Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

COURT COMPELS PRODUCTION OF REINSURANCE TREATIES, BUT NOT RELATED COMMUNICATIONS

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In a discovery dispute involving requests for documents related to an insurer’s reinsurance treaties, a court compelled the production of the treaties, but reserved ruling on the production of related communications, subject to additional briefing on relevance. The court held that reinsurance policies themselves are discoverable without showing relevance. Communications regarding reinsurance, however, require a showing that the documents are relevant to alleged insurer bad faith. The assumption “that reinsurance decisions do not involve questions of policy interpretation is especially applicable when the reinsurance is treaty insurance.” Isilon Systems, Inc. v. Twin City Fire Insurance Co., Case No. 2:10-cv-01392 (USDC W.D. Wash. Feb. 15, 2012).

This post written by Michael Wolgin.

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

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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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FOURTH CIRCUIT STATES POST-STOLT NIELSEN VIEW ON MANIFEST DISREGARD

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The U.S. Court of Appeals for the Fourth Circuit recently stated that manifest disregard remains a viable doctrine in an opinion refusing to vacate a $1.1 million arbitration award against Wachovia for frivolous litigation under state law. Wachovia argued that the panel committed manifest disregard of the law by failing to provide Wachovia adequate notice and hearing under the state statute. The court disagreed, holding the panel was not bound by the statutory procedure in awarding fees, and, in any event, Wachovia was partly responsible for any insufficient process based on its conduct in the arbitration. In so holding, the court provided its interpretation of the Supreme Court’s footnote on manifest disregard in Stolt-Nielsen: “We read this footnote to mean that manifest disregard continues to exist either ‘as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10.’ Therefore, we decline to adopt the position of the Fifth and Eleventh Circuits that manifest disregard no longer exists.” Wachovia Securities, LLC v. Brand, No. 10-2111 (4th Cir. Feb. 16, 2012).

This post written by Michael Wolgin.

See our disclaimer.

REINSURANCE MARKET UPDATE

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This time of year the major reinsurance brokers publish various market-related reports. Among the interesting recent reports are:

This post written by Rollie Goss.

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ARBITRATION AWARD UPDATE

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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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