STORY FROM: Reinsurance & Arbitration

Calif. Federal Judge Refuses to Impose Bad Faith Tort Liability Upon Reinsurer

LOS ANGELES — A California federal judge has dismissed a cedent’s bad faith claim against its reinsurer as a tort remedy, explaining that the parties share no “special relationship” that justifies imposing tort liability upon the reinsurer.

However, in a July 16 order, Judge Otis D. Wright II of the U.S. District Court for the Central District of California refused to strike the claim, ruling that it is not redundant of the cedents’ breach of contract claim. The judge found the cedents “allege bad faith conduct that goes beyond the statement of a mere contract breach.”

According to the complaint, ...

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