Aviation Co. Fights Delay Of Russian Planes Coverage Suit

Posted on May 06, 2024
Steven Marks
Steven C. Marks

By Carolina Bolado – Law360, Miami (April 29, 2024, 9:59 PM EDT)

A Florida-based aircraft leasing company has pushed back on its insurers’ request to pause its coverage suit for $700 million worth of airplanes reappropriated by Russian airlines after the Ukraine war began, saying the insurers’ own litigation against reinsurers should have no bearing on its coverage claims.

Carlyle Aviation Partners LLC filed a response to a request by some of its insurers to suspend Carlyle’s suit against them while the insurers’ suits against its reinsurers are resolved, arguing that those reinsurance contracts are “wholly distinct from Carlyle’s policy” and that the resolution of those cases will not resolve Carlyle’s claims.

Carlyle’s policy does not depend on a coverage determination under any other contract, according to the response. The insurers’ request for a stay is “premised on an incorrect interpretation” of the policy — that the policy’s contingent coverage “depends on whether Carlyle’s ‘loss is covered'” by the policies obtained by the operators of the leased aircraft, according to the response.

Carlyle said that the insurers have already presented this interpretation as an affirmative defense and that with a request for a stay, they are seeking “summary adjudication of those affirmative defenses.”

“If defendants wish to carry their burden of proof on those defenses, they can do so through an appropriate motion,” Carlyle said. “But defendants cannot … seek summary disposition of those defenses under the guise of a motion to stay, particularly where their own sworn testimony contradicts the defenses.”

A stay would “deeply prejudice” Carlyle because it would probably add years of delay, according to the response.

Earlier this month, Fidelis Insurance Bermuda Ltd. and Fidelis Underwriting Ltd. asked for the stay, arguing that without it, the current lawsuit would proceed faster than the others, leading to potentially incongruent rulings. The insurers were joined in the request by eight other co-defendants.

“Justice would be brought into disrepute here if inconsistent judgments arise in different jurisdictions on the same critical issue, leading to complex and uncertain appeals to try to right the inconsistency,” Fidelis said.

Carlyle filed the suit in October 2022 against several U.S. and European underwriters and insurers after more than a dozen aircraft that had been leased to Russian airlines were reappropriated after the Ukraine war began. The aircraft were also separately insured under policies obtained by Carlyle’s Russian lessees and issued by Russian insurers.

Carlyle said it made claims under those Russian insurance policies, but they have not been paid. Carlyle’s policy provides “contingent” coverage in the event that the company is not indemnified under the lessees’ insurance policies, according to Carlyle’s response.

Carlyle’s attorney Steven Marks said the defendants have “engaged in bad faith conduct by refusing to honor” his client’s valid insurance claims.

“After litigating this case in Florida for more than eighteen months, a minority of the defendants in this case brought this motion out of desperation after they lost their bid to have English reinsurance cases dismissed in favor of a Russian court,” Marks said. “This belated request to indefinitely suspend this case is yet another attempt to delay accountability in Florida. It is exactly the opposite of what Carlyle’s insurers committed to do when they entered into a Florida-law insurance contract, over which the Florida courts have exclusive jurisdiction.”

An attorney for the Fidelis defendants did not respond to a request for comment.

Carlyle is represented by Steven C. Marks, Kristina M. Infante and Pablo Rojas of Podhurst Orseck PA.

The Fidelis defendants are represented by Armando P. Rubio of Fields Howell LLP.

The case is Carlyle Aviation Partners LLC et al. v. American International Group UK Ltd. et al., case number 2022-020857-CA-01, in the Eleventh Judicial Circuit Court of the State of Florida.

–Additional reporting by David Minsky. Editing by Rich Mills.