Certain London Market Co. Reinsurers v. Lamorak Ins. Co., No. 18- 10534-NMG, 2019 U.S. Dist. LEXIS 39429 (D. Ma. Feb. 20, 2019).

A US Magistrate Judge recommended that a reinsurance dispute removed by the cedent from state court to federal court not be remanded to state court. On March 8, 2019, the district court judge accepted the magistrate’s recommendation.

The dispute involves underlying pollution liabilities insured under umbrella policies that were facultatively reinsured. As in many similar cases, the underlying liabilities were settled and ceded to the reinsurers. The reinsurers disputed their obligations. A similar state court case exists between the cedent and Lloyd’s, which is seeking recoupment of its payments under a reservation of rights.

In denying the reinsurer’s motion for remand, the court found that this case and the state court case with Lloyd’s were not sufficiently parallel for the application of judicial doctrines that would require abstention. The decision outlines the similarities and differences between the two cases, but ultimately the court determined that there was no certainty that both courts will be called upon to interpret the same provisions in the reinsurance contracts. The court concluded that a remand would not be more efficient or promote wise judicial administration. 

This case has been ordered to mediation later this year.