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LTNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ACE PROPERTY & CASUALTY
INSURANCE COMPANY, as successor in
interest to CENTRAL NATIONAL
INSURANCE COMPANY OF OMAHA,
Plaintiff,
-against-
TRAVELERS CASUALTY AND SURETY
COMPANY flklaAETNA CASUALTY &
SURETY COMPANY,
CASE NO.
COMPLAINT FOR DECLARATORY AND
INJLINCTIVE RELIEF
Defendant.
Plaintiff ACE Property & Casualty Insurance Company
("
to Central National Insurance Company of Omaha as respects busi behalf by
Cravens Dargan & Co., Pacific Coast ("Central National"), as and for its complaint against
defendant Travelers Casualty and Surety Company flUa Aetna Casualty & Surety Company
("Travelers"), alleges as follows:
NATURE OF THE CASE
1. This action seeks declaratory relief pursuant to 28 U.S.C.
$
2201 et seq. and Rule
57 of the Federal Rules of Civil Procedure, and injunctive relief pursuant to Rule 65(a) of the
Federal Rules of Civil Procedure. Travelers has purported to demand arbitration against ACE,
asserting that there are arbitrable disputes between Travelers and ACE under two facultative
reinsurance contracts allegedly issued by ACE to Travelers reinsuring, respectively, insurance
policies issued by Travelers to two of its policyholders, Smith Kline Corporation ("Smith Kline")
and Rorer Amchem Corporation ("Rorer Amchem"). In fact, however, ACE did not issue a
facultative reinsurance contract to Travelers in connection with the Rorer Amchem policy.
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Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 1 of 7
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Moreover, although ACE issued a facultative reinsurance certificate to Travelers in connection
with the Smith Kline policy (the "Smith Kline Certificate"), there currently are no disputes
between the parties under the Smith Kline Certificate, and in any event no disputes that fall
within the scope of the arbitration clause contained in thx certificate. Accordingly, ACE brings
this action seeking: (a) a Declaration that no reinsurance contract exists between ACE and
Travelers as respects the Rorer Amehem poiicy; (b) a Declaration that there are presently no
arbitrable disputes between ACE and Travelers under the Smith Kline Certificate; and (c) a
pennanent injunction prohibiting the putative arbitration improperly demanded by Travelers
from proceeding.
PARTIES
Z. ACE is an insurance compan)i organizedunder the laws of the Commonwealth
of
pennsylvanlawith
its principal place of business in Philadelphia, Pennsylvanta.
3 . Travelers is an insurance company organized under the laws of the State of
Connecticut with its principal place of business in Hartford, Connecticut. Travelers is licensed to
and does regularly caffy onthe business of insurance inthe State ofNew York.
JURTSDICTION AND VENUE
4. This Court has
jurisdiction over this action pursuant to 28 {J.S.C.
$
1332(a)
because the parties are citizens of different states, and the matter in controversy exceeds
$75,000.00
exclusive of interest and costs.
5. Venue is proper inthis district pursuant to 28 U.S.C.
$$
1391(b), (c) and (d)
because Travelers is subject to personal
jurisdiction within this distrist.
t)
Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 2 of 7
FIRST CAUSE OF ACTION
_
DECLARATORY JUDGMENT
6. ACE repeats and incorporates herein by reference the allegations contained in
paragraphs 1 through 5 above as if fully set forth herein.
7. By letter dated April 28,2A14 ("Travelers' April 28Letter"), Travelers asserted
that ACE had issued a facultative reinsurance certificate to Travelers reinsurin g aninsurance
policy issued by Travelers to Rorer Amchem. Travelers' ApriIzB Letter further asserted that
ACE had failed or refused to reimburse Traveiers in full in connection with unspecified Rorer
Amchem reinsurance billings allegedly due from ACE, and purported to demand arbitration
againstACE seeking "anaward. . . which, among otherthings: (1) orders
[ACE]
to paythe
overdue principal balances in full, plus interest; and, (2) prescribes such other and further relief,
including but not limited to attomeys' fees and costs, as the
farbitration]
Panel deems
appropriate."
8. Upon information and belief, ACE did not issue a facultative reinsurance
certificate to Travelers reinsuring a policy issued by Travelers to Rorer Amchem.
9. ACE has repeatedly requested that Travelers and its broker provide a copy of the
alleged facultative certificate, but no certificate has ever been provided.
10. ACE has undertaken a thorough and exhaustive search of its records for the
alleged facultative certificate, but no such facultative certificate was located.
11. Travelers has provided ACE with so-cal1ed "secondary evidence" of the existence
of the alleged facultative certificate, but that purported "evidence" does not establish the
existence of the certificate or any other contract betw'een Travelers and ACE reinsuring the
policy issued by Travelers to Rorer Amchem.
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Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 3 of 7
12. An actuai and
justiciable
controversy exists between the parties with respect to the
existence of a facultative reinsurance certificate allegedly issued by ACE to Travelers in
connection with the policy issued by Travelers to Rorer Amchem, including the existence of an
agreement that contains an arbitration clause.
13. Accordingly, ACE seeks a
judicial declaration that there is no reinsurance
agreement between it and Travelers reinsuring the insurance policy issued by Travelers to Rorer
Amchem, and thus no reinsurance agreement betr,veen the parties that contains an arbitration
clause, and that Travelers' putative arbitration demand dated April 28,2014 is a nullity.
SECOI{I} CAUSE OF ACTIOI{
_
DECLARTTTORY JUDGMEI{T
14. ACE repeats and incorporates herein by reference the allegations contained in
paragraphs 1 through 13 above as if fully set forth herein.
1 5. For the period Juiy 27, 197 6 to October 1, 197 6,ACE issued to Traveiers the
Smith Kline Certificate, Reinsurance Certificate No. CNS 9-41-9 i, reinsuring Travelers policy
number 04XN89SCA issued to Smith Kline. The Smith Kline Certificate provides reinsurance
in the amount of "$500,000 each occurrence and in the aggregate part of $5,000,000
xs
s15,000,000."
16. The Smith Kline Certificate provides that "[p]ay*ent of its proportion of loss and
expense paid by
fTravelers]
n'ill be made by
[ACE]
to
[Travelers]
promptly following receipt of
proof of loss."
17 . The Smith Kline Certificate contains an arbitration clause that provides for
arbitration only of an "irreconcilable difference of opinion" between the parties "as to the
interpretation of this Contract."
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Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 4 of 7
1g. Travelers,
April 2g Letter asserled
that AcE had failed or refused to reimburse
Travelers in full in connection
with unspecified
smith Kline billings allegedly
due from AcE'
and purported to demand
arbitration
against
AcE pursuant to the Smith Kline certificate
seeking
,,an
award . . . which, among other things:
(i) orders
[ACE]
to pay the overdue
principal
balances
in full, plus interest; and,
(2) prescribes such other and further relief, including
but not
limited to attorneys,
fees and costs, as the
[arbitration]
Panel deems appropriate'"
19 . upon information
and belief. there are no proofs of loss that have been provided
to ACE and remain unpaid under the Smith Kline Certificate'
2A. ACE has repeatedly
requested
that Travelers and its broker
provide copies of the
alleged unpaid
proofs of loss, but no proofs of loss have ever been
provided'
zl,. AcE has underlaken
a thorough and exhaustive
search of its records for any
unpaid
proofs of loss under the Smith Kline certificate,
but no such proofs of loss have been
located.
zz. There
presently is no "irreconcilable
difference
of opinion"
between
ACE and
Travelers
..as
to the interpretation
of
fthe
Smith Kline certihcate]."
23. An actual and
justiciabie controversy
exists between
the parties with respect to the
existence of an arbitrable
dispute between
AcE and rravelers that falls within the scope of the
arbitration clause contained
in the Smith Kline certificate.
24. Accordingly,
AcE seeks a
judicial declaration
that there
presently are no
arbitrable disputes between the parties under the Smith Kline Certificate,
and that Travelers'
putative arbitration
demand dated Aprii 28,2014 is a nullity'
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Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 5 of 7
THIRD CAUSE OF ACTION
_
II{JUI{CTIVE RELIEF
25. ACE repeats and incorporates herein by reference the allegations contained in
paragraphs 1 through24 above as if fully set forth herein.
26. Travelers'April 28 Letterpurports to demand arbitration against ACE despite the
fact that:
(a) there is no reinsurance agreement between ACE and Travelers reinsuring the
insurance policy issued by Travelers to Rorer Amchem; and(b) there presently arc no arbitrabie
disputes betr,veen ACE and Travelers under the Smith Kline Certificate.
27 . ACE will suffer irreparable harm unless this Court grants the injunctive relief
ACE seeks because the arbitration, if allowed to proceed, will purport to adjudicate claims and
disputes that ACE has not agreed to arbitrate, and ACE, may face substantial
prejudice if it elects
not to parlicipate in the putatirre arbitration improperly commenced by Traveiers.
28. ACE has no adequate remedy at law.
29. Travelers will suffer no irreparable harm in the event an injunction issues.
30. The balance of equities w-eighs heavily in favor of an injunction.
3 i. The pubiic interest would be served by enjoining Travelers from prosecuting its
putative claims against ACE in arbitration because ACE and Travelers did not agree to arbitrate
such disputes.
PRAYER FOR RELIEF
WHEREFORE, ACE respectfuily requests :
(a) A Declaration that there is no reinsurance agreement between ACE and Travelers
in relation to the insurance policy issued by Travelers to Rorer Amchem;
(b) A Declaration that there are presently no arbitrable disputes between ACE, and
Travelers under the Smith Kline Certificate, and/or that there are presently no
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Case 1:14-cv-04901-RMB Document 2 Filed 06/30/14 Page 6 of 7
disputes between ACE and Travelers that fall within the scope of the arbitration
provision contained in the Smith Kline Certificate;
(c) A Declaration that Travelers' putative demand for arbitration is a nullity;
(d) An injunction perrnanently enjoining the putative arbitration demanded by
Travelers from proceeding;
(e) An order staying the putative arbitration demanded by Travelers pending final
resolution of this action;
(0 An award of attorneys' fees and reasonable costs; and
(g) Such other and fuither relief as the Court may deem
just
and proper.
Dated: June 3A,2A74
Respectfully submitted,
Crowell & Moring LLP
590 Madison Avenue, 20th Floor
New York, NY 1A022-2524
212.223.4000
ACE Property & Casualty Insurance
Company
NYACTIVE-I4066868,I
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