Arent Fox Secures Dismissal of Major Claim

New York, NY – Arent Fox LLP secured a victory for Fortress Re Inc.—the aviation reinsurance agency that infamously insured the four planes that crashed on 9/11—after a New York district court dismissed a breach of contract claim in late March. Insurance & Reinsurance partner Julius A. Rousseau and associate Lee A. Pepper have represented Fortress through all stages of litigation and successfully argued that the statute of limitations on claims in New York starts when there is a legal right to demand payment and not when a fiduciary communicates a rejection of its trust.

Judge Victor Marrero for the US District Court for the Southern District of New York dismissed a complaint against Fortress brought by NEM Re Receivables LLC, formerly known as Federated Reinsurance Co. that sought payment for funds stemming from a settlement agreement that never came to fruition. Judge Marrero agreed with Arent Fox attorneys that requirements for a claim of accounting were not met and that New York’s statute of limitations for breach of contract passed more than five years ago.

“We are thrilled that Judge Marrero dismissed the complaint and that he found, as other courts have, that a conventional business relationship does not become a fiduciary relationship by mere allegation,” said Mr. Rousseau. “Our argument is clear that NEM Re did not meet the requirements for a claim of accounting and the statute of limitations expired several years ago.”

Fortress served as an agent and manager for insurance companies and was in possession of letters of credit and other funds belonging to Federated several decades ago. In 1990, Federated became insolvent and was placed into liquidation. But it was not until 2004, that the Commissioner of Insurance of the State of New York assigned all of Federated’s then uncollected reinsurance receivables to NEM Re — starting the six-year window for NEM Re to file a complaint. But it was not until 2015 that NEM Re asked Fortress Re to pay any amounts that may have been owed, along with interest, attorney fees, and costs