Public Risk Management of Fl. v. One Beacon Ins. Co., No. 6:13-cv-1067-Orl-31 TBS, 2013 U.S. Dist. LEXIS 150091, 2013 WL 5705575 (M.D. Fl. Oct. 18, 2013).
A Florida federal court granted a reinsurer’s motion to dismiss a cedent’s complaint finding that there was no coverage under the cedent’s policy and, therefore, no claim for reimbursement under the reinsurance contract. The case arose out of the reinsurance of a public official’s errors and omissions claim for a construction project dispute between a municipality and a contractor. The reinsurance dispute was over whether the reinsurer was required to reimburse the cedent for expenses defending the underlying action between the contractor and the municipality (indemnity was not an issue as the settlement payment was not ceded).
In dismissing the complaint, the court determined that the underlying complaint was not based on negligence and, therefore, no “wrongful act” was alleged to bring the matter within the coverage grants of the policy. Additionally, the policy excluded intentional breaches of contract. Both these bases were sufficient to sustain the motion to dismiss. The court also rejected a claim of equitable estoppel based on reservation of rights letters from the reinsurer.