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Musick Peeler PUBLICATIONS INNOVATIVE EXPERIENCED ACCESSIBLE
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INSURANCE NOTES

U.S. District Court Rules Tort Liability Does Not Exist For Breach of Reinsurance Contracts

05.09.2008
On April 21, 2008, Judge Dale S. Fischer, United States District Judge, issued an Order on a Motion to Dismiss addressing, as a matter of first impression, the question of “bad faith” in the reinsurance context. Munich Reinsurance America, Inc. issued two reinsurance agreements to the California Joint Powers Insurance Authority and declined to provide reinsurance coverage to the Authority on several bases. The Authority filed suit alleging, among other things, breach of the implied covenant of good faith and fair dealing and seeking punitive damages. MRAm moved to dismiss that cause of action and to strike that claim for damages. Finding that the California Supreme Court would not “impose tort liability in the reinsurance context,” Judge Fischer granted the Motion to Dismiss and struck the prayer for punitive damages.  ( Please click on the link below for the text of the order.)


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