REINSURER PRECLUDED FROM INTERPOSING EARLY DEFENSES IN LIQUIDATION CLAIMS PROCESS
Everest Reinsurance Company intervened in the liquidation proceedings of Midland Insurance Company, and moved to have the anti-suit injunction vacated, in order to allow it to participate in the claims settlement process, and to interpose defenses. The trial court denied the motion, and Everest appealed. The appellate court affirmed, finding Everest’s defenses were premature, as none of the relevant claims had yet been approved, and because adequate procedures existed for it to interpose defenses later in the process. It further found that Everest’s ability to challenge the liquidator’s claims decisions was limited by the “follow the fortunes” language in its reinsurance policies. Everest also appealed the trial court’s decision denying its motion for an order precluding the liquidator and Midland policyholders from introducing evidence of settlements entered into by Everest as a direct insurer in other proceedings. The court, however, affirmed that ruling as well, noting such evidence might be relevant insofar as it demonstrated that Everest utilized claims handling methodologies that it seeks to challenge in the Midland proceeding. In re Liquidation of Midland Insurance Co., No. 41294/86 (N.Y. App. Aug. 25, 2011).
This post written by John Pitblado.
