An aviation repair company recently filed a lawsuit in federal court in Florida seeking recovery from its insurance broker and Lloyds of London for their alleged failure to cover a purported loss of plane engines leased to a Mexican airline that were confiscated by the Mexican government. Click here to read the Complaint in Aero Technologies, LLC, v Lockton Companies Int’l Ltd. and Lloyds of London.

The plaintiff alleges that it was listed as a “contract party as lessor” on six certificates of insurance issued to Aero California S.A. de C.V. (“Aero California”), a Mexican Airline, by Lockton, an insurance broker, and underwritten by Lloyds of London. It further alleges that the certificates cover nine engines that were leased to Aero California. According to the Complaint, the Mexican government ordered the grounding and suspension of operations of Aero California in July 2008 due to the airline’s unpaid debts due Mexican airports. Aero Technologies also alleges that the Mexican government ordered a confiscation of Aero California’s assets, including the nine engines.

According to the Complaint, the insurance policy covers the insured, and the plaintiff, for loss or damage against war risks and allied perils, including a confiscation by a government. The plaintiff claims that because of the lengthy confiscation and the dilapidated condition of the engines due to the lack of maintenance, the engines are a total loss, valued at $4.385 million.

The complaint asserts causes of action for breach of contract against Lockton and Lloyds. The plaintiff alleges that the broker entered into a reinsurance contract with Aero California to insure the nine engines, and that the contract listed the plaintiff as “contract party as lessor on the separate certificates of insurance” for the nine engines. The plaintiff also alleges that Lloyds was the underwriter on the reinsurance contract between Lockton and Aero California to reinsure the nine engines. The plaintiff alleges that the broker and underwriters “breached the contract by failing to pay [Plaintiff’s] claims . . . [within] the settlement date listed on the insurance contract.”