Segregated Account of Bermuda Reinsurance Company Lacked Capacity to Sue

Posted: December 12, 2025 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Standing, Foreign Law

Segregated Account of Bermuda Reinsurance Company Lacked Capacity to Sue

On November 6, 2025, Justice Joel M. Cohen of the New York County Commercial Division issued a decision in Mobility Seller Representative LLC v. AMTrust Financial Services, Inc., Index No. 652780/2022, dismissing without prejudice a complaint because of the plaintiff's lack of capacity to sue under Bermuda law, explaining:

The named Plaintiff asserting a claim for breach of the QSRA is “Universal Re-Insurance Company Limited as agent and manager on behalf of its Segregated Account No. URFTM-21- 01.” As noted below, Plaintiffs’ counsel has confirmed that URe is not a party to this action in its own right, which is consistent with the phrasing of the caption indicating URe as agent and the Segregated Account as principal. Thus there is a threshold legal question whether the Segregated Account has the legal capacity to sue for breach of contract. As discussed below, it does not.

"An entity's capacity to be sued is determined by the law of the jurisdiction where the entity is organized or established" (Norex Petroleum Ltd. v Blavatnik, 48 Misc 3d 1226(A), 22 NYS3d 138 [NY Sup 2015], judgment entered sub nom. Norex Petroleum Ltd. v Blavatnik, et al. [N.Y. Sup Ct 2015], and affd, appeal dismissed, 151 AD3d 647 [1st Dept 2017]).

URe was incorporated in Bermuda under the Universal Reinsurance Company Limited Act 1999 (NYSCEF 190, the “URe Act”). The URe Act attributes the key corporate characteristics to the company itself rather than to any separate account within the company (NYSCEF 187 [Luthi Aff]).

. . .

[T]he “Segregated Account No. URFTM-21-01” is, under Bermuda law, merely a separate account maintained within URe. Any legal rights or obligations arising out of the QSRA are attributable to (and enforceable by and against) URe itself, albeit potentially with certain limits on recourse beyond the Segregated Account. Thus, the Court finds that the Segregated Account lacks capacity under Bermuda law to sue for breach of the QSRA.

Plaintiffs argue that Defendants waived the defense that the Segregated Account lacks capacity to sue because they did not raise it in their Answer or motion to dismiss. That argument is unavailing. The issue of capacity came to light during discovery when Plaintiffs’ counsel responded to Defendants’ request for a URe witness.

. . .

In these circumstances, Defendants did not waive their capacity defense (Lance Intern., Inc. v First Nat. City Bank, 86 AD3d 479, 479 [1st Dept 2011] ["While a defense that a party lacks capacity to sue (see CPLR 3211[a] [3] ) is waived if not raised in a pre-answer motion or in a responsive pleading (see CPLR 3211[e] ), plaintiff's lack of capacity did not arise until after joinder of issue, and therefore, defendant did not waive that defense"]).

. . .

The claim is dismissed without prejudice to substituting URe (or another appropriate entity having the capacity to sue) as the proper plaintiff.

When dealing with plaintiff entities established under non-U.S. law, a defendant should confirm that the plaintiff entity is the proper entity with standing and capacity to sue. And by the same token, plaintiffs' attorneys should do the same before filing suit. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning the capacity of non-U.S. entities to sue.