Alexander & Alexander Services, Inc. v. Lloyd's Syndicate 317
| Decision Date | 18 April 1990 |
| Docket Number | Docket No. 89-9231 |
| Citation | 902 F.2d 165 |
| Parties | ALEXANDER & ALEXANDER SERVICES, INC., Alexander & Alexander, Inc., and Alexander & Alexander of New York, Inc., Third-Party Plaintiffs-Appellees, v. LLOYD'S SYNDICATE 317, Third-Party Defendant-Appellant. |
| Court | U.S. Court of Appeals — Second Circuit |
Before KAUFMAN, FEINBERG and WALKER, Circuit Judges.
On consideration of the briefs and records and the oral argument in this appeal, it is hereby ORDERED that the Clerk of the Court transmit to the Clerk of the New York Court of Appeals a Certificate in the form attached, together with a complete set of the briefs, appendix, and record filed by the parties with this court.
--against--
LLOYD'S SYNDICATE 317, Third-Party Defendant-Appellant.
____________________
Certificate to The New York Court of Appeals (pursuant to
Sec. 500.17(b)--certification of
unsettled question of state law)
Alexander & Alexander Inc. is a Maryland corporation with its principal place of business in Maryland; Alexander & Alexander of New York Inc. is a New York corporation engaged, among other things, in the insurance brokerage business; Alexander & Alexander Services Inc. is a Maryland corporation with its principal place of business in Maryland. (All three corporations are referred to hereafter as Alexander.) Lloyd's Syndicate 317 (Syndicate 317) is a group of insurance underwriters who conduct their underwriting business in the insurance marketplace known as "Lloyd's of London," located in London, England. Landoil Resources Corporation (Landoil) is a Philippines corporation with its principal place of business in the Philippines. During the relevant period, Landoil's activities included the provision of a comprehensive range of contracting, management and construction services on large public and private projects in Third World and Middle Eastern countries.
An overview of the unique manner in which Lloyd's insurance market operates is necessary background. All underwriting at Lloyd's is performed by the underwriting members of Lloyd's in their individual capacities. These individual underwriting members transact their business in groups called syndicates. The syndicates are managed by managing agents, who, among other things, accept or reject the risks submitted for underwriting, collect premiums, pay losses and disburse all funds. The various syndicates conduct all of their underwriting business at the central Lloyd's building in London. Insurance business may be brought to these underwriting syndicates only by registered Lloyd's brokers, who have been appointed either by the prospective insured or by the insured's non-Lloyd's broker. The Lloyd's broker prepares a "slip" for submission to any number of managing agents, setting forth the risk to be insured; any managing agent who wishes to underwrite all or a portion of the risk indicates this on the slip; once the entire risk has been subscribed, the broker informs its principal that the insurance has been placed; and subsequently, the Corporation of Lloyd's (a nonprofit corporation created by a Special Act of Parliament) issues a policy through its Policy Signing Office in London.
The Corporation of Lloyd's itself does no underwriting, but instead provides services to the member underwriters at Lloyd's. One of its administrative departments is the Finance & Market Services Group (FMSG), which administers the American Trust Fund (the Fund), a fund held in trust by it and the Corporation of Lloyd's as security for Lloyd's policies issued to American insureds. As of December 31, 1988, the Fund had $9.4 billion dollars on deposit at Citibank in New York. Although the underwriters neither deposit directly into the Fund nor are able to draw directly from it, a portion of their premium income derived from the underwriting of American risks is deposited in the Fund through various complex accounting arrangements. We were told at oral argument that the Fund is "fairly active" in paying out claims. The Fund enables New York insurance brokers and insurance companies to do business with Lloyd's underwriting syndicates, which are not authorized to write insurance in New York.
A New York insurance broker is prohibited from placing insurance with an unauthorized alien or foreign insurer unless it has ascertained, among other things, that such insurer maintains a trust fund at a New York bank, in an amount specified by regulation, as security for the insured. 11 N.Y.C.R.R. Sec. 27.5(a)(1)(ii). Similarly, a New York insurance company may neither count as an asset nor credit against its loss reserves any obligation reinsured with an unauthorized alien insurer, unless such alien insurer maintains a trust fund at a New York bank in a similarly specified amount. 11 N.Y.C.R.R. Sec. 125.4(c).
The policies at issue here were obtained in accordance with these customary practices. Alexander acted as insurance broker for Landoil in obtaining two political risk insurance policies for Landoil's projects in the Middle East and Africa in 1982 and 1983. Because Alexander is not a registered Lloyd's broker, the policies were negotiated between Alexander's Lloyd's broker subsidiary and certain Lloyd's underwriters, with all communications taking place in London. Although disputes arose regarding alleged losses under both policies, a settlement of all the disputes under both policies was reached between Landoil and certain underwriters at Lloyd's following arbitration proceedings in London, to which Alexander was not a party.
In November 1987, after Landoil settled with its underwriters, it commenced the underlying direct action here against Alexander in the United States District Court for the Southern District of New York, alleging, among other things, breach of contract and fraud and misrepresentation. In January 1989, Alexander filed a third-party complaint against, among others, certain Lloyd's underwriters, including Syndicate 317, alleged to have subscribed to the political risk insurance policies at issue in the direct action. Alexander sought indemnification and contribution from some 62 (we are told) underwriting syndicates. Due to a dispute over the scope of Alexander's service of process only Syndicate 317 (of the underwriters sued in the third-party action) purported to appear, and only it moved the district...
To continue reading
Request your trial
-
Riordan v. Nationwide Mut. Fire Ins. Co.
... ... cases supporting both arguments); Alexander & Alexander Servs., Inc. v. Lloyd's Syndicate ... ...
-
Vought Aircraft Indus. Inc. v. Underwriting
... ... of the underwriting members of Lloyd's Syndicate 1209, and all other Lloyd's Syndicates ... See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once ... 's overhead is part of the fee for his services. Rather than charge an hourly or per-job fee, he ... , pay losses and disburse all funds." Alexander & Alexander Servs., Inc. v. Lloyd's Syndicate ... ...
-
Landoil Resources Corp. v. Alexander & Alexander Services, Inc.
... ... Third-Party Plaintiffs ... Lloyd's Syndicate" 317 et al., Third-Party Defendants ... Court of Appeals of New York ... Nov. 20, 1990 ... \xC2" ... ...
-
Rivkin v. Century 21 Teran Realty LLC
... ... Among other services, a buyer's agent finds property that a purchaser ... See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see ... See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 ... there is "no direct precedent." See Alexander & Alexander Servs., Inc. v. Lloyd's Syndicate ... ...
-
Federalism is alive and well and living in New York: Honorable Hugh R. Jones Memorial Lecture.
...Banque Worms v. BankAmerica Int'l, 928 F.2d 538, 541 (2d Cir. 1991) (quoting Alexander & Alexander Servs., Inc. v. Lloyd's Syndicate, 902 F.2d 165, 169 (2d Cir. (21) Banque Worms v. BankAmerica Int'l, 77 N.Y.2d 362, 372, 570 N.E.2d 189, 195, 568 N.Y.S.2d 541, 547 (1991) (quoting Hatch v......