Confirmation / Vacation of Arbitration Awards

MISSISSIPPI SUPREME COURT ISSUES “TRUE-UP” DECISION IN KATRINA LITIGATION

March 6, 2012 by Carlton Fields

As a result of Hurricane Katrina, the Mississippi Windstorm Underwriting Association sustained losses well in excess of its reinsurance. The Association assessed its members to cover the loss based on their percentages of wind and hail insurance premiums written in the previous calendar year. Several companies then complained that the Association had incorrectly reported the previous year’s figures and were given a one-time opportunity to submit correct data (a true-up). Some members, most of whom did not submit corrected data, appealed the assessment following the true-up. The Mississippi Supreme Court reviewed the lower court’s grant of relief to the members. The Court affirmed the lower court’s decision on two issues: finding that grouping was permitted and that reinsurance was allocated properly. The Court, however, reversed and remanded on the following issues: whether MWUA had authority to set and enforce a true-up deadline, the mandatory nature of voluntary credits and farm-property exclusions, whether assessments are akin to privilege taxes, and the mobile-home reporting issue. Further, because the lower court lacked authority to order the Association to adopt new rules, the Court reversed and rendered that part of the judgment below. Mississippi Windstorm Underwriting Assoc. v. Union Nat’l Fire Ins. Co., No 10-00076 (Miss. Jan. 26, 2012).

This post written by John Black.

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ARBITRATION AWARD UPDATE

February 29, 2012 by Carlton Fields

Contract Formation

Logan & Kanawha Coal Co., LLC v. Detherage Coal Sales, LLC, No. 2:11-cv-00342 (USDC S.D. W. Va. Jan. 20, 2012) (granting vacatur, alleged arbitration provision not incorporated into parties’ contract)

Exceeded Scope

Zenith Logistics, Inc. v. Teamsters Local Union No. 100, No. 1:11-cv-00301 (USDC S.D. Ohio Feb. 1, 2012) (vacatur denied, arbitrator did not exceed scope in construing contract)

Evident Partiality

NGC Network Asia, LLC v. PAC Pacific Group Int’l, Inc., No. 1:09-cv-08684 (USDC S.D.N.Y. Feb. 3, 2012) (vacatur denied, no evident partiality).

Public Policy

Titan Tire Corp. v. United Steel, No. 3:10-cv-50296 (USDC N.D. Ill. Dec. 22, 2011) (denying vacatur on de novo review of claim that arbitration award under CBA violated public policy)

Manifest Disregard

Fastware, LLC v. Gold Type Business Machines, No. 2:09-cv-01530 (USDC D.N.J. Jan. 5, 2012) (motion to vacate denied, no manifest disregard)

Agility Public Warehousing Co., K.S.C. v. Supreme Foodservice GmbH, No. 11 Civ. 7375 (USDC S.D.N.Y. Dec. 19, 2011) (see also the court’s subsequent memorandum providing support for the December 19 Order) (confirming award, denying vacatur, no manifest disregard)

Hosier v. Citi Group Global Markets, Inc., No. 11-cv-00971 (USDC D. Colo. Dec. 21, 2011) (denying vacatur, arbitrators did not exceed authority, no manifest disregard)

Westminster Securities Corp. v. Petrocom Energy, Ltd., No. 1:10-cv-07893 (2d. Cir. Jan. 19, 2012) (affirming denial of vacatur, arbitrators did not exceed scope, no manifest disregard).

Priority One Services, Inc. v. W&T Travel Services, LLC, No. 10-1873 (USDC D.D.C. Aug. 23, 2011) (vacatur denied, arbitrators did not exceed scope, no manifest disregard), and subsequent order (Jan. 23, 2012) (awarding attorneys fees and costs to prevailing party due to frivolous vacatur argument)

Sawyer v. Horwitz & Assoc., Inc., No. 11-CV-1604 (USDC S.D. Cal. Jan. 31, 2012) (denying vacatur, no manifest disregard, no failure to hear pertinent material evidence)

Procedure

Choice Hotels Int’l, Inc. v. RMC Realty, Ltd., No. 8:11-cv-02093 (USDC D. Md. Jan. 31, 2012) (granting motion for default in action seeking confirmation of award).

Pacific Employers Ins. Co. v. Global Reinsurance Corp. of Am., No. 1:11-cv-06301 (USDC S.D.N.Y. Dec. 12, 2011) (granting motion to confirm award, including declaratory relief)

Johnson v. Nat’l Railroad Passenger Corp. Amtrak, No. No. 11-13739 (11th Cir. Jan. 10, 2012) (affirming dismissal of vacatur action for failure to state a cognizable statutory ground for vacatur)

Big Lagoon Rancheria v. California, No. 4:09-cv-01471 (USDC N.D. Cal. Feb. 1, 2012) (denying vacatur of JAMS mediator recommendations and orders)

This post written by John Pitblado.

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ARBITRATION AWARD IN FAVOR OF PROGRESSIVE AFFIRMED

February 23, 2012 by Carlton Fields

Recently, the Minnesota Court of Appeals affirmed the entry of an arbitration award against North Star Taxi. North Star and Progressive were parties to a voluntary arbitration agreement for all property damage and business-interruption-loss claims through intercompany arbitration before Arbitration Forums, Inc. After a dispute arose regarding an auto accident between one of Progressive’s insureds and one of North Star’s bailee-independent contractors, an arbitrator ruled that each of the two drivers were 50% responsible for the accident and reduced North Star’s undisputed damages by 50% based upon that negligence. North Star moved to vacate the award, and the Minnesota state district court ruled that North Star had waived its right to seek vacation of the award by entering into the arbitration award. North Star appealed (now also seeking attorneys’ fees), and the Court of Appeals concluded that under the Minnesota Uniform Arbitration Act, North Star had contractually waived its right to judicial review of the award. Accordingly, the award was confirmed and North Star’s motions were denied. North Star Taxi v. Progressive American Insurance Co., No. 11-757 (Minn. Ct. App. Jan. 30, 2012).

This post written by John Black.

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CONFIDENTIAL ARBITRATION AWARD AGAINST AXA RE CONFIRMED WITHOUT OPPOSITION

February 9, 2012 by Carlton Fields

A court recently confirmed an arbitration award against AXA Re in a reinsurance dispute involving reinsurance contracts entered into by predecessor companies in the 1970s. Details on the underlying arbitration are not available, as the petitioners’ filing was sealed by court order in accordance with a confidentiality agreement entered into by the parties in the arbitration. AXA Re did not oppose the petition nor appear in the court action, which was filed pursuant to the New York Convention. ACE Property & Casualty Insurance Co. v. AXA Re, Case No. 1:11-cv-07050 (USDC S.D.N.Y. Jan. 9, 2012).

This post written by Michael Wolgin.

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COURT CONFIRMS REINSURANCE ARBITRATION ORDERS OVER TIMELINESS AND FINALITY CONCERNS; REFUSES TO STRIKE CONFIDENTIAL FACTS IN PETITION

February 7, 2012 by Carlton Fields

A court has granted two unopposed petitions to confirm two arbitration orders under the New York Convention, in what was a dispute over documentation requirements of a forty-year old asbestos claims reinsurance agreement between Century Indemnity Company and certain London market reinsurers (LMRs). The first arbitration order required one of the LMRs to post letters of credit to secure Century’s then-outstanding claims. While the panel initially entered the order in 2006, the letters of credit were subsequently addressed in another order by the panel in 2008. The second order, entered in 2007 and made final in 2009, related to the panel’s findings on the merits of the reinsurance agreement’s documentation requirements. The court found that both orders were “necessarily incorporated” in the respective 2008 and 2009 orders, and were thus timely under the New York Convention’s three-year statute of limitations. In confirming the first order, the court explained that although it technically was not a final award (which is a requirement for jurisdiction under the Federal Arbitration Act), it was “sufficiently separate and final for federal court review and confirmation.”

Also noteworthy was the court’s denial of Century’s motion to strike, which argued that portions of the LMR’s petition contained gratuitous assertions that violated the parties’ confidentiality agreement and were intended to be a “press release for use in other matters.” The court found that the language at issue was related to the underlying controversy, that the panel’s orders were made public in the court record, and that “the mere fact that the parties ha[d] designated certain documents as confidential among themselves is insufficient to rebut the ‘strong presumption of public access to court records’ that exists in federal courts.” Century Indemnity Co. v. Certain Underwriters at Lloyd’s London, Case No. 1:11-cv-01040 (USDC S.D.N.Y. Jan. 10, 2012).

This post written by Michael Wolgin.

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