C.V. Starr & Co. v. Boston Reinsurance Corp

C.V. Starr & Co. v. Boston Reinsurance Corp. (1987) 190 Cal.App.3d 1637 involved a dispute among 11 reinsurers concerning allocation of a large judgment against an insured. (Id. at p. 1641.) Only one reinsurer was "presently subject to arbitration." (Ibid.) "Thus, the remaining allocation disputes would presumably be determined by court action." (Ibid.) Affirming the order denying arbitration, the court stated: "The potential for conflicting rulings is readily apparent." (Ibid.) The appellant argued "that the trial court could have obviated the possibility of conflicting rulings by staying the court action until arbitration was completed and then taken the . . . arbitration award into account when deciding allocation among the others." (Id. at p. 1642.) The court rejected that argument, saying "the potential result of the suggested procedure would be to give the arbitrators' decision binding effect on all the other reinsurers as well, even though, of course, they are not legally bound to arbitrate." (Id. at p. 1642.) The court concluded that the "optimal procedure in the present case" would be "a single proceeding bringing together all the affected parties for an orderly decision on the allocations of each reinsurer." (Ibid.) "Section 1281.2, subdivision (c) expressly authorizes the trial court to proceed in that manner." (Ibid.) Therefore, "the trial court acted well within the bounds of its discretion in denying arbitration pursuant to section 1281.2, subdivision (c)." (Id. at p. 1643.)