Court Compels Arbitration of Contract Claims, but not Tort Claims Arising From Commutation

Plaintiff Repwest Insurance Company, as cedent, entered into an excess workers compensation quota share agreement with various reinsurers, including Conestoga Casualty Insurance Company and the defendant, Preatorian Insurance Company. Praetorian later entered into a commutation agreement with Conestoga, whereby Conestoga took on Praetorian’s portion of the risk involving Repwest. Repwest was not informed of the commutation until after the fact. Repwest sued, arguing that the quota share agreement required assent from Repwest for such a commutation agreement. Praetorian moved to compel arbitration. Repwest argued in response that its claims did not “arise under” the quota share agreement, and therefore were not subject to arbitration under that contract. The court disagreed and granted Praetorian’s motion to compel arbitration, finding that the claims did arise from the quota share agreement, and that Praetorian did not waive its right to arbitration. The court, however, limited the claims that could be submitted to arbitration, finding that tort claims for misrepresentation and fraudulent inducement were outside the scope of the agreement. Repwest Insurance Co. v. Praetorian Insurance Co., Case No. CV 12-0369-PHX-JAT (USDC D. Ariz. Aug. 28, 2012).

This post written by John Pitblado.

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