Pacific Employers Ins Co v. Global Reinsurance Corp of Ame
693 F.3d 417
3rd Cir.2012Background
- PEIC purchased a four-page Certificate of Reinsurance from Constitution (now Global) in 1980 for Buffalo Forge exposure.
- DSOL clause: PEIC must promptly provide a definitive statement of loss for claims involving death, serious injury, or lawsuit.
- Two DSOL obligations exist: first for serious claims (DSOL subset), second triggered when PEIC demands payment under the Certificate.
- Buffalo Forge asbestos claims emerged in the 2000s; PEIC notified Global in 2008, with billings beginning in 2009.
- Global asserted late-notice defenses; parties stipulated to judgment of non-liability and limited Global liability to $1 million otherwise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does DSOL trigger? | Global: triggers promptly on report of death/serious injury/lawsuit. | PEIC: triggers only after PEIC demands payment. | DSOL triggered promptly on report under DSOL first sentence. |
| Is DSOL a condition precedent to coverage or to payment? | DSOL is a condition precedent to Global’s reinsuring obligation. | DSOL may be treated as a performance condition, not preventive of coverage. | DSOL is a condition precedent to coverage under New York law. |
| What law governs the DSOL provision? | Pennsylvania law governs choice-of-law analysis. | New York law should apply to enforce DSOL as written. | New York law applies; DSOL enforceable as written. |
| Are there genuine material facts precluding summary judgment? | Disputes about timing of notice and DSOL handling preclude judgment. | No material issues; contract language unambiguous, enforceable. | No genuine issues; judgment of non-liability for Global affirmed. |
Key Cases Cited
- Unigard Sec. Ins. Co. v. North River Ins. Co., 594 N.E.2d 571 (N.Y. 1992) (must-show-prejudice default rule for late notice in reinsurance)
- Brakeman v. Potomac Ins. Co., 371 A.2d 193 (Pa. 1977) (public policy against forfeiture of coverage for notice breaches)
- Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167 (3d Cir. 2011) (choice-of-law and inter-jurisdictional considerations in contract)
- Trustees of Univ. of Pa. v. Lexington Ins. Co., 815 F.2d 890 (3d Cir. 1987) (Brakeman-like protection against forfeiture in primary context applicability)
- British Ins. Co. of Cayman v. Safety Nat’l Cas., 335 F.3d 205 (3d Cir. 2003) (policy considerations in reinsurance notice provisions; prejudice implications)
- N. River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194 (3d Cir. 1995) (principles regarding treaty vs. facultative reinsurance and risk assessment)