Acumen Re Management Corp. v. General Security National Insurance

769 F.3d 135, 89 Fed. R. Serv. 3d 962, 2014 U.S. App. LEXIS 18926, 2014 WL 4942279
CourtCourt of Appeals for the Second Circuit
DecidedOctober 3, 2014
DocketNo. 12-5081-cv
StatusPublished
Cited by35 cases

This text of 769 F.3d 135 (Acumen Re Management Corp. v. General Security National Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Acumen Re Management Corp. v. General Security National Insurance, 769 F.3d 135, 89 Fed. R. Serv. 3d 962, 2014 U.S. App. LEXIS 18926, 2014 WL 4942279 (2d Cir. 2014).

Opinion

SUSAN L. CARNEY, Circuit Judge:

This case arises from a reinsurer’s contractual undertakings to compensate a specialized underwriter. The underwriter, Acumen Re Management Corporation (“Acumen”), sued the reinsurer, General Security National Insurance Company (“General Security”), for breach of contract, seeking contingent commissions alleged to be due. The United States District Court for the Southern District of New York (George B. Daniels, Judge) entered partial summary judgment for General Security, ruling that four of Acumen’s five breach-of-contract theories were baseless and that, under all 'five theories, no more than nominal damages were available. The District Court then certified the judgment under Federal Rule of Civil Procedure 54(b), and, notwithstanding the remaining disputed theory, closed the case.

General Security asserts that we lack jurisdiction to entertain Acumen’s appeal, arguing that the District Court’s certification under Rule 54(b) was improper in that its partial judgment did not address separate “claim[s] for relief.” We agree, and conclude that we must dismiss the appeal.

BACKGROUND1

We begin with some details of the dispute. In 1994, Acumen, an underwriter, entered into the “Acumen Re Reinsurance Underwriting Agency Agreement” (the “Underwriting Agreement”) with Sorema North America Reinsurance Company (“Sorema”). Pursuant to the Underwriting Agreement, Sorema engaged Acumen to underwrite reinsurance of certain workers’ compensation insurance, subject to detailed guidelines. The undertaking concerned “facultative reinsurance,” in which Sorema, as a reinsurer, would assume on a policy-by-policy basis certain portions of risks insured as an initial matter by other companies (the “ceding companies”).2

Acumen’s role for Sorema was primarily to underwrite — that is, to identify, investigate, evaluate, and price — risks of a type and range that were well defined by the Underwriting Agreement. For each qualifying risk identified by Acumen and accepted by Sorema, Acumen would produce a “certificate” documenting the risk and related undertakings.

The Underwriting Agreement provided that Acumen would receive, as compensation, an eight percent commission on “net written premium received by [Sorema] on ... certificates bound or written under [the] Agreement.” The Underwriting Agreement was supplemented at its inception by a “Contingency Commission Addendum” (“Addendum”) providing that Acumen would “be allowed a thirty percent (30%) contingent commission on [Sorema’s] share of annual net profits, if any ... arising from [certificates] bound or written under the [parties’ agreement],” subject to further specified terms. The [137]*137Addendum set out a detailed schedule and method for calculating the contingent commissions, using as factors both the profitability of the underwritten policies and the size of certain of Sorema’s reserves. Together, these documents (the “Initial Agreement”) established the terms on which Sorema would compensate Acumen for its underwriting services.

Seven years later, in 2001, Sorema was acquired and became General Security. The following year, General Security and Acumen agreed to end their relationship, in the “Agreement Terminating Acumen Re Reinsurance Underwriting Agency Agreement” (“Termination Agreement”). The Termination Agreement called for General Security to make an immediate payment of $1 million to Acumen in 2001, and, in early 2008, to calculate and pay any contingent commissions due under the Addendum for the prior underwriting years— from the start of 1997 through April 30, 2002.3 The Termination Agreement also specified certain provisions of the Initial Agreement that would survive the termination. These included General Security’s obligation to provide to Acumen quarterly reports on any losses General Security incurred on claims then outstanding. (Collectively, the Initial Agreement and the Termination Agreement will be referred to as the “Agreements”)

After the termination in 2002 and before the final commission payment became due in 2008, General Security commuted certain of its reinsurance certificates, some of which had been underwritten by Acumen.4 The commutations — which Acumen alleged General Security made without consulting Acumen (thereby breaching the Underwriting Agreement, according to Acumen) — were entered into General Security’s accounting system as “paid losses.” Acumen alleges that General Security accounted for those losses in its financial statements without distinguishing among losses associated with commuted certificates underwritten by Acumen and those underwritten by other companies. General Security also stopped providing quarterly reports to Acumen after December 2004.

In 2008, when the time came for General Security to calculate the contingent commissions owed to Acumen, it concluded that none were due. Rather, it determined that, in the end, the certificates Acumen underwrote generated losses for General Security in excess of $56.7 million.

Acumen disputed that conclusion, maintaining that it was owed contingent commissions by General Security, and, later in 2008, it sued. Acumen’s complaint framed the claims in two counts, one for breach of contract and a second for breach of the implied covenant of good faith and fair dealing. As relief, it sought principally compensatory and punitive damages. Not long after Acumen filed an amended complaint, General Security moved for partial summary judgment on the issues of liability and punitive damages, as well as on Acumen’s claim for attorney’s fees. In an order dated February 25, 2010, the District Court dismissed, as duplicative of its breach of contract claim, Acumen’s claim for breach of the implied covenant of good [138]*138faith and fair dealing, but denied as premature General Security’s motion on the breach of contract claim itself.5 The case then proceeded on that breach claim.

In that claim, framed in the complaint simply as “COUNT I — Breach of Contract,” Acumen alleged that General Security committed “multiple breaches” of the Agreements by: (1) failing to provide Acumen with quarterly financial reports; (2) unilaterally commuting certificates underwritten by Acumen; (3) failing to consult with Acumen before determining the profit (if any) it realized on any of Acumen’s certificates; and (4) failing (through poor data management, inter alia) to perform a valid calculation of and to pay Acumen’s contingent commissions. It did not specify damages attributable to each individual alleged breach. Nor did it specify a particular quantum of damages for the Count as a whole, instead asserting generally that it should receive the contingent commissions allegedly owed under the Agreements.6

After the close of discovery, General Security moved again for summary judgment on liability and damages, and Acumen filed its own motion for summary judgment on liability. The District Court granted partial summary judgment in General Security’s favor. Acumen Re Mgmt. Corp. v. Gen. Sec. Nat’l Ins. Co., No. 09 CV 01796(GBD), 2012 WL 3890128 (S.D.N.Y. Sept. 7, 2012).

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769 F.3d 135, 89 Fed. R. Serv. 3d 962, 2014 U.S. App. LEXIS 18926, 2014 WL 4942279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/acumen-re-management-corp-v-general-security-national-insurance-ca2-2014.