(Article from Insurance Law Alert, April 2021)
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A California federal district court refused to dismiss claims alleging that companies that acquired a reinsurer intentionally interfered with the reinsurance contract between the acquired reinsurer and the plaintiff insurance companies and induced a breach of that contract. California Capital Ins. Co. v. Enstar Holdings US LLC, 2021 WL 1406028 (C.D. Cal. Apr. 14, 2021).
Plaintiff insurance companies alleged that they entered into a reinsurance treaty with non-party Maiden Reinsurance and that for several years, Maiden fulfilled its contractual obligations under the treaty. However, plaintiffs claimed that when the defendant companies acquired Maiden, they interfered with Maiden’s performance under the treaty. In particular, plaintiffs allege that the defendants fabricated coverage disputes and directed Maiden to refuse payment for losses and to demand the return of funds for payments already made. Defendants moved to dismiss the complaint.
The court denied the motion, finding that the complaint sufficiently alleged claims for intentional interference with contractual relations and inducing breach of contract. The court noted that while plaintiffs “do not allege exactly how Defendants directed Maiden to breach the Treaty,” the complaint nonetheless met the federal notice pleading standards so as to survive dismissal. Additionally, the court refused to dismiss the complaint on the ground that defendants were agents of Maiden and thus could not be held liable for interference with or inducing breach of the reinsurance treaty. Because the court declined to take judicial notice of the agreements between Maiden and the defendants, those documents could not be used to support defendants’ agency argument.