COURT DECLINES APPLICATION FOR PRE-AWARD SECURITY IN REINSURANCE ARBITRATION
The defendant was the managing general agent for a book of reinsurance business for the plaintiff reinsurer. The parties disputed commission amounts owed by defendant to the plaintiff. Plaintiff initiated an arbitration seeking recoupment of approximately $2 million in commissions it claimed it was owed, as well as approximately $70,000 in other expenses arising from the dispute. An interim order in the arbitration established that plaintiff was owed the $70,000 portion of the claim, and the parties agreed to resolve the larger portion later, as they needed information to develop the claim. In the meantime, the plaintiff filed an application in district court seeking security from the defendant, pursuant to a Texas statute allowing for the posting of security in arbitrations. It sought security for the $70,000 already established by the interim award, as well as the $2 million it continued to seek in the arbitration. The Court denied both, arguing that plaintiff had not made out a case that is was likely to secure the $2 million award it sought, and that there was no basis to require security for the “de minimis” $70,000. General Fidelity Insurance Co. v. WFT Inc., 3-11-CV-0448 (USDC N.D. Tex. Oct. 15, 2012).
This post written by John Pitblado.
