RGA Reinsurance Co. v. Ulico Casualty Co. ( 2004 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 02-4036
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RGA Reinsurance Company, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Missouri.
Ulico Casualty Company, *
*
Appellant. *
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Submitted: June 13, 2003
Filed: January 28, 2004
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Before MELLOY, BEAM, and SMITH, Circuit Judges.
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SMITH, Circuit Judge.
This is an appeal from a decision of the district court1granting summary
judgment in favor of RGA Reinsurance Company ("RGA") and ordering Ulico
Casualty Company ("Ulico") to pay a $4.8 million arbitration award. Ulico urges
reversal, arguing that the district court impermissibly modified the arbitration award.
Specifically, Ulico argues that the arbitration panel took into account certain credits
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The Honorable Stephen N. Limbaugh, United States District Judge for the
Eastern District of Missouri.
RGA claims it is entitled to, and that the final decision of the arbitration panel–and
the fact that the panel refused two requests to "clarify" its decision–shows that the
panel already considered and applied the credits RGA is claiming. RGA contends that
the district-court action was a proper confirmation proceeding to enforce the decision
rendered by the arbitration panel. After a careful review of the record, we find that the
confirmation proceedings before the district court were proper, and affirm the district
court in all respects.
I.
Ulico writes medical insurance policies. RGA is a reinsurer. In 1997, Ulico and
RGA entered into an agreement whereby RGA would take over a percentage of
Ulico's liabilities on a group of policies issued in Florida in exchange for a
corresponding percentage of the premiums collected on those policies. The agreement
included a provision requiring that any irreconcilable disputes be submitted to
arbitration. The agreement also limited RGA's liability to $100,000 per insured
person, per year.
In 2000, RGA made demand for arbitration against Ulico, seeking rescission
of their agreement. In its demand for arbitration, RGA claimed Ulico had submitted
claims for loss payments in excess of the $100,000 per-person limit in the reinsurance
agreement. As an alternative to rescission, RGA sought a credit for the claims in
excess of the $100,000 limit.
The arbitration panel issued its "Final Award" denying RGA's claim for
rescission and ordering RGA to pay $14.5 million to Ulico on November 17, 2001.
The panel also directed Ulico to confirm that losses in excess of the $100,000 per-
person limit had not been charged to RGA, and that if any such losses were charged,
they were to be refunded to RGA.
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In December of 2001, RGA sought a clarification from the arbitration panel,
submitting that it was entitled to offset $6.5 million in excess loss payments against
the $14.5 million award ordered by the panel. The panel did not issue a clarification
or any further order, and RGA paid to Ulico the full $14.5 million. In 2002, RGA
sought a $4.7 million credit. Ulico responded claiming that RGA had received all
credit it was due in the arbitration award. The panel took no further action.
RGA then filed an action in district court to confirm the arbitration award
under 9 U.S.C. § 9 again seeking a $4.7 million credit. Ulico moved to dismiss the
complaint, arguing that RGA was actually seeking to modify the award, and that such
an action was time barred under the three-month limitation imposed by 9 U.S.C. § 12.
RGA moved for summary judgment on its claim for the $4.7 million credit, and Ulico
moved for summary judgment arguing that the original arbitration award should
stand.
The district court issued two orders. First, in denying Ulico's motion to dismiss,
the court found that "Paragraph 4"2 of the arbitration order was readily capable of
ministerial computation by the court, and was therefore consistent with a
confirmation proceeding under the Federal Arbitration Act. The court concluded that
RGA was not requesting a time-barred modification of the arbitration panel's award,
but was asking the court to conduct a confirmation proceeding–specifically
confirming the delineated obligations under "Paragraph 4" of the award.
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"Paragraph 4" outlines Ulico's duty to credit losses in excess of $100,000 to
RGA, and states in relevant part:
With respect to claims in excess of $100,000 the Parties agree that such
excess losses are not subject to the treatise at issue in this arbitration.
The Panel directs that [Ulico] take all necessary steps to confirm that
such losses have not been charged to [RGA]. If any such losses have
been charged to [RGA], then such amounts shall be returned
immediately.
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In its second order, the district court granted RGA's motion for summary
judgment and ordered Ulico to pay RGA $4,853,110. In so doing, the district court
relied on the affidavit and accounting analysis submitted by RGA and found that
Ulico failed to rebut that evidence with proof of any transactions showing that a
credit or offset had already been applied.
II.
In reviewing an order confirming an arbitration award, we review questions of
law de novo and factual findings for clear error. Titan Wheel Corp. v. Local 2048,
Int'l Ass'n of Machinists & Aerospace Workers, 253 F.3d 1118, 1119 (8th Cir. 2001).
Arbitration modification and arbitration confirmation are different specie of
action and different limitation periods apply. If an arbitration award is inconsistent
or serious doubt exists as to its meaning, the district court may vacate, modify, or
correct the award pursuant to the Federal Arbitration Act. 9 U.S.C. §§ 10–11.
However, proceedings to vacate, modify, or remand an arbitration award must be
initiated promptly within three months of the arbitration ruling. 9 U.S.C. § 16. If an
award is unambiguous but needs clarification, then a district court has jurisdiction to
conduct a confirmation proceeding. 9 U.S.C. § 9; UHC Mgmt. Co. v. Computer Sci's.
Corp., 148 F.3d 992 (8th Cir. 1998). A party seeking confirmation of an arbitration
must file a petition to confirm within one year after the award. 9 U.S.C. § 9; Val-U
Const. Co. of S. D. v. Rosebud Sioux Tribe, 146 F.3d 573, 581 (8th Cir. 1998).
In this case, RGA did not file its petition with the district court until April 5,
2002, greater than three months after the arbitration ruling; therefore, the district
court lacked jurisdiction to modify or vacate the award. Piccolo v. Dain, Kalman &
Quail, Inc., 641 F.2d 598, 600 (8th Cir. 1981). However, RGA and the district court
both characterized the proceedings as a confirmation of the award rather than an
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attempt to modify or vacate the arbitration ruling. Thus, its petition for confirmation
of the award was filed well within one year of the award.
Ulico argues that RGA–despite its claim that it was seeking only a
confirmation of the arbitration order–was actually seeking a time-barred modification.
However, the district court rejected the notion that it was modifying the award, citing
cases holding that a court may confirm an award by crafting specific relief "consistent
with the intent of the arbitrators." See, e.g., Flender Corp. v. Techna-Quip Co., 953
F.3d 273, 280 (7th Cir. 1992) (award not fatally indefinite where arbitrator resolved
all claims before him and left to the district court only the ministerial computation of
the amount owed); Island Creek Coal Sales Co. v. City of Gainesville, 746 F.2d 437,
440–41 (6th Cir. 1985) (court had authority "to enforce the clear meaning and intent
of [the arbitration] order" and could insert quantity where arbitrators required city to
"continue performance" of supply contract by accepting coal shipments).
Ulico argues that RGA's twin requests to the arbitration panel to clarify its
ruling, and the panel's denial of each, provides some evidence that the arbitration
award properly accounted for credits due RGA under the $100,000 per-person limit.
However, neither the record nor our precedent supports such a conclusion. Once an
arbitration panel renders a decision regarding the issues submitted, the panel becomes
functus officio and thus lacks power to reexamine that decision. Colonial Penn Ins.
Co. v. The Omaha Indem. Co., 943 F.2d 327, 331–32 (3rd Cir. 1991). As noted by the
district court, the fact that the arbitrators included "Paragraph 4" in their ruling meant
that the arbitrators necessarily determined that such credits had not been reflected in
the $14.5 million award. Any other interpretation would render "Paragraph 4"
meaningless, i.e., if the credits had already been applied, there would have been no
reason for the arbitrators to include a provision for refunding those credits to RGA.
RGA adduced evidence supporting its entitlement to arbitration confirmation,
and Ulico failed to rebut that proof with any evidence that the credits had been
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applied to RGA. Accordingly, the district court's grant of summary judgment in favor
of RGA was appropriate.
III.
Applying a de novo review to the questions of law, we hold that the district
court had jurisdiction to confirm the arbitration award and that the proceedings were
properly characterized as a confirmation rather than a modification. Further, the
district court was within its authority to award an amount certain for credits due to
RGA that were contemplated (but not specifically calculated) in the arbitration award.
We also find no clear error in the factual findings made by the district court. For the
foregoing reasons, we affirm the district court's order.
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