Welcome back to the Washington State federal court. For those who regularly read this blog you will remember the case where the court granted a motion to compel arbitration against one reinsurer and not the other. That arbitration concluded, which allowed the litigation to continue against the remaining reinsurer. The cedent moved to amend the complaint and the reinsurer move for judgment on the pleadings.
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Reinsurer Loses First Motion to Dismiss
A reinsurance contract is typically an agreement between a ceding insurer and a reinsurer, which affords no rights of third parties, including underlying insureds to access the reinsurance contract. Typically, an insured cannot bring a direct action against the reinsurer because there is no contractual privity. But sometimes, in some reinsurance relationships, the actions of the reinsurer, whether contractual or not, may open the door for a direct action.
In court, at the pleading stage, sometimes the reinsurer’s motion to dismiss a complaint is superseded by the insured’s motion to amend the complaint. That happened in late 2022 in a federal court in Arizona.
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