Certain Underwriters at Lloyd's London v. Argonaut Insurance

500 F.3d 571, 2007 U.S. App. LEXIS 20620, 2007 WL 2433139
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 29, 2007
Docket06-3395
StatusPublished
Cited by26 cases

This text of 500 F.3d 571 (Certain Underwriters at Lloyd's London v. Argonaut Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Certain Underwriters at Lloyd's London v. Argonaut Insurance, 500 F.3d 571, 2007 U.S. App. LEXIS 20620, 2007 WL 2433139 (7th Cir. 2007).

Opinion

*572 RIPPLE, Circuit Judge.

Certain Underwriters at Lloyd’s London (“Underwriters”) entered into a reinsurance contract with Argonaut Insurance Company (“Argonaut”). A dispute over coverage arose, and Argonaut demanded arbitration in accordance with the contract. Further disputes arose related to the arbitration, and Underwriters filed a petition in the United States District Court for the Northern District of Illinois under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. It sought an order confirming a panel of arbitrators. After preliminary proceedings, the parties filed cross-motions for summary judgment. The district court granted summary judgment for Underwriters and thus confirmed the panel of arbitrators. Argonaut timely appeals. For the reasons stated in this opinion, we affirm the judgment of the district court.

I

BACKGROUND

A. Facts

Underwriters, a reinsurance syndicate whose participants include citizens of the United Kingdom, entered into certain reinsurance contracts, or “treaties,” with Argonaut, a California-based insurer. The treaties contain an arbitration provision as well as a further clause that details the responsibilities of the parties in selecting the arbitration panel. That clause provides, in pertinent part:

If any dispute shall arise between the Company and the Underwriters with reference to the interpretation of this Agreement or their rights with respect to any transaction involved, this 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 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.

R.1, Ex. 1 at Art. 15.

Argonaut settled certain asbestos-related claims with one of its insured parties, Western MaeArthur. Argonaut then made a claim for reimbursement from Underwriters under the reinsurance treaties. Before processing the claim, Underwriters sought additional information from Argonaut and, in response, Argonaut sent an arbitration demand. That demand, made on August 4, 2004, included a request that Underwriters name its arbitrator within 30 days. Underwriters complied with the deadline and named its arbitrator on September 3.

On August 6, 2004, before Underwriters nominated its arbitrator, it sent a demand that Argonaut nominate its arbitrator. Consistent with the treaty, Underwriters’ demand also invoked the thirty-day time limit; although the demand did not specifically so note, the expiration of Argonaut’s thirty-day period would come on Sunday, September 5, 2004. That day, however, came and went without any word from Argonaut regarding its nomination of an arbitrator.

The following day, Monday, September 6, was Labor Day, a legal holiday in the United States, where Argonaut is located and where the arbitration proceedings were to take place, but a normal business day in the United Kingdom, where the Underwriters syndicate is based. On that day, one day after the expiration of thirty calendar days from the date of Underwriters’ request for Argonaut’s naming of an arbitrator, Underwriters faxed a letter to Argonaut invoking the default provision of the treaty’s arbitration clause and naming a second arbitrator. R.1, Ex. 6.

*573 In response, on Tuesday, September 7, thirty-two days after the demand had been made, counsel for Argonaut first sent an email to Underwriters, representing that Argonaut’s named arbitrator had been selected properly on the previous Friday, and notice thereof sent to Underwriters the previous week. Later in the day on the 7th, when it became clear that, in fact, no notice had been sent during the previous week, Argonaut faxed a new letter to Underwriters naming its arbitrator. In that letter, Argonaut claimed it was not bound by the strict thirty-day deadline because its terminus was a Sunday followed by a legal holiday; instead, it claimed that it was not obligated to name the arbitrator on Sunday or on Monday and that the Tuesday, September 7, notice was a timely nomination of the second arbitrator within the meaning of the treaty.

B. District Court Proceedings

Because of the competing demands for arbitrators, Underwriters filed a petition in the district court under 9 U.S.C. § 5 for an order confirming the appointment of its two nominees as arbitrators in its dispute with Argonaut.

Shortly thereafter, Argonaut sent Underwriters notice that it was withdrawing “without prejudice” its initial arbitration demand, “specifically and expressly reserving] all of its rights to seek recovery for any and all amounts billed to and owed by [Underwriters] with regard to this loss at any time in the future.” R.4, Ex. A. After this “withdrawal,” Argonaut filed a 12(b)(1) motion in the district court, seeking to have the case dismissed for want of jurisdiction. Because it had made the only arbitration demand in the case, Argonaut took the view that, once that demand was withdrawn, the case over the appointment of arbitrators had become moot. The district court disagreed; it concluded that Argonaut could not circumvent Underwriters’ right under the clause to appoint the second arbitrator simply by ending the first arbitration proceeding with the clear intent to begin a new one.

The court granted summary judgment for Underwriters. It first noted that it had jurisdiction over the petition under Title 9, Chapter 2 of the United States Code, which implements the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T. 2517, 380 U.N.T.S. 38 (implemented by 9 U.S.C. § 201 et seq.) (“New York Convention” or “Convention”). The court observed that there was no genuine dispute as to any material fact and that the parties’ only disagreement was over the proper interpretation of the contract default provision and its thirty-day time limit.

The parties disagreed about what law should govern the default provision in the arbitration clause of the treaty. Underwriters took the view that the matter should be decided under principles of federal common law; Argonaut urged that California law controlled.

In determining that federal common law likely should provide the rule of decision, the court focused on the need for unitary standards by which international agreements to arbitrate would be observed. Because of this particularized need for uniformity, the court concluded that there was a substantial federal interest in international agreements, sufficient to support the invocation of a federal common law rule.

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Bluebook (online)
500 F.3d 571, 2007 U.S. App. LEXIS 20620, 2007 WL 2433139, Counsel Stack Legal Research, https://law.counselstack.com/opinion/certain-underwriters-at-lloyds-london-v-argonaut-insurance-ca7-2007.