Jan 2012
CAYMAN ISLANDS
GRAND COURT
PROCEDURE – INSURANCE – STRIKING OUT – ABUSE OF PROCESS
The Plaintiff purchased the Hyatt Hotel, Grand Cayman, in December 2003 and obtained property and business interruption insurance for it from various insurers in three layers. Part of the second layer of insurance was provided by the London office of a Texas insurance company (the “Texas insurer”). In September 2004 Hurricane Ivan devastated Grand Cayman and the Hyatt was badly damaged. The Plaintiff claimed on all of its policies. The claim was not paid and action was brought in Cayman by the Plaintiff against its insurers. During the discovery phase of litigation the Plaintiff threatened to bring a separate action for punitive damages in Texas against the Texas insurer. Settlement negotiations followed, during which the parties entered into a standstill agreement whereby neither party would file any new legal proceedings in any jurisdiction until the Cayman litigation was either settled or went to judgment. Protracted negotiations followed during which the Plaintiff alleged that a settlement had been reached (thus concluding the standstill agreement) but funds not paid. The Plaintiff commenced the punitive damages action against the Texas insurer in Texas. Eventually, settlement was reached with all of the second layer insurers save the Texas insurer. The Texas insurer made a full tender offer, plus costs and interests, without prejudice to the Texas claim, an offer which sat open for some ten months and was neither accepted nor declined by the Plaintiff. The Plaintiff took no formal steps in its action against the Texas insurer in Cayman for a period of over three years. The Texas insurer then brought this application to strike out the claim against it. During this drama, the Plaintiff made repeated statements to the press accusing the Texas insurer of, inter alia, dishonesty and bad faith. The Texas insurer counterclaimed against the Plaintiff for damages to its reputation, upon which summary default judgment was granted. Application was brought for an order setting aside the Judgment on the counterclaim, but affidavit evidence in support of that application was not filed for some four months.