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Arbitration / Court Decisions

CLIENT NOT PERMITTED TO SUBMIT COUNSEL’S DECLARATION IN SUPPORT OF MOTION FOR RECONSIDERATION OF DISQUALIFICATION ORDER

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As we reported on November 1, 2011, a federal district court disqualified counsel for Insco, Ltd. because counsel had improperly procured and reviewed emails between members of an arbitration panel touching on deliberations in the ongoing arbitration. Insco moved for reconsideration of this decision and sought leave to file a declaration of one of its attorneys in support of its motion. The court denied Insco’s request, finding that nothing in the declaration raised new arguments or facts that had not been pursued in Insco’s opposition to Northwestern National’s motion to disqualify. The court will limit its decision on the motion for reconsideration to the record before it on Northwestern National’s original motion. Northwestern National Insurance Co. v. Insco, Ltd., Case No. 11-1124 (USDC S.D.N.Y. Nov. 10, 2011).

This post written by Ben Seessel.

PARTY’S PREVIOUSLY WAIVED RIGHT TO ARBITRATE “REVIVED” AFTER AMENDED COMPLAINT

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Sara Krinsk filed a putative class action lawsuit against SunTrust Bank, alleging that it improperly revoked a line of credit on her home, based on an alleged company wide policy to dispatch with certain credit risks after issues with collateralized mortgage debt came to light in 2008 and 2009. After participating in the litigation for nine months, and after plaintiff amended her complaint greatly enlarging the putative class, SunTrust moved to compel arbitration based on the arbitration provision in the parties’ contract, which also precluded class arbitration. The district court denied the motion, finding SunTrust had waived its right to arbitrate due to its participation in the litigation to that point. SunTrust appealed, arguing that the Plaintiff’s amendment of her complaint shortly before SunTrust moved to compel arbitration revived its right to arbitrate anew. The Eleventh Circuit agreed, finding the case presented “one of those limited circumstances” warranting revival of arbitration rights because the amended complaint significantly altered the scope of the case. Krinsk v. Suntrust Banks, Inc., No. 10-11912 (11th Cir. Sept. 7, 2011)

This post written by John Pitblado.

APPEALS COURT REVERSES TRIAL COURT’S ORDER VACATING ARBITRATION AWARD AS INSUFFICIENTLY “REASONED”

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A federal circuit court of appeals reversed a lower court order vacating an arbitration award because the arbitrators had “exceeded their powers” by purportedly failing to provide a “reasoned award” as agreed upon by the parties. Cat Charter, LLC and its principals initiated an arbitration against Multihull Technologies, Inc. and its owner to resolve a dispute involving the construction of a yacht. The parties requested a “reasoned award” from the panel. According to the district court, the arbitrators failed to deliver an award that was sufficiently “reasoned,” exceeding their powers under Federal Arbitration Act section 10(4)(a). The court of appeals analyzed what it termed the “spectrum of increasingly reasoned awards” that runs from a “standard award,” which merely announces a decision, to “findings of fact and conclusions of law,” which requires “relatively exacting” detail. The appellate court found that a “reasoned award” was somewhere in the middle of the spectrum and that the panel’s award, though “it could have provided more,” gave a sufficiently detailed explanation to be considered “reasoned.” The appeals court reinstated the award, noting that if the parties had desired more detail, they could have requested that the arbitrators provide “findings of fact and conclusions of law.” Cat Charter 11th Cir 7.13.11, No. 10-11674 (11th Cir. July 13, 2011).

This post written by Ben Seessel.

SETTLEMENT REACHED IN ASBESTOS LIABILITY REINSURANCE DISPUTE

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A suit filed late last year by two subsidiaries of Chartis, Inc. against their reinsurer, Transport Insurance Co, was recently settled and dismissed. The underlying complaint alleged that Transport failed to reinsure in excess of $4.5 million in connection with asbestos claims paid under commercial umbrella liability policies. The parties filed a stipulation of dismissal on October 11, 2011 and an order dismissing the case was entered two days later. Insurance Co. of the State of Pennsylvania v. Transport Ins. Co., Case No. 2:10-cv-09830 (USDC C.D. Cal. Oct. 13, 2011).

This post written by Michael Wolgin.

PREMATURE TO RULE ON EFFECT OF UNUTILIZED REINSURANCE ON OTHER INSURANCE CLAUSE BEFORE LOSSES ESTABLISHED

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In ruling on cross motions for summary judgment, the U.S. District Court for the Western District of Michigan considered a request for a declaration regarding the application of an “Other Insurance” clause in a Directors and Officers liability insurance policy. The insurer (F&D) requested a declaration that any coverage available under the policy is limited to the amount in excess of the $1.25 million of unutilized reinsurance coverage available to the insured (Michigan Millers) from its reinsurer (Employers Reinsurance Corporation). The District Court denied the request for declaration, finding it premature. The court explained that because of the different nature of the F&D and ERC policies, the Other Insurance clause may have to operate as a reimbursement scheme rather than an outright excess insurance provision. So, prior to losses being established, it is premature to rule on the effect of the Other Insurance clause. Michigan Millers Mutual Insurance Co. v. Fidelity and Deposit Co. of Maryland, No. 09-596 (W.D. Mich. Aug. 15, 2011).

This post written by John Black.