Patton Boggs Reinsurance Newsletter- March 2013: Connecticut Federal Court Grants Cedent's Motion to Amend Complaint Adding Account Stated and CUPTA Claims

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The Travelers Indem. Co. v. Excalibur Reinsurance Corp., No. 3:11-CV-1209 (CDH), 2012 WL 424535 (D. Conn. Feb. 1, 2013).

A Connecticut federal court granted a cedent's motion to amend its complaint in a dispute with its reinsurer. The underlying dispute involves insurance brokers' errors and omissions policies and the settlement of an underlying E&O claim. The reinsurer refused to pay and this action commenced.

The cedent's motion for an amended complaint adds two additional claims beyond breach of contract: account stated and violation of Connecticut's Unfair Trade Practices Act ("CUTPA"). The reinsurer opposed the motion based on its untimeliness and the legal sufficiency of the additional causes of action. The court, in granting the motion, found no substance to the timeliness objection based on the case being in its early stages. On the sufficiency issue, the court found that the cedent adequately pled a plausible claim for an implied account stated and for violations of CUTPA.

The reinsurer also raised the issue of the cedent's strategy in seeking to amend its complaint to force the reinsurer to post pre-answer security as a basis to deny the motion on bad faith grounds. The court rejected this argument, finding that the pending motion for security did not bear on the cedent's right to add plausible claims to its complaint as a "proper and professional exercise" to further its legitimate purpose of seeking "to transfer money from a defendant's pocket into its own."

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