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One Per Occurrence Limit per Policy Period or One Per Occurrence Limit . . . Period? — New York Court of Appeals Reaffirms Noncumulation Clause Means what it Says  

December 2nd, 2014 Accumulation of Loss, Allocation, Allocation of Settlements, Anti-Stacking Provisions, Certificate or Treaty Limits, Claims Handling, Definition of Occurrence, Environmental Contamination Claims, Insurance Contracts, Insurance Coverage, Lead Paint Claims, New York Court of Appeals, New York State Courts, Noncumulation Clauses, Nuts & Bolts, Nuts & Bolts: Reinsurance, Reinsurance Allocation, Reinsurance Claims, Timing and Number of Occurrences, Trigger of Coverage Comments Off on One Per Occurrence Limit per Policy Period or One Per Occurrence Limit . . . Period? — New York Court of Appeals Reaffirms Noncumulation Clause Means what it Says  

Introduction

Liability insurance policies written on a per occurrence basis generally provide coverage for losses that occur during the policy period and arise out of an “occurrence.” In general (and subject to policy definitions) “occurrence” means not only a temporally discrete accident or event, but also “continuous exposure” to the same harmful conditions. Such “continuous exposure” may occur during more than one consecutive policy period and cause what is, for all intents and purposes, indivisible, continuing injury or property damage. Examples of that type of continuous exposure resulting in continuing injury or damage include, among others, exposure of tenants to cracked or peeling lead paint in an apartment building for a period of years, exposure of persons to asbestos products, or exposure of groundwater to hazardous waste over a period of years, resulting in liability for clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (a/k/a “Superfund”).

Issues concerning the timing and number of occurrences, and per-policy allocation of loss, are particularly important in coverage cases where continuous exposure to conditions spans multiple policy periods and causes continuing, indivisible injury or property damage during those periods. The liability insurer’s indemnity obligation is limited to a specified limit per occurrence. In a continuous exposure case, the “occurrence” happens continuously over a period during which multiple consecutive policies are in effect.. There is one occurrence—sometimes referred to as a “continuing occurrence”—but it takes place during each of several consecutive policy periods. Does that mean that the insurer is obligated to pay a maximum of one per occurrence limit for all loss that occurs during its total coverage period, irrespective of how many policies it issued during that period, or must it pay up to one per occurrence limit per policy for whatever portion of the loss falls, or is deemed to fall, within that policy?

The answer to that question can have significant economic consequences for the liability insurer, and, of course, its reinsurers. If a liability insurer issues a landlord three, consecutive one-year-term policies with per occurrence limits of $X, and a tenant sustains injury attributable to continuous exposure to cracked or peeling lead paint, then, all else equal, the answer will determine whether the insurer’s maximum total indemnity obligation is $X or three-times that amount ($X multiplied by the number of policies involved).

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Pine Top Receivables, LLC v. Banco De Seguros Del Estado: The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?    

November 19th, 2014 Appellate Jurisdiction, Appellate Practice, Arbitrability, Arbitration Practice and Procedure, Contract Interpretation, FAA Chapter 3, Foreign Sovereign Immunities Act, Insolvency Proceedings, Inter-American Convention on International Commercial Arbitration, McCarran-Ferguson Act, Nuts & Bolts: Reinsurance, Panama Convention, Practice and Procedure, Pre-Answer Security, Reinsurance Litigation, United States Court of Appeals for the Seventh Circuit, United States Supreme Court Comments Off on Pine Top Receivables, LLC v. Banco De Seguros Del Estado: The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?    

In Pine Top Receivables, LLC v. Banco De Seguros Del Estado, ___ F.3d ___, Nos. 13-1364/2331, slip op. (7th Cir. Nov. 7, 2014) (per curiam) the United States Court of Appeals for the Seventh Circuit addressed a trio of issues that—once upon a time at least—arose fairly frequently in reinsurance litigation: pre-answer security; immunity from posting security, courtesy of the Foreign Sovereign Immunities Act (the “FSIA”), 28 U.S.C. § 1602-11 (2013); and the effect of the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-­15 (2013), this time whether a state pre-answer security statute can reverse preempt the FSIA.

It did so in the somewhat unusual context of Chapter 3 of the Federal Arbitration Act, which implements the Inter-American Convention on International Commercial Arbitration (a/k/a the “Panama Convention”). That raised an arcane issue of appellate jurisdiction, which appears to have been caused by Congress failing to amend the appellate jurisdiction provisions of Chapter 1 (codified at 9 U.S.C. § 16 (2013)) to reflect Congress’ enactment of Chapter 3.

Throw in an assignment agreement between the insolvent cedent and a contract interpretation dispute over whether the cedent’s assignee purchased the right to compel arbitration under the reinsurance treaties between the insolvent cedent and the Uruguay-owned reinsurance company, and we have something that might appear to resemble a perfect storm of reinsurance and arbitration-related issues. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

November 14th, 2014 New York Court of Appeals, Nuts & Bolts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Retrospectively-Rated Premium Contracts, Statute of Limitations Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part IV.C.2

 

Why Hahn Automotive v. American Zurich Ins. Co. is an Important Statute-of-Limitations Accrual Case (Cont’d)

Part IV.C.1 of our New York reinsurance-claim statute-of-limitations feature wrapped up our discussion about the likely influence of  Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012) on statute-of-limitations accrual in cases where a demand for payment is an express condition of the obligor’s duty to perform.  That brings us to the fourth reason (of the seven enumerated in Part IV.B) why Hahn is an important statute-of-limitations accrual case, namely, that Hahn all but forecloses an argument that a court may justify a delay in the statute of limitations by deeming a demand requirement to be an implied condition. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

November 5th, 2014 Claims Handling, Contract Interpretation, Insurance Contracts, Late Notice, New York Court of Appeals, New York State Courts, Nuts & Bolts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Retrospectively-Rated Premium Contracts, Statute of Limitations Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part IV.C.1

Why Hahn Automotive v. American Zurich Ins. Co. is an Important Statute-of-Limitations Accrual Case

(Cont’d)

 

  Introduction

Part IV of our New York reinsurance statute-of-limitations feature started out by taking a closer look at Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012). (See Part IV.A.) Part IV.B enumerated the seven reasons Hahn is a very significant development in New York statute-of-limitations law, and discussed the first two reasons,  namely that Hahn:

  1. Creates a new general rule, which effectively extends to a larger universe of contracts a statute of limitations accrual principle that the New York Court of Appeals had applied only to certain specific types of contracts, including contracts of indemnity; and
  2. Demonstrates that, outside the limited context of express conditions, breach-of-contract statute-of-limitations accrual is not exclusively a matter of party intent.

Part IV.B. also set the stage for discussing the third reason, that is, Hahn suggests the New York Court of Appeals—if faced with an accrual question where the obligor’s obligation to perform is conditioned on the obligee’s demand for payment—may deem the statute of limitations to accrue: (a) once the obligee is legally entitled to demand payment; or (b) the earlier of (i) the date the obligee demands payment or (ii) the expiration of a commercially reasonable period measured from the date the obligee became legally entitled to demand payment.

This Part IV.C.1 wraps up our discussion about Hahn’s likely influence on how courts applying New York law will decide cases where—unlike Hahn—a demand for payment is an express condition of the obligor’s duty to perform, but—like Hahn—the obligee has, for whatever reason, delayed making a demand. The focus of the wrap-up is on why we think that courts will probably permit accrual to be delayed for no more than a brief, commercially reasonable period, and may simply conclude that the Hahn legally-entitled-to-demand-payment rule should govern such cases because the performance of the condition is within the obligee’s control,  the benefits of the Hahn rule far exceed its costs and the costs of a “commercially reasonable time” rule exceed its benefits. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

October 6th, 2014 Choice-of-Law Provisions, Claims Handling, Contract Interpretation, New York Court of Appeals, New York State Courts, Nuts & Bolts: Reinsurance, Reinsurance Arbitration, Reinsurance Claims, Retrospectively-Rated Premium Contracts, State Courts, Statute of Limitations Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

 Part IV.B

 Why is Hahn Automotive v. American Zurich Ins. Co. Important?

Introduction

Now that we’ve taken a closer look at Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012), let’s step back a bit and consider what it means both in general and in the reinsurance-claim-statute-of-limitations scheme of things.

As will be explained in this Part VI.B, Part VI.C, and Part VI.D, Hahn:

  1. Creates a new general rule, which effectively extends to a larger universe of contracts a statute of limitations accrual principle that it had applied only to certain specific types of contracts, including contracts of indemnity;
  2. Demonstrates that, outside the limited context of express conditions, breach-of-contract statute-of-limitations accrual is not exclusively a matter of party intent;
  3. Suggests that the New York Court of Appeals, if faced with an accrual question where the obligee’s demand is an express condition to the obligor’s liability, would probably not permit accrual to be delayed for more than a relatively brief period measured from the date on which the obligee was legally entitled to demand payment;
  4. All but forecloses an argument that a court may justify a delay in the statute of limitations by deeming a demand requirement to be an implied condition;
  5. Creates an analytic framework for determining breach-of-contract statute-of-limitations accrual questions that is at least as well-suited to excess-of-loss reinsurance contracts as it is to retrospective premium contracts;
  6.  Will likely be applied to reinsurance contract statute-of-limitations questions, that cedents or reinsurers may in the past have assumed would be governed by Continental Cas. Co. v. Stronghold Ins. Co., 77 F.3d 16 (2d Cir. 1996); and
  7. If so applied to a situation where, as in Stronghold: (a) the reinsurance contract does not unambiguously condition the reinsurers’ liability on claims presentation; and (b) the cedent settled the underlying insurance claims more than six-years before commencing their action, will, all else equal, likely require a finding that the cedent’s claims are time-barred.

Hahn therefore has some important claims management implications for both cedents and reinsurers, which we’ll discuss in Part IV.E.

But there is, as no doubt many readers have discerned, a proverbial “elephant in the room:” arbitration. Arbitration agreements are exceedingly common in reinsurance contracts, particularly in treaties. In Part V., we’ll discuss the profound effect that the choice between judicial and arbitral resolution of a controversy can have on statute of limitations questions, and how that choice bears on cedent and reinsurer time-bar strategy.

Finally, there is another very important—and all too frequently overlooked— consideration that we would arguably be remiss not to discuss: choice-of-law. Reinsurance disputes, like so many of their other commercial counterparts, frequently cross state and national borders, raising horizontal choice-of-law issues. But in many (indeed, probably most U.S.) jurisdictions, including New York, choice-of-law rules that determine what substantive rules of decision apply (i.e., what rules of decision apply to merits-related issues) do not determine what statute-of-limitations rules apply, and that may be true (as it ordinarily is in New York) even where parties agree that the law of State X governs their agreement.

In New York, that issue is ordinarily determined by New York’s borrowing statute, New York Civ. Prac. L. § 202, many other states have similar (although not necessarily identical) borrowing statutes and at least a few other states may either simply follow the traditional rule that forum law governs statute of limitations or apply substantive choice-of-law rules to determine the applicable statute of limitations. Part VI will thus address choice-of-law questions pertinent to the statute of limitations, focusing on New York’s borrowing statute, and discuss how choice-of-law issues affect time-bar strategy. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

September 19th, 2014 Claims Handling, Contract Interpretation, Insurance Contracts, Late Notice, New York Court of Appeals, New York State Courts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Retrospectively-Rated Premium Contracts, Statute of Limitations, United States Court of Appeals for the Second Circuit Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part IV.A

Hahn Automotive v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012): Unless Parties Unambiguously Condition Obligor’s Duty to Perform on Demand for Payment, Statute of Limitations Begins to Run as Soon as Obligee is Legally Entitled to Demand Payment

If you’ve been following this multi-part post from inception, then you know that we think the New York Court of Appeals’ 2012 decision in Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (2012) strongly suggests that, if faced today with facts materially identical to those in Continental Cas. Co. v. Stronghold Ins. Co., 77 F.3d 16 (2d Cir. 1996), New York’s highest court would hold that the cedent’s claims were time-barred because: (a) the notice provisions in the reinsurance contracts did not unambiguously condition the reinsurers’ obligation to pay on presentation of claims and demands for payment; and (b) the cedent was legally entitled to present and demand payment for each of its reinsurance claims more than six years before the cedent commenced its action. This Part IV.A discusses what transpired in Hahn, and Part IV.B will analyze Hahn’s likely effect on excess-of-loss reinsurance-claim statute-of-limitations accrual.

Hahn Facts and Procedural History

Hahn was a dispute between an auto parts distributor (the “Insured”), and its two insurers, both members of the Zurich Insurance Group (the “Insurers”).

During each annual period between September 1992 and September 2003, the Insurers provided general liability, auto liability and workers’ compensation coverage to the Insured. The insurance was priced using three types of alternative-risk-finance rating plans embodied in: (a) retrospective premium agreements (the “Retro Premium Agreements”); (b) adjustable deductible policies (the “Adjustable Deductible Policies”); and (c) deductible policies (the “Deductible Policies”). The Insurers also entered into certain claims services contracts (the “Claims Services Contracts”) under which the Insurers provided claims-handling services on a fixed-fee-per-claimant basis. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

April 27th, 2014 Claims Handling, Contract Interpretation, New York Court of Appeals, New York State Courts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Statute of Limitations, United States Court of Appeals for the Second Circuit Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part III.C

Does New York Law on Implied or Constructive Conditions

Provide a Basis for Stronghold’s Conclusion?

 

New York’s six-year statute of limitations for breach of contract does not begin to run until the obligee has satisfied all express conditions to the obligor’s duty to perform. (See Parts I and II.) Part III.B explained why we believe the Second Circuit in Continental Cas. Co. v. Stronghold Ins. Co. did not correctly interpret and apply New York law when it concluded that a garden-variety notice-of-loss provision in an excess-of-loss reinsurance contract was an express condition to the extent it required the cedent to notify reinsurers of paid-loss claims and demand payment. That (we believe) erroneous conclusion enabled the Second Circuit to hold that the cedent’s breach-of-contract claims were not barred by New York’s six-year statute of limitations, even though they were based on settlements the cedent had concluded with its insureds more than six-years before the cedent commenced its action. (See Part III.A.)

At the conclusion of Part III.B we raised the question whether Stronghold might make sense under the law of implied or constructive conditions, that is, if we were to interpret it as having construed the notice-of-loss provision as an implied or constructive condition. But Stronghold fails even if it is reconceptualized that way.  Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

April 12th, 2014 New York Court of Appeals, New York State Courts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Statute of Limitations, United States Court of Appeals for the Second Circuit Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part III.B

Continental Cas. Co. v. Stronghold: Did the Court Correctly Apply New York Law?

Welcome to Part III.B of our multi-part reinsurance statute of limitations feature. (Links to previous installments are listed at the end of this post.)

If you’ve been following this series, then you already know that under New York law, the six-year statute of limitations begins to run on a reinsurance claim once it is settled and the cedent has the right to demand payment. This is the general rule that applies to other contracts of indemnity, including insurance contracts, but it is subject to an exception: when an insurance or reinsurance contract expressly conditions the reinsurer’s duty to perform its obligations on the presentation of a claim, the statute of limitations generally does not begin to run any earlier than the date the cedent presents the claim.

In Part III.A we summarized the facts and holding of the United States Court of Appeals for the Second Circuit’s decision in Continental Cas. Co. v. Stronghold Ins. Co., 77 F.3d 16 (2d Cir. 1996), which concluded that a garden-variety notice of loss provision in a reinsurance contact was an express condition to the extent that it required notice of paid loss, which the Court seemed to think was more important to reinsurers than prompt notice of the original insureds’ reported losses losses and their development over time.  Stronghold essentially created an express condition out of whole cloth by placing a strained interpretation on a timely notice provision identical in all material respects to one that New York’s highest court, in North River Ins. Co. v. Unigard Sec. Ins. Co., 79 N.Y.2d 576 (1992) (“Unigard I”), had held was not an express condition. And it relied on that interpretation to justify delaying the accrual of the statute of limitations on claims that were settled more than six-years before the Cedent commenced its action against the Reinsurers.

This Part III.B explains why we believe Stronghold misconstrued the notice provision, misapprehended its purpose and misapplied New York law on express conditions. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

March 20th, 2014 Claims Handling, Contract Interpretation, New York Court of Appeals, Nuts & Bolts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Claims, Statute of Limitations, United States Court of Appeals for the Second Circuit Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part III.A

Continental Casualty Co. v. Stronghold Ins. Co.: Background

In Part II (here) we reviewed New York law pertinent to express conditions and how they can delay the accrual of the statute of limitations if the plaintiff has not satisfied them.

Now let’s turn to the U.S. Court of Appeals for the Second Circuit’s decision in Continental Cas. Co. v. Stronghold Ins. Co., 77 F.3d 16 (2d Cir. 1996), a case that features a fairly comprehensive recitation of New York’s reinsurance-related statute-of-limitations accrual rules as they existed in 1996, but did not apply New York’s express-condition rules consistently with controlling, New York Court of Appeals authority. This Part III.A summarizes what transpired in Stronghold and Part III.B will explain why we think the case not correctly decided.

The Stronghold Facts

Stronghold was a dispute between a United States cedent (the “Cedent”) and its London-Market reinsurers (the “London Reinsurers”) that arose under certain excess-of-loss treaties reinsuring medical malpractice liability policies the Cedent had issued to its hospital insureds.

In the 1980s the Cedent settled several medical malpractice liability claims on behalf of its insureds, but did not notify London Reinsurers of the underlying losses that resulted in the settlements, or present their reinsurance claims to the London Reinsurers, until sometime after the underlying claims were settled. The record apparently did not specify the date or dates on which the Cedent first notified the London Reinsurers of the settlements and demanded payment from the London Reinsurers.

The excess-of-loss treaties (the “Reinsurance Contracts”) provided that the London Reinsurers were “liable only for the excess of loss” incurred by the Cedent in excess of specified retentions of “ultimate net loss.” The contracts defined “ultimate net loss,” as “the sums actually paid in cash in settlement of losses [for] which [the Cedent] is liable.” They also featured notice of loss provisions that said “Loss, if any, under” a policy is “to be reported to [the London Reinsurers] as soon as practicable.”

The London Reinsurers denied each of the reinsurance claims during the period 1987-1990, and in 1991 the Cedent commenced an action for breach of contract in the United States District Court for the Southern District of New York. The London Reinsurers defended on late notice and statute-of-limitations grounds.

As respects the date on which the statute of limitations began to run on each reinsurance claim, the London Reinsurers argued that each claim accrued when the Cedent settled the claim with its insured. Each claim was settled more than six years before the Cedent commenced its action. According to the London Reinsurers, the Cedent was entitled to indemnity immediately upon payment of each settlement, even thought it did not demand payment from the London Reinsurers until a much later date. Alternatively, the London Reinsurers argued that even if their indemnity obligation was conditioned on the Cedent’s presentation of a reinsurance claim for payment,  each of the Cedent’s individual breach of contract of contract claims accrued on the date it became entitled to demand payment from the London Reinsurers, and that occurred each time the Cedent settled an underlying claim.

The Cedent argued that the claims accrued when the London Reinsurers allegedly breached the reinsurance contracts by refusing to pay the claims. Since the London Reinsurers did not refuse to pay the claims any earlier than 1987, and the Cedent commenced its lawsuit in 1991, the lawsuit would not be barred by the statute of limitation under the Cedent’s date-of-accrual theory.

Back in 1991, as some readers may recall, the New York Court of Appeals had not yet decided whether a reinsurer could successfully defend on late notice grounds without establishing prejudice. But in 1992, the London Reinsurers’ litigation strategy was dealt a painful blow when the New York Court of Appeals held, in Unigard Sec. Ins. Co. v. North River Ins. Co., 79 N.Y.2d 576 (1992), that unless a late notice provision expressly conditions a reinsurer’s liability for the claim on timely notice—i.e., the late notice provision is an express condition, not simply a promise—a reinsurer must establish prejudice to be relieved of liability based on the cedent’s failure to provide timely notice of a claim or occurrence.

Answering a question certified to it by the United States Court of Appeals for the Second Circuit, New York’s highest Court explained that, to be express conditions, contractual provisions must unambiguously evidence the parties’ intent to make performance of a duty conditional.[1] The New York Court of Appeals also held that the notice provision before it—which required “[p]rompt notice . . . of any occurrence or accident which appears likely to involve this reinsurance’”—was not an express condition, and that accordingly, the reinsurer in that case could not be relieved of liability for the cedent’s late notice of the loss or losses sustained and reported by the insureds, unless the reinsurer could prove it suffered prejudice as a result of the late notice.

Not too long after the New York Court of Appeals’ landmark reinsurance-law decision answering the Second Circuit’s certified question, the Second Circuit issued its own landmark decision in the Unigard case, holding, among other things, that the reinsurers were unable to establish either prejudice—i.e., “economic injury”—resulting from late notice or that the cedent acted in bad faith in failing to provide timely notice (which would have relieved the reinsurer from liability even without a showing of prejudice).[2]

The London Reinsurers apparently concluded that they could not establish the requisite prejudice to prevail on their late notice defense, a decision which apparently prompted the parties to enter into a stipulation designed to facilitate summary judgment on the merits in favor of one party or the other on the statute of limitations issue. To that end the London Reinsurers agreed to waive their late notice and all other defenses other than statute of limitations, and stipulated with the Cedent that: (a) New York law governed; (b) New York’s six-year statute of limitations applied; (c) the Cedent satisfied all conditions of the Reinsurance Contracts; (d) the Cedent had settled its claims with its insureds more than six years prior to commencing the action; and (e) the Cedent had commenced the action within six-years of the London Reinsurers’ earliest denial of any of the claims.

The parties cross-moved for summary judgment, and the district court ruled in favor of the Cedent, holding that no breach of the Reinsurance Contracts occurred until the London Reinsurers refused to pay the Cedent’s claims. The district court granted summary judgment in favor of the Cedent, holding that the Cedent’s causes of action did not accrue until the London Reinsurers denied the Cedent’s claims.

The London Reinsurers appealed to the United States Court of Appeals for the Second Circuit, which affirmed the district court’s judgment. Continue Reading »

What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

March 4th, 2014 Claims Handling, Contract Interpretation, Internal Controls, New York Court of Appeals, New York State Courts, Nuts & Bolts, Nuts & Bolts: Reinsurance, Practice and Procedure, Reinsurance Arbitration, Reinsurance Claims, Statute of Limitations, United States Court of Appeals for the Second Circuit Comments Off on What is the Statute of Limitations for a Reinsurance Claim under New York Law and When does it Begin to Run?

Part II

In Part I (here) we determined the probable success of Reinsurer R’s motion to dismiss turns on whether the reinsurance contract expressly makes Cedent C’s presentation of claims a condition precedent to R’s obligation to pay them.  This Part II discusses in some detail New York law pertinent to contract statute-of-limitations accrual as it existed both before and after the Second Circuit’s 1996 decision in Continental Cas. Co. v. Stronghold Ins. Co., 77 F.3d 16 (2nd Cir. 1996), and before the New York Court of Appeals decided Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765, 771 (2012).

Parts III and IV will discuss Stronghold and Hahn in some detail, and explain why we believe Stronghold misapplied New York law by concluding that the reinsurance contract before it expressly conditioned the reinsurers’ obligation to pay on the cedent presenting claims for payment. This Part II provides readers with the background required to understand better why we think that is so. Continue Reading »

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