Massachusetts Federal Court Rules English Law Governs Reinsurance Dispute but Denies Reinsurers’ Motion for Summary Judgment

Plaintiffs, Certain London Market Company Reinsurers (LMRs), filed suit against Lamorak Insurance Co. seeking a declaratory judgment that they were not obligated to pay reinsurance billings ceded by Lamorak. The disputed amounts stem from various settlements between Lamorak and its insured relating to numerous environmental damage claims dating back several decades. The LMRs moved for summary judgment in the reinsurance coverage dispute, arguing that English law governed the interpretation of the reinsurance agreements. Lamorak claimed that Massachusetts law applied. The Massachusetts federal court agreed with the LMRs.

Lamorak argued that the choice-of-law analysis was governed by Restatement section 193. But the court ruled that Restatement sections 6 and 188 controlled, noting it found no precedent supporting Lamorak’s position. Applying Restatement section 188 in the reinsurance context, the court held that choice of law is dictated by “the state where the reinsurance certificate issued and the location where performance is expected, i.e. the place to which the ceding insurer must make its demand for payment, typically control for purposes of choice of law.” Here, the reinsurance agreements were signed in England, the relevant documents were issued from England, and Lamorak’s demands for payment under the agreements were made to the LMRs in England. As such, the court found it was beyond dispute that English law applied. Notwithstanding, the court denied the LMRs’ motion for summary judgment, finding the disputed issues of material fact were too numerous to identify in the decision. The court ruled it was sufficient to deny the motion on the ground that the parties fundamentally disagreed as to whether the reinsurance agreements were the relevant contracts in the first instance.

Certain London Market Company Reinsurers v. Lamorak Insurance Co., No. 1:18-cv-10534 (D. Mass. Jan. 20, 2022).