Reinsurance Focus

Although this case does not directly address reinsurance or arbitration issues, it may be of interest to our readers, as it is a federal appellate opinion covering the relationship between parallel proceedings in federal and state court. Specifically, the Eleventh Circuit affirmed a district court’s decision to grant the defendant’s motion to stay pending a state court action involving the same issues. Plaintiff, Great Lakes Reinsurance (UK) PLC, appealed the ruling arguing that the lower court: (1) failed to apply the proper test governing whether to stay a declaratory judgment action; and (2) failed to give sufficient weight to the fact that the uniquely federal issues of admiralty law were central to the federal case.

The Eleventh Circuit disagreed with both arguments, and affirmed a stay of the case pending the resolution of the state court case. In Ameritas Variable Life Ins. Co. v. Roach, the Eleventh Circuit set forth nine factors that a court should consider in determining whether to accept or decline jurisdiction under the Declaratory Judgment Act when a related state action is pending. Although the district court did not expressly cite to the Ameritas case, the Eleventh Circuit found that the district court did sufficiently address certain prongs of the test. Additionally, the Eleventh Circuit concluded that the fact that the case involved admiralty law issues did not control the district court’s decision whether to stay the case. Great Lakes Reinsurance v. TLU Ltd., No. 08-11588 (11th Cir. Oct. 10, 2008).

This post written by Lynn Hawkins.