Vantage Commodities Fin. Servs. I, LLC v. Assured Risk Transfer PCC, LLC, No. 1:17-cv-01451, 2019 U.S. Dist. LEXIS 70417 (D.D.C. Apr. 26, 2019).

A District of Columbia federal court denied a motion to dismiss a claim for breach of implied contract in a credit insurance dispute. The insured extended US$44 million of credit to an energy company and insured up to US$22 million of its exposure through a credit insurance policy with the cedent. The cedent reinsured 90% of its exposure with the defendant reinsurers. The reinsurers provided the insured with credit insurance binders, which confirmed cedent’s reinsurance of the credit insurance policy. When the energy company defaulted, the cedent refused to pay.

The insured recovered a multimillion-dollar arbitration award against the cedent and then sued the reinsurers in this case. The district court dismissed the insured’s breach of contract claim against the reinsurers because there was no contract between the reinsurers and the insured, but the court allowed the insured to pursue claims for breach of an implied contract, promissory estoppel and unjust enrichment. 

Pertinent to the court’s decision was a finding that the insured had alleged sufficient facts that the cedent acted as the agent for the reinsurers. The reinsurers moved to dismiss the remaining claims or, alternatively, to compel arbitration. The reinsurers argued that if there was an implied contract, it incorporated the same terms as the credit insurance policy and thus the limitations and the arbitration provisions in the policy applied. The court rejected these arguments, noting that it was too soon to determine the contours of any implied contract and that there was no evidence that the reinsurers agreed to arbitrate a dispute with the insured.