A US District Court, which had twice before denied motions to dismiss for lack of personal jurisdiction filed by Equitas Holdings Limited, Equitas Reinsurance Limited and Equitas Limited, has granted a motion to dismiss filed by the same entities in a third case seeking arbitration of issues arising out of the denial of reinsurance claims. Employers Insurance Company of Wausau v. Equitas Holdings Limited, Case no. 06-291 (W.D. Wisc. Sept. 12, 2006). The Court found that the factual record before it in the prior cases had not been fully developed, and that it was joining the majority of courts that had ruled on this issue.
A Court has granted summary judgment on most claims relating to surety bonds that secured obligations under premium finance agreements. Westrm-West Risk Markets, Ltd. v. XL Reinsur. America, Inc., Case No. 02-7344 (USDC S.D. N.Y. July 19, 2006). The claims were complicated by allegations that the signature of the broker's representative were forged on some of the documents.
The United States Court of Appeals for the First Circuit has joined numerous other Circuits this year in announcing a harsh standard for vacating arbitration awards on the basis that they are in manifest disregard of the law. In , Case No. 06-1001 (1st Cir. Sept. 19, 2006), the Court vacated a District Court Order that set aside an arbitration award. The Court of Appeal held that to prevail in establishing manifest disregard, “there must be some showing in the record, other than the result obtained, that the arbitrators knew the law and expressly disregarded it. … 'Disregard' implies that the arbitrators appreciated the existence of a governing legal rule but wilfully decided not to apply it.” The District Court had previously vacated a decision by the Panel and remanded with instructions, which it believed the Panel “might” have disregarded on remand. The Court of Appeal held that this was insufficient to vacate the Panel's second award, because, as stated by the Supreme Court in United Paperworkers Int'l Union v. Miusco, Inc., 484 U.S. 29, 38 (1987), courts “do not sit to hear claims of factual or legal error by an arbitrator as an appellate court does in reviewing decisions of lower courts.” The First Circuit concluded that even if legal error is “painfully clear, courts are not authorized to reconsider the merits of arbitration awards.”
Two courts recently addressed discovery issues relating to reinsurance.
- In , Case No. 4-1437 (USDC E.D. Mo. Aug. 30, 2006), a coverage action, the Court denied a motion to compel discovery of information about reserve funds and reinsurance, on the basis that they were subject to work product protection and of limited relevance.
- , Case No. 05-02238 (USDC N.D. Cal. Sept. 13, 2006), involved a claim on a life insurance policy for breach of contract and bad faith. The Court denied a motion to quash a subpoena issued to a reinsurer of the risk, finding that the requested information was discoverable and not privileged.
In the massive criminal tax case against seventeen former partners and employees of KPMG, KPMG declined, under severe pressure from the government, to pay the attorneys' fees of the defendants. The District Court permitted the defendants to add KPMG as a defendant, and assert a claim against it for fees. The Court recently denied KPMG's motion for summary judgment, and set the claims seeking the advancement of fees for trial on an expedited basis. , Case No. 05-crim-0888 and 06-civ-5007 (USDC S.D. N.Y. Sept. 6, 2006). The Court rejected KPMG’s contention that the fee issue was subject to arbitration under the partnership agreement, in part because not all of the defendants had been partners, but also on public policy grounds, due to the severe disruption that such a course would necessarily have had on the pending criminal case. This opinion may become of interest to reinsurers to the extent that there are criminal charges filed relating to finite reinsurance matters.