In the AIRROC Annual 2022, the authors published “Dancing to the Beat of Divisive Mergers; The ‘Texas Two-Step’ Bankruptcy Strategy,” summarizing the strategy and discussing several recent cases.1 Most notably, the LTL Management, LLC (Johnson & Johnson) case was discussed in detail. In that case, the talc claimants and others filed a motion to dismiss, arguing that the … [Read more...] about Third Circuit Reverses; Dismisses LTL’s “Texas Two-Step” Bankruptcy Case
Case Law
Arbitration in the Courts
Functus Officio gets a new exception: Second Circuit holds that district courts remand of unreasoned award to arbitrator does not violate the functus officio doctrine. Smarter Tools, Inc. v. Chongqing SENCI Import & Export Trade Co., Ltd., No. 21-724, (2d Cir. January 17, 2023). The functus officio doctrine – Latin for having “completed one’s office” – dictates … [Read more...] about Arbitration in the Courts
Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
In a closely watched decision, the Court of Appeals for the Third Circuit ordered the dismissal of the Chapter 11 petition of LTL Management, LLC, the entity created by Johnson & Johnson to hold J&J’s talc-related liabilities in a divisional merger process under Texas law. Reversing the Bankruptcy Court for the District of New Jersey, the Third Circuit held that … [Read more...] about Third Circuit Dismisses Chapter 11 Filing by Johnson & Johnson Subsidiary Formed to Segregate Talc Liabilities
Follow-the-Fortunes Rejected By 11th Circuit
Follow-the-fortunes is a reinsurance concept that often is misconstrued. Some wish to impose it on every reinsurance contract regardless of whether a follow-the-fortunes clause exists. Cedents invoke it to compel payment from their reinsurers. In a recent case, the Eleventh Circuit had an opportunity to weigh in on whether the follow-the-fortunes doctrine should be inferred … [Read more...] about Follow-the-Fortunes Rejected By 11th Circuit
QuickStudy: Dobbs and the Future of Health Plan Abortion Coverage
The Supreme Court’s June 24 ruling in Dobbs v. Jackson Women’s Health eliminating the constitutional right to an abortion, and leaving states to regulate or restrict the procedure, has created a complex and tangled web of federal and state laws surrounding abortion. The challenge is particularly fraught for health plans that wish to provide coverage of medically necessary … [Read more...] about QuickStudy: Dobbs and the Future of Health Plan Abortion Coverage
The Real Issue In The Sex In A Car Case That Everyone Is Talking About
And Now for Something Completely Different…Auto Insurer Covers Insured’s Dashboard Dalliance?? In M.O. v. GEICO General Ins. Co. No. WD84722 (Mo. Ct. App. June 7, 2022), a Missouri appellate court has confirmed a $5.2M arbitration award against GEICO in favor of petitioner M.O. who alleged that having unprotected sex with GEICO’s insured in his 2014 Hyundai Genesis caused her … [Read more...] about The Real Issue In The Sex In A Car Case That Everyone Is Talking About
Arbitration in the Courts
Absent diversity of citizenship, federal courts lack jurisdiction over petitions to confirm or vacate domestic arbitration awards, even where the underlying claims arise under federal law. U.S. Federal courts are courts of limited jurisdiction, which Congress and the Constitution have defined to include two main categories: “diversity” jurisdiction (suits between citizens of … [Read more...] about Arbitration in the Courts
Massachusetts Federal Court Rejects Adria Towers, Finds Construction Defects Not an “Occurrence”
In an important ruling for insurers, U.S. District Court Judge Patti Saris found that Massachusetts does not follow the position taken in Cypress Point Condo Association v. Adria Towers, LLC, 226 N.J. 403, 418 (2016), i.e., it does not hold that "faulty workmanship claims [should be recognized] as ... an 'occurrence,' thus triggering coverage, 'so long as the allegedly … [Read more...] about Massachusetts Federal Court Rejects Adria Towers, Finds Construction Defects Not an “Occurrence”
Party-Appointed Arbitrators on the Precipice
Concerns about bias and prejudice from multiple repeat appointments have plagued party-appointed arbitrators for years. This is true of international arbitration, commercial arbitration and, of course, insurance and reinsurance arbitration. Recently, there have been several cases in the United States and the United Kingdom addressing implicit bias, repeat players and the need … [Read more...] about Party-Appointed Arbitrators on the Precipice
Uncertainty > Risk: Lessons for Legal Thought from the Insurance Runoff Market
Abstract: Insurance ideas inform legal thought: from tort law, to health law, to theories of distributive justice. Within legal thought, insurance is often conceived as an ideal type in which insurers distribute determinable risks through contracts that fix the parties’ obligations in advance. This ideal type has normative appeal because, among other reasons, it explains how … [Read more...] about Uncertainty > Risk: Lessons for Legal Thought from the Insurance Runoff Market
Exhaustion Found Ambiguous Causing Reinsurer to Follow the Settlement
In a recent facultative reinsurance dispute over the payment of an asbestos settlement, a New York federal court found the term “exhaustion” ambiguous and granted summary judgment to the cedent requiring the reinsurer to pay its share of an asbestos settlement. In Fireman’s Fund Insurance Co. v. OneBeacon Insurance Co., No. 14 Civ. 4718 (PGG) (S.D.N.Y. Oct. 19, 2020), the … [Read more...] about Exhaustion Found Ambiguous Causing Reinsurer to Follow the Settlement
UK High Court Rules on Business Interruption Insurance Test Case
On September 15, 2020, the UK’s High Court issued its highly-anticipated ruling on the “test case” for COVID-19 business interruption insurance coverage. The case was brought by the UK Financial Conduct Authority (FCA) on behalf of several policyholders – many small and medium sized enterprises (SMEs) – to determine how the Court would rule on several different policy wordings … [Read more...] about UK High Court Rules on Business Interruption Insurance Test Case
To the Cedent, Summary Judgment
A New York federal court grants summary judgment to a cedent for breach of contract where reinsurer failed to provide the required collateral. Legal News Many reinsurance arrangements require the posting of collateral. The failure to post collateral is often grounds for a breach of contract claim. In a recent decision, a New York federal court granted summary judgment to the … [Read more...] about To the Cedent, Summary Judgment
No Tort Liability in Reinsurance Contract Dispute Under California Law
California federal court addressing an issue of the first impression holds that tort liability for breach of the implied covenant of good faith and fair dealing was not a valid cause of action under California law in a reinsurance dispute. A typical reinsurance dispute is essentially a breach of a contract dispute. A reinsurance agreement is a contract between two insurance … [Read more...] about No Tort Liability in Reinsurance Contract Dispute Under California Law
Arbitration Prevails in Coverage Dispute
Court compels arbitration finding issue of arbitrability was delegated to the arbitrators as well as sorting out procedural differences between the arbitration provisions. https://www.inredisputesblog.com/2020/06/arbitration-prevails-in-coverage-dispute/ … [Read more...] about Arbitration Prevails in Coverage Dispute
Using a Letter Agreement to Strengthen the Confidentiality of Settlement Negotiations
Letter agreements are usually confidential. As a result, there is a dearth of practical guidance on when, and how, to use them. Porter Wright Morris & Arthur LLP helps fill that gap. Your settlement negotiation checklist should include this entry: “whether, and how, to use a letter agreement.” A letter agreement—if well-drafted—can … [Read more...] about Using a Letter Agreement to Strengthen the Confidentiality of Settlement Negotiations
Assessing USF&G’s ‘Objective Reasonableness’ Standard
Let’s take a look at the impact of one of the reinsurance industry’s most talked about and scrutinized case dealing with post-settlement allocations. http://airrocupdate.wpengine.com/wp-content/uploads/2020/05/ARIAS-Q1-Final-1.pdf This article was first published in the ARIAS-U.S. Quarterly, Q1 2020. … [Read more...] about Assessing USF&G’s ‘Objective Reasonableness’ Standard
Second Circuit Says Cedent Cannot Use the “Follow-the-Settlements” Doctrine to Circumvent Plain, Unambiguous Policy Provision
Second Circuit holds that the “follow-the-settlements” doctrine does not bind a reinsurer to settlement decisions that are inconsistent with the plain, unambiguous terms of the reinsured policy. https://www.whiteandwilliams.com/resources-alerts-Second-Circuit-Says-Cedent-Cannot-Use-the-Follow-the-Settlements-Doctrine-to-Circumvent-Plain-Unambiguous-Policy-Provision.html … [Read more...] about Second Circuit Says Cedent Cannot Use the “Follow-the-Settlements” Doctrine to Circumvent Plain, Unambiguous Policy Provision
Arbitrators to Decide If Reinsurance Rebilling After Final Arbitration Award Is Precluded
Federal District Court in Massachusetts holds that the preclusive effect of a prior arbitration award is itself an arbitrable issue. Read full article here - https://www.inredisputesblog.com/2020/03/arbitrators-to-decide-if-reinsurance-rebilling-after-final-arbitration-award-is-precluded/ … [Read more...] about Arbitrators to Decide If Reinsurance Rebilling After Final Arbitration Award Is Precluded
Final Award Confirmed Over Interim Final Award in Reinsurance Dispute
Court rules that the Final Award is the Final Award and rejects reinsurer’s argument that the arbitration panel was functus officio after it issued the Interim Final Award. Read full article here - https://www.inredisputesblog.com/2020/04/final-award-confirmed-over-interim-final-award-in-reinsurance-dispute/ … [Read more...] about Final Award Confirmed Over Interim Final Award in Reinsurance Dispute