Petitioner, Catalina Holdings (Bermuda) Ltd. was involved in a reinsurance dispute with Legion Indemnity Co., an insolvent insurer, and its liquidator, Robert Muriel, acting director of insurance of the state of Illinois. Following an arbitration hearing, the panel issued an initial award that Muriel/Legion must pay Catalina $76,000 in unpaid premiums. After further briefing, the panel issued a final award granting Catalina an additional $437,501.04 in “costs,” which consisted of attorneys’ fees and expenses. Catalina moved to confirm the award in the Northern District of Illinois. Muriel moved to vacate or modify as it related to the award of attorneys’ fees.
The court denied Muriel’s motion, finding that the panel did not exceed its authority by awarding attorneys’ fees on a noncontractual basis, or any other bases. The arbitration clause at issue allowed the arbitrators to award “interest and costs” but was silent as to what “costs” may include. Noting that arbitrators are “pretty much at large in the formulation of remedies” when the arbitration clause is silent in that regard, the court disagreed with Muriel/Legion that the word “costs” left “no possible interpretive route to the award of attorneys’ fees.” The court also distinguished Seventh Circuit cases setting aside awards for lacking a contractual basis, finding that the arbitrators in those cases ignored contract language that was “clear, unambiguous, and not silent.” Under the circumstances here, the court found no basis to vacate. Further, since the panel had specifically invited briefing on the issue of attorneys’ fees before issuing the final award, the court found no basis to modify the final award under section11(b) of the Federal Arbitration Act. Catalina’s motion to confirm was therefore granted, and Muriel’s motion was denied in its entirety.
Catalina Holdings (Bermuda) Ltd. v. Muriel, No. 1:18-cv-05642 (N.D. Ill. Apr. 6, 2020).