Aon calls for Clear Blue’s lawsuit over Vesttoo fraud to be dismissed

Aon has filed a motion calling for the New York state lawsuit that fronting specialist Clear Blue Insurance filed against it, in relation to the reinsurance letter of credit (LOC) fraud perpetrated by insurtech Vesttoo, to be dismissed in its entirety.

Clear Blue had filed a lawsuit against insurance and reinsurance broking giant Aon and certain of its subsidiaries in the New York court last year, as the fronting specialist looked to recover some of its losses due to the impacts of the fraudulent activity.

The lawsuit claimed that Aon introduced Vesttoo to Clear Blue, as the fronting specialist appeared to feel wronged by that, after certain deals it had sat in the middle of went south due to the collateral fraud, causing a significant financial impact to the company.

Clear Blue said that Aon was obligated to verify letters of credit used for collateral and as they turned out to be forged, the broker is deemed to have some responsibility for the failure to ensure collateral security, in its eyes.

That original lawsuit complaint was filed by Clear Blue on November 30th 2023, after which Clear Blue and Aon reached an agreement on an extended deadline, stipulating that Aon should respond to the complaint by the end of January 31st 2024.

Aon responded on schedule, but its response is a motion to dismiss the court case entirely, saying that Clear Blue’s complaint “should be dismissed in its entirety with prejudice for two reasons.”

First, that Clear Blue has not met its burden of showing that the Court has jurisdiction over either Aon plc or Aon Insurance Managers (Bermuda) Inc., which are entities domiciled in Ireland and Bermuda, respectively.

“Clear Blue has not and cannot demonstrate that either Defendant transacted business in New York that gave rise to Plaintiffs’ claims,nor that they were parties to any agreements with Clear Blue,” Aon’s motion states.

Secondly, Aon also states that “Clear Blue fails to state a claim for any asserted cause of action. The contracts incorporated by reference in the Complaint show that neither Defendant signed an agreement with Clear Blue.”

“As a result, each of Clear Blue’s myriad theories for liability premised on a contract—including breach of contract promissory estoppel, and unjust enrichment — must fail. Further, Clear Blue’s claims that require an even closer relationship, such as a fiduciary or special relationship, fail for the same reason: neither Defendant established the type of relationship needed to support Clear Blue’s claims for negligent misrepresentation and constructive fraud,” Aon’s motion goes on to explain.

Aon concludes, “Clear Blue should not be allowed to abuse the court system by filing a deficient complaint for the sole purpose of gaining media headlines. In addition to lacking jurisdiction, the undisputed documentary evidence—including the contracts that Clear Blue purports to sue on— unambiguously defeat Clear Blue’s claims. Clear Blue’s Complaint should be dismissed.”

The motion goes on to lay out all the reasons for Aon’s objection to the case being filed in New York and being filed at all, placing the onus firmly back on Clear Blue, or on the court to decide as to whether the jurisdiction can stand, so we should expect further responses to be filed in due course.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.