedings. The federal district court rejected National Casualty’s motion, holding that National Casualty had not overcome the presumption of public access to judicial documents, which included First State’s moving papers and the award itself. First State Insurance Co. v. National Casualty Co., Case No. 1:13-cv-00704 (USDC S.D.N.Y. Feb 19, 2013).
This post written by Ben Seessel.
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USF&G settled underlying asbestos coverage claims for nearly a billion dollars, and looked to its reinsurers for coverage. The reinsurers, including American Re, challenged the claims, and USF&G brought suit. A New York state trial court granted USF&G summary judgment, and the intermediate appellate court affirmed. American Re petitioned to New York’s high court, arguing (1) summary judgment was improper because USF&G improperly calculated its share of the losses; and (2) USF&G improperly attempted to allocate the portion of the underlying settlements attributed to bad faith claims against USF&G to the reinsurers.
As to issue (1), the Court of Appeals affirmed, citing the “follow the settlements” doctrine. As to issue (2), the Court agreed with American Re that summary judgment was improper as to the issue of allocating a portion of the settlements that could reasonably have been attributed to extracontractual bad faith claims against USF&G. It remanded with instructions for the trial court to determine if, and by how much, it should reduce allocation to the reinsurers of any portion of the underlying settlements attributable to USF&G’s settlement of the underlying bad faith claims against it, for which the reinsurers are not responsible. United States Fidelity & Guaranty v. American Re-insurance Co., 2013 NY Slip Op 00784 (N.Y. Feb. 7, 2013).
This post written by John Pitblado.
In a case that has been litigated since 2004, and on which we have frequently reported, the New York Attorney General (“NYAG”) has attempted to block progress toward resolution by filing an objection to the pending settlement between class plaintiffs and a group of defendants. The NYAG asserts that the settlement is “unfair and inadequate” because it does not take into account an allegedly fraudulent finite reinsurance transaction between AIG and General Reinsurance Corp. The court found that the NYAG lacks standing to object, both under the Class Action Fairness Act and constitutional standing requirements, and denied the NYAG’s request for intervention taking into consideration the interest of the settlement class to resolve the matter without further delay. The court did, however, entertain the NYAG’s concerns about misrepresentations in the Class Notice regarding findings from the plaintiffs’ loss causation expert and ordered a Supplemental Notice to be sent out, which includes an additional opportunity to opt out of the settlement class. The Fairness Hearing for the proposed settlement is set for April 10, 2013. In re American International Group, Inc. Securities Litigation, Case No. 04-cv-8141 (USDC S.D.N.Y. Jan. 7, 2013).
This post written by Abigail Kortz.
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Following is a summary of five recent opinions of note concerning the interpretation of arbitration agreements and arbitration procedure:
Klein v. Nabors Drilling USA L.P., Case No. 11-30824 (5th Cir. Feb. 26, 2013) (reversing denial of motion to compel arbitration; option in contract to agree to non-binding alternative dispute resolution proceedings did not render mandatory arbitration clause unenforceable).
Noohi v. Toll Bros., Inc., Case No. 12-1261 (4th Cir. Feb. 26, 2013) (affirming denial of motion to dismiss or stay pending arbitration; arbitration clause was unenforceable because it lacked mutuality of consideration under state law, notwithstanding Concepcion).
GGNSC Omaha Oak Grove, LLC v. Payich, Case No. 12-2592 (8th Cir. Mar. 4, 2013) (affirming denial of application to compel arbitration; estate of deceased nursing home resident was not bound by arbitration agreement as a third-party beneficiary where agreement was not executed by decedent’s son in his individual capacity).
Landers v. FDIC, Case No. 27223 (S.C. Feb. 27, 2013) (reversing denial of motion to compel arbitration of claims for slander, emotional distress, illegal proxy solicitation, and wrongful expulsion, in connection with arbitration clause in employment agreement; the “pleadings provide a clear nexus between [plaintiff’s] claims and the employment contract sufficient to establish a significant relationship to the employment agreement”).
MHC Kenworth-Knoxcille/Nashville v. M & H Trucking, LLC, Case No. 2011-SC-000441 (Ky. Feb. 21, 2013) (reversing order denying motion to compel arbitration; state case law holding jurisdiction does not exist for state courts to compel out-of-state arbitration did not apply when arbitration clause provided for choice of law to be the FAA).
This post written by Michael Wolgin.
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