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.fir#$ pEa.ufil{t4ffi 4S0 1TNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORKACE PROPERTY & CASUALTYINSURANCE COMPANY, as successor ininterest to CENTRAL NATIONALINSURANCE COMPANY OF OMAHA,

Plaintiff,-against-

TRAVELERS CASUALTY AND SURETYCOMPANY flklaAETNA CASUALTY &SURETY COMPANY,

CASE NO.

COMPLAINT FOR DECLARATORY ANDINJLINCTIVE RELIEF

Defendant.

Plaintiff ACE Property & Casualty Insurance Company (to Central National Insurance Company of Omaha as respects busi behalf byCravens Dargan & Co., Pacific Coast ( Central National ), as and for its complaint againstdefendant Travelers Casualty and Surety Company flUa Aetna Casualty & Surety Company( Travelers ), alleges as follows:

NATURE OF THE CASE1. This action seeks declaratory relief pursuant to 28 U.S.C. $ 2201 et seq. and Rule

57 of the Federal Rules of Civil Procedure, and injunctive relief pursuant to Rule 65(a) of theFederal Rules of Civil Procedure. Travelers has purported to demand arbitration against ACE,asserting that there are arbitrable disputes between Travelers and ACE under two facultativereinsurance contracts allegedly issued by ACE to Travelers reinsuring, respectively, insurancepolicies issued by Travelers to two of its policyholders, Smith Kline Corporation ( Smith Kline )and Rorer Amchem Corporation ( Rorer Amchem ). In fact, however, ACE did not issue afacultative reinsurance contract to Travelers in connection with the Rorer Amchem policy.

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Moreover, although ACE issued a facultative reinsurance certificate to Travelers in connectionwith the Smith Kline policy (the Smith Kline Certificate ), there currently are no disputesbetween the parties under the Smith Kline Certificate, and in any event no disputes that fallwithin the scope of the arbitration clause contained in thx certificate. Accordingly, ACE bringsthis action seeking: (a) a Declaration that no reinsurance contract exists between ACE andTravelers as respects the Rorer Amehem poiicy; (b) a Declaration that there are presently noarbitrable disputes between ACE and Travelers under the Smith Kline Certificate; and (c) apennanent injunction prohibiting the putative arbitration improperly demanded by Travelers

from proceeding.PARTIES

Z. ACE is an insurance compan)i organizedunder the laws of the Commonwealth ofpennsylvanlawith its principal place of business in Philadelphia, Pennsylvanta.

3 . Travelers is an insurance company organized under the laws of the State ofConnecticut with its principal place of business in Hartford, Connecticut. Travelers is licensed toand does regularly caffy onthe business of insurance inthe State ofNew York.

JURTSDICTION AND VENUE4. This Court has jurisdiction over this action pursuant to 28 {J.S.C. $ 1332(a)

because the parties are citizens of different states, and the matter in controversy exceeds$75,000.00 exclusive of interest and costs.

5. Venue is proper inthis district pursuant to 28 U.S.C. $$ 1391(b), (c) and (d)because Travelers is subject to personal jurisdiction within this distrist.

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FIRST CAUSE OF ACTION _ DECLARATORY JUDGMENT6. ACE repeats and incorporates herein by reference the allegations contained in

paragraphs 1 through 5 above as if fully set forth herein.7. By letter dated April 28,2A14 ( Travelers' April 28Letter ), Travelers asserted

that ACE had issued a facultative reinsurance certificate to Travelers reinsurin g aninsurancepolicy issued by Travelers to Rorer Amchem. Travelers' ApriIzB Letter further asserted thatACE had failed or refused to reimburse Traveiers in full in connection with unspecified RorerAmchem reinsurance billings allegedly due from ACE, and purported to demand arbitration

againstACE seeking anaward. . . which, among otherthings: (1) orders [ACE] to paytheoverdue principal balances in full, plus interest; and, (2) prescribes such other and further relief,including but not limited to attomeys' fees and costs, as the farbitration] Panel deemsappropriate.

8. Upon information and belief, ACE did not issue a facultative reinsurancecertificate to Travelers reinsuring a policy issued by Travelers to Rorer Amchem.

9. ACE has repeatedly requested that Travelers and its broker provide a copy of thealleged facultative certificate, but no certificate has ever been provided.

10. ACE has undertaken a thorough and exhaustive search of its records for thealleged facultative certificate, but no such facultative certificate was located.

11. Travelers has provided ACE with so-cal1ed secondary evidence of the existenceof the alleged facultative certificate, but that purported evidence does not establish theexistence of the certificate or any other contract betw'een Travelers and ACE reinsuring thepolicy issued by Travelers to Rorer Amchem.

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12. An actuai and justiciable controversy exists between the parties with respect to theexistence of a facultative reinsurance certificate allegedly issued by ACE to Travelers inconnection with the policy issued by Travelers to Rorer Amchem, including the existence of anagreement that contains an arbitration clause.

13. Accordingly, ACE seeks a judicial declaration that there is no reinsuranceagreement between it and Travelers reinsuring the insurance policy issued by Travelers to RorerAmchem, and thus no reinsurance agreement betr,veen the parties that contains an arbitrationclause, and that Travelers' putative arbitration demand dated April 28,2014 is a nullity.

SECOI{I} CAUSE OF ACTIOI{ _ DECLARTTTORY JUDGMEI{T14. ACE repeats and incorporates herein by reference the allegations contained inparagraphs 1 through 13 above as if fully set forth herein.

1 5. For the period Juiy 27, 197 6 to October 1, 197 6,ACE issued to Traveiers theSmith Kline Certificate, Reinsurance Certificate No. CNS 9-41-9 i, reinsuring Travelers policynumber 04XN89SCA issued to Smith Kline. The Smith Kline Certificate provides reinsurancein the amount of $500,000 each occurrence and in the aggregate part of $5,000,000 xss15,000,000.

16. The Smith Kline Certificate provides that [p]ay*ent of its proportion of loss andexpense paid by fTravelers] n'ill be made by [ACE] to [Travelers] promptly following receipt ofproof of loss.

17 . The Smith Kline Certificate contains an arbitration clause that provides forarbitration only of an irreconcilable difference of opinion between the parties as to theinterpretation of this Contract.

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1g. Travelers, April 2g Letter asserled that AcE had failed or refused to reimburseTravelers in full in connection with unspecified smith Kline billings allegedly due from AcE'and purported to demand arbitration against AcE pursuant to the Smith Kline certificate seeking,,an award . . . which, among other things: (i) orders [ACE] to pay the overdue principalbalances in full, plus interest; and, (2) prescribes such other and further relief, including but notlimited to attorneys, fees and costs, as the [arbitration] Panel deems appropriate'

19 . upon information and belief. there are no proofs of loss that have been providedto ACE and remain unpaid under the Smith Kline Certificate'

2A. ACE has repeatedly requested that Travelers and its broker provide copies of thealleged unpaid proofs of loss, but no proofs of loss have ever been provided'

zl,. AcE has underlaken a thorough and exhaustive search of its records for anyunpaid proofs of loss under the Smith Kline certificate, but no such proofs of loss have beenlocated.

zz. There presently is no irreconcilable difference of opinion between ACE andTravelers ..as to the interpretation of fthe Smith Kline certihcate].

23. An actual and justiciabie controversy exists between the parties with respect to theexistence of an arbitrable dispute between AcE and rravelers that falls within the scope of thearbitration clause contained in the Smith Kline certificate.

24. Accordingly, AcE seeks a judicial declaration that there presently are noarbitrable disputes between the parties under the Smith Kline Certificate, and that Travelers'putative arbitration demand dated Aprii 28,2014 is a nullity'

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THIRD CAUSE OF ACTION _ II{JUI{CTIVE RELIEF25. ACE repeats and incorporates herein by reference the allegations contained in

paragraphs 1 through24 above as if fully set forth herein.26. Travelers'April 28 Letterpurports to demand arbitration against ACE despite the

fact that: (a) there is no reinsurance agreement between ACE and Travelers reinsuring theinsurance policy issued by Travelers to Rorer Amchem; and(b) there presently arc no arbitrabiedisputes betr,veen ACE and Travelers under the Smith Kline Certificate.

27 . ACE will suffer irreparable harm unless this Court grants the injunctive reliefACE seeks because the arbitration, if allowed to proceed, will purport to adjudicate claims anddisputes that ACE has not agreed to arbitrate, and ACE, may face substantial prejudice if it electsnot to parlicipate in the putatirre arbitration improperly commenced by Traveiers.

28. ACE has no adequate remedy at law.29. Travelers will suffer no irreparable harm in the event an injunction issues.30. The balance of equities w-eighs heavily in favor of an injunction.3 i. The pubiic interest would be served by enjoining Travelers from prosecuting its

putative claims against ACE in arbitration because ACE and Travelers did not agree to arbitratesuch disputes.

PRAYER FOR RELIEFWHEREFORE, ACE respectfuily requests :

(a) A Declaration that there is no reinsurance agreement between ACE and Travelersin relation to the insurance policy issued by Travelers to Rorer Amchem;(b) A Declaration that there are presently no arbitrable disputes between ACE, and

Travelers under the Smith Kline Certificate, and/or that there are presently no

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disputes between ACE and Travelers that fall within the scope of the arbitrationprovision contained in the Smith Kline Certificate;

(c) A Declaration that Travelers' putative demand for arbitration is a nullity;(d) An injunction perrnanently enjoining the putative arbitration demanded by

Travelers from proceeding;(e) An order staying the putative arbitration demanded by Travelers pending final

resolution of this action;(0 An award of attorneys' fees and reasonable costs; and(g) Such other and fuither relief as the Court may deem just and proper.

Dated: June 3A,2A74 Respectfully submitted,Crowell Moring LLP590 Madison Avenue, 20th FloorNew York, NY 1A022-2524212.223.4000

ACE Property Casualty InsuranceCompany

NYACTIVE-I4066868,I -7-

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