Court Finds No Personal Jurisdiction in Reinsurance Dispute and Dismisses Case

Believe it or not, jurisdictional questions still arise in reinsurance disputes that find their way to court. While those who arbitrate disputes under contractual arbitration clauses do not typically have these issues, there are plenty of reinsurance agreements without arbitration clauses. Courts cannot just take a case without determining whether the court has jurisdiction over the parties.

In a recent case, a Nebraska federal court granted the cedent’s motion to dismiss a declaratory judgment action for lack of personal jurisdiction.

In TIG Insurance Co. v. National Indemnity Co., No. Case No. 22-cv-165-SE (D. NH Mar. 27, 2023), the issue before the court was the scope of in-state activity necessary to establish specific jurisdiction over an out-of-state declaratory-judgment defendant after a successor party to the subject contract has relocated to the forum state. Now, that is a mouthful and the decision is very detailed in its findings concerning the activity of the cedent and how it related to the underlying claim and to the State of New Hampshire.

Here, the cedent wrote a liability policy for the State of Montana and reinsured the policy with the reinsurer’s predecessor. An asbestos claim arose and the cedent settled the claim. It billed the reinsurer, who paid. But then the cedent brought a declaratory judgment action against the insured, which resulted in a second settlement. The reinsurer, who was now operating through an entity based on New Hampshire, brought this declaratory judgment action seeking a declaration that the second settlement was not covered by the reinsurance contract.

Other actions by both the cedent and other reinsurers were brought over coverage for the second settlement. All those actions have been consolidated into an action in Nebraska federal court.

In dismissing this action, the court addressed the question of relatedness. In other words, did the cedent’s activities in New Hampshire relate to the claim being made. The court found that the reinsurer pointed to no evidence to show that the cedent’s contacts with New Hampshire were instrumental to either the formation or breach of the reinsurance contract. The court also found that the reinsurer had not offered specific facts to show that the cedent had regular contact with New Hampshire regarding the reinsurance claim or the reinsurance contract. The court held that the reinsurer failed to meet its burden to show relatedness. Accordingly, it granted the cedent’s motion to dismiss.