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ARBITRATION ROUND-UP

April 3, 2014 by Carlton Fields

Arbitration Procedure

Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund v. Alliance Workroom Corp., No. 13-Civ-5096 (USDC S.D.N.Y. Dec. 11, 2013) (arbitration award confirmed, treating unopposed petition to confirm as summary judgment motion based on unopposed record, granting attorneys fees incurred in unopposed action to confirm arbitration award).

Thai-Lao Lignite (Thailand) Co., Ltd. v. Government of the Lao People’s Democratic Republic, No. 10-CV-5256 (USDC S.D.N.Y. Feb. 6, 2014) (vacating award based on ruling in parallel action in Malaysian Court of Appeal, based on New York Convention for the Enforcement of Foreign Arbitral Awards).

McAlpine v. Priddle, No. S-14891 (Alaska Feb. 21, 2014) (affirming confirmation of award in criminal defense attorney fee agreement, agreement not procured by fraud, not barred by public policy)

Lakeshore Engineering Services, Inc. v. Target Construction, Inc., No. 13-14498 (USDC E.D. Mich. Feb. 27, 2014) (no waiver, contract and arbitration agreement binding and enforceable)

Exceeding Powers

Renard v. Ameriprise Fin. Svcs., Inc., No. 13-CV-555 (USDC E.D. Wis. Mar. 6, 2014) (arbitrators did not exceed powers, award not procured by fraud, no failure to hear pertinent evidence)

Manifest Disregard

Schafer v. Multiband Corp., No. 13-1316 (6th Cir. Jan. 6, 2014) (reversing district court’s order granting vacatur of award, where award was contrary to precedent, but nevertheless “reasoned” and therefore not in manifest disregard of the law).

Abu Dhabi Investment Authority v. Citigroup, Inc., No. 13-1068-cv (2d Cir. Feb. 19, 2014) (no manifest disregard in application of New York law in choice-of-law dispute)

Evident Partiality

Ometto v. ASA Bioenergy Holding A.G., Nos. 12-4022, 13-225 (2d Cir. Jan 7, 2014) (affirming denial of petition to vacate award, no evident partiality based on claim of arbitrator’s failure to disclose information; no manifest disregard of law)

Scope of Arbitration Agreement

Aetrex Worldwide, Inc. v. Sourcing For You Limited, No. 13-3933 (3d Cir. Jan. 23, 2014) (denying motion to compel arbitration where arbitration agreement contained exception for injunction actions, which applied even after injunction request denied and withdrawn)

Neuronetics, Inc. v. Fuzzi, No. 13-1506 (3d Cir. Jan. 24, 2014) (affirming grant of motion to confirm, issue regarding non-payment of contract for sale of healthcare products within scope of arbitration agreement).

Unconscionability

Kirby v. Lion Enterprises, Inc., No. 12-C-47 (W. Va. Mar. 7, 2014) (reversing decision affirming confirmation of award and remanding with instructions to develop record on issue of unconscionability)

This post written by John Pitblado.

See our disclaimer.

Filed Under: Confirmation / Vacation of Arbitration Awards

SUMMARY JUDGMENT IN FAVOR OF BROKER IN MALPRACTICE CASE REVERSED, WHERE SPECIAL RELATIONSHIP WITH INSURED MAY HAVE EXISTED

April 2, 2014 by Carlton Fields

In a case involving alleged broker malpractice with respect to certain underinsured business interruption losses under a commercial property insurance policy, the New York high court reversed a lower appellate court’s affirmance of summary judgment in favor of the insurance broker. The court found that the evidence suggested that “there was some interaction regarding a question of business interruption coverage, with the insured relying on the expertise of the agent,” where the insured testified that (1) she and the broker discussed the coverage, (2) the broker requested sales figures and other data, (3) the broker assured the insured that the coverage was adequate, and (4) the broker repeatedly pledged to review coverage annually and recommend adjustments as the insured’s businesses grew. The court also reversed the intermediate court’s majority view that the insured’s knowledge of the coverage limits warranted dismissal. The court explained that, where a special relationship existed, “it is wholly irrelevant whether [the insured was] aware of the limits that were actually procured.” Voss v. Netherlands Insurance Co., Case No. 11 (N.Y. Ct. App. Feb. 25, 2014).

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Brokers / Underwriters

TREATY TIP – THE IMPORTANCE OF PROPERLY COORDINATING CONTRACT PROVISIONS

April 1, 2014 by Carlton Fields

Sometimes a reinsurance program will not operate as intended due to the unintended consequences of conflicting reinsurance contract provisions. In this Treaty Tip, Roland Goss reviews one such instance found in a recently reported case.

This post written by Rollie Goss.

See our disclaimer.

Filed Under: Contract Interpretation, Week's Best Posts

COURT DISMISSES CLAIM AGAINST AIG FOR BREACH OF REINSURNACE CONTRACTS

March 31, 2014 by Carlton Fields

Reinsurer Transatlantic Reinsurance Company sued AIG and certain of its subsidiaries for a declaration that they breached various provisions of reinsurance certificates by transferring their risk under asbestos liability policies to another insurer. The court dismissed the claim against AIG, holding that it was undisputed that AIG itself was not a signatory to the reinsurance certificates at issue, and that the complaint failed to allege that AIG, as an “alter ego,” dominated and controlled the actions of the signatory AIG subsidiaries. The court was not persuaded into finding AIG liable by the contention that AIG was the party responsible for making the decision to transfer the insurance risk. The court explained that “TransRe’s allegations that AIG’s ‘de-risking’ strategy interfered with the Insureds’ abilities to meet their obligations under their contracts with TransRe do not permit this court to find that AIG has made a sham of the corporate formalities of the Insurers, as required to establish alter-ego liability.” Transatlantic Reinsurance Co. v. American International Group, Inc., et al., Case No. 152812/2013 (N.Y. Sup. Ct. Feb. 7, 2014).

This post written by Michael Wolgin.

See our disclaimer.

Filed Under: Reinsurance Claims, Week's Best Posts

COURT REFUSES DISCOVERY OF COMMUNICATIONS WITH REINSURERS BECAUSE POLICY TERM WAS NOT AMBIGUOUS

March 27, 2014 by Carlton Fields

Reinsurance communications were held not discoverable in a commercial coverage dispute. By way of background, PBM Products, LLC sued its competitors, Mead Johnson Nutrition Company and Mead Johnson & Company, for allegedly engaging in a false advertising campaign against formulas manufactured by PBM. On November 10, 2009, PBM won a $13.5 million judgment. Mead Johnson had a commercial general liability policy issued by National Union Fire Insurance Company and a commercial umbrella liability policy issued by Lexington Insurance Company. After the verdict, National Union filed a declaratory judgment action based on untimely notice and because the damages imposed by the jury were not covered under the policy. Mead Johnson counterclaimed against National Union and Lexington for breach of contract and seeking a declaration that Mead Johnson was entitled to coverage. The Court entered summary judgment on the issue of late notice in favor of the Insurers. Mead Johnson appealed and the Seventh Circuit reversed summary judgment because there had been no factual development concerning the issue of harm.

On remand, the district court revisited a pending discovery dispute. The magistrate judge had earlier granted Mead Johnson’s request with respect to: (1) the underwriting files; (2) communications between the insurers’ reinsurers; (3) the number of times Paul Hastings was retained by the insurers to defend “personal and advertising injury” claims during the relevant time period; and (4) the insurers’ manuals or marketing materials. Specifically with regard to the reinsurance communications, the court found that because the term “personal and advertising injury” was not ambiguous, communications with reinsurers regarding the meaning of claim terms were irrelevant. National Union Fire Insurance Co. of Pittsburgh, PA. v. Mead Johnson & Co., Case No. 3:11-CV-00015-RLY-WGH (USDC S.D. Ind. Mar. 10, 2014).

Filed Under: Discovery

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