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Arch claims GenRe misled court in dispute


STAMFORD, Conn.--Arch Capital Group Ltd. has struck the latest blow in a noncompete dispute with General Re Corp., accusing Gen Re of misusing the courts to stop four former Gen Re executives from developing Arch's facultative reinsurance business.

In counterclaims filed in a Connecticut state court this week, Bermuda-based Arch charges that Gen Re tortiously interfered with Arch's business and committed libel in its efforts to deter competition from the four executives, who quit Gen Re in April and joined Arch.

Gen Re originally filed suit and won a temporary restraining order in May against Arch and the four facultative managers: Jennifer Apgar, Philip Augur, Steven Franklin and Kenneth Vivian. The court filings charged that the four plotted to move Gen Re's business to a new employer and orchestrated an "en masse departure" that included 26 other Gen Re employees (BI, May 28).

The temporary restraining order was later replaced with an agreed order that barred Arch from using any Gen Re proprietary information (BI, June 25).

In counterclaims filed Monday, though, Arch charges that Gen Re misled the court in winning the temporary restraining order and that it has wrongly pursued a plan to obstruct Arch's facultative business.

While Gen Re backed its temporary restraining order request partly by arguing that the four former managers had attempted to destroy documents before leaving Gen Re and might destroy more, a Gen Re senior vp and an outside consultant later testified that Gen Re had no factual basis for the charges, Arch alleges.

The four managers in fact had no employment contracts, noncompete agreements or other restrictive covenants with Gen Re, Arch's filing says.

Gen Re has also communicated with clients and prospective clients about its dispute with Arch and has mischaracterized the agreed order as a continuation of the temporary restraining order, Arch alleges.

Gen Re has "exploited" its dispute with Arch "to create an opportunity to suppress (Arch's) ability to compete and to misappropriate, for its own advantage and profit, Arch's business relationships with other members of the reinsurance industry," the filing charges.

Arch is seeking unspecified compensatory damages for lost business and punitive damages for libel.

Gen Re officials could not be reached for comment.