Mizuho Corporate Bank (Usa) v. Cory & Associates

ARGUED DECEMBER 5, 2002 Insurance is meant to cushion the blow caused by a disaster; it is supposed to be part of the solution, not part of the problem. In this case, however, the contest is over who was responsible for inadequacies in the insurance policy itself, and who must bear the uncovered losses. In general terms, this litigation arose out of the bankruptcy proceeding of the under-insured party, Cyberstar and Caribbean Communications (CCC). One of CCC's creditors (International Bank of Japan, or IBJ1) sued the retail insurance broker (Cory & Associates, or Cory) that had procured the policy, and it in turn impleaded the wholesale broker (Insurance Broker Services, Inc., or IBSI) and the ultimate insurer (Travelers Indemnity Company, or Travelers). One of the issues we are considering on appeal concerns the effect of a settlement between IBJ and Cory in the main action on the eve of trial. The district court ruled that this settlement resolved all issues conclusively with respect to Cory's alleged responsibility for the expensive mishap, and it therefore limited the trial to the question whether there was a fiduciary relationship between Cory and IBSI. The jury decided that there was, and thus stuck IBSI with the responsibility of paying the entire amount (some $20 million) reached in the settlement agreement. IBSI has appealed, claiming that this was error. The district court should not have so restricted the trial, and we therefore remand for further proceedings. The second major point concerns the correctness of the district court's decision to grant summary judgment in favor of Travelers. We affirm the court's ruling that Travelers was entitled to summary judgment.