Territoriality test foils Fleming’s case against James River

Previously Bermuda-based specialty re/insurance holding James River recently upheld its legal defence against estranged partner Fleming Insurance Holdings, with no signs at present that it might have to backtrack or otherwise pay for an asset sale gone sour from late 2023.

A New York federal court stood by its summer decision to dismiss Fleming’s allegations of securities fraud and common fraud stemming from the sale agreement for James River unit JRG Reinsurance. Fleming claimed to have found fraud and misrepresentations in the original sales deal for the asset, but failed to alter the deal and failed to fend off a court injunction to proceed with the $277 million purchase.

The court that weighed the Fleming allegations didn’t need to dive too deep into the heart of the matter, ruling instead that the deal between and for chiefly Bermudian firms fails the territoriality test for a US federal court.

Fleming’s claims were largely based on allegations that James River and/or the unit in question had made misrepresentations to the Bermuda Monetary Authority and purported violations of Bermuda law.

James River, in a notable but not necessarily related move, has recently relocated from Bermuda to the US.

The state court issuing the initial injunction to force the purchase hadn’t been as ambiguous on the merits. Contract breaches alleged by Fleming were “contrived and contrary” vis-a-vis the clearer terms of the purchase agreement, the judge wrote.

That court hadn’t been as worried about territoriality as terms of the sales agreement had dictated eventual jurisdiction, the federal judge noted.

Fleming need not be done; it has until January 2 2026 to appeal the current case.

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