A dispute over rural water district revenue bonds has reached an end. CIFG commenced an action in the Supreme Court for New York County to recover for payments it made to its insured, Xenia Rural Water District, under a financial guarantee insurance policy which allegedly should have been made by defendant Assured Guaranty pursuant to a reinsurance agreement. CIFG further contended that failure to pay constitutes a breach of the parties’ administrative services agreement. CIFG moved for summary judgment. The Supreme Court granted the motion, finding that the reinsurance agreement clearly allows for exclusion of policies with investment ratings below certain thresholds, even if the policy was inadvertently listed as meeting the threshold requirement at the time. The court, however, also granted summary judgment to Assured on CIFG’s allegation that Assured acted in bad faith. Finally, the court dismissed several of Assured’s affirmative defenses and its counterclaims.
Shortly following the Supreme Court’s order, the parties announced in a press release that they had reached a settlement dismissing the action altogether. Under the settlement agreement, Assured will reinsure 100% of the Xenia policy, and CIFG and Assured will seek to novate the policy to Assured according to the terms and procedures adopted by the parties with respect to the novation of other CIFG policies covered by the reinsurance agreement. CIFG Assurance North America, Inc. v. Assured Guaranty Corp., No. 651090/10 (N.Y. Sup. Ct. June 15, 2011).
This post written by John Black.