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Markel International Insurance Co. v. Westchester Fire Insurance Co.

August 10, 2006

MARKEL INTERNATIONAL INSURANCE COMPANY, FORMERLY KNOWN AS TERRA NOVA: INSURANCE COMPANY AND CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SUBSCRIBING TO REINSURANCE AGREEMENTS KNOWN AS "COMPREHENSIVE CATASTROPHE EXCESS OF LOSS TREATY PROGRAM" AND "SPECIAL CASUALTY CONTINGENCY EXCESS OF LOSS TREATY PROGRAM" PETITIONERS,
v.
WESTCHESTER FIRE INSURANCE COMPANY, RESPONDENT.



The opinion of the court was delivered by: Walls, Senior District Judge

FOR PUBLICATION CLOSED

OPINION

Petitioners Markel International Insurance Company and Certain Underwriters at Lloyd's of London move to compel separate arbitration proceedings and stay respondent's arbitration demand. Respondent Westchester Fire Insurance Company cross-moves to commence arbitration to determine the scope of arbitration. These motions are decided without oral argument pursuant to Fed. R. Civ. P 78. Petitioners' motion to compel arbitration and stay respondent's arbitration demand is denied. Respondent's cross-motion to compel arbitration is granted.

FACTS AND PROCEDURAL BACKGROUND

Accepting as true the allegations in the complaint, the Court recounts the basic facts of this case: Markel International Insurance Company and Certain Underwriters at Lloyd's London ("Reinsurers" or "Petitioners"), both with principal places of business in London, England, entered into two reinsurance contracts with Westchester Fire Insurance Company ("WFIC" or "Respondent"), a New York insurance company licensed to do business in New Jersey, called the Comprehensive Catastrophe Excess of Loss Treaty Program ("Comprehensive Catastrophe Program") and the Special Casualty Contingency Excess of Loss Treaty Program ("Special Contingency Program"). Reinsurers agreed to cover WFIC for a share of the losses respondent paid to its policyholders. These reinsurance contracts are multi-layered and had different terms of years but contain substantially similar arbitration clauses. The arbitration clauses are silent with respect to the issue of consolidated arbitration.

WFIC insured the Babcock & Wilcox Company ("B&W") between 1977 and 1979, issuing multiple policies during that time. After paying asbestos losses to B&W covered by the policies, WFIC billed the losses to Reinsurers under the Comprehensive Catastrophe Program. Petitioners' refusal to cooperate evoked an Arbitration Demand by respondent on October 20, 2005. Respondent requested a single consolidated arbitration proceeding and appointed a single arbitrator pursuant to the arbitration clauses in the Comprehensive Catastrophe Program and the Special Contingency Program reinsurance contracts that read as follows:

If any dispute shall arise between the Reinsured and the Reinsurer, either before or after the termination of this contract, with reference to the interpretation of this contract or the rights of either party with respect to any transactions under this contract, the dispute shall be referred to three arbitrators, one to be chosen by each party and the third by the two so chosen.

If either party refuses or neglects to appoint an arbitrator within thirty days after the receipt of written notice from the other party requesting it to do so, the requesting party may nominate two arbitrators who shall choose the third.

In the event the two arbitrators do not agree on the selection of the third arbitrator within thirty days after both arbitrators have been named, the reinsured shall petition the American Arbitration Association to appoint an arbitrator . . . . Any such arbitration shall take place in Morristown, New Jersey unless some other location is mutually agreed upon by the parties. (emphasis added) Respondent maintains that if its position respecting payment under the Comprehensive Catastrophe Program is correct, then payment is owed under the Special Contingency Program.

In response to respondent's Arbitration Demand, petitioners filed a motion to compel separate arbitration proceedings and stay the consolidated arbitration proceeding commenced by respondent. Respondent cross-moved to compel a single arbitration.

LEGAL STANDARD

Motions to compel arbitration are governed under the well-settled summary judgment standard set forth in Fed. R. Civ. P. 56(c). Interdigital Commc'ns Corp. v. Fed. Ins. Co., 392 F. Supp. 2d 707, 711 (E.D. Pa. 2005). Summary judgment is appropriate where the moving party establishes that "there is no genuine issue as to any material fact and that [it is] entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 318 (1986).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 465 U.S. 574, 586 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Shields v. Zuccarini, 254 F.3d 476, 481 (3d Cir. 2001). At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. ...


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