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R&Q Reinsurance Co. v. American Motorist Insurance Co.

October 14, 2010

R&Q REINSURANCE COMPANY, F/K/A ACE AMERICA REINSURANCE COMPANY, PETITIONER/CROSS-RESPONDENT,
v.
AMERICAN MOTORIST INSURANCE COMPANY AND LUMBERMENS MUTUAL CASUALTY COMPANY, RESPONDENTS/CROSS-MOVANTS.



The opinion of the court was delivered by: George W. Lindberg Senior U.S. District Judge

MEMORANDUM OPINION AND ORDER

Hon. George W. Lindberg

Before the Court are cross-motions to confirm and vacate the award in an underlying arbitration. Petitioner R&Q Reinsurance Company ("R&Q") is seeking to vacate the arbitration award. Respondents American Motorist Insurance Company and Lumbermens Mutual Casualty Company (collectively "Lumbermens") are seeking confirmation of the award. For the reasons set forth more fully below, R&Q's motion to vacate is denied and Lumbermens' motion to confirm is granted.

I. Jurisdiction

This Court has undisputed subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1332. The parties have diverse citizenship and the amount in controversy exceeds $75,000. The Court has jurisdiction to entertain the parties' cross-motions to confirm/vacate the disputed arbitration award pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq.

II. Relevant Facts

The underlying arbitration award stems from a reinsurance contract dispute between R&Q and Lumbermens regarding a series of Blanket Excess of Loss Reinsurance Contracts (collectively the "Treaties") that the parties entered into between 1976 and 1983. On June 19, 2007, Lumbermens demanded arbitration against R&Q pursuant to the arbitration clauses in the Treaties. In the arbitration, Lumbermens sought to recover from R&Q amounts billed under the Treaties relating to three insureds: the Artra Group ("Artra"), Rapid American Corporation ("Rapid"), and the Roman Catholic Archdiocese of Boston ("Archdiocese").

The parties selected a three-person arbitration panel (the "Panel") that met for an organizational meeting on February 5, 2008. At that meeting, the Panel and the parties agreed on certain parameters for the arbitration. When asked what type of "Final Award" his client expected from the Panel, Lumbermens' counsel stated:

So what I think that we would appreciate getting from the panel is something more than simply Party A wins, here's the amount. I think a paragraph as an illustration explanation that says here is what our decision was based on or if there is a crucial finding on a disputed fact, for example, that because of this fact, we find as follows so that the parties have an understanding of how the claims were determined and through the extent that there are open claims, that sort of understanding would be helpful in perhaps preventing future disputes or at least allowing parties to move forward in an educated manner.

R&Q's counsel agreed with Lumbermens' counsel and stated:

. . . the award you win and you lose probably won't be very helpful. What we've done recently I think which has been helpful, and it seems like it might be helpful in a case like this, but we may want to reserve as we go forward as we get closer to the hearing to make a decision, is the parties provide the draft awards or draft order for the panel, each side seeking the specific relief that they're seeking; and therefore, the panel can see maybe even prior to the hearing so the panel can use that as a guide , adopt it or adopt some from one or some from another or come up with your own but at least the panel is very familiar with the types of specific relief that each side is seeking. I think that sometimes is very helpful. But, again, I think from the standpoint of a reasoned award or a petitioner wins or respondent wins, I wouldn't want the later, but as we get closer to the hearing date, I think it would be best if we revisited this.

The umpire arbitrator then responded:

If I understand this, neither of you want a one-line award. . . . And hopefully neither of you want ...


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