Opinion ID: 1060083
Heading Depth: 3
Heading Rank: 2

Heading: Equitable Claim for Priority

Text: Swiss Re further asserts that even if it is not entitled to administrative priority for the amounts owed it under the Fidelity treaty as an expense of administration, equity requires that it be given priority over all other creditors of the Fidelity receivership estate. Swiss Re asserts that it was gulled by Fidelity to enter into the Fidelity and Protective treaties as a favor, and that Fidelity deliberately misled Swiss Re as to Fidelity's solvency. This assertion is belied by the undisputed facts of the case. Swiss Re is a company experienced in the practice of issuing and administering treaties of reinsurance. Nothing in the record suggests that Swiss Re's agreements with Fidelity and Protective were not arm's length transactions by sophisticated parties of equal position. Nor was Swiss Re prevented from making inquiries into the financial condition of Fidelity. Protective's obvious concerns with respect to Fidelity's position expressed during the negotiations were sufficient to place Swiss Re reasonably on notice as to the potential for difficulties in the future. Under such circumstances, equity cannot be invoked to permit a party to avoid the consequences of what became an ill-advised transaction. See Curtis v. Lee Land Trust, 235 Va. 491, 498, 369 S.E.2d 853, 857 (1988). Such is particularly the case here where an unsecured party seeks a priority over the claims of policyholders of an insolvent insurance company.