Note: As part of a reinsurance agreement, Assurecare Corporation (Re-Insurer/Applicant) provided Arrowood Indemnity Company (Insurer/ Beneficiary) with a standby letter of credit issued by U.S. Bank (Issuer). When Re-Insurer/Applicant refused to reimburse Insurer/Beneficiary for US$ 580,484.65 in losses associated with litigation arising out of a death at a nursing home insured by Insurer/ Beneficiary, Insurer/Beneficiary drew US$ 361,518 under the standby and sued Re-Insurer/Applicant to recover the balance of the losses. Re-Insurer/ Applicant counterclaimed for breach of contract, conversion, fraud, unjust enrichment, and negligence based on the alleged wrongful drawing of the standby. Insurer/Beneficiary moved to dismiss the fraud and unjust enrichment counterclaims, whereupon Re- Insurer/Applicant abandoned its fraud claim and alleged a new claim that Insurer/Beneficiary had tortiously interfered with Applicant's business relationship with Issuer. The United States District Court for the Northern District of Illinois, Hibbler, J., granted Insurer/Beneficiary's motion to dismiss both the tortious interference and unjust enrichment claims.

The Judge ruled, that the facts pled did not state a cause of action for tortious interference or unjust enrichment. The Judge stated that the pleadings did not indicate that Insurer/Beneficiary intended to interfere with Re-Insurer/Applicant's relationship with Issuer or that Insurer/Beneficiary's conduct actually did interfere with that relationship. Further, because Re-Insurer did not dispute the validity of the underlying contract that governed Insurer/ Beneficiary's drawing of the standby, the Judge rejected Re-Issuer's unjust enrichment claim because under Georgia law such a remedy is not available where there is an enforceable contract.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.