ReliaStar Life Insurance Co. of N.Y. v. EMC National Life Co.

ReliaStar Life Insurance Co. of N.Y. (ReliaStar) (defendant) and National Travelers Life Company (Travelers) (plaintiff) were parties to coinsurance agreements. The coinsurance agreements had identical terms and conditions and contained an agreement to arbitrate. Section 10.1 of the arbitration agreement appointed arbitrators to “decide any dispute or difference” between the parties related to the coinsurance agreements. Three arbitrators would decide a dispute by majority vote. Section 10.3 of the arbitration agreement stated that each party would bear the cost of its own attorney’s fees and costs and the fees of one arbitrator, and the parties would share the costs of the third arbitrator. In 2006, Travelers initiated arbitration against ReliaStar and its successor-in-interest, EMC National Life Co. (EMC) (defendant). Travelers sought a declaration terminating the coinsurance agreements under Travelers’ proposed method of accounting. Following a hearing, the arbitration panel found that the coinsurance agreements remained in force and ordered Travelers to pay ReliaStar more than $21 million in past-due amounts. Further, the arbitrators awarded ReliaStar over $4 million in attorney’s and arbitrator’s fees and costs based on Travelers’s arbitration conduct, which a majority of the panel explained had been lacking good faith. In district court, Travelers filed a petition to vacate the portion of the award granting fees and costs. The district court vacated the award to that extent. ReliaStar appealed.