EVEREST REINSURANCE COMPANY v. CENTURY INDEMNITY COMPANY et al
Filing
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MEMORANDUM OPINION filed. Signed by Judge Mary L. Cooper on 10/28/2011. (mmh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EVEREST REINSURANCE COMPANY,
Plaintiff,
v.
CENTURY INDEMNITY COMPANY,
Defendant.
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CIVIL ACTION NO. 11-2789 (MLC)
MEMORANDUM OPINION
COOPER, District Judge
This matter is before the Court on the Motion to Enforce
Settlement (“Motion”) by Plaintiff, Everest Reinsurance Company
(“Everest”).
(Dkt. entry no. 19.)
For the reasons set forth
below, the Court will deny the Motion and direct the Clerk of the
Court to designate this action as closed.
BACKGROUND
The Court, for purposes of reciting the background of this
action, accepts the facts as Everest presents them in the brief
supporting the Motion and in the Amended Complaint.1
Everest and
Defendant, Century Indemnity Company (“Century”), entered into a
1
Everest commenced this action by filing a document titled
“Petition to Appoint Umpire Pursuant to 9 U.S.C. § 5”. (Dkt.
entry no. 1, Compl.) This document is, in actuality, the
Complaint. See Fed.R.Civ.P. 3 (“A civil action is commenced by
filing a complaint with the Court.”). The “Amended Petition to
Appoint Umpire Pursuant to 9 U.S.C. § 5” is, thus, an Amended
Complaint. (See dkt. entry no. 5, Am. Compl.)
First Excess General Liability Excess of Loss Reinsurance
Agreement (“Treaty”), effective January 1, 1978.
¶ 6.)
(Am. Compl. at
Through the Treaty, Everest agreed to reinsure certain
liabilities insured by Century, and both parties agreed to submit
disputes arising under the Treaty to arbitration.
7.)
(Id. at ¶¶ 6-
The parties agreed to hold such arbitration before a panel
consisting of two party-appointed arbitrators and a neutral
umpire.
(Id. at ¶¶ 7, 9; dkt. entry no. 19-1, Everest Br.
Supporting Mot. to Enforce Settlement at 1, 6-8.)
Century demanded such arbitration on February 4, 2011.
Compl. at ¶ 8.)
(Am.
The underlying dispute rises from Century’s
reinsurance claims against Everest for payments relating to
“certain Formosa Plastics asbestos products and asbestos nonproducts claims.”
(See id.)
the “Formosa Arbitration”.
The arbitration for those claims is
(See, e.g., Everest Br. Supporting
Mot. to Enforce Settlement at 1; dkt. entry no. 23, Century Opp’n
at 5.)
The parties, following Century’s demand for arbitration and
pursuant to the terms of the Treaty, selected and appointed their
respective arbitrators, and drafted and exchanged lists of
proposed neutral umpires.
(Am. Compl. at ¶ 9.)
They were
unable, however, to agree upon any of the proposed candidates for
umpire.
(See id. at ¶¶ 10-15.)
This action followed.
2
PROCEDURAL POSTURE
Through the Amended Complaint, Everest detailed the history
of the Formosa Arbitration and “respectfully request[ed] that
this Court appoint an umpire in this case or grant such alternate
relief as [was] proper.”
(Id. at ¶ 18.)
Everest specifically,
in its request for relief, sought an Order:
(a) appointing one of Everest’s umpire candidates
to serve as umpire in the arbitration between Century
and Everest;
(b) alternatively, appointing a neutral party of
the Court’s choosing to serve as an umpire;
(c) alternatively, requiring Century to
participate in a neutral umpire selection process; and
(d) granting such other relief as the Court deems
proper.
(Id. at 5 (ad damnum clause).)
Everest also filed a “Motion to Appoint Umpire Pursuant to 9
U.S.C. § 5”, seeking nearly identical relief.
(Dkt. entry no. 8,
Notice of Mot.; dkt. entry no. 8-1, Everest Br. Supporting Mot.
to Appoint Umpire at 34 (“Everest respectfully requests that this
Court enter an Order either appointing one of Everest’s umpire
candidates or some other neutral party to serve as an umpire in
the arbitration between Everest and Century, or alternatively,
requiring Century to participate in the neutral selection process
proposed by Everest.”).)
In its supporting brief, Everest
described the ARIAS neutral umpire selection process, an industry
standard for umpire selection, and suggested that the Court
compel Century to participate in that process.
3
(Everest Br.
Supporting Mot. to Appoint Umpire at 32-33.)
Century responded
by filing what it referred to as a Motion to Dismiss Everest’s
Motion to Appoint Umpire.
(Dkt. entry no. 18, Mot. Dismiss.)
Century, however, thereafter contacted Everest and proposed
that the parties select an umpire, using the ARIAS selection
process.
at 1.)
(See Everest Br. Supporting Mot. to Enforce Settlement
Everest agreed, subject to “certain minor adjustments” to
the selection process.
(Id. at 1.)
Everest and Century also
agreed to use the adjusted umpire selection process in two other
pending arbitrations, the “Congoleum Arbitration” and “Flintkote
Arbitration”.
(Id.)
Pursuant to their agreement to use the adjusted umpire
selection process in these three proceedings (“Global
Agreement”), Everest and Century selected an umpire in the
Formosa Arbitration and notified the Court, by letter dated
September 30, 2011, of such selection.
(See dkt. entry no. 22,
Letter From Everest’s Counsel (“the parties have selected an
umpire in the Formosa Arbitration pursuant to the parties’ global
agreement”).)
The parties also noted that the Motion to Appoint
Umpire and Motion to Dismiss were moot and, accordingly, they
withdrew both motions.
(Id.)
Everest, through the Motion and supporting papers, now
alleges that Century breached the Global Agreement by moving in
the United States District Court for the Southern District of New
4
York to consolidate the Congoleum Arbitration with a fourth
arbitration, the “Foster Wheeler Arbitration”.
Supporting Mot. to Enforce Settlement at 2).2
(Everest Br.
The Foster Wheeler
Arbitration, unlike the Congoleum Arbitration, is ongoing; in the
Foster Wheeler Arbitration, the parties have already selected and
appointed a panel, and completed document discovery.
(Id. at 3.)
Everest thus argues, inter alia, that Century’s attempt to
consolidate the Congoleum Arbitration and Foster Wheeler
Arbitration “is in reality nothing more than a strategic play by
Century to present the Congoleum [A]rbitration dispute to an
arbitration panel of its choosing rather than a panel selected as
the parties had agreed.”
(Id. at 2.)
Everest also alleges, in contradiction to its earlier
filings, that the parties have not yet selected an umpire in the
Formosa Arbitration.
Everest instead claims that the parties are
still engaged in that umpire selection process.
(Id. at 10.)
Everest does not, however, indicate that this process has
“deadlocked,” as it had in earlier filings.
(Compare id., with
Everest Br. Supporting Mot. to Appoint Umpire at 9-12.)
Everest thus seeks enforcement of the Global Agreement “with
respect to umpire selection in the Formosa, Congoleum and
Flintkote arbitrations, and requiring Century to withdraw its
2
See Petition to Compel Arbitration, Century Indem. Co. v.
Everest Reinsurance Co., No. 11-5893-LTS, dkt. entry no. 1
(S.D.N.Y. Aug. 22, 2011).
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motion to consolidate the Congoleum arbitration into the Foster
Wheeler arbitration[.]”
(Everest Br. Supporting Mot. to Enforce
Settlement at 24.)
DISCUSSION
I.
Everest’s Request for Relief with Respect to the Congoleum
Arbitration and the Flintkote Arbitration
As noted in the Amended Complaint, “[t]his is an action to
appoint an umpire, pursuant to Section 5 of the Federal
Arbitration Act (the “FAA”), 9 U.S.C. § 5.”
(Am. Compl. at ¶ 1.)
This is, more specifically, an action to appoint an umpire in the
Formosa Arbitration.
(See id. at ¶¶ 8, 18 (referencing the
parties’ dispute relating to Century’s
“reinsurance billing of
certain Formosa Plastics asbestos products and non-products
claims[,]” and seeking related relief “in this case” (emphasis
added)).)
Everest has repeatedly stated that its request for
relief was specific to the Formosa Arbitration.
(See id.;
Everest Br. Supporting Mot. to Appoint Umpire (noting need for
umpire in Formosa Arbitration and failing to otherwise mention
need for umpire selection in other pending arbitration
proceedings).)
Because Everest did not seek relief relating to the
Congoleum Arbitration or the Flintkote Arbitration in either the
Complaint or the Amended Complaint, the Court will not grant such
relief now.
A movant may not seek relief beyond the scope of its
initial pleadings.
See Schneiderman v. United States, 320 U.S.
6
118, 159-60 (1943) (limiting argument, in naturalization
proceeding, to matters charged in the complaint); Liberty
Lincoln-Mercury v. Ford Motor Co. 134 F.3d 557, 569-70 (3d Cir.
1998) (reversing entry of judgment premised upon claim first
raised in plaintiff’s “Motion to Enforce”); Morris v. Phila.
Hous. Auth., No. 95-6650, 1996 WL 167615, at *4 (E.D. Pa. Apr.
10, 1996) (noting that plaintiff may not move for judgment on
claims not raised in complaint), aff’d, 106 F.3d 386 (3d Cir.
1996) (table).
The Court will, accordingly, deny the Motion
insofar as Everest seeks relief relating to the Congoleum
Arbitration and Flintkote Arbitration.
The Court’s decision in this matter is buttressed by Federal
Rule of Civil Procedure (“Rule”) 8.
Rule 8 protects parties from
surprise and undue prejudice in litigation, by requiring the
party seeking relief to set forth a short and plain statement of
its claims for relief and a demand for such relief.
Fed.R.Civ.P.
8(a)(2)-(3); see also Sun Microsystems v. Versata Enters., Inc.,
630 F.Supp.2d 395, 409 n.11 (D. Del. 2009) (noting that purpose
of Rule 8 “is to avoid surprise and undue prejudice”).
Granting
Everest relief beyond that sought in the Amended Complaint would
contravene the purpose of Rule 8 and subject Century to such
surprise and undue prejudice.
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II.
Everest’s Request for Relief with Respect to the Formosa
Arbitration
The Court will also deny the Motion insofar as Everest seeks
relief pertaining to the Formosa Arbitration, as moot.
Everest
came before the Court, asking the Court either to appoint an
umpire or to compel Century to participate in a neutral umpire
selection process.
(Am. Compl.; Mot. to Appoint Umpire.)
When
Century agreed to participate in the ARIAS selection process,
Everest obtained by settlement the relief it sought by judicial
intervention.
(See Letter From Everest’s Counsel; see also
Everest Br. Supporting Mot. to Appoint Umpire at 9-12 (detailing
parties’ joint efforts to move forward with Formosa
Arbitration).)
Because Everest has failed to demonstrate how or
if Century breached the Global Agreement inasmuch as it affects
the Formosa Arbitration--because, in fact, Everest has
demonstrated that Century has willingly participated in the
Formosa Arbitration umpire selection process (see Everest Br.
Supporting Mot. to Enforce Settlement at 9-12)--the Court will
not intervene.
CONCLUSION
The Court will issue an appropriate Order, denying the
Motion.
Because Everest has obtained the relief sought in its
Amended Complaint, the Court will further order the Clerk of the
Court to designate this action as closed.
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The Court notes that Everest will not be prejudiced by this
ruling.
Insofar as Everest sought relief in the Congoleum
Arbitration through the Motion, Everest may file an appropriate
motion before the arbitration board in that matter or in case
number 11-5893 in the Southern District of New York, where other
motions relating to the Congoleum Arbitration are pending.
Further, insofar as the Motion sought relief in the Formosa
Arbitration, Everest has obtained the relief it sought.
If,
however, the umpire selection process in the Formosa Arbitration
falls apart or otherwise deadlocks again, Everest may bring a new
action seeking relief.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated:
October 28, 2011
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