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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

PACIFIC EMPLOYERS INSURANCE COMPANY v. GLOBAL REINSURANCE CORPORATION OF AMERICA

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
1:11-cv-06301 Search Pacer
ACE Group party(s): 
Opposing Party: 
Pacific Employers Insurance Company
Court Type: 
Federal
US District Court: 
Southern District of New York
Date Filed: 
Sep 9 2011

"4. This Petition is submitted under Chapter 1 of the FAA, 9 U.S.C. §§ 1-16. This proceeding involves commercial arbitration agreements that are between citizens of the United States, and thus falls within Chapter 1 of the FAA. See 9 U.S.C. § 1.

5. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 in that the petition involves citizens of different states and the amount in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.

6. This Court has personal jurisdiction over Global as Global is incorporated by the State of New York and has its principal place of business in New York, New York.

7. Further, this Court has personal jurisdiction by virtue of Global's agreement, in the subject contracts of reinsurance, that "any arbitration shall take place in New York, N.Y." See Global Facultative Certificate Nos. 71-23346 and 71-23347 (hereinafter "Global Certificates"), attached hereto as Exhibits 2 and 3 respectively, at ¶ 17 ("Arbitration Clause") As the arbitration occurred in New York, New York, pursuant to the agreement of the parties, personal jurisdiction is proper in this Court. See id.

8. Venue is proper in this Court because Global is deemed to reside in this district, as its principal place of business is located in this district and a substantial part of the events
giving rise to this action occurred in this district. 28 U.S.C. § 1391(a)(2).

9. Further, venue is proper here because Section 9 of the FAA provides that "[i]f no court is specified in the agreement of the parties, then such application may be made to the
United States court in and for the district within which such award was made." 9 U.S.C. § 9. The Final Award was made in New York, New York; thus, venue in this district is proper.

10. Moreover, venue is appropriate in this Court as, pursuant to the contractual agreement of the parties, the arbitration hearing was conducted in this district.

BACKGROUND

11. The underlying arbitration concerned Global's responsibility under two facultative reinsurance certificates for asbestos claims paid by PEIC under an umbrella excess policy issued to Buffalo Forge Company ("Buffalo Forge")

12. In a reinsurance contract, a reinsurer agrees to indemnify the reinsured against all or part of the loss that the reinsured may sustain under an insurance policy or policies the company has issued, in exchange for a portion of the premium paid to the reinsured for the insurance policies.

13. A "facultative" reinsurance contract reinsures a specific insurance policy or risk, as opposed to "treaty" reinsurance, which reinsures multiple insurance policies or an entire book of business written by the reinsured.

14. PEIC issued an umbrella commercial liability excess of loss policy to its insured, Buffalo Forge, effective June 30, 1980 to June 30, 1981 ("PEIC Policy"). See PEIC Policy No. XMO 003649, attached as Exhibit 4 hereto.

15. The PEIC Policy provides indemnity limits of $9 million per occurrence and in the aggregate for products claims excess of $1 million in underlying insurance provided by Utica
Mutual. Id. at 1.

16. The PEIC Policy also provides for the payment of defense costs "in addition" to the policy limit. Id. at 2.

17. Gerling Global Reinsurance Corporation (as predecessor to Global), issued two facultative reinsurance certificates to PEIC, Global Certificate Nos. 71-23346 and 71-23347,
pursuant to which Global, as the reinsurer, agreed to reinsure, on an excess of loss basis, parties of the PEIC Policy.

18. The Global Certificates obligated Global to reimburse PEIC for a proportion of "loss" and "in addition thereto" a proportion of expenses under PEIC's policy with Buffalo
Forge. See Exhibits 2 and 3, at ¶ 11.

19. As with many reinsurance contracts, the Global Certificates provided that Global's liability "shall follow that of [PEIC] and ... shall be subject in all respects to all the terms and conditions of [PEIC's] policy." See Exhibits 2 and 3, at ¶ 9.

20. The Global Certificates also contain "follow the settlements" language, which provides that all of PEIC's loss settlements under the Buffalo Forge policy will be paid promptly
following the receipt of proof of loss. See Exhibits 2 and 3, at ¶ 12.

21. After the Global Certificates were executed, Buffalo Forge and its corporate successors were named as defendants in many asbestos products personal injury claims and lawsuits. These claims and lawsuits were tendered to Buffalo Forge's insurers for defense and indemnity.

22. Eventually, the insurance policy below PEIC's policy exhausted and PEIC began to participate in defense and indemnity of Buffalo Forge and its corporate successors, pursuant to the terms of the PEIC Policy.

23. PEIC's participation in the defense and indemnity of Buffalo Forge was in accordance with the terms of a "Defense and Indemnity Agreement" between Buffalo Forge's corporate successors and their remaining insurers with unexhausted insurance policies.

24. Eventually, PEIC's indemnity payments under the PEIC Policy exceeded the retention on the lower of Global's facultative certificates.

25. Beginning on September 2, 2009, PEIC issued reinsurance billings to Global under Global's share of PEIC indemnity payments under the PEIC Policy and, in addition thereto, Global's proportionate share of defense costs.

26. In November 2009, Global sent another letter to PEIC, wherein Global raised a laundry list of purported issues with PEIC's reinsurance billing.

27. Global refused to pay the billings in full, inter alia, because Global contended that total liability under the certificates, inclusive of defense costs.

28. On December 3, 2009, PEIC initiated arbitration proceedings seeking to recover the outstanding balance due from Global under Global Certificate No. 71-23346, as well as a declaration regarding Global's payment obligations for amounts which will in the future become due under that certificate and Global Certificate No. 71-23347.

29. A panel of three arbitrators (the "Panel") was appointed and accepted by the parties at an Organizational Meeting on October 11, 2010 in New York, New York.

30. After discovery and briefing, a two-day evidentiary hearing was held on March 1St and March 2qd, 2011 in New York, New York.

31. The Panel issued its Final Award on March 7, 2011. See Exhibit 1.

32. PEIC now petitions this Court to confirm the Final Award."

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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