Newmont U.S.A. Ltd. v. Ins. Co. of N. Am., 2010 U.S. App. LEXIS 17018 (10th Cir. [CO] Aug. 11, 2010)
In a dispute over reinsurance obligations and the requirement to arbitrate their dispute, an insurer issued general liability policies to a corporation. The corporation’s subsidiary, a reinsurer, agreed to reinsure the insurer with respect to those policies. The reinsurance agreement provided “[a]s a condition precedent to any right of action hereunder, any dispute arising out of this Agreement shall be submitted to the decision of a board of arbitration.”
Following environmental claims relating to mining sites, the insurer and the corporation entered into settlement agreements regarding coverage for claims brought against two of corporation’s subsidiaries. The settlement agreements included releases of the reinsurer, but only with respect to claims arising from the involved sites. The settlement agreements did not contain an arbitration provision.
A third subsidiary subsequently sued the insurer seeking coverage for claims arising from another site, and the parties disputed whether the reinsurer was required to reimburse the insurer in connection with that litigation. The reinsurer and its parent argued that the issue was not subject to arbitration under the agreements. The Tenth Circuit federal court of appeals held that the arbitration provision in the reinsurance agreements was broad and encompassed the reimbursement dispute, and neither the expiration of the reinsurance agreements nor the release included in the settlement agreements extinguished arbitrability. The court held that the settlement agreements were intended to resolve claims relating to the first two subsidiaries only. The court further held that an alteration of the post-judgment interest rate by the district court from the rate agreed to in the reinsurance contract to a statutory rate was improper since the issue was arbitrable and the statute did not preclude parties from setting a rate by contract.
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Bryan Richmond and Jeffrey Kingsley