Applied Underwriters, Inc., Loses Argument To Enforce Mandatory Forum Selection Clause In Reinsurance Contract

On September 12, the District Court for Connecticut denied a motion to transfer predicated on a mandatory forum selection clause in a reinsurance contract. The contract was one of several entered into by Applied Underwriters, Inc., and its affiliates (collectively "Applied") with Aiello Home Services ("Aiello") for a "novel [workers' compensation] insurance product known as 'EquityComp,' which required participation by the insured in a reinsurance facility. Applied's relations with Aiello broke down when Applied sent Aiello a statement "assessing an additional premium charge of $195,786.52, and reporting total estimated costs nearly $200,000 higher than the previous month's total cost estimate." Aiello filed suit alleging violations of the Connecticut Unfair Trade Practices Act and other statutory violations. Applied removed the case to federal court and sought to transfer to the District of Nebraska based on the forum selection clause.

The court denied the motion to transfer. The court found that the bulk of Aiello's claims arose from statutory violations, not the contract, and therefore were not within the scope of the forum selection clause. The fact that Applied's defenses relied primarily on the contract was insufficient to...