R.J. Wilson & Associates, LTD. v. Underwriters at Lloyd's London

Filing 7

MEMORANDUM AND ORDER - Pending before the Court is Petitioner's motion for a preliminary injunction to enjoin the selection of a third "umpire" arbitrator in a pending arbitration between Petitioner and Respondent. Petitioner's motion for a preliminary injunction is DENIED and its petition is sua sponte DISMISSED. The Clerk of the Court is directed to mark this matter as CLOSED. So Ordered by Judge Joanna Seybert on 5/26/10. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------X R.A. WILSON & ASSOCIATES, LTD., Petitioner, -againstCERTAIN INTEREST UNDERWRITERS AT LLOYD'S LONDON, MEMORANDUM AND ORDER 10-CV-2232 (JS)(ARL)

Respondent. ------------------------------------X APPEARANCES: For Petitioner: Aaron S. Halpern, Esq. Joseph John Ortego, Esq. Nixon Peabody LLP 50 Jericho Quadrangle, Suite 300 Jericho, NY 11753 For Defendant: No appearance.

SEYBERT, District Judge: Pending before the Court is Petitioner's motion for a preliminary injunction to enjoin the selection of a third

"umpire" arbitrator in a pending arbitration between Petitioner and Respondent. The Court previously denied Petitioner's motion See Docket No. 6. It now

for a temporary restraining order.

denies Petitioner's motion for a preliminary injunction and sua sponte dismisses this action. DISCUSSION Petitioner is a Maryland corporation that is in the business of obtaining and/or "binding" commercial liability

insurance

coverage.

Respondent

is

in

the

business

of

underwriting such coverage. Petitioner and Respondent got into a legal dispute See 08the

concerning an insurance policy issued on June 29, 2001. CV-322. parties On to September proceed in 21, 2009, Judge Hurley on

compelled the

arbitration,

based

insurance

policy's arbitration agreement. The arbitration agreement provides for each side to choose a "party arbitrator." Pet. ¶¶ 13-14. The arbitration

agreement then provides that "the two arbitrators shall appoint a third arbitrator," and that, if the arbitrators fail to agree on a third arbitrator, then "either [arbitrator] or either of the parties may apply to the appointer for the appointment of a third arbitrator." defines the Pet. ¶ 16. The as the arbitration the Vice President President See agreement of of the the

further Chartered Institute

"appointer" or

Insurance if the

Institute, is

President

unavailable.

08-CV-322,

Docket No. 3 at 26. the process that the

The agreement does not, however, specify party arbitrators must go through to

appoint the third arbitrator, or the process that the appointer must use if the arbitrators cannot agree on a suitable

candidate.

Based on this alleged ambiguity, Petitioner seeks to

have the Court rewrite the arbitration agreement to impose a defined process, because the parties have not been able to reach 2

such

an

agreement.

To

that

end,

Petitioner

commenced

this

Petition, pursuant to 9 U.S.C. § 5, demanding that the Court "establish arbitrator." a method for the appointment of the third-

Pet. at p. 5. DISCUSSION

9

U.S.C.

§

5

provides

that,

if

an

arbitration

agreement provides "for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed; but if no method be provided therein . . . then upon the application of either party to the controversy the court shall designate and appoint an arbitrator or arbitrators or

umpire." Here, the arbitration agreement sets forth a clear

"method of naming or appointing an arbitrator."

Specifically,

the two party arbitrators are supposed to agree on the third, so-called "umpire" arbitrator. Pet. ¶ 16. And the agreement

further provides that, if the party arbitrators fail to reach agreement, then the President or Vice President of the Chartered Insurance Institute is to select the third arbitrator, after considering candidates proposed by both the party arbitrators and the parties. Compl. ¶ 16; 08-CV-322, Docket No. 3 at 26.

True, the arbitration agreement does not specify the specific process that the party arbitrators or appointer must use in selecting the umpire arbitrator. 3 But this is not a

failure umpire.

to

adequately

define

the

"method"

for

choosing

the

Rather, the Court reads the arbitration agreement as

giving the party arbitrators and the appointer the discretion to use their professional judgment in deciding upon an appropriate process in choosing the third arbitrator. So, enforcing the

arbitration agreement as written, this means that ­ because the party arbitrators could not reach agreement ­ the President or Vice President of the Chartered Insurance Institute has full authority to select the umpire arbitrator. The Court cannot

"circumvent the parties' designation" of this individual as the appointer. See In re Salomon Inc. Shareholders' Deriv. Litig.,

68 F.3d 554, 561 (2d Cir. 1995) (designation of arbitral forum). Rather, the Court must "implement [the arbitration] clause as written." Underwriters (S.D.N.Y. Global at Reinsurance Corp.-U.S. 465 F. Branch Supp. v. 2d Certain 308, 312

Lloyd's,

London,

2006).

Here, "the next step in the umpire selection Id. submit The parties, and the party arbitrators, umpire arbitrator candidates to the

process is clear." are supposed to

appointer, who then makes the final determination.

It follows

then that Petitioner can seek no relief under 9 U.S.C. § 5. Petitioner's motion for a preliminary injunction is DENIED and its petition is sua sponte DISMISSED. the Court is directed to mark this matter as CLOSED. The Clerk of

4

SO ORDERED. /s/____________ Joanna Seybert, U.S.D.J. Dated: Central Islip, New York May 26, 2010

5