Justia Insurance Law Opinion Summaries
Articles Posted in Delaware Court of Chancery
Freestone Insurance Company was a Delaware-domiciled insurer that was placed in liquidation. The liquidation proceeding was governed by the Uniform Insurers Liquidation Act (the Uniform Act). The order that placed Freestone into liquidation contained an injunction (the Anti-Suit Injunction) barring third parties from pursuing claims against Freestone other than through the statutory process for receiving evaluating, and paying claims (the Claims Process). U.S. Bank National Association (the Bank) moved to lift the Anti-Suit Injunction, claiming that it wished to litigate against Freestone outside of the Claims Process and establish the amount of its claims and its status as a general creditor of Freestone. The Court of Chancery denied the Bank’s motion, holding that granting relief on the facts of this case would contravene the policies of the Uniform Act, interfere with the Claims Process, and impose unnecessary costs on Freestone and the Insurance Commissioner of the State of Delaware, who was serving as the receiver for Freestone. View "In re Liquidation of Freestone Ins. Co." on Justia Law
Travelers, an insurer, was being sued for insurance benefits in a New Jersey court. Plaintiff there was a subsidiary of a defendant here, Sequa. Travelers sought specific performance of, and a declaratory judgment arising from, a release of claims by Sequa in favor of Travelers, made in connection with the settlement of coverage litigation in the Delaware Superior Court in 1997. The relief sought by Travelers here would relieve it from, or indemnify it for, liability in the coverage litigation being undertaken in New Jersey. Because the explicit language of the release excluded the sites for which plaintiff in the New Jersey action sought coverage, as a matter of contract law Travelers was not entitled to the specific performance or declaratory judgment it sought here. Accordingly, the court dismissed the matter.
This matter came before the court on the basis of two competing motions related to a petition for the appointment of a receiver under 8 Del. C. 279 for Kraft-Murphy Company, Inc., a defunct Delaware corporation that had been dissolved for more than twelve years. The first motion was a motion to perfect service on the company brought by petitioners, who were claimants in various asbestos-related tort suits filed against the company in various jurisdictions in the mid-Atlantic region. The second motion was a motion to dismiss, filed by the company's insurers on behalf of the company. The court held that service of process could be perfected on the dissolved corporation and that petitioners conceivably could be able to show that a receiver should be appointed for the corporation to enable it to respond to claims brought against it, because the corporation's informal plan of dissolution contemplated using its insurance contracts for that purpose. Therefore, the court granted petitioners' motion to perfect service and denied the company's motion to dismiss.
This action came before the court following the insolvency and proposed rehabilitation of a Delaware insurance company. At issue was whether the arbitration clause in the reinsurance agreements between the insolvent insurance company and the reinsurer were enforceable against the receiver under Delaware law. If so, the question became whether this court should, in its discretion, require the parties to honor their agreement to arbitrate in light of the ongoing rehabilitation of the insurer. The court held that Delaware law permitted enforcement of the arbitration clause of the reinsurance agreements against the receiver and that the parties should be required to arbitrate their competing claims to the disputed cash. In addition, the court ordered a partial stay of the proceedings pending resolution of the arbitration.
This action arose from a final arbitration award made in favor of defendant where plaintiff sought to vacate the award. At issue was whether the Arbitration Award should be filed under seal. Also at issue was whether the arbitrator concealed material information about past adversarial relationships with plaintiff-related entities amounting to evident partiality requiring the court to vacate the Arbitration Award. The court held that the existence of a confidentiality order did not necessarily require, without regard for whether it applied to the Arbitration Award or not, the sealing of the award. Rather, Court of Chancery Rule 5(g) controlled the treatment of that award and mandated that plaintiff show good cause as to why the Arbitration Award should be sealed. The court also held that because plaintiff was entitled to limited discovery into the arbitrator's alleged adversarial relationship with it, the court denied defendant's motion for a protective order and held in abeyance the entry of a scheduling order on motions for summary judgment.