The Sixth Circuit Court of Appeals has affirmed summary judgment in favor of Swiss Re in a complex reinsurance dispute brought by Amerisure Mutual Insurance Company. The litigation stemmed from Amerisure’s decision to pay defense costs in addition to policy limits in underlying asbestos bodily injury claims involving its insured, Armstrong. This decision nearly tripled Amerisure’s exposure, which it sought to pass on to its reinsurers. 

Years earlier, BatesCarey represented Allstate in arbitration against Amerisure over the same issue. Amerisure had argued that its policies required payment of defense costs outside of limits, despite having previously treated those costs as within limits. Allstate objected and agreed only to reimburse costs as originally structured. After extended arbitration proceedings, the panel ruled in Allstate’s favor, finding that defense costs were within limits and that Allstate was not obligated to reimburse Amerisure on the expanded basis.

Following its loss in arbitration, Amerisure pursued similar claims against Swiss Re, filing suit in federal district court in Michigan. Unlike Allstate’s contracts, Swiss Re’s reinsurance agreements did not include an arbitration clause. The case was defended on the merits and asserted that collateral estoppel barred Amerisure’s claims, given the prior resolution of the same coverage issue in the Allstate arbitration. The district court agreed and granted summary judgment.

On appeal, Amerisure raised numerous objections to the application of collateral estoppel, including distinctions between the issues, lack of appellate review in arbitration and Swiss Re’s nonparticipation in the prior proceedings. The Sixth Circuit rejected all of Amerisure’s arguments, describing its approach as “the kitchen sink,” and adopted much of the reasoning presented in Swiss Re’s appellate briefs.