This case was previously reported by us on our blog on January 5, 2016, June 28, 2016 and July 20, 2016. For the full procedural background, we refer to the recent November 3, 2016 and November 16, 2016 decisions. In sum, Plaintiff Companion Property and Casualty Insurance Company (“Companion”) participated in a fronted insurance program with two reinsurers, Redwood and Freestone. Reinsurance collateral trusts were established for Companion’s benefit and maintained by defendant U.S. Bank as trustee. Companion authorized Redwood and Freestone to administer the trusts’ assets by giving direction to U.S. Bank. One such direction was to authorize certain third-parties who could act for Redwood and Freestone with regard to each trust account. Through the direction of Redwood, Freestone and their authorized third-parties, U.S. Bank made certain investments which were ultimately to the detriment of the trusts.

U.S. Bank then made claims against the third-parties for apportionment, contribution and indemnification for its liability to Companion. The third-parties moved to dismiss U.S. Bank’s claims, which was granted except for U.S. Bank’s claim for contribution. U.S. Bank then filed an amended third-party complaint, adding Aon Insurance Managers (Cayman) Ltd. (“Aon”) as a third-party defendant. One of the third-parties, Alexander Chatfield Burns (“Burns”) also filed an answer to U.S. Bank’s third-party complaint, which contained seven counterclaims against U.S. Bank. U.S. Bank then moved to dismiss Burns’ counterclaims. Aon also moved to dismiss the third-party complaint by U.S. Bank on the basis that the court lacked personal jurisdiction over it. Burns also filed a fourth party complaint against U.S. Bank Trust National Association (“USBT”) for contribution. USBT also moved to dismiss the complaint by Burns on the basis that the court lacked personal jurisdiction over it.

The South Carolina federal court recently ruled on the motions to dismiss by U.S. Bank, Aon and USBT. On November 3, 2016, the court granted in part and denied in part U.S. Bank’s motion to dismiss Burns’ counterclaims. First, the court noted that Burns’ contribution counterclaims were premised on its liability to either U.S. Bank or Companion. The court dismissed Burns’ contribution counterclaim against U.S. Bank premised on Burns’ liability to U.S. Bank as contribution is not available in such case. As for Burns’ contribution counterclaim premised on its liability to Companion, even though Companion had not yet formally sued Burns, that counterclaim remained. The court noted that the torts giving rise to U.S. Bank’s and Burns’ liability to Companion have already occurred and thus, Burns’ cause of action for contribution had accrued. Burns’ remaining counterclaims sounding in contract and tort, however, were dismissed because through those claims, Burns was seeking to recover damages on behalf of Redwood and Freestone, and thus ran afoul of the prudential standing doctrine.

On November 16, 2016, the South Carolina federal court granted the motions to dismiss by Aon and USBT. With respect to USBT’s motion to dismiss Burns’ fourth party complaint, the court found that Burns failed to meet his burden that USBT, which is incorporated and has its principal place of business in Delaware, should be subject to the court’s general or specific personal jurisdiction, and thus the complaint against USBT was dismissed. With respect to Aon’s motion to dismiss U.S. Bank’s third-party complaint, the court found that U.S. Bank also failed to meet its burden that Aon, which is incorporated and has its principal place of business in the Cayman Islands, should be subject to the court’s specific personal jurisdiction, and thus the complaint against Aon was dismissed.

Companion Property and Casualty Insurance Co. v. U.S. Bank Nat’l Association, No. 3:15-cv-01300 (USDC D.S.C. Nov. 3, 2016 and Nov. 16, 2016).