Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

CONTINENTAL CASUALTY CORP. v. AMERICAN NATIONAL INS. CO.

February 10, 2004.

CONTINENTAL CASUALTY CORP., Plaintiff,
v.
AMERICAN NATIONAL INS. CO., Defendant



The opinion of the court was delivered by: CHARLES NORGLE, District Judge

OPINION AND ORDER

I. INTRODUCTION

Before the court is Defendant's Motion to Dismiss, or in the Alternative, to Stay Proceedings [4-1]. For the following reasons, the Motion to Dismiss is granted.

  II. BACKGROUND

  Plaintiff Continental Casualty Corp. ("CCC") and Defendant American National Insurance Co. ("ANICO") were members of a reinsurance pool, collectively referred to as Associated Accident and Health Reinsurance Underwriters ("AAHRU"). AAHRU was managed by IOA Re, Inc. ("IOA Re"), pursuant to separate contracts (the "Participation Agreement[s]") entered into between IOA Re and each individual AAHRU member. Each individual AAHRU member's Participation Agreement was identical or substantially identical to those of other AAHRU members. Under the Participation Agreements, IOA Re was authorized to enter into reinsurance contracts on behalf of members of the AAHRU pool.

  On July 5, 2000, CCC sent a letter to IOA Re indicating that CCC was terminating its Participation Agreement effective December 31, 2000. Subsequent letters to the same effect were Page 2 also sent on July 21 and November 29, 2000. By another letter dated August 22, 2000, CCC informed IOA Re that it was revoking the authority of IOA Re to enter into multiple-year contracts, to extend policy periods, or to back-date effective dates of reinsurance policies.

  It is not disputed that there was a sophisticated and long-standing relationship between the parties in the reinsurance pool, and that there was routine commercial communication, CCC does not claim that it also notified other members of the AAHRU pool of the attempted revocation of IOA Re's authority. CCC does not allege that IOA Re acknowledged receipt of such notice or that any other members of the AAHRU pool communicated in any way about the revocation of an agency relationship.

  On April 20, 2001, IOA Re and ANICO executed a Quota Share Accident Retrocession Contract ("Quota Share Contract") pursuant to which AAHRU members indemnified ANICO, according to varying shares per member, on certain of ANICO's reinsurance business. ANICO's reinsurance concerned certain risks covered in the World Trade Center attacks of September 11, 2001. CCC alleges that it learned of the Quota Share Contract in mid-September 2001, in the wake of the September 11th terrorist tragedies.

  On September 17, 2002, CCC filed suit against ANICO. CCC's Complaint seeks a declaratory judgment that it is not bound by, and owes no duty under, the Quota Share Contract, based on the fact that IOA Re lacked authority to enter into the Quota Share Contract on CCC's behalf.

  ANICO has filed the instant Motion to Dismiss, or in the Alternative, to Stay Proceedings. In that Motion, ANICO makes the following arguments: (1) the Quota Share Contract contains an arbitration clause, thus arbitration is required under the Federal Arbitration Act ("FAA"), and CCC's Page 3 Complaint should be dismissed; (2) the case should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(3) based on improper venue; and (3) the case should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(7) based on failure to join IOA Re, an indispensable party.

  CCC has responded arguing that under Sphere-Drake Ins. Ltd, v. All Amer. Ins. Co., 256 F.3d 587 (7th Cir. 2001), the issue of whether an agreement to arbitrate was formed — whether IOA Re had authority to bind CCC to the Quota Share Contract — must be preliminarily determined by the court.

  From this point ANICO's briefs take on a discordant quality, and have resulted in a total of six briefs having been filed between the parties. In order to simplify the confusion created by these pleadings, the court will not address any arguments other than the issue of whether this matter should be arbitrated.

  ANICO filed a reply arguing that arbitration is required based on the Participation Agreement executed by IOA Re and CCC, and has attached a copy of that Participation Agreement to its Reply.*fn1 As an additional argument, relying on Reinsurance Co. of Amer. v. Amer. Cent, Ins. Co., 621 F. Supp. 516, 518 (C.D. Ill 1985), ANICO argues that IOA Re had apparent authority to bind CCC to the Quota Share Contract, and thus arbitration is required.

  CCC was granted leave to file a sur-reply, and argues that the Participation Agreement has nothing to do with its Complaint in this matter. CCC gives short shrift to ANICO's apparent authority argument, stating only that IOA Re's apparent authority is a fact ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.