COURT ENFORCES ARBITRATION AGREEMENT AGAINST INSURER AND ITS SUBSIDIARY DESPITE THRESHOLD CONTRACTUAL DEFENSES
The court compelled arbitration in a dispute over asbestos insurance coverage that had reached an impasse after six years of mediation. The insured sought to compel arbitration against the insurer and the insurer’s nonsignatory subsidiary, which had purportedly separately contracted with the insurer to reimburse a portion of the risk. The court compelled arbitration against the subsidiary because the insured had entered into a broad agreement with the subsidiary to arbitrate disputes related to asbestos claims, and the threshold question of whether the subsidiary agreed to provide insurance coverage was subject to arbitration. The court also compelled arbitration against the signatory insurer over the insurer’s objection that it had a separate written agreement with the insured to resolve disputes only through litigation. The court found that although the insurer never agreed to arbitrate, the insurer had “exploited” the arbitration agreement of its subsidiary by mediating the dispute for six years. The insurer was estopped from avoiding arbitration because the insured had relied on the insurer’s “exploit[s]” to its detriment, having “lost the time value of money” and “spent six years attempting to reach resolution through mediation.” Fintkote Co. v. Indemnity Marine Assurance Co., Case No. 1:13-cv-00935 (USDC D. Del. Sept. 30, 2013).
This post written by Michael Wolgin.
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