Trenwick America Reinsurance Corp. v. W. R. Berkley Corp.
2012 WL 4872773
Conn. App. Ct.2012Background
- Reinsurance plaintiff Trenwick and defendant W. R. Berkley entered SCARF II reinsurance facility with Signet Star; SCARF II provided contingent losses and premiums.
- On Sept. 3, 2004, the parties executed a global commutation and release agreement terminating past and future obligations under reinsurance agreements.
- Commutation required a lump-sum payment of $15,248,338 by the Reinsurer to the Company, claiming full discharge of past, present and future net liabilities.
- Eisenmann, plaintiff's executive, concluded the commutation globalized SCARF II, relieving plaintiff of SCARF II obligations as of the effective date.
- Plaintiff continued payments under SCARF II after commutation, while defendant also paid premiums; around 2006–2008 plaintiff fell behind on SCARF II payments.
- Plaintiff sued for declaratory judgment that SCARF II was commuted; defendant contested; trial court found SCARF II was commuted and rejected unjust enrichment recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether mutual mistake supports reformation of the commutation | Trenwick argues no mutual mistake; contract reflects intended global settlement. | Berkley asserts mutual mistake; SCARF II should be excluded from commutation. | No mutual mistake; no reformation. |
| Whether the term 'reinsurance agreements' is ambiguous | Trenwick contends term includes SCARF II as a reinsurance agreement. | Berkley argues ambiguity; extrinsic evidence should clarify scope. | Not ambiguous; SCARF II included. |
| Whether restitution/ unjust enrichment is available | Trenwick seeks return of payments post-commutation as unjust enrichment. | Berkley contends no unjust enrichment due to mutual performance and Rockwell/Northrop distinctions. | No restitution; unjust enrichment not established. |
| Whether attorney’s fees should be awarded under the commutation agreement | Trenwick seeks fees for breach-based relief under article 11, § (h). | Berkley argues American rule; only prevailing on breach would warrant fees. | No fees; no breach judgment supporting § (h). |
Key Cases Cited
- Greenwich Contracting Co. v. Bonwit Construction Co., 156 Conn. 123 (1968) (reformation requires mutual mistake; strict evidentiary standard)
- McBurney v. Cirillo, 276 Conn. 782 (2006) (clearly erroneous standard for factual findings)
- Rockwell v. New Departure Mfg. Co., 102 Conn. 255 (1925) (distinction when contract duties are equal; mistake of law/contract interests)
- Northrop v. Graves, 19 Conn. 548 (1849) (equitable restitution for money paid under mistake of fact or law)
- Ayotte Bros. Construction Co. v. Finney, 42 Conn. App. 578 (1996) (equitable determinations depend on balanced factors; appellate review limited)
- ACMAT Corp. v. Greater New York Mutual Ins. Co., 282 Conn. 576 (2007) (American rule on attorney’s fees; contractual exceptions required)