December 2018 – The United States Court of Appeals for The Second Circuit ruled in favor of Chaffetz Lindsey’s client, Zurich American Insurance Company, affirming the dismissal of an Amended Complaint filed by Plaintiffs Keller Foundations, LLC, Keller Group PLC, and Hayward Baker, Inc.
Plaintiffs in the case were two construction companies and their parent who alleged Zurich breached its duties to them under an insurance policy by paying a claim to another insured under that policy. While they argued that settling this claim might affect their coverage under the Policy, plaintiffs were actually unhappy with this claim payment because Zurich had billed and recovered a share of that claim from its reinsurer, which happened to be a wholly owned “captive” of the plaintiffs. By reason of their intercompany arrangements with their captive, plaintiffs themselves had to fund that reinsurance payment.
The Second Circuit agreed with Chaffetz Lindsey’s argument that that plaintiffs failed to show: (i) how Zurich’s claim payment breached any obligation to plaintiffs under the contract; and (ii) that any damages arose from Zurich’s actions under the policy, rather than actions by the reinsurer under the separate Reinsurance Agreement. The Second Circuit also affirmed dismissal of Plaintifffs’ claims for breach of the duty of good faith and declaratory judgement.