Pac. Emp’rs Ins. Co. v. Global Reinsurance Corp. of Am.

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In 1980 Pacific purchased a certificate of reinsurance from a predecessor of Global. The Certificate included a sentence that reads, “As a condition precedent, the Company [i.e., Pacific] shall promptly provide the Reinsurer [i.e., Global] with a definitive statement of loss on any claim or occurrence reported to the Company and brought under this Certificate which involves a death, serious injury or lawsuit.” In the early 1990s, claimants began inundating Buffalo Forge with asbestos-related lawsuits. It notified Pacific, its excess carrier, of these claims in April 2001. By 2004, its primary policy was exhausted. In 2005, Pacific instructed its broker to keep its reinsurers informed about developments in the Buffalo Forge matter. The district court applied Pennsylvania law. Under New York law, when a reinsurance contract expressly requires a reinsured to provide its reinsurer with prompt notice of a claim or occurrence as a condition precedent to coverage and the reinsured fails to do so, that failure excuses the reinsurer from its duty to perform, regardless whether the reinsurer suffered prejudice as a result of the late notice. The Third Circuit reversed and applied New York law and concluded that the agreement is fairly susceptible to only one reasonable interpretation. View "Pac. Emp'rs Ins. Co. v. Global Reinsurance Corp. of Am." on Justia Law