Pine Top Receivables of Ill., LLC v. Banco de Seguros del Estado, No. 16-3499, 2017 U.S. App. LEXIS 14492 (7th Cir. Aug. 7, 2017).
The Seventh Circuit Court of Appeals affirmed the dismissal of a complaint as untimely by the assignee of receivables from a cedent in liquidation against a non-US reinsurer. The treaties were entered into between 1977 and 1984 and the cedent stopped writing business in 1985. After going into liquidation in 1987, the liquidator would comply with the treaties by calculating balances quarterly and billing the reinsurer on a net basis. After 1993, however, the treaty accounting stopped.
After 15 years of silence, the liquidator billed the reinsurer for amounts due from 1993 to 1999. The reinsurer did not respond for almost two years (claiming it did not receive the bills until 2010) and rejected the 2008 bill as untimely.
After the liquidator sold all its receivables to an assignee, the assignee sued the reinsurer to collect the balance. The district court granted the reinsurer's motion to dismiss the claim as untimely and the assignee appealed.
In affirming the dismissal on timeliness grounds, the circuit court rejected the assignee's argument that Illinois law allowed the liquidator to ignore the statute of limitations and the terms of the treaties because Illinois insolvency law allows the offsetting of mutual debits and credits and provides no time limitation for doing so in a liquidation. The court held that there is "no statutory basis for thinking that a liquidator has carte blanche to do the netting any time he pleases and thus to deprive reinsurers of the benefit of negotiated deadlines and extend the statute of limitations forwell, potentially forever."
The court also rejected the assignee's second contention that the 2008 bill was an account stated. The court stated that failure to respond to a proposal differs from acceptance. The liquidator made a proposal, the reinsurer did not accept and the account stated argument fails.