Accident Ins. Co., Inc. v. U.S. Bank Nat’l Assn., No. 3:16-vc-02621-JMC, 2019 U.S. Dist. LEXIS 47656 (D.S.C. Mar. 22, 2019).

Generally, trustees involved in reinsurance transactions are insulated from disputes involving the funds placed in trust. In this case, a fronting carrier, who was the beneficiary of a trust agreement, sued the trustee bank for, among other things, civil conspiracy, when the reinsurer went insolvent and after a substantial segment of the assets in trust were deemed valueless.

The trustee bank moved for summary judgment dismissing the civil conspiracy claim and the court denied the motion. The court found a triable issue of fact regarding whether the trustee bank was part of a combination of two or more entities “that carried out an unlawful act in furtherance of such combination thereby causing” damage. The court viewed the evidence in the light most favorable to the fronting carrier and found that communications between the trustee bank and other entities could allow a jury to infer a nefarious agreement to use the value-deficient investments as eligible assets for the trust account.