Nebraska Federal Court Applies First-To-File Rule To Reinsurance Breach Of Contract Disputes, Transfers Case To Connecticut

Author:Mr Thaddeus Ewald
Profession:Carlton Fields

The District of Nebraska recently ruled in favor of Charter Oak Oil Co. ("Charter Oak")'s attempt to dismiss a breach of contract case by Applied Underwriters Captive Risk Assurance Co. ("AUCRA") based on the first-to-file rule. AUCRA administered the investment component of a reinsurance participation plan with Charter Oak. Charter Oak moved to dismiss for improper venue based on concurrent litigation by Charter Oak against AUCRA in Connecticut federal court. AUCRA opposed the motion to dismiss, arguing that "compelling circumstances" and "red flags" existed sufficient to warrant an abrogation of the first-to-file rule. Specifically, AUCRA alleged it warned Charter Oak via a demand letter of its intent to file this lawsuit in Nebraska and Charter Oak raced to the Connecticut courthouse first. AUCRA further alleged that it was attempting to settle the dispute out of court by notifying Charter Oak of its intent to file suit.

The court, however, brushed off those arguments and held that "even assuming them to be true" the first-to-file rule still applied. It noted there was no evidence that Charter Oak knew the Nebraska lawsuit was imminent, that Charter Oak misled AUCRA to gain the advantages of filing first, or that Charter Oak made any prior assurances it would not file a complaint but then did...

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