Tuesday, July 19, 2016

US District Court for District of Massachusetts allows default judgment after defendant insured served by publication

After Juan Molina was killed in a construction site accident, his estate brought a wrongful death claim against multiple defendants including Santos Remodeling, Inc., a landscaping company. 

Santos was insured by Amguard Insurance Company.  The Amguard policy excludes bodily injury to an employee of the insured arising out of and in the course of employment. 

In a declaratory judgment action against Santos, Amguard alleged that Santos breached its duties under the policy because it never notified Amguard of Molina's death and has not cooperated in Amguard's defense of the claim.  Amguard alleged that is has been prejudiced by those failures both in its investigation of coverage and in its defense of the claim.

Molina's estate was also named as a defendant in the declaratory judgment action.  (Typically all parties to an underlying case should be parties in a dj action.)  The estate moved to dismiss for improper venue.  That motion was granted, so that the only remaining defendant was Santos.

Amguard's motion to serve Santos by publication was granted.  Amguard published a notice of the litigation in the local paper.  When Santos did not answer the complaint, Amguard moved for a default judgment.  That motion was allowed in Amguard Insurance Company v. Santos Remodeling, Inc., 2016 WL 424961 (D. Mass.) (unpublished). 

It's hard for me to understand why Molina's estate sought to be dismissed from the case instead of litigating on the merits.  Santos is likely judgment-proof, so any recovery against it must come from the insurer.   Maybe the estate felt that the insurer's facts were so strong, either on coverage or defense, that it was not worth fighting for coverage.  Maybe other defendants in the underlying matter have sufficient coverage that Molina's coverage is irrelevant.  (But if so, where are the carriers for the codefendants -- surely they would want to share liability with other defendants?) 

Tuesday, July 12, 2016

U.S. District Court denies insurer's request to remove arbitrator prior to arbitration award being issued

The following case is a straightforward decision on the law of arbitration, but it provides a glimpse into the world of reinsurance as well as the mergers, acquisitions, demergers and sales of insurance entities. 

John Hancock Life Insurance Company entered into an agreement with Employers Reassurance Corporation  by which John Hancock would transfer to Employers a percentage of its retention of liability under some of its policies.  The transfer agreement included an arbitration clause that provided that in the event of a dispute each party would appoint one arbitrator and those two arbitrators would select a third. 

John Hancock initiated arbitration to resolve a dispute regarding Employers' right to increase the reinsurance premiums charged under the agreement.  Employers selected Denis Loring as its appointed arbitrator.

John Hancock alleged that the appointment of Loring violated the agreement's prohibition on the appointment of arbitrators who were past or present employees of John Hancock or its affiliates because Loring had worked for one of its affiliates.  Employers asserted that the appointment was consistent with the agreement because Loring ceased working for the affiliate before it became affiliated with John Hancock, and the affiliate is no longer affiliated with John Hancock.  (The name of the affiliate is John Hancock Mutual Life Insurance Company -- not to be confused with John Hancock Life Insurance Company, the plaintiff in this case.) 

In John Hancock Life Insurance Company (U.S.A.) v. Employers Reassurance Corporation, 2016 WL 3460316 (D. Mass.) (unpublished), the United States District Court for the District of Massachusetts held that the Federal Arbitration Act does not authorize a court to remove an arbitrator before a final arbitration award has been issued.

Friday, July 8, 2016

A great insurance event (a month later)

Last month I was privileged to attend a fantastic networking event at the Insurance Library in Boston, where I caught up with scattered colleagues and met local giants in the insurance field including current and former commissioners of the Massachusetts Division of Insurance, the publisher of The Standard, a weekly insurance journal, long-time teachers of insurance certification classes, and others.  

Agency Checklists, one of my favorite blogs, posted about it here along with a description of some of the services offered by the Insurance Library.