Millenium Petrochemicals v. Jago

Millenium Petrochemicals v. Jago

Opinion

 [*655] MEMORANDUM OPINION

This matter is before the Court on Defendants Equitas' Motion to Dismiss. ¹ Plaintiff filed a response to which Defendant Equitas replied. After reviewing the file and being otherwise sufficiently advised, the Court finds that Defendant Equitas should be dismissed from this action. Defendant's Motion to Dismiss [dkt. # 4] is granted for the reasons set forth below.

I. Introduction

Plaintiff brought this action for breach of an insurance policy, breach of the covenant of good faith and fair dealing, and for bad faith settlement [**4]  practices in violation of the Kentucky Unfair Claims Settlement Practices Act. In addition to seeking a declaratory judgment, Plaintiff seeks interest on alleged amounts of reimbursement, punitive damages and attorney fees.

Defendant Equitas seeks a dismissal of the complaint against it on the grounds that the court lacks in personam jurisdiction and on the grounds that the complaint fails to state a claim upon which relief can be granted. In order to properly place the grounds upon which the motion is based into context, it becomes necessary to first briefly review the insurance background in this action.

II. Background

In 1984, Plaintiff purchased several reimbursement insurance policies totaling the sum of $ 50 million to indemnify its directors from the expense of any litigation they might incur while acting on behalf of the company. These insurance policies were sold by members of the Lloyds of London Society who are referred to as "Names." ² To memorialize the conditions  [*656]  under which Plaintiff would be buying and the Names would be selling the reimbursement insurance, the parties entered into an insurance contract. The contract contained a service of suit clause which [**5]  "was viewed by Lloyds as an important marketing tool for selling policies in the United States." Essentially, this clause served as a jurisdiction consent clause whereby the Names agreed to submit to the jurisdiction of any court in the United States if a dispute over a claim arose. As such, Plaintiff invoked the service of suit clause for jurisdiction in the United States and filed this action against the "Names" who sold the insurance policies seeking reimbursement of amounts it spent in defending previous company lawsuits.

 [**6]  In filing this action, Plaintiff also named Equitas as a defendant. Equitas was formed by Lloyds of London in 1996 to reinsure pre-1993 policies issued by the Names. This meant that Equitas would indemnify the Names/Syndicate for any amount they had to pay out on the policies they had issued before 1993. To be entitled to the indemnification, the Names had to enter a reinsurance contract with Equitas which provided that Equitas would have the exclusive authority to handle, litigate, defend and settle any claim arising against the Names. The contract also specifically provided that it did not have any "effect on the liability of any Name" and that it did not create any third-party beneficiary rights upon the policyholders.

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