Petition to Confirm Arbitration Award - Reinsurance Focus

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 1 of 6UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF MICHIGANSOUTHERN DIVISIONAMERICAN BANKERS INSURANCE COMPANY OFFLORIDA,ATLAS ASSURANCE COMPANY OF AMERICA,n/k/a PEERLESS INDEMNITY INSURANCECOMPANYJudge:Deck:Date:Case Number:MONARCH INSURANCE COMPANY OF OHIO,n/k/a GENERAL STAR NATIONAL INSURANCECOMPANY, andNORTH AMERICAN COMPANY FOR PROPERTYAND CASUALTY INSURANCE,n/k/a XL REINSURANCE AMERICA INC.,AndPetitioners,NATIONAL CASUALTY COMPANY,Respondent.PETITION TO CONFIRM ARBITRATION AWARDPetitioners American Bankers Insurance Company of Florida, Peerless IndemnityInsurance Company, General Star National Insurance Company, and XL Reinsurance AmericaInc. (Petitioners) move for confirmation of an arbitration award against Respondent NationalCasualty Company (National Casualty) and entry of judgment against National Casualty inconformity with that award.1

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 2 of 6SUMMARY OF PETITIONThis is a petition filed pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (FAA),to confirm an award issued by a three-person arbitration Panel sitting in Southfield, Michigan.This Court is familiar with some of the circumstances that preceded the hearing. In September2005, this Court granted the Petitioners’ motion to dismiss National Casualty’s petition for thejudicial appointment of an Umpire. National Casualty v. American Bankers InsuranceCompany, Case No. 05-71843, dated September 20, 2005. Affirmation of James Veach, datedAugust 7, 2008, submitted in support of petition to confirm, Ex. J (Veach Aff.).PARTIES AND JURISDICTION1. National Casualty is an insurance company organized and existing underWisconsin law with its principal place of business in Wausau, Wisconsin.2. American Bankers Insurance Company of Florida is an insurance companyorganized and existing under Florida law with its principal place of business in Miami, Florida.3. Atlas Assurance Company of America, n/k/a/ Peerless Indemnity InsuranceCompany, is an insurance company organized and existing under Illinois law with its principalplace of business in Keene, New Hampshire.4. Monarch Insurance Company of Ohio, n/k/a General Star National InsuranceCompany, is an insurance company organized and existing under Ohio law with its principalplace of business in Stamford, Connecticut.2

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 3 of 65. North American Company for Property and Casualty Insurance, n/k/a XLReinsurance America Inc., is an insurance company organized and existing under the laws of theState of New York with its principal place of business in Stamford, Connecticut.6. This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a)(1) in that the subjectmatter of this dispute is between citizens of different states and the amount in controversyexceeds $75,000, exclusive of interest and costs.7. Venue is proper pursuant to 28 U.S.C. § 1391(a)(2) and 9 U.S.C. § 9 in that theparties designated a location within the Eastern District of Michigan as the site for a hearingconducted in September 2007.FACTS8. As this Court noted in its September 2005 decision, this dispute concerns twoExcess of Loss Casualty Retrocessional Agreements (No. NC 3-050, effective January 1, 1974 toJanuary 1975, and No. NC3059, effective January 1, 1975 to January 1, 1976) (Agreements)pursuant to which Petitioners reinsured National Casualty’s reinsurance obligations to otherinsurers and reinsurers. Copies of the Reinsurance Agreements are attached as Exhibits A and Bto the Veach Affirmation.9. As this Court noted in September 2005, a dispute arose between Petitioners andNational Casualty concerning whether asbestos, environmental contamination, products liability,and other losses belatedly ceded to Petitioners should be treated as a single occurrence.10. National Casualty demanded arbitration on New Year’s Eve, 2004 pursuant to thearbitration provisions in the two Reinsurance Agreements. Veach Aff., Ex. C. Petitioners and3

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 4 of 6Respondent both appointed arbitrators, but the parties could not agree on an Umpire. NationalCasualty petitioned this Court to appoint an umpire, but for the reasons stated in this Court’sdecision, the Court dismissed National Casualty’s petition “so that the parties may pursuearbitration according to the terms of their contract.” Veach Aff., Ex. J at 8.11. The Reinsurance Agreements required that in the event the two Arbitrators do notagree on the selection of the Umpire, National Casualty shall be required to petition the CircuitCourt of Wayne County, Michigan, for the 1974 Reinsurance Agreement and the Circuit Courtof Oakland County, Michigan for the 1975 Agreement. Veach Aff., Exs. A and B at Art. XIII(C).12. National Casualty petitioned both Circuit Courts and the parties appeared beforeboth Courts in May 2006 (Judges John H. Gillis, Jr. and Edward Sosnick). Judge Sosnickappointed Kenneth F. Neuman, Esq., with offices in Southfield, Michigan, as the Umpire withrespect to the 1975 Agreement. The following day, Judge Gillis appointed Mr. Neuman as theUmpire with respect to the 1974 Agreement. The parties subsequently agreed to Mr. Neuman’sappointment as the Umpire on a single panel to resolve the parties’ disputes with respect to bothagreements. Veach Aff., 18- 21.13. On June 21, 2006, the parties and the Panel met at an organizational meeting.Veach Aff., 21. As a result of discussions at the organizational meeting and an exchange ofcorrespondence, the Umpire ruled in a September 20, 2006 letter with respect to confidentiality.Copies of the parties’ correspondence, a draft of the proposed order, and the Umpire’s September20 th letter, are attached to the Veach Aff., Exs. M, N, and O.4

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 5 of 614. Neither the Panel nor the parties executed the draft order. Nor did NationalCasualty seek to enforce the draft order at any time before the Panel disbanded. Veach Aff., 27.15. After discovery and depositions, the parties appeared before the Panel onSeptember 25-27, 2008 for a three-day hearing in Southfield, Michigan. Veach Aff., 28.16. The Panel issued an Award on November 8, 2007 and requested the parties’comments. Neither party objected to the Award. Veach Aff., 29.17. The Panel issued its Final Award on December 10, 2007, a copy of which wehave not submitted to the Court pending the Court’s determination with respect to whether thefinal award should be placed under seal. Veach Aff., 30; Memorandum of Law in Support ofPetition to Confirm Arbitration Award Pursuant to Section 9 of the Federal Arbitration Act; Pt.II.18. This Petition is brought within one year of the Final Award and neither party hasrequested that the Final Award be modified or vacated within the time specified in 9 U.S.C. § 12.5

Case 2:08-cv-13522-NGE-DAS Document 1 Filed 08/14/2008 Page 6 of 6WHEREFORE, Petitioners seek an order: (1) confirming the arbitration award againstRespondent; (ii) entering judgment in favor of the Petitioners; and (iii) providing Petitioners withsuch other and further relief as the Court deems proper.Dated: Bingham Farms, MichiganAugust 12, 2008/s/ Ronald S SiegelRonald S. SiegelAttorney for Respondents30150 Telegraph Rd. Ste. 444Bingham Farms, MI 48025ron@siegelpc.comOf Counsel:James VeachMOUND COTTON WOLLAN & GREENGRASSOne Battery Park PlazaNew York, New York 10004(212) 804-42006