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Arbitration / Court Decisions

CONFIRMATION OF ARBITRATION AWARD OF ATTORNEYS FEES AND COSTS AFFIRMED ON APPEAL

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White Springs Agricultural Chemicals, Inc. and Glawson Investments Corp. had a history of property dispute litigation arising from their respective uses of neighboring properties in Florida. They stipulated to a settlement, agreeing that future disputes would be arbitrated. A dispute again arose, and Glawson demanded arbitration in accordance with the agreement. The parties arbitrated, and the panel found in Glawson’s favor, awarding attorneys fees and costs. White Springs sought to vacate the award in federal court, arguing the fee award was improper and beyond the scope of the submission. The court disagreed, confirming the award. White Springs appealed. The Eleventh Circuit affirmed, citing the agreement for the panel’s authority to award attorneys fees, and noting that, while Glawson had not initially sought fees, it was apparent the parties had submitted that issue to the arbitration panel, inasmuch as both parties briefed the issue, and the panel heard argument on the issue before issuing the award. White Springs Agricultural Chemicals, Inc. v. Glawson Investments Corp., No. 10-14532 (11th Cir. Oct. 17, 2011).

This post written by John Pitblado.

INSURERS IN COVERAGE SUIT COMPELLED TO PRODUCE DISCOVERY ON REINSURANCE

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Olin Corporation sought a declaratory judgment that it was covered for damages to its industrial plant under a policy issued by a consortium of property insurers. Olin sought to discover information on the property insurers’ reinsurance coverage. The property insurers moved for a protective order and Olin moved to compel. The magistrate judge held that, pursuant to Federal Rule 26(a)(1)(A)(iv), the insurers must produce any reinsurance agreement that might be used to satisfy a judgment or indemnify or reimburse the insurers for payments made to satisfy a judgment. The court further held that communications with the reinsurers were also discoverable because they might contain information relevant to the property insurers’ affirmative defenses relating to their analysis of the sufficiency of Olin’s proof of loss and satisfaction of contractual prerequisites. Olin Corp. v. Continental Casualty Co., Case No. 10-CV-623 (USDC D. Nev. Aug. 30, 2011).

This post written by Ben Seessel.

REINSURER LIMITED TO COMPLAINT’S REQUEST FOR APPOINTMENT OF NEUTRAL UMPIRE

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A dispute arose between Century Indemnity Company and Everest Reinsurance Company over reinsurance coverage for certain asbestos claims. The parties each selected an arbitrator pursuant to the procedure set forth in their reinsurance treaty. Unable to reach agreement on the selection of a neutral umpire, Everest filed an action seeking appointment of an umpire or, in the alternative, to compel Century to participate in an ARIAS neutral umpire selection process. After Everest filed its complaint, however, Century agreed to the ARIAS process as part of a global agreement involving the arbitration (the “Formosa Arbitration”), and two other pending arbitrations (the “Congoleum Arbitration” and the “Flintkote Arbitration”), mooting the issue. Everest thereafter moved to enforce the global agreement, complaining that Century had sought to consolidate the Congoleum Arbitration with another arbitration that was not part of the agreement, and in which a panel of arbitrators had already been selected, circumventing the agreed-upon panel selection process. The court denied Everest’s motion on the basis that it was outside the complaint’s scope, which merely sought appointment of a neutral umpire in the Formosa Arbitration. To obtain relief regarding the Congoleum Arbitration, Everest could file a motion with the Congoleum Arbitration panel or in the court where other motions relating to that proceeding were pending. Everest Reinsurance Co. v. Century Indemnity Co., Case No. 11-2789 (USDC D.N.J. Oct. 31, 2011).

This post written by Ben Seessel.

FIFTH CIRCUIT AFFIRMS ARBITRATION AWARD IN FAVOR OF FATHER AGAINST SON

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After being fired by his father, losing the arbitration related to his termination, and having his motion to vacate the award denied, Charles Wanken appealed the motion to vacate to the Fifth Circuit Court of Appeals. Concluding Mr. Wanken’s total defeat, the Fifth Circuit affirmed the trial court’s denial of the motion to vacate and affirmed Mr. Wanken’s father’s motion to confirm. The Fifth Circuit ruled that (a) the award had not been procured by the father’s fraud, (b) there was no evidence to support Wanken’s claim that the arbitration panel failed to consider material evidence, (c) the panel was not improperly biased, (d) the panel did not exceed its powers, and (e) the district court properly considered the motion to vacate and gave proper notice to Mr. Wanken. Wanken v. Wanken, No. 11-10219 (5th Cir. Sept. 29, 2011).

This post written by John Black.

STATE INSURANCE LAW THAT PRECLUDES ARBITRATION PREEMPTED IN FAVOR OF THE FAA UNDER THE LIABILITY RISK RETENTION ACT

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A court recently compelled arbitration in a dispute between an insured and an insurer-risk retention group, concluding that the McCarren-Ferguson Act did not mandate the enforcement of a state anti-arbitration law over the FAA and broad arbitration agreements between the parties. The court held that while McCarran-Ferguson was met to the extent that (1) the federal law (the FAA) impaired the state insurance law, and that (2) the FAA does not clearly relate to the “business of insurance,” here the relationship between the parties was not a classic insurance relationship. The insurer was not a public offering insurance company, but rather a risk retention group, which necessitates the application of the federal Liability Risk Retention Act, a law that preempts state laws that impair the “formation or operation” of risk retention groups. The court concluded that such an impairment existed in this case because the state law prohibiting arbitration would significantly increase the costs of litigation, adversely affecting the risk retention group’s operations. Central Claims Service, Inc. v. Claim Professionals Liability Insurance Co., Case No. 10-04672 (USDC E.D. La. Sept. 2, 2011).

This post written by Michael Wolgin.