New reinsurance-related and arbitration developments from Carlton Fields
The NAIC has had a special sub-group reviewing the regulation and use of captive insurers and special purpose vehicles. John Pitblado reports in a Special Focus article on the scope and development of this review.
This post written by John Pitblado.
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In an antitrust suit by certain pharmacies against CaremarksPCS, the plaintiffs appealed a trial court order granting defendant Caremark’s motion to compel arbitration based on the parties’ arbitration agreement. The plaintiffs argued that (1) Caremark waived its right to arbitrate by actively litigating the case in federal court for over ten months before demanding arbitration; and (2) that the arbitration clause is unenforceable because it limited the remedies available under the Sherman Act. The Third Circuit agreed with the plaintiffs, finding that Caremark waived the right to arbitrate based on the fact that it actively litigated the matter for so long prior to demanding arbitration. The court did not reach the second argument, as it was rendered moot by the holding on waiver. In re Pharmacy Benefit Managers Antitrust Litigation, No. 12-1430 (3d Cir. Nov. 15, 2012).
This post written by John Pitblado.
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Continental Casualty Company sold its crop insurance book of business to IGF Insurance Company, which subsequently sold the business to Acceptance Insurance Companies. Continental asserted claims against IGF, its affiliates, and certain of its officers and directors, alleging that $24,000,000 that Acceptance paid IGF to purchase the business had been illegally diverted to IGF affiliates and IGF officers and directors, rendering IGF unable to pay its significant debt to Continental. The court found that IGF had illegally diverted the $24,000,000 and, further, that certain of its officers and directors were jointly and severally liable for the debt owed to Continental. More than two years later, these officers and directors filed a motion to amend the court’s findings of fact and conclusions of law and for entry of judgment in their favor. The court rejected the directors’ request in substance, amending only an inconsequential finding of fact. IGF Insurance Co. v. Continental Casualty Co., Case No. 1:01-cv-799-RLY-MJD (S.D. Ind. Nov. 14, 2012).
This post written by Ben Seessel.
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The Second Circuit has dismissed an appeal arising from a reinsurance dispute between Northwestern National Insurance Company and Insco, Ltd. As we last reported in a December 29, 2011 post, those entities were parties to a reinsurance agreement and submitted a dispute to arbitration, with each party appointing its own arbitrator, and those two in turn selecting a neutral third to act as umpire. Insco’s appointed arbitrator shared private email communications between panel members with Insco’s counsel, believing that they showed that Northwestern’s selected arbitrator could not serve as an impartial arbitrator. Insco reviewed the emails and thereafter demanded that all the arbitrators resign immediately. Northwestern’s arbitrator resigned, but Insco’s and the neutral umpire did not. Northwestern then became suspicious that Insco had received the private panel member emails and demanded copies, but Insco refused. Northwestern named a new arbitrator, and the panel took up the issue, compelling production, determining that Insco’s counsel had acted inappropriately, and allowing the parties time to take the matter up in court.
Northwestern brought an action in federal court to disqualify Insco’s counsel. The trial court granted the motion to disqualify. Insco appealed, challenging the trial court’s jurisdiction and statutory authority to do so. On November 6, 2012, however, Insco moved to dismiss the appeal because the parties had settled the underlying arbitration. That motion was granted on November 21, 2012. Northwestern National Insurance Co. v. Insco, Ltd., No. 11-4626 (2d Cir. Nov. 21, 2012).
This post written by Brian Perryman.
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Amerisure successfully arbitrated a dispute with Global Re. Under the parties’ reinsurance agreement, arbitration was to be governed by Illinois law, though Amerisure is a Michigan-based company and Global Re is based in New York. Amerisure’s award was confirmed by an Illinois circuit court but the portion of it awarding attorney’s fees was vacated. Subsequently, Amerisure filed a one-count complaint in the circuit court seeking attorney’s fees pursuant to Illinois statute. The court dismissed Amerisure’s complaint, determining that New York law applied to the lawsuit and that New York law did not permit an award of attorney’s fees in this instance. While the parties agreed that Illinois law should apply to arbitration matters, there was no such provision governing litigation. Absent a governing choice of law provision, New York law applied because New York had the most significant contacts with the parties’ dispute. Amerisure Mutual Insurance Co. v. Global Reinsurance Corp. of America, Case No. 10 L 012665 (Ill. Cir. Ct. Nov. 7, 2012).
This post written by Ben Seessel.
See our disclaimer.