Full opinion text
OPINION AND ORDER MARTIN, District Judge: Background Elkhorn Reinsurance Company (“Elk-horn”) was incorporated in Kentucky on October 7, 1965, for the purpose of insuring the property and casualty risks of National Distillers and Chemical Corporation, now known as Quantum Chemical Corporation (“Distillers”). In 1972 Elkhorn expanded its business and began assuming reinsurance risks of unrelated third parties. Elkhorn’s outside business consisted of reinsuring these primary insurers and ceding portions of risks it took on to secondary reinsurers, also known as “retrocessionaires.” On September 30, 1983, Distillers sold a portion of Elkhorn to Delta Holdings, Inc. (“Delta Holdings”). Under the sale agreement Elkhorn was reorganized into two corporations, DR Insurance Company and Delta America Re Insurance Company (“Delta Re”). DR Insurance Company was retained by Distillers to operate the captive insurance business of Distillers, and Delta Holdings obtained Delta Re to operate its business of reinsuring risks of unrelated third parties. In this opinion, “Delta Re” will sometimes be used to refer to both Elkhorn Reinsurance Company, i.e. the entity existing before September 30, 1983, and Delta America Re Insurance Company, the entity existing after such date, when such reference is appropriate. In 1985, Delta Re was declared insolvent. After a brief period of rehabilitation, the company was placed in liquidation proceedings on September 15, 1985. Don W. Stephens, in his capacity as liquidator (the “Liquidator”), has instituted these four actions, as well as others, in connection with the insolvency proceedings. The following is a brief summary of each action: 1. Stephens v. National Distillers & Chem. Corp., 91-Civ-2901 (The “Distillers” case) The Liquidator seeks recovery from Distillers of dividends paid by Elkhorn from 1981 to 1983, claiming that Elkhorn’s insolvency during that period renders such dividends illegal. Summary judgment was granted to the Liquidator on this claim by a Kentucky state court, which judgment is the subject of a motion here. The Liquidator also named certain retrocessionaires who reinsured Elkhorn/Delta Re before 1984 (the “Elkhorn Retrocessionaires”), seeking full coverage under the reinsurance contracts between them and the insolvent. The Elkhorn Retrocessionaires defend on the basis of fraud and seek rescission. 2. Stephens v. American Risk Management, 89-Civ-2999 (The “ARM” case) The Liquidator seeks coverage from certain retrocessionaires who signed reinsurance contracts with Delta Re in 1984 and 1985 (“Delta Re Retrocessionaires”). As in the Distillers case, the Delta Re Retrocessionaires defend on the basis of fraud and seek rescission. If such relief is granted, the Liquidator seeks to hold liable, inter alia, persons who managed Delta Re after the sale (“Management Defendants”). These Management Defendants have impleaded Distillers and certain officials of the Kentucky Department of Insurance. 3. Stephens v. American Home Assurance Co., 91-Civ-2898 (The “American Home” case) The Liquidator seeks premiums from companies which ceded insurance risks to Delta Re in 1984 and 1985 (the “Delta Re Cedents"). As in the ARM case, the Delta Re Cedents claim fraud and seek rescission, and the Liquidator named Management Defendants in the alternative, who impleaded Distillers and Kentucky officials. The Kentucky officials, however, were dismissed by the Kentucky Federal District Court before it transferred this case here, which dismissal is contested. 4. Stephens v. American International, 91-Civ-6245 (The “American International” case) The Liquidator seeks premiums from ceding companies contracting with Elkhorn before 1984 (the “Elkhorn Cedents”). The Second Circuit’s recent opinion in Delta Holdings, Inc. v. National Distillers & Chem. Corp., 945 F.2d 1226 (2d Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 1671, 118 L.Ed.2d 390 (1992), provides further relevant background. There, Delta Holdings sued Distillers for rescission of the sale of Delta Re, claiming common law fraud and violation of securities laws, inter alia. The Second Circuit found that no fraud had been committed as to Delta Holdings, and reversed the district court’s grant of rescission. Reference is made to that decision throughout this opinion, and familiarity with it is assumed. Further background will be provided in discussion of the motions to which it is relevant. Summary of Present Motions In the Distillers, ARM and American Home cases, the Liquidator moves to certify to the Kentucky Supreme Court the question of whether rescission is available as a remedy after an insurance company has gone into liquidation proceedings, pp. 945-47. Absent certification, the Liquidator moves for judgment on the pleadings against the Elkhorn and Delta Re Retrocessionaires and the Delta Re Cedents for a determination that rescission is not available, pp. 945-48. The Elkhorn Retrocessionaires move for summary judgment against the Liquidator in the Distillers ease on their defenses of fraud and illegality to the claims against them, pp. 948-50. Distillers moves for summary judgment against the Elkhorn Retrocessionaires on their cross-claims against Distillers in the Distillers case, pp. 950-56, and also to vacate or reconsider the Kentucky state court summary judgment rendered against it in favor of the Liquidator, pp. 956-58. Some of the Elkhorn Cedents move to dismiss the claims filed against them by the Liquidator in the American International case, pp. 958-60. The Kentucky state official third-party defendants in the ARM case move for dismissal of the Management Defendants’ claims against them, pp. 960-63, while the Management Defendants seek reconsideration of such dismissal in the American Home case, pp. 963-64. These motions will be considered seriatim. Liquidator’s Motion for Certification/Judgment on the Pleadings In the Distillers, ARM, and American Home cases, The Liquidator moves to certify to the Kentucky Supreme Court the question of whether rescission and the defense of fraud are available after liquidation proceedings have been initiated, and in the alternative, for an order disallowing the retrocessionaires’ and cedents’ defenses of fraud and barring their claims of rescission as a matter of law. Defendants are retrocessionaires and cedents who engaged in reinsurance transactions with Elkhorn/Delta Re. The Liquidator is suing them for provision of coverage and payment of premiums, respectively, pursuant to various contracts. The defendants defend on the basis of fraud, and have counter-claimed for rescission. They claim that Elkhorn/Delta Re was insolvent as early as 1980, and its failure to disclose this and other facts material to the reinsurance contracts renders the contracts void and unenforceable. The Liquidator claims that such claims are barred as a matter of law. Contending that this matter is governed by Kentucky insurance insolvency laws, the Liquidator seeks to have certified to the Kentucky Supreme Court this question: Whether Kentucky’s comprehensive scheme for marshalling and distributing the assets of insolvent insurers — the Kentucky Insurers Rehabilitation and Liquidation Act — displaces any common law right of rescission that might otherwise be available to a party who dealt with the insolvent? Failing that, the Liquidator moves for judgment on the pleadings as to whether rescission and the defense of fraud are available as a matter of law. Choice of Law A federal court, sitting in diversity, normally applies the conflict of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Arkwright-Boston Mfrs. Mut. Ins. Co. v. Calvert Fire Ins. Co., 887 F.2d 437, 439 (2d Cir.1989). Likewise, where federal jurisdiction is derived from the Federal Sovereign Immunities Act the conflict of law rules of the forum state govern. Barkanic v. General Admin. of Civ. Aviation of the People’s Republic of China, 923 F.2d 957, 959-61 (2d Cir.1991). However, in a case that has been transferred pursuant to 28 U.S.C. § 1404(a), the court should apply the law of the transferor court’s forum state. Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Spar, Inc. v. Information Resources, Inc., 956 F.2d 392, 395 (2d Cir.1992); Shamley v. ITT Corp., 869 F.2d 167, 171 (2d Cir.1989). Since the Distillers and American Home cases were originally filed in Kentucky and later transferred here, Kentucky’s conflict of law rules apply under Van Dusen, even though New York is the forum state. On the other hand, the ARM case was filed in this district, requiring an application of New York conflict of laws. Kentucky courts apply a “most significant relationship” test to settle conflict of law questions. Breeding v. Massachusetts Indem. & Life Ins. Co., 633 S.W.2d 717 (Ky.1982); Lewis v. American Family Ins. Group, 555 S.W.2d 579 (Ky.1977). “ ‘The modern test is which state has the most significant relationship to the transaction and the parties.’” Id. at 581-82, quoting Restatement (Second) of Conflict of Laws, § 188 (1971). “Justice, fairness and the best practical result may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation.” Breeding, 633 S.W.2d at 719, citing Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 749, 191 N.E.2d 279, 283 (1963). “New York courts apply an ‘interest analysis’ to choice of law issues involving contractual disputes, see Intercontinental Planning, Ltd. v. Daystrom, Inc., 24 N.Y.2d 372, 300 N.Y.S.2d 817, 248 N.E.2d 576 (1969); see also Hutner v. Greene, 734 F.2d 896, 899 (2d Cir.1984), and, therefore, ‘the law of the jurisdiction having the greatest interest in the litigation will be applied.’ Daystrom, 24 N.Y.2d at 382, 300 N.Y.S.2d at 825, 248 N.E.2d at 582.” Arkwright-Boston, 887 F.2d at 439 (choice of law in reinsurance contract dispute). It is clear that New York has the most significant relationship to, and the greatest interest in, the present issue. All retrocession agreements were solicited, negotiated, executed, and performed in New York and the intermediary, Paul Napolitan, Inc., is located in New York. The Kentucky Court of Appeals, in the context of a personal jurisdiction issue, characterized the relationship of the State of Kentucky to some of these transactions as follows: [Deltaj’s principal offices, records and personnel were removed to New York City [in 1983] and all business was conducted from that location. The record before us reflects that even though Delta did business both foreign and domestic, there is no absolutely no indication that it was engaged in any activity in the Commonwealth until it became insolvent, or, in other words, ceased doing active business. Sullivan Payne Co. v. McCarty, No. 86-CA-2998-MR, slip op. at 2 (Ky.Ct.App.1990). While this opinion expressly reserved judgment on conflict of law issues, it clearly indicated the lack of a relationship between Kentucky and the transactions relevant to this motion. The only relationship Kentucky bears to this entire litigation relates to the insolvency proceedings. Because Delta Re is a Kentucky corporation, Kentucky’s liquidation statutes govern Delta Re’s insolvency proceedings. Thus, Kentucky has a significant relationship to and interest in all issues arising from the insolvency. However, the defense of fraud in the inducement and the equitable rescission of a contract due to fraud are declarations that the contract was void ab initio. Christiania Gen. Ins. Corp. v. Great Am. Ins. Co., 979 F.2d 268, 278 (2d Cir.1992); Eastern Dist. Piece Dye Works, Inc. v. Travelers Ins. Co., 234 N.Y. 441, 138 N.E. 401 (1923). The validity of a contract must be determined by reference to the laws of the state that has the most significant relationship with and greatest interest in its formation, rather than the state in which its enforcement is sought. If there were no valid contracts in the first place, the Liquidator could hardly attempt to enforce them regardless of authority granted by Kentucky’s statutes. Since Kentucky had no relationship, significant or otherwise, with the formation of the contracts, and New York’s relationship is overwhelming, Kentucky conflict of law rules dictate that New York substantive law applies to whether the defense of fraud and the remedy of rescission are available in the Distillers and American Home cases. Likewise, since New York has the greatest interest in a determination of the validity of the contracts, New York conflict of laws rules dictate that New York substantive law applies in the ARM case. Certification Because New York law governs these issues, the motion for certification to the Kentucky Supreme Court is denied. Availability of Rescission After Insolvency As the Second Circuit observed in Christiania Gen. Ins. Corp. v. Great Am. Ins. Co., 979 F.2d 268 (2d Cir.1992): The relationship between a reinsurer and a reinsured is one of utmost good faith, requiring the reinsured to disclose to the reinsurer all facts that materially affect the risk of which it is aware and of which the reinsurer itself has no reason to be aware. In certain cases, the description of items covered under the original policy may be so imprecise as to warrant rescission of the contract because the reinsurer was not adequately apprised of the risk. 979 F.2d at 278 (citations omitted). It is clear that, were it not for the insolvency of Delta Re, rescission and the defense of fraud would be available. Sumitomo Marine & Fire Ins. Co. v. Cologne Reinsur. Co. of Am., 75 N.Y.2d 295, 303, 552 N.Y.S.2d 891, 895, 552 N.E.2d 139, 143 (1990); New York Bowery Fire Ins. Co. v. New York Fire Ins. Co., 17 Wend. 359 (N.Y.1837); Royal Indem. Co. v. Preferred Acc. Ins. Co., 243 A.D. 297, 276 N.Y.S. 313 (1st Dept.1934), aff'd, 268 N.Y. 566, 198 N.E. 407 (1935). Indeed, the Liquidator has conceded this point. Thus, the question becomes whether the insolvency of Delta Re renders the remedy of rescission and/or the defense of fraud unavailable as a matter of New York law. The general rule is that a liquidator of an insurance company “stands in the shoes” of the insolvent, gaining no greater rights than the insolvent had. Bohlinger v. Zanger, 306 N.Y. 228, 117 N.E.2d 338 (1954); Corcoran v. National Union Fire Ins. Co., 143 A.D.2d 309, 532 N.Y.S.2d 376, 387 (1st Dept.1988). Thus, absent specific law to the contrary, “the reinsurers are free to assert any affirmative defenses, such as fraud, that they may have had against the [insolvent company].” In re Union Indem. Co., No. 41292-85, slip op. at 12 (N.Y.Sup.Ct. October 28, 1992). The New York Court of Appeals has held that the defense of set-off survives insolvency proceedings, despite the argument that the debts were not mutual because the liquidator was a different legal entity from the insolvent company. In re Midland Ins. Co., 79 N.Y.2d 253, 582 N.Y.S.2d 58, 590 N.E.2d 1186 (1992). In so holding, the court said: [Liquidation cannot place the liquidator in a better position than the insolvent company he takes over, authorizing him to demand that which the’company would not have been entitled to prior to liquidation. Defendant concedes that before Midland was adjudged insolvent Kemper Re had the right to set off the treaty premiums against the amount owed under the Playtex contract. Those rights were not altered merely because a liquidation order was entered. 582 N.Y.S.2d at 64, 590 N.E.2d at 1192 (citations omitted). While Midland was an interpretation of a statutory defense of set-off, see N.Y.Ins.Law § 7427, as opposed to the common law defense of fraud or remedy of rescission, the analysis of the Court of Appeals is distinctly relevant to the instant issue. Indeed, Midland has been the basis for a New York Supreme Court’s ruling on the precise issue before this Court. See Union Indemnity. There, although finding the affirmative relief of rescission barred by an injunction previously issued by the court, the court held that the defense of fraud was available to a reinsurer whose contractual obligations the liquidator sought to enforce. Citing Midland, the Supreme Court ruled that “the reinsurers are free to assert any affirmative defenses, such as fraud, that they might have had against [the insolvent company].” Id., slip op. at 12. The New York Court of Appeals has also recently held that an insured’s contractual right to notification of cancellation of coverage survives a declaration of insolvency. In re Transit Casualty Co., 79 N.Y.2d 13, 580 N.Y.S.2d 140, 588 N.E.2d 38, cert. denied, — U.S. -, 113 S.Ct. 199, 121 L.Ed.2d 141 (1992). Ruling that “nothing in the [Uniform Insurer’s Liquidation] Act obligates states subscribing to its terms to abandon statutory or decisional law requiring notice of cancellation to be sent to policyholders before an insurance contract is cancelled,” the Court of Appeals found that the contractual right of notification, having vested prior to liquidation proceedings, was not extinguished by them. 79 N.Y.2d at 20, 580 N.Y.S.2d at 144, 588 N.E.2d 38. Thus, New York courts have been strongly supportive of preserving rights which existed prior to liquidation proceedings. As illustrated by Union Indemnity, the defense of fraud and the remedy of rescission for fraudulent inducement are included in this protection. While no determination is made at this time as to the merits, it is clear they are not rendered unavailable as a matter of New York law by the mere fact of insolvency proceedings. Retrocessionaires’ Summary Judgment Motion Retrocessionaires in the Distillers case move for summary judgment on their defense of fraud based on material misstatements and/or omissions made by Elkhorn, and on their defense of illegality based on Delta Re’s insolvency at the time of contracting. Background The insolvency of Delta Re, and the failure to discover it quickly, stemmed primarily from the difficulty in calculating and monitoring the accuracy of loss reserves carried by insurance companies. While a complete discussion of these problems and their relation to Delta Re is contained in the Second Circuit Delta Holdings opinion, 945 F.2d at 1228-40, a brief explanation of some of these factors is required to put these motions in context. Because future claims will be a drain on an insurer’s resources, insurance companies are required to carry “loss reserves” as liabilities. These loss reserves are intended to estimate the value of claims which will be paid on policies which the company is carrying. Loss reserves consist of both “case reserves” and “incurred-but-not-reported reserves”, or “IBNR” reserves. Case reserves are reserves established upon the filing of a claim; since not every claim will be fully paid, case reserves are only estimated losses on these claims. However, they are at least substantially predictable. IBNR reserves, on the other hand, are reserves set aside before claims are even filed. Thus IBNR reserves are extremely conjectural, and may need adjustment as time passes and their accuracy can be tested in retrospect. In February, 1982 Elkhorn received from Tillinghast, Nelson & Warren (“Tillinghast”) a report (the “February Report”) commissioned by Elkhorn which recommended a method by which to calculate IBNR reserves different from the method Elkhorn was then using. Appended to the report, at Elkhorn’s request, was a series of worksheets with data from Elkhorn’s operations filled in, by which one could calculate Elkhorn’s recommended IBNR reserves under this new method. Although these calculations were not completed, again at Elkhorn’s request, it was established in Delta Holdings that they would have indicated an IBNR reserve recommendation $10 million higher than the one Elk-horn was currently carrying. In April, 1982 Elkhorn requested that Tillinghast prepare another report (the “April Report”) on three reinsurance contracts which had not been considered in the February Report. The April Report, which unlike the February Report completed all calculations, indicated that the $2.3 million IBNR reserves Elkhorn was carrying for these three contracts were deficient by $10.9 million. In response, Elkhorn purchased a $10 million loss transfer policy in order to offset the bulk of the deficiency. Discussion Summary judgment should be granted “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The Retrocessionaires claim that the concealment of the two Tillinghast reports and Elkhorn’s insolvency violated Elkhorn’s duty of utmost good faith, and thus rendered the contracts void ab initio. In order to defend, the Retrocessionaires must show that Elkhorn failed to disclose a material fact of which it was aware. Christiania, 979 F.2d at 278-79. With regard to Elkhorn’s insolvency, the Retrocessionaires have failed to show that Elkhorn was in fact aware that it was insolvent at the times of contracting. That Elkhorn have known of the insolvency is a necessary precursor to its requirement to disclose all facts it has reason to believe are material. See Christiania, 979 F.2d at 279; Knight v. United States Fire Ins. Co., 804 F.2d 9, 13 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Furthermore, the Second Circuit in Delta Holdings found that Elkhorn did not know of its insolvency at the time of its acquisition. 945 F.2d at 1242. Since, at present, there are no facts presented in this case that were not present in Delta Holdings, principles of stare decisis indicate that this conclusion be accepted here as well. Thus, summary judgment may not be granted based on Elkhorn’s insolvency. It is clear, however, that the Tillinghast reports were known to Elkhorn. Thus, if they were material, the contracts may be subject to rescission based on their non-disclosure. Under New York law, “[a] fact is material so as to void ab initio an insurance contract if, had it been revealed, the insurer or reinsurer would either not have issued the policy or would have only at a higher premium.” Christiania, 979 F.2d at 278; Merchants’ & Shippers’ Ins. Co. v. St. Paul Fire & Marine Ins. Co., 219 A.D. 636, 640-41, 220 N.Y.S. 514 (1st Dept.), aff'd 246 N.Y. 616, 159 N.E. 674 (1927). While Delta Holdings discussed the materiality of the reports, it did so in a very different context. The Second Circuit found the text of the February Report non-material in that it merely presented information widely known and irrelevant to Elk-horn specifically. The appended worksheets, however, were found non-material for the distinct reason that by the time the acquisition was being contemplated, their data were outdated and stale, and would not have been considered. No comment was made on whether the worksheets would have been material at the time they were produced, albeit unfinished. The April Report, by contrast, would have been material but for the fact that its substance had already been disclosed to the purchaser. Thus, it is clear that the findings in Delta Holdings as to the materiality of the reports are not determinative here, where the timing of disclosure differed and different information was transmitted. Neither report can be said to be material as a matter of law. Although the April Report disclosed a $10.9 million deficiency in loss reserves, Elkhorn attempted to compensate for this problem by purchasing a loss transfer policy. Given that this information had been disclosed to Delta Holdings in the context of the acquisition and apparently did not present a problem, it is not certain that the report, in light of the purchase of the loss transfer policy, was material. Likewise, the materiality of the February Report is not conclusively established. While finishing the calculations may have disclosed an additional $10 million deficiency, it cannot be said as a matter of law that Elkhorn should reasonably have expected such action to be taken if it had made the report available to its reinsurers. “An actuary coming upon the February Report would not have bothered to complete the appended worksheets but would simply have assumed that any relevant data contained in the appended worksheets would either be reflected in the December 31, 1982 and June 30, 1983 triangles or supplanted by treaty-category data.” Delta Holdings, 945 F.2d at 1243. Similarly, a reinsurer seeing the worksheets in March, 1992 might have believed the calculations to be unnecessary, in that Elkhorn had already made IBNR figures available, albeit using a different calculation method. There has been no evidence that Elkhorn should reasonably have known that the worksheets would have been relevant to a reinsurer. Conclusory and self-serving statements from individual Retrocessionaires that they would not have reinsured Elkhorn or would have charged a higher premium if they had known of the Tillinghast reports are not sufficient for this summary judgment motion. As discussed supra, these statements are not sufficient to find, as a matter of law, that Elkhorn should reasonably have anticipated the relevance of the worksheets in the February Report, or that knowledge of both the April Report and the stop loss policy would have affected the decisions of the retrocessionaires. The materiality of the reports is not so obvious that it can be said as a matter of law that Elkhorn should have known of it. This question of fact is best addressed on a full record. The Elkhorn Retrocessionaires also contend that the contracts are unenforceable because they were illegal when entered into, in that Elkhorn was conducting business while technically insolvent, and thus in violation of Kentucky and New York statutory minimal capital requirements for insurance companies. Under New York law, however, “[i]f the statute does not expressly provide that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy ... the right to recover will not be denied.” John E. Rosasco Creameries v. Cohen, 276 N.Y. 274, 278, 11 N.E.2d 908 (1937). “Allowing parties to avoid their contractual obligation is especially inappropriate where there are regulatory sanctions and statutory penalties in place to redress violations of the law.” Lloyd Capital Corp. v. Pat Henchar, Inc., 80 N.Y.2d 124, 128, 589 N.Y.S.2d 396, 398, 603 N.E.2d 246, 248 (1992). Thus, the Retrocessionaires cannot avoid their contractual obligations merely because Elkhorn was insolvent when it entered into them, since the statutes do not expressly render them unenforceable and allowing such avoidance would not be consonant with sound public policy. See id. Distillers’ Motion for Summary Judgment Distillers moves for summary judgment in the Distillers case on the cross-claims of the Elkhorn Retrocessionaires. The Retrocessionaires claim that Distillers is liable for any losses they may sustain under the retrocession contracts on the grounds that (1) Distillers is vicariously liable as Elkhorn’s parent for Elkhorn’s fraudulent and/or negligent actions with respect to the Retrocessionaires under a theory of “piercing the corporate veil”, and (2) Distillers is directly liable to the Retrocessionaires as a result of its own conduct. These claims will be addressed separately. Discussion In a summary judgment motion, the moving party “always bears the initial responsibility of informing the district court of the basis for its motion” and of demonstrating the absence of any genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The Celotex Court held that a moving party does not have to support its “motion with affidavits or other similar materials negating” the claim where the non-movant will bear the burden of proof on that issue at trial. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. Rather, the burden is on the non-moving party to “set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (quoting Fed.R.Civ.P. 56(e)). Thus, the non-moving party must “produce sufficient evidence favoring the non-moving party for a jury to return a verdict for that party.” Anderson, 477 U.S. at 349, 106 S.Ct. at 2510, (citations omitted). Choice of Law Prior to September 20, 1983, Elk-horn was a Kentucky corporation with its principal place of business in Louisville, Kentucky. In this case, the appropriate law to apply to the question of whether to pierce the corporate veil is the law of the state of incorporation, that is, Kentucky law. See Poyner v. Lear Siegler, Inc., 542 F.2d 955, 958 (6th Cir.1976), cert. denied, 430 U.S. 969, 97 S.Ct. 1653, 52 L.Ed.2d 361 (1977) (applying Kentucky law); Horowitz v. Southwest Forest Indus., Inc., 612 F.Supp. 179 (D.Nev.1985) (matters peculiar to relationship among corporation are internal affairs of corporation and governed by law of state of incorporation); United States v. Daugherty, 599 F.Supp. 671, 673 (E.D.Tenn.1984) (piercing corporate veil must be determined with reference to law of state of incorporation). On the other hand, the contracts with the Retrocessionaires were entered into in New York, with virtually all relevant events taking place there. As discussed supra in the context of the motion for judgment on the pleadings, New York law will control issues of agency and contractual liability. Piercing the Corporate Veil Judges and commentators have long recognized that the theories associated with the question of whether to pierce the corporate veil “are usually stated in broad terms that offer little guidance to judges or litigants in subsequent cases.” Robert B. Thompson, Piercing the Corporate Veil: An Empirical Study, 76 Cornell L.Rev. 1036 (1991); see also Berkey v. Third Ave. Ry., 244 N.Y. 84, 155 N.E. 58 (1926) (opinion by Cardozo, J.). In fact, one commentator has even acknowledged that the same facts appear in cases providing relief and cases denying relief. David C. Cummings, Comment, Disregarding the Corporate Entity: Contract Claims, 28 Ohio St.L.J. 441, 450 (1967). In Kentucky, the corporate veil should only be pierced “reluctantly and cautiously.” White v. Winchester Land Dev. Corp., 584 S.W.2d 56, 60-61 (Ky.Ct.App.1979). A corporation will be regarded as a separate legal entity except when “the idea of a separate legal entity is used to justify wrong, protect fraud or defend crime.” United States v. WRW Corp., 778 F.Supp. 919, 922 (E.D.Ky.1991); Dare to Be Great, Inc. v. Commonwealth ex rel. Hancock, 511 S.W.2d 224, 227 (Ky.Ct.App.1974). In evaluating whether to pierce the corporate veil Kentucky courts have utilized both the “alter ego” theory and the “instrumentality” theory. White, 584 S.W.2d at 60-61. The alter ego theory provides that the corporate veil should be pierced when (1) not only is the corporation influenced by the owners, but also there is such unity of ownership and interest that their separateness has ceased; and (2) the facts are such that an adherence to the normal attributes of separate corporate existence, i.e. treatment as a separate entity, would sanction a fraud or promote injustice. Id. at 61-62. The instrumentality theory provides that the corporate veil should be pierced when (1) the corporation was a mere instrumentality of the shareholders; (2) the shareholders exercised control over the corporation in such a way as to defraud or to harm the plaintiff; and (3) a refusal to disregard the corporate entity would subject the plaintiff to unjust loss. Id. at 61. Kentucky courts, however, have acknowledged that the alter ego and instrumentality theories are not totally distinct. Id. As such, Kentucky courts have held that regardless of which theory is utilized, the party seeking to pierce the corporate veil has the burden of establishing that an injustice or a fundamental unfairness would result if the corporate veil were not pierced. The Retrocessionaires have failed to meet that burden, and have not “produced sufficient evidence ... for a jury to return a verdict” in their favor. Anderson, 477 U.S. at 349, 106 S.Ct. at 2510. Thus, Distillers' motion for summary judgment should be granted. The White court stated that “issues of alter ego do not lend themselves to strict rules ... and whether the corporate veil should be pierced depends upon the innumerable equities of each case.” White, 584 S.W.2d at 62. The White court listed factors that would indicate “unfair dealings.” These factors include: (1) undercapitalization; (2) a failure to observe the formalities of corporate existence; (3) nonpayment or overpayment of dividends; (4) a siphoning off of funds by the dominant shareholder(s); and (5) the majority shareholders having guaranteed corporate liabilities in their individual capacities. Id. at 62; see also Daugherty, 599 F.Supp. at 673 (utilizing above factors to determine whether to disregard the corporate veil); WRW Corp., 778 F.Supp. at 923 (same). A. Undercapitalization “ ‘Inadequate capitalization’ means capitalization very small in relation to the nature of the business of the corporation and the risks the business necessarily entails.” 1 Fletcher, Cyclopedia of the Law of Private Corporations § 44.1 (perm. ed. 1990); accord Anderson v. Abbott, 321 U.S. 349, 362, 64 S.Ct. 531, 538, 88 L.Ed. 793 (1944); Lowell Staats Mining Co. v. Pioneer Urvan, Inc., 878 F.2d 1259, 1263 (10th Cir.1989); Dewitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 685 (4th Cir.1976). Thus, an examination of the adequacy of capitalization should entail a review of both initial capital contributions, and subsequent capital infusions prior to the corporation distinctly changing the nature or magnitude of its business. 1 Fletcher, supra, § 44.1. The record indicates that Elkhorn was incorporated on October 7, 1965, for the purpose of insuring the property and casualty risks of Distillers. At that time, Distillers made an initial capital contribution of $900,000, which included $300,000 of paid-in capital and $600,000 of paid-in surplus. Affidavit of John F. Salisbury II3 (“Salisbury Aff.”). This initial capital contribution was $450,000 more than the minimum capital requirement mandated under Kentucky law to qualify for authority to transact property and casualty insurance in Kentucky. On November 4, 1971, Distillers contributed an additional $300,000 of paid-in capital and an additional $1,100,000 of paid-in surplus. Salisbury Aff. U 4. Subsequent to this capital infusion Elkhorn expanded its business and began assuming reinsurance risks of unrelated third parties. Although the Retrocessionaires recognized the need to establish Elkhorn’s alleged undercapitalization, and identified available methods of computing whether a corporation was adequately capitalized, the Retrocessionaires provided no affidavits or testimony substantiating Elkhorn’s alleged undercapitalization. Instead, the Retrocessionaires relied on the fact that Elkhorn was insolvent during the period from 1980 to 1983, in order to illustrate that Elkhorn was undercapitalized. However, a corporation that commences business with adequate capital and subsequently suffers insolvency is not undercapitalized as the term is used in a “piercing the corporate veil” question. 1 Fletcher, supra, § 44.1. See also J-R Grain Co. v. FAC, Inc., 627 F.2d 129 (8th Cir.1980). Thus, the Retrocessionaires fail to set forth any specific facts to establish a question of fact as to whether Elkhorn was undercapitalized during the period from 1980 through 1983. B. Failure to Observe Corporate Formalities On January 1, 1975, Elkhorn and Distillers executed a Management Services Agreement (the “Management Agreement”) under which Distillers agreed to manage the business of Elkhorn. The Retrocessionaires contend that the Management Agreement between Distillers and Elkhorn is prima facie evidence of the extent of Distillers’ domination and control over Elkhorn, and therefore evidence of Elkhorn’s failure to observe corporate formalities. Under the Management Agreement, Distillers rendered a variety of services to Elkhorn in exchange for a monthly management fee. Distillers’ furnishing of these services, however, is not dispositive of the piercing the corporate veil question. “Common directorships are an inevitable consequence of a parent-subsidiary relationship,” and do not alone justify piercing the corporate veil. American Commercial Lines, Inc. v. Ostertag, 582 S.W.2d 51, 53 (Ky.Ct.App.1979); accord C.L. & L. Motor Express Co. v. Achenbach, 82 S.W.2d 335, 340 (Ky.Ct.App.1935). Likewise, that the two companies shared officers is not sufficient to show a failure to observe corporate formalities. Poyner, 542 F.2d at 958; see United States Fire Ins. Co. v. Allied Towing Corp., 966 F.2d 820, 828 (4th Cir.1992); United States v. Fidelity Capital Corp., 920 F.2d 827, 837 (11th Cir.1991); Lowell Staats, 878 F.2d at 1263. Distillers submitted an affidavit stating that the Board of Directors of Elkhorn met in Kentucky at least twice a year, that separate books and records were maintained by Elkhorn, that funds for operating expenses and capital expenditures were generated by the activities of Elkhorn, that all assets and funds of Elkhorn were segregated from the assets and funds of Distillers, that Distillers did not guarantee the liabilities of Elkhorn, and that Elkhorn and Distillers maintained separate bank accounts. Salisbury Aff. ¶¶ 6, 10-11. Thus, Elkhorn followed many of the corporate formalities that courts have examined in determining whether to pierce the corporate veil. See Ostertag, 582 S.W.2d at 53 (separate bank accounts favored not piercing corporate veil); Craig v. Lake Asbestos of Quebec, Ltd., 843 F.2d 145, 152 (3d Cir.1988) (corporate veil not pierced when entities maintained separate books, records and bank accounts); Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1162 (5th Cir.1983) (corporate veil not pierced when companies maintained separate assets, books, ledgers, and bank accounts). Finally, despite the existence of the Management Agreement, Elkhorn appears to have been a viable entity, and “not merely a facade for the operations of the dominant stockholder.” DeWitt Truck Brokers, 540 F.2d at 687. There is no indication the Distillers financed Elkhorn’s activities beyond its initial capital contributions. In fact, the level of compensation Elkhorn paid under the Management Agreement was adjusted annually to meet actual expenses. For example, in 1975 Elkhorn paid Distillers $11,000 a month for services rendered under the Management Agreement. By 1982, however, the amount was $75,000 a month with an annual adjustment to actual costs. Affidavit of Perry Kreidman, Exhibit D (minutes of 1981 Elkhorn Board of Directors meeting) (“Kreidman Aff.”). Moreover, the level of compensation was again adjusted during the following year. In 1983, Elkhorn was paying Distillers one-twelfth of the estimated annual expenses each month with adjustments to actual expenses at year end. Id. at Exhibit D (minutes of 1982 Elkhorn Board of Directors meeting). Although it is apparent that under the Management Agreement Distillers exercised a large measure of control over the activities of Elkhorn, “mere ownership and control over the corporation by persons sought to be held liable is not alone a sufficient basis for denial of entity treatment.” Poyner, 542 F.2d at 958. Thus, although the Management Agreement provided proof of Distillers’ control over Elk-horn, it failed to present an issue of fact as to how Distillers’ dominance resulted in a fundamental unfairness to the Retrocessionaires. C. Overpayment of Dividends or a Siphoning Off of Funds The Retrocessionaires next argue that Distillers’ receipt of dividends from Elk-horn during a period when Elkhorn was insolvent, that is, between 1980 and 1983, provides evidence that Distillers’ siphoned off Elkhorn’s funds, and caused Elkhorn’s insolvency. The Retrocessionaires rely on the fact that Robert Norton (“Norton”), while working as President of Elkhorn and Vice-President of Distillers, recommended that Elkhorn pay dividends to Distillers for the 1980, 1981 and 1982 fiscal years. See Kreidman Aff. Exhibit D (minutes of Elk-horn Board of Directors meetings 1981 & 1982). At first glance the Retrocessionaires appear to have a strong argument. However, the Second Circuit concluded in Delta Holdings that Elkhorn’s president had no knowledge of Elkhorn’s insolvency during the period that the dividends were declared. 945 F.2d at 1242. The Retrocessionaires have produced no additional evidence in contradiction of this finding. Thus, in order for the Retrocessionaires to establish specific facts showing a genuine issue for trial, the Retrocessionaires must establish that the dividends that Elk-horn declared were excessive in light of Elkhorn’s reported yearly earnings. Here, during the seven year period between 1977 and 1983, Elkhorn declared dividends that amounted to an average of 21.8% of Elk-horn’s net income. Salisbury Aff. Exhibit B (summary of Elkhorn’s income, dividends and capital). The Retrocessionaires, however, fail to provide any evidence that Elk-horn’s dividend payout ratio was excessive as compared to other similarly situated reinsurance companies. D. Guarantee of Corporate Liabilities in Individual Capacities. There is no indication that Distillers ever guaranteed any of Elkhorn’s liabilities in its individual capacity. In fact, under the Management Agreement, Distillers expressly disclaimed responsibility for Elk-horn’s obligations. The Retrocessionaires have thus failed to produce any evidence establishing that a fundamental unfairness or injustice will result without a piercing of the corporate veil. Accordingly, Distillers will not be held liable on such theory. Other Grounds for Liability The Retrocessionaires claim that there are grounds for holding Distillers liable apart from piercing the corporate veil. In their cross-complaints, they alleged that: National Distillers, pursuant to its management contract with Elkhorn, its voluntary acceptance and performance of the duties owed by Elkhorn to the retrocessionaires, and its domination and control of Elkhorn for its own purposes and advantages, assumed and purported to discharge the duties owed by Elkhorn to the retrocessionaires under the contracts. * * * * * * Pursuant to its management contract with Elkhorn, its voluntary acceptance and performance of all duties owed by Elkhorn to the retrocessionaires, and its domination and control of Elkhorn for its own purposes and advantages, National Distillers had a fiduciary duty to the retrocessionaires ... Amended Answer & Cross-Claims of Arion Retrocessionaires 1111 59, 62. The Retrocessionaires have elucidated the legal theories of liability in their briefs responding to this motion: (1) That Distillers took on a duty to perform the contracts and a fiduciary duty to the Retrocessionaires as a result of the Management Agreement, presumably because the Retrocessionaires were third-party beneficiaries of the Management Agreement, or by voluntarily assuming and performing such duties; (2) That Distillers’ pervasive “domination and control of Elkhorn” rendered Elkhorn merely an agent for Distillers, thus making Distillers liable as a principal; and (3) That Distillers is liable for Elk-horn’s alleged fraudulent conduct with respect to the Retrocessionaires because they actively acquiesced in, or aided and abetted, such fraud. The first theory, that Distillers’ liability arises under the Management Agreement or by Distillers’ actions, cannot survive a summary judgment motion. It cannot be said, and the Retrocessionaires point to no evidence which indicates, that Distillers and Elkhorn entered into the Management Agreement to benefit the Retrocessionaires, or that Distillers voluntarily assumed any duties which Elkhorn owed to the Retrocessionaires under the contracts. The language of the Management Agreement specifically contradicts such an assertion. Section 3 of the Management Agreement states in part, “National [Distillers] shall not, by reason of this Agreement or anything done or intended to be done by it in the performance thereof, be or become responsible for any debts, liabilities or other obligations of Elkhorn ...” Thus, there is no issue of material fact as to whether Distillers assumed any duties owed by Elk-horn by virtue of the Management Agreement or its actions. The Retrocessionaires also claim that, due to the domination and control exerted by Distillers over Elkhorn, an agency was created which obligated Distillers for obligations taken on by Elkhorn. It is unclear how the standards for such a de facto agency based on “domination and control” differ from the factors required to pierce the corporate veil, if at all: A corporation ... may become an actor in the whole business of a subsidiary. When this occurs it will be legally responsible (Van Valkenburgh, Nooger & Neville, Inc. v. Hayden Pub. Co., 30 N.Y.2d 34, 330 N.Y.S.2d 329, 281 N.E.2d 142). A subsidiary corporation over which the parent corporation exercises control in every day operations may be deemed an instrumentality or agent of the parent (Rapid T. Subway Constr. Co. v. City, 259 N.Y. 472, 182 N.E. 145). The determinative factor is whether the subsidiary corporation is a dummy for the parent corporation (Port Chester Elec. Constr. Corp. v. Atlas, 40 N.Y.2d 652, 389 N.Y.S.2d 327, 357 N.E.2d 983; Astrocom Electronics Inc. v. Layfayette Radio Electronics Corp., 63 A.D.2d 765, 404 N.Y.S.2d 742). A.W. Fiur Co. v. Ataka & Co., 71 A.D.2d 370, 422 N.Y.S.2d 419, 422 (1st Dept.1979). While a failure to pierce the corporate veil does not preclude a finding of agency, see Jackam v. Hospital Corp. of Am. Mideast, 800 F.2d 1577, 1580 (11th Cir.1986), the theory under which the Retrocessionaires seek to establish agency bears sufficient identity to the vicarious liability theory discussed supra to justify its rejection for the same reasons. See A.W. Fiur. The Retrocessionaires have neither alleged nor brought forth any evidence, other than that relating to domination and control, on which agency may be found. The Retrocessionaires’ last theory,. that Distillers aided in the alleged fraud perpetrated by Elkhorn, likewise lacks merit. The officers and directors involved in the alleged wrongdoing were acting in their capacities as representatives of Elk-horn, and so it cannot be said that Distillers aided in the wrongdoing of Elkhorn. Motion to Vacate/Reconsider Judgment of Kentucky State Court Distillers moves to vacate a judgment of the Kentucky state court rendered in favor of the Liquidator in the amount of $20,191,-345.40. In the alternative, it seeks reconsideration of the Kentucky state court’s decision. Background The Distillers case was originally filed in Kentucky state court on September 19, 1986. Removal was effected to the United States District Court for the Eastern District of Kentucky under 28 U.S.C. § 1441 on January 13, 1989. On June 12, 1989 the action was remanded to the state court on the basis of forum selection clauses contained in the contracts at issue. Certain defendants timely appealed the remand decision to the Sixth Circuit. On December 27, 1989, the action having been remanded, the Kentucky state court awarded summary judgment for the Liquidator on the issue of whether Distillers would be required to repay dividends issued by Elkhorn during 1981-83. Finding that Elkhorn’s insolvency in fact rendered the dividends illegal, even though no fault on the part of Elkhorn at the time of issuance was alleged for purposes of the motion, the state court ordered Distillers to pay the Liquidator $20,191,345.40. Distillers timely filed a motion to reconsider the judgment. On March 30, 1990, subsequent to the entry of final judgment and before the state court could rule on the motion to reconsider, the Sixth Circuit reversed the Kentucky federal district court’s decision to remand, thus returning the case to federal court. In re Delta America Re Ins. Co., 900 F.2d 890 (6th Cir.), cert. denied, 498 U.S. 890, 111 S.Ct. 233, 112 L.Ed.2d 193 (1990). Distillers now moves (1) to vacate the judgment of the Kentucky state court, on the grounds that the decision of the Sixth Circuit rendered the state court proceedings void ab initio, and (2) in the alternative, for reconsideration of the state court judgment pursuant to the timely filed motion. Motion to Vacate It is unclear what effect a state court partial judgment rendered after remand but before a reversal of such remand should be given. The problem stems from the availability of appeal from certain remand orders, which appeals, in the words of the Fifth Circuit, have a “peculiar binary quality: Either the remand is affirmed, in which case the appeal itself was a waste because it had no effect on the on-going state case; or the remand is reversed, in which case progress made in the state court proceedings may be nullified and the parties forced to restart in federal court.” Sykes v. Texas Air Corp., 834 F.2d 488, 491 (5th Cir.1987). That opinion recognized, however, that “final state court judgments would not be affected by a successful appeal of a remand order.” Id. at 491 n. 10; see also id. at 490. Further, “[tjhere might also be intermediate rulings in the state court prior to final judgment that are final in effect and thus binding as res judicata even if the remainder of the case returns to federal court.” Id. at 491 n. 10. Other courts, recognizing this possibility, have suggested that proper protection may be afforded by seeking a stay of the state court proceedings during appeal of the remand. See Fosdick v. Dunwoody, 420 F.2d 1140, 1141 n. 1 (1st Cir.1970); Board of Ed. v. City-Wide Comm’n for Integration of Schools, 342 F.2d 284, 286 (2d Cir.1965); see also State v. Lehman, 278 N.W.2d 610, 615 (Neb.1979) (criminal conviction on remand valid despite pending appeal of remand order); Dorsey v. State, 357 N.E.2d 280 (Ind.App.1976) (same). But see Wisconsin v. Glick, 782 F.2d 670, 672 n. 5 (7th Cir.1986) (indicating in dicta that state court criminal conviction could be set aside upon a subsequent decision that remand was improper). Allowing state court final judgments to survive a successful appeal of remand will best balance the need for efficient litigation practices with the availability of a remedy to certain incorrect remand decisions, at least where, as here, the state court is competent to decide the subject matter. Nullification of intervening state court judgments would mean that a remand will cause the case to grind to a halt until appeals on the remand have been exhausted or else cause the parties and the court to go forward in what may be a futile and wasteful proceeding. On the other hand, if state court judgments are permitted to survive, the party losing the remand motion may seek the protection of a stay if it would be unduly prejudiced by being made to proceed in state court while awaiting a disposition of its appeal. Thus, the motion to vacate the partial summary judgment entered by the Kentucky state court should be denied, and the motion to reconsider that judgment will be considered. Motion to Reconsider Given that no new arguments were raised in Distillers’s motion to reconsider which were not raised in the original motion for summary judgment, this Court is in the unusual position of reconsidering a decision of Kentucky state law rendered by a Kentucky state court of competent jurisdiction. Absent any compelling errors which the state court, given the chance, would itself have been likely to rectify, it would be inadvisable for the Court to decide this issue at variance with the state court. Clearly, the Kentucky state court is in a far better position to determine the meaning of state statutes and case law than a New York federal district court. The summary judgment issue was exclusively a legal one: Whether dividends which were issued when a company was reasonably believed to be solvent must be repaid upon a showing that the company was in fact insolvent at the time of issuance. That a substantial portion of a reinsurance company’s actual liabilities can only be estimated at any given time rendered the question compelling. Finding actual insolvency to be the dis-positive issue, the Kentucky state court held, and this Court does not question, that “the statutes and relevant case law suggest that when called upon to balance the interests of the shareholders of an insolvent company such as Delta against the interest of that corporation’s creditors, the interest [sic] of the latter are afforded preeminent protection.” Delta America Re Ins. Co. v. Morgan, No. 85-CI-0591-AP-6, slip op. 4 (Ky.Cir.Ct. November 29, 1989). Thus, even though the dividends may have been made and received in good faith, that the company was insolvent in fact renders them illegal under Kentucky law and subject to repayment. As Distillers cites no Kentucky authority contradicting this determination, the motion to reconsider the judgment of the Kentucky state court will be denied. Elkhorn Cedents’ Motion to Dismiss Certain Elkhorn Cedents in the American International case move to dismiss the Liquidator’s complaint pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted, and for lack of subject matter jurisdiction, inter alia. The dismissal of a complaint pursuant to Fed.R.Civ.P. 12(b)(6) should be granted in limited circumstances. As the Second Circuit has stated: [T]o dismiss a complaint for failure to state a claim upon which relief can be granted, a court must accept plaintiff’s allegations at face value, ... must construe the allegations in the complaint in the plaintiff’s favor, ... and must dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Rapf v. Suffolk County of New York, 755 F.2d 282, 290 (2d Cir.1985) (citations omitted); see also Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). Although the Liquidator provided the Ce-dents with copies of the alleged reinsurance treaties, the Cedents maintain that dismissal is proper. The Cedents raise several grounds for dismissal. First, the Ce-dents argue that the Liquidator’s complaint is “so vague and ambiguous that it does not provide them with fair notice of any claim.” Second, the Cedents contend that certain contract claims may be barred by the statute of limitations. Third, the Ce-dents challenge the Liquidator’s allegations of jurisdictional amount. Sufficiency of Complaint The Cedents assert that the complaint should be dismissed because the Liquidator failed to attach copies of the treaties to the complaint and neglected to plead the required elements of a contract cause of action. Neither of these arguments is tenable. First, courts in this jurisdiction have held that a plaintiff is not required to attach a copy of the contract to the complaint. Stratton Group, Ltd. v. Sprayregen, 458 F.Supp. 1216, 1218 (S.D.N.Y.1978); Marquardt-Glenn Corp. v. Lumelite Corp., 11 F.R.D. 175, 176 (S.D.N.Y.1951). Second, the complaint sufficiently pleads the requisite elements of a contract action. The essential elements to pleading a breach of contract under New York law are (i) the making of an agreement; (ii) due performance by the plaintiff; (iii) breach thereof by the defendant; (iv) and damage suffered by the plaintiff. See Sprayregen, 458 F.Supp. at 1217. “Each element need not be separately plead.” Nordic Bank, PLC v. Trend Group, Ltd., 619 F.Supp. 542, 561 (S.D.N.Y.1985). All that is required is “ ‘a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” 2A James W. Moore, Moore’s Fed.Prac. ¶ 8.13 (2d ed. 1987). The Liquidator alleged that the Cedents entered into reinsurance treaties with Elk-horn during the underwriting years prior to 1984. These allegations establish the first element of a contract claim under the liberal theory of “notice pleading” required by the Federal Rules. Conley v. Gibson, 355 U.S. 41, 47-48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957); see also Seligson v. Plum Tree, Inc., 361 F.Supp. 748 (E.D.Pa.1973) (principle of notice pleading applies to contract actions). In addition, the Liquidator alleges due performance of the contracts. Paragraph 3 of the complaint states that “Delta was ... engaged in the business of providing reinsurance coverage. In the course of that business ... [Delta] accepted risks from insureds in exchange for payment of premiums.” Allegations respecting a plaintiff’s conduct are sufficient to plead contract performance. Rosales v. AT & T Inform. Sys., 702 F.Supp. 1489, 1504 (D.Colo.1988). Accepting the Liquidator’s allegations at face value, the assertion that Elkhorn provided reinsurance coverage to the Cedents is adequate to allege performance of the reinsurance treaties. Rapf, 755 F.2d at 290. Finally, the Liquidator alleges both breach of contract and damage. Paragraphs 39-40 of the complaint state that “cedents have failed or otherwise refused to pay premiums due ... under their reinsurance treaties,” and that “failure and refusal to make payment constitutes a breach of their treaty obligations.” Additionally, paragraph 41 states that “the Liquidator seeks payment ... of all premiums due, ... plus interest.” Thus, the complaint specifies both the nature of the breach, and the nature of the relief sought. Because the “substantive strength and weakness of the controversy are left to the discovery process and trial ... [and only] a general indication of the type of relief sought” is required to defeat a motion to dismiss, 5 Charles A. Wright & Arthur R. Miller, Fed.Prac. & Proc.: Civil 2d § 1259 (2d ed. 1990), the complaint properly sets forth a cause of action for breach of contract; therefore, the motion to dismiss must fail. The motion for a more definite statement pursuant to Fed.R.Civ.P. 12(e) also fails. In the instant case, amendment of the complaint would be fruitless, as the Cedents have already been supplied with copies of the alleged contracts. Moreover, the Cedents’ claim that the produced documents are incomplete is irrelevant. “[Discovery is not the purpose behind Rule 12(e).” Marquardt-Glenn Corp. v. Lumelite Corp., 11 F.R.D. 175 (S.D.N.Y.1951). A rule 12(e) motion should be granted only when a “pleading is so vague and ambiguous that a party cannot reasonably be required to frame a responsive pleading.” Fed.R.Civ.P. 12(e). The Cedents have provided affidavits acknowledging the existence of a number of contracts with Delta Re. Thus, the Cedents cannot claim that they are unable to respond to the Liquidator’s complaint. Statute of Limitations The Cedents next contend that certain contract claims are barred by the statute of limitations. In New York, breach of contract claims must be brought within six years from the time of breach. N.Y.C.P.L.R. § 213(2); Barr v. McGraw-Hill, Inc., 710 F.Supp. 95, 98 (S.D.N.Y.1989). As such, any claim alleging a breach prior to September 1984 would be barred by the statute of limitations. Subject Matter Jurisdiction The Cedents next contend that the Liquidator’s allegations of jurisdictional amount are deficient. It is well established that the Liquidator has the burd