On August 20, 2010, after nearly eight years of litigation, Justice Richard B. Lowe, III of the New York County Supreme Court granted Travelers affiliates United States Fidelity & Guaranty Co. and St. Paul Fire and Marine Insurance Company (collectively “USF&G”) summary judgment in the amount of $262 million plus pre-judgment interest at 9%, which will result in a total award of over $425 million, in its reinsurance action against multiple reinsurers, including American Re-Insurance Company (now known as Munich Reinsurance America, Inc.) and various other insurance companies that were part of Excess Casualty Reinsurance Association (“ECRA”), including, among others, ACE Property and Casualty Company (collectively, the “Reinsurers”). During the pendency of the litigation Travelers settled with a number of the participants in the ECRA pool for substantial sums.
In 2002, USF&G settled for $987 million a California state insurance coverage action, Western MacArthur Co. v. United States Fidelity & Guaranty Co., in full satisfaction of all asbestos injury-related claims made against Western Asbestos Company. The settlement was approved as part of the MacArthur bankruptcy proceeding. USF&G paid the entire settlement out-of-pocket and billed the Reinsurers for their share of the losses under the reinsurance treaties among USF&G and the Reinsurers. The Reinsurers refused to pay any portion of the Western Asbestos loss, raising a host of defenses aimed at second-guessing USF&G’s settlement. After lengthy discovery spanning many years and numerous appeals to the Appellate Division, in January 2010 both USF&G and the reinsurers moved for summary judgment. USF&G argued that the parties entered a valid reinsurance contract, that USF&G performed its obligations under the contract, that USF&G acted reasonably and in good faith in entering the settlement and billing the Reinsurers, and that the Reinsurers’ breached the contract by failing to reimburse their share of the losses in the amount of $262 million. The Reinsurers also moved for summary judgment, pressing various defenses for refusing to pay their share of the settlement, including challenging USF&G’s good faith, and arguing that the treaties had been endorsed to include significantly higher retentions which would have left the settlement uncovered. In his August 20, 2010 Decision and Order, Justice Lowe denied the Reinsurers’ motions for summary judgment and granted in its entirety USF&G’s motion for summary judgment, directing judgment to be entered in favor of USF&G for the full amounts the Reinsurers owed under the reinsurance treaty plus 9% pre-judgment interest dating back to the time of the reinsurance billings.
Mary Kay Vyskocil and Chet Kronenberg led the litigation. Over the course of eight years the team has included Helena Almeida, Ryan Kane, Steven Fitzgerald, Ryan Soots, Robert Annis, Jessica Marek and paralegals Rick Rosario and Jennifer Ross, and many former litigation associates.