UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

AMERISURE MUTUAL INSURANCE 

COMPANY (f/k/a Michigan Mutual 

Insurance Company), Case No. 14-cv-13060 

 Hon. Matthew F. Leitman 

 Movant, 

v. 

EVEREST REINSURANCE COMPANY 

(f/k/a Prudential Reinsurance Company), 

 Respondent. 

_________________________________/ 

OPINION AND ORDER GRANTING MOVANT’S MOTION TO 

CONFIRM ARBITRATION AWARD (ECF #2) AND 

DENYING RESPONDENT’S MOTION TO VACATE 

ARBITRATION AWARD (ECF #23) 

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INTRODUCTION 

 This is a reinsurance coverage dispute between Movant Amerisure Mutual 

Insurance Company (“Amerisure”), and its reinsurer, Respondent Everest 

Reinsurance Company (“Everest”). After a nine-day, highly-contentious 

arbitration hearing, an arbitration panel awarded Amerisure over $14 million. 

Amerisure now moves to confirm the arbitration award (see ECF #2); Everest 

moves to vacate it. (See ECF #23.) For all of the reasons stated below, the Court 

GRANTS Amerisure’s motion and DENIES Everest’s motion. 

RELEVANT FACTUAL BACKGROUND AND PROCEDURAL HISTORY 

A. The Parties and the Direct Access Treaty 

 Amerisure is a property and casualty insurance company. In 1979, 

Amerisure purchased “reinsurance” from Everest. “‘In essence, reinsurance is 

insurance for insurance companies,’ whereby a reinsured (here, [Amerisure]), 

cedes some of its risk to a reinsurer (in this case, [Everest]), and shares its premium 

with the reinsurer.” Certain Underwriters at Lloyd's London v. Westchester Fire 

Ins. Co., 489 F.3d 580, 582 n. 1 (3d Cir. 2007) (quoting Cont'l Cas. Co. v. 

American Nat'l Ins. Co., 417 F.3d 727, 729 n. 1 (7th Cir. 2005)). Amerisure 

purchased its reinsurance from Everest under a series of treaties. 

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The treaty in place between July 1979 and July 1988 is referred to as the 

“Direct Access Treaty.” (See ECF #28-1.) This treaty was amended several times 

while it was in force. (See the “Endorsements,” id. at 3-27, Pg. ID 242-266.) 

The Direct Access Treaty provided that “with respect to each occurrence,” 

Everest would indemnify Amerisure for the amount of “net loss under [the] 

casualty business of [Amerisure] ... in excess of the ‘Company Retention.’” (Id. at 

40, Pg. ID 279.) The Direct Access Treaty defined an “occurrence” as “each 

accident or occurrence or series of accidents or occurrences arising out of one 

event.” (Id. at 43, Pg. ID 282.) The “Company Retention” was a $500,000 “per 

occurrence” deductible that Amerisure had to satisfy before it was entitled to 

indemnification from Everest. (Id. at 40, Pg. ID 279.) 

B. The Direct Access Treaty Contained Exclusions From Coverage and 

Exceptions to Those Exclusions 

The original version of the Direct Access Treaty included five specificallynumbered exclusions from coverage.1

 (Id. at 40-41, Pg. ID 279-280.) These 

exclusions provided that Everest would not indemnify Amerisure for losses arising 

out of, among other things, “insurance written by [Amerisure’s] aviation unit,” 

                                                            

1

 These five enumerated exclusions appear in the “Exclusions” section of the 

Direct Access Treaty under the heading “Liability Other than Auto.” (See ECF 

#28-1 at 40, Pg. ID 279.) The Direct Access Treaty also included a standalone 

sixth exclusion for “[t]rucks used for transporting explosives or munitions” under a 

separate heading titled “Automobile Liability.” (Id.) 

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insurance related to the “handling and shipping” of explosives, and bodily injuries 

arising out of riots. (Id.) 

The original version of the Direct Access Treaty also contained an exception 

to the listed exclusions. This exception provided that an otherwise-applicable 

exclusion would not bar indemnification if the trigger for the exclusion was merely 

an incidental part of the insured’s overall operations: 

If [Amerisure] provide[s] insurance for an insured with respect 

to any premises, operations or products listed in one or more of 

the exclusions and such premises, operations or products 

constitute only a minor and incidental part of the total premises, 

operations or products of the insured such exclusion(s) shall not 

apply. 

(The “Generally-Applicable Incidental Exception to the Treaties’ Exclusions,” id.

at 41, Pg. ID 280.) 

Effective July 1, 1987, the parties adopted an endorsement to the Direct 

Access Treaty. (See the “1987 Endorsement,” id. at 6-7, Pg. ID 245-246.) The 

1987 Endorsement added four new specifically-numbered coverage exclusions 

beyond the five exclusions listed in the original treaty. The newly-added ninth 

exclusion precluded indemnification for certain asbestos-related losses if either (1) 

Amerisure knew that its insured’s operations presented a risk of asbestos exposure 

or (2) the insured’s asbestos exposure was generally recognized (the “Asbestos 

Exclusion”). But this new exclusion provided that it did not apply to (and would 

not preclude indemnification for) certain specified asbestos-related activities if 

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those activities were merely incidental to an insured’s operations (the “Incidental 

Exception Language in the Asbestos Exclusion”). The entire text of this exclusion 

was as follows: 

SECTION 2 – EXCLUSIONS, is amended to include the following: 

[....] 

9. Bodily injury (including occupational disease) and/or 

property damage arising from the manufacture, removal, 

installation, storage, mining, handling or transportation of 

asbestos if the insured’s operations, at the time of the policy 

issuance, present known and/or generally recognizable asbestos 

exposures; however, this exclusion shall not apply to the 

removal, installation, storage, handling or transportation of 

asbestos if such removal, installation, storage, handling or 

transportation is incidental to the insured’s operations: 

The term “incidental” as used in this exclusion is intended to 

recognize the fact that certain insureds (such as, but not limited 

to, plumbing, carpentry, etc.) will infrequently, but regularly, 

encounter asbestos within the scope of their operations – even 

though their operations, as such, do not involve the 

manufacture, removal, installation, storage, mining, handling, 

or transportation of asbestos. This Exclusion does not apply to 

such “incidental” operations. 

(Id. at 6-7, Pg. ID 245-246.) 

The 1987 Endorsement expressly provided that all of the Direct Access 

Treaty’s “other terms and conditions” – i.e., those not specifically modified or 

deleted in the endorsement – “shall remain unchanged.” (Id. at 9, Pg. ID 248.) The 

1987 Endorsement did not purport to modify or delete the Generally-Applicable 

Incidental Exception to the Treaties’ Exclusions. Thus, the modified version of the 

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Direct Access Treaty contained both the Incidental Exception Language in the 

Asbestos Exclusion and the Generally-Applicable Incidental Exception to the 

Treaties’ Exclusions. 

C. The Woods Treaties

 In 1988 and 1989, Everest provided reinsurance to Amerisure under a series 

of six additional contracts that the parties refer to as the “Woods Treaties” 

(together with the Direct Access Treaty, the “Treaties”). (See ECF ## 28-2 – 28-

7.) The Woods Treaties expressly stated that Amerisure was permitted to 

aggregate individual losses in order to satisfy its $500,000 deductible. (See, e.g., 

ECF #28-2 at 13, Pg. ID 307.) Except for this difference, the Woods Treaties and 

the Direct Access Treaty were similar in all respects relevant to this dispute. For 

example, the Woods Treaties contained virtually the same Asbestos Exclusion 

included in the 1987 Endorsement to the Direct Access Treaty.2

 The Woods 

Treaties also contained the Incidental Exception Language in the Asbestos 

Exclusion and the Generally-Applicable Incidental Exception to the Treaties’ 

Exclusions. (See id. at 7-8, Pg. ID 301-302.) 

                                                            

2

 The Woods Treaties contained one additional sentence in the Asbestos Exclusion 

that was not included in the 1987 Endorsement: “However, the term incidental 

does not contemplate the Reinsured knowingly writing operations classified as 

asbestos removal or installation.” (ECF #28-2 at 7, Pg. ID 301.) This difference is 

not relevant to the motions before the Court. 

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D. The Treaties’ Arbitration and Choice of Law Provisions 

 The Treaties all contained arbitration provisions that required the parties to 

submit “any dispute arising out of [the treaties] ... to the decision of a board 

comprised of two arbitrators and an umpire....” (Direct Access Treaty at 34-35, Pg. 

ID 273-274; see also the Woods Treaties at ECF #28-2 at 19-20, Pg. ID 313-314.) 

The arbitration provision in the Direct Access Treaty stated that “the laws of the 

State of Michigan shall govern any arbitration proceedings.” (Direct Access 

Treaty at 34, Pg. ID 273.) The Woods Treaties did not contain any choice-of-law 

provision. (See, e.g., ECF #28-2 at 19-20, Pg. ID 313-314; ECF #28-3 at 18, Pg. 

ID 343; ECF #28-4 at 19-20, Pg. ID 373-374; ECF #28-5 at 17-18, Pg. ID 402-

403; ECF #28-6 at 18-19, Pg. ID 432-433; ECF #28-7 at 17-18, Pg. ID 461-462.) 

E. Everest Denied Indemnification for Amerisure’s Asbestos-Related 

Losses, and Amerisure Demanded Arbitration 

During the terms of the Treaties, Amerisure provided insurance coverage to 

a steam trap manufacturer, [Company X] (“[Company X]”). [Company X] and 

one of its affiliates, [Company Y], manufactured products that included parts 

containing asbestos. Certain individuals made claims against [Company X] and 

[Company Y] for asbestos-related injuries that were allegedly caused by these 

products. 

In 2006, Amerisure notified Everest that [Company X] and [Company Y] 

had received these claims. (See ECF #32-17, Pg. ID 1996-1197.) Over the course 

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of several years, Amerisure indemnified [Company X] and [Company Y] for 

some of these claims (the “Amerisure Asbestos Losses”). When considered in the 

aggregate, the dollar amount of the Amerisure Asbestos Losses far exceeded the 

$500,000 Company Retention under the Treaties. (See, e.g., ECF #32-20, Pg. ID 

1221-1222.) But it appears that the dollar amount of each individual claim for 

which Amerisure indemnified [Company X] and [Company Y] was less than the 

Company Retention. 

In 2009, Amerisure sought indemnification from Everest for the Amerisure 

Asbestos Losses. Everest rejected Amerisure’s claim on May 3, 2010. (See the 

“Denial Letter,” ECF #32-19 at 3-4, Pg. ID 1218-1219.) In the Denial Letter, 

Everest asserted that the Direct Access Treaty “required” Amerisure to satisfy its 

$500,000 deductible “on a per occurrence” basis. (Id. at 3, Pg. ID 1218.) In other 

words, Everest contended that Amerisure could not aggregate the individual losses 

that comprised the Amerisure Asbestos Losses into a single “occurrence” in order 

to exceed the Company Retention and thereby qualify for indemnification. 

Everest also asserted that the Asbestos Exclusion, as included in the 1987 

Endorsement and in the Woods Treaties, precluded indemnification for the 

Amerisure Asbestos Losses. (See id.) Everest contended that [Company X] “was 

a manufacturer of asbestos containing products, and such products necessarily 

presented known or generally recognizable asbestos exposures.” (Id.) Everest also 

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asserted that the Incidental Exception Language in the Asbestos Exclusion did not 

apply because Amerisure’s insured, [Company X], produced asbestos-containing 

products: “As an insurer of a manufacturer of asbestos containing products, 

Amerisure cannot avail itself of the ‘incidental’ exception which is limited to 

incidental/infrequent ‘removal, installation, storage, handling, or transportation’ of 

asbestos during an insured’s operations. Manufacturing operations are not included 

in the exception.” (Id.; emphasis in original.) 

 Amerisure demanded arbitration on October 10, 2011. (See ECF #32-20, 

Pg. ID 1221-1222.) In its arbitration demand, Amerisure wrote that it had “made 

certain payments pursuant to [its insurance policies with] [Company X] [] and will 

make additional payments in the future.” (Id. at 2, Pg. ID 1221.) Amerisure 

sought indemnification from Everest in the amount of $3,210,153 (for the 

Amerisure Asbestos Losses it had already paid) and for amounts to be paid in the 

future. (See id.) 

F. Everest and Amerisure Appointed Their Party Arbitrators and Selected 

Roger Moak as Umpire for Their Arbitration 

 Amerisure and Everest each appointed one arbitrator to the three-member 

hearing panel (the “Panel”). Amerisure chose Andrew Maneval (“Maneval”), and 

Everest chose James White (“White”). The parties then proceeded to choose a 

neutral “umpire” to complete the Panel. While the Treaties specified that the two 

party-selected arbitrators would jointly choose the umpire, it appears that Everest 

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suggested a different process. (See, e.g., ECF ## 41-3, 41-4, Pg. ID 2155, 2157-

2159.) Everest proposed that the parties simultaneously exchange lists, each 

identifying six umpire candidates. (See ECF #41-4 at 3, Pg. ID 2158.) The parties 

would then confer and determine if any umpires were included on both lists. (See 

id.) If the parties listed twelve different umpire candidates, conflict questionnaires 

would be sent to all twelve, and the parties would then re-confer and complete a 

“ranking” procedure to select the umpire. If there were any candidates listed by 

both parties, only those candidates would be sent a questionnaire, and the parties 

would then complete the “ranking” procedure to select the umpire. (See id.) 

 It is unclear from the record before this Court whether Amerisure agreed to 

this “ranking” procedure in its entirety. However, Amerisure did send a list of six 

proposed umpires to Everest on February 17, 2012. (See ECF #33-13, Pg. ID 

1438.) One of the umpires Amerisure listed was Roger Moak (“Moak”), an 

experienced umpire in the insurance/reinsurance industry. (See id.) 

 On February 29, 2014, counsel for Amerisure and Everest jointly e-mailed 

Moak, informed him that he had been nominated as an umpire candidate, and 

asked that he fill out a questionnaire addressing, among other things, his prior 

dealings with the parties, their counsel, and their party-selected arbitrators. (See

ECF #41-5, Pg. ID 2161-2169.) Moak completed the questionnaire and disclosed 

that he had previously been appointed as an arbitrator “in an arbitration against 

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Everest,” but that the case had settled prior to arbitration. (Moak’s Completed 

Questionnaire, ECF #31-12 at 2, Pg. ID 795.) Moak also disclosed that he had 

never served on an arbitration panel with Maneval, that he had participated in 

arbitrations with White, and that he had previously served as an umpire in cases 

involving Amerisure’s counsel. (See id. at 3-4, Pg. ID 796-797.) Ultimately, the 

parties selected Moak as the umpire and informed Moak of his selection in a joint 

communication from Maneval and White. (See ECF #28-9, Pg. ID 483-484.) 

There is no evidence in the record before the Court that Moak was ever told how 

he had been selected to serve as the umpire and/or told anything about the role of 

either party in his selection. 

G. The Panel Granted Everest a Multiple-Month Adjournment and 

Reopened Discovery 

The arbitration hearing was scheduled to begin in June 2013. On May 17, 

2013, Everest requested an adjournment. (See ECF #32-23, Pg. ID 1230-1238.) 

Everest told the Panel that “a recent development drastically reshape[d] the issues 

in this matter.” (Id. at 1, Pg. ID 1230.) Everest said that it received documents 

from [Company X] which “establish[ed] that [Company X] represented a ‘known 

and/or generally recognizable’ asbestos exposure as of 1987” and therefore 

precluded Amerisure’s claim for indemnification by operation of the Asbestos 

Exclusion. (Id.) Everest requested that the arbitration be delayed and that 

discovery be reopened on this issue. Amerisure vigorously opposed Everest’s 

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“extraordinary request” and urged the Panel to “summarily reject[]” it. (ECF #32-

24 at 1, Pg. ID 1240.) By “majority vote,”3

 the Panel granted Everest’s motion, 

albeit, in Moak’s words, “most reluctantly.” (ECF #32-25, Pg. ID 1244.) 

H. Moak Made Additional Disclosures at the Start of the Hearing

 Following Everest’s additional discovery, the arbitration hearing began on 

April 24, 2014. That same day, Everest’s counsel asked Moak to disclose on the 

record whether he had been nominated as an umpire by either side, or their 

counsel, in any other matter. (See the “Arbitration Transcript,” at 307, ECF #41-2 

at Pg. ID 2152.) Moak responded that Everest’s request was unprecedented and 

improper. (See id.) Moak also said that he was not necessarily aware in any given 

case which party actually nominated him. (See id.) Everest’s counsel said that he 

“realize[d]” that Moak “might know and [] might not know” who nominated him, 

and that Moak “probably [did] not” know who nominated him in any specific case. 

(Id.) 

Moak nonetheless attempted to list the arbitrations in which attorneys from 

the law firms representing Everest and Amerisure were involved and had 

potentially nominated him. (See id. at 307-310, Pg. ID 2152.) Moak further said 

that he thought “he [had] been nominated in a couple of cases in which Mr. 

                                                            

3

 Because the decision to adjourn the arbitration hearing and reopen discovery was 

made by a “majority vote,” and not by a “unanimous vote,” it appears that Maneval 

dissented from this ruling. 

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Maneval is an arbitrator but I didn’t – I wasn’t retained. And I may have been 

nominated in a couple of cases in which Mr. White was an arbitrator and I wasn’t 

retained. But I didn’t have time to do the research necessary to figure all that out.” 

(Id. at 309, Pg. ID 2152.) 

Before the hearing began, Moak made a further disclosure about interactions 

he had with the two party-selected arbitrators, Maneval and White: 

I omitted to disclose at the outset that several weeks ago Mr. 

Maneval and I went to the Metropolitan Museum together 

based on my fulfilling a pledge I made to him that I would take 

him to the Metropolitan Museum and give him a tour of the 

American wing, which is an invitation to anybody else. Many 

members of the ARIASA club have had that tour, and I love 

doing it. So you are all invited. 

The other thing is Mr. White and I shared a limo he arranged, a 

limo service he arranged and he didn’t let me reimburse him for 

it, but I did pay for the bell man. I treated for the bell man. 

[...] Now the record is as complete as I can make it. 

(Id. at 457-458, ECF #41-2 at Pg. ID 2153.) 

I. The Key Issues in Dispute at the Hearing 

During a nine-day arbitration hearing, the Panel heard testimony from more 

than a dozen witnesses (including experts) and reviewed scores of exhibits. Three 

contested issues before the Panel are now at issue in this action. Those issues 

were: 

1. Under the Direct Access Treaty, could Amerisure treat the 

individual losses that, collectively, comprised the 

Amerisure Asbestos Losses, as a single “occurrence” that 

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satisfied the $500,000 “per occurrence” Company 

Retention, or was each of the individual underlying losses 

a separate and standalone “occurrence”? 

2. Did the Asbestos Exclusion preclude indemnification for 

the Amerisure Asbestos Losses, or did an exception to that 

exclusion apply that would preserve Amerisure’s right to 

indemnification? 

3. Did Amerisure’s demand for arbitration seek 

indemnification for losses that Amerisure paid to 

[Company Y], or did the demand seek indemnification 

solely for amounts paid to [Company X], itself? 

J. Moak and Everest’s Counsel Clashed During the Hearing, but When 

Specifically Asked to Identify Any Way in Which Moak Prevented 

Everest From Presenting Its Case, Everest’s Counsel Identified Only a 

Single Limitation on Cross-Examination

At various times during the arbitration, Moak appeared frustrated with how 

Everest presented its case. For example, at one point during Everest’s questioning 

of a witness, Moak asked Everest to “move on” and said that Everest’s counsel was 

“go[ing] over and over – you are arguing with the witness. We know what the 

witness has to say....” (Arb. Tr. at 2527, ECF #31-21 at Pg. ID 837.) Moak and 

Everest’s counsel then had the following colloquy: 

Everest’s counsel: Well, there are a few nuances to this thing 

that I think are bringing – worth bringing out. If you don’t 

want to hear it, I will close my book and sit down. Thank you. 

Moak: Fine. That’s your choice. 

Everest’s counsel: It’s a choice I’m not given by you, Roger, 

because you keep telling me you don’t want to hear the 

evidence, and that’s really a problem. 

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Moak: I never said that []. That’s unfair and I resent it. [] 

Everest’s counsel: I’m sure you do. 

Moak: You’re – you’re repetitive asking about – I have let you 

get away with a lot already []. So if you have another question, 

which isn’t repetitive, which isn’t arguing with the witness, go 

ahead and ask it. If it is argumentative or it is repetitive, then 

sit down. Okay. It’s your choice. 

[....] 

Everest’s counsel: I’m going to sit. I don’t think I have any 

choice. 

(Id. at 2527-2529, Pg. ID 837.) 

 At the conclusion of the hearing on May 7, 2014, Moak asked counsel for 

Everest if he had any objections as to how the Panel allowed Everest to present its 

case, and counsel for Everest identified only a single objection: 

Moak: With respect to the panel’s affording you an opportunity 

to present your arguments and your evidence, are you satisfied 

that the panel allowed you to submit your evidence and your 

arguments? 

Everest’s counsel: Subject to the situation that I identified on 

the record where I felt we were not. 

Moak: Where I cut you off from your cross-examination. Is 

that what you are talking about? 

Everest’s counsel: Yes. 

Moak: Anything else? I will let the record speak for itself with 

respect to that. 

Everest’s counsel: I think it does, I think it does. 

Moak: Anything else that you want to say? 

Everest’s counsel: No. Thank you. 

(Arb. Tr. at 3655-3656, ECF #40-6, Pg. ID 1992-1993.) 

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K. Everest Filed a Post-Arbitration Sanctions Motion That Angered Moak 

 On May 13, 2014, prior to the start of the Panel’s deliberations, Everest 

sought sanctions on the ground that Amerisure “flouted its discovery obligations in 

this matter and thereby deprived Everest of key evidence.” (ECF #31-25 at 2, Pg. 

ID 859.) Everest argued that “[t]he prejudice resulting from Amerisure’s failure to 

engage in good faith discovery is not calculable, but has been exacerbated by the 

Panel’s denial of Everest’s right to introduce pertinent and material evidence at 

the final hearing, and the Panel applying a different standard to Everest with 

respect to the introduction of evidence.” (Id.; emphasis added.) 

 Everest’s allegations irritated Moak. In a May 14, 2014, e-mail to Maneval 

and White, Moak wrote: 

Jim and Andrew, I was preliminary inclined to rule, mostly at 

least, in favor of Everest since before the hearing started, which 

is why I’ve been impatient with [Everest’s counsel’s] 

exaggerations, repetitions, and overkill tactics. While I’m still 

so inclined, I have to tell you that accusations aimed at me 

about Everest’s being denied a fair hearing piss me off! Of 

course, I’ll put that aside whenever we get to deliberate. 

(ECF #32-27 at 4, Pg. ID 1260.) 

L. Moak Made Yet Another Disclosure 

 Following the conclusion of the arbitration hearing, but before the Panel 

issued its ruling, Moak made an additional disclosure to the parties. Moak wrote in 

an e-mail, sent over the July Fourth holiday, that “in accordance with my 

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continuing disclosure obligation, I was notified this morning that I have been 

selected as an umpire in an arbitration in which Mr. Maneval is a party-appointed 

arbitrator.” (ECF #31-18, Pg. ID 815.) 

At no time did either party seek to disqualify Moak due to his relationships 

or past interactions with the parties or attorneys involved in the arbitration. Nor 

did either party ever seek to disqualify Moak on any grounds. While Everest 

complained in its sanctions motion that “the Panel” applied a different standard to 

Everest’s request to admit evidence, Everest never suggested during the arbitration 

that Moak was unfit to serve as umpire nor suggested that he harbored a bias that 

prevented him from being fair. 

M. The Panel Awarded Amerisure Over $14 Million 

 Following in-person deliberations, the Panel issued its “Decision and Final 

Award” on July 25, 2014. (See the “Final Award,” ECF #22-2, Pg. ID 182-188.) 

Moak and Maneval signed the Final Award; White issued a dissent. (See White’s 

dissent, ECF #31-20.)4

 The Final Award “direct[ed] Everest to indemnify 

Amerisure for Everest’s share of the asbestos loss ... which amount is 

$14,123,907.40 as of March 31, 2014.” (Final Award at 7 at ¶d, Pg. ID 188.) 

                                                            

4

 Unless specified otherwise, the Court’s references to “the Panel” when discussing 

the Final Award refer to the two-person majority that signed the Final Award 

(Moak and Maneval). 

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 The Panel began the Final Award by providing a “procedural history” of the 

dispute. (See id. at 1-3, Pg. ID 182-184.) In this section, the Panel explained that 

“[a]fter due deliberation” the Panel had ruled “on the morning of the hearing’s 

final day that the [Company Y] claims were ‘in the case.’” (Id. at 2, Pg. ID 183.) 

 The Panel then provided its “Findings and Conclusions.” (See id. at 3-6, Pg. 

ID 184-187.) Before listing these conclusions in numbered paragraphs, the Panel 

first noted that it did “not intend to comment [in the Final Award] on every 

noteworthy witness and exhibit in this arbitration.” (Id. at 4, Pg. ID 185.) Instead, 

the Panel said that it intended “to provide the Parties with the findings and 

conclusions upon which [its] rulings on the principal issues have most heavily 

relied. Of course, [the Panel’s failure] to mention additional or contrary evidence 

and testimony is not intended to imply that it was not considered by the Panel.” 

(Id.) 

 The Panel first noted that the meaning of the key disputed contract terms 

was far from clear and that it was applying rules of contract construction applicable 

to ambiguous language: 

2. The applicable arbitration clause calls for the panel’s 

decision to be made ‘with regard to the custom and usage of 

the insurance and reinsurance business.’ Complying with 

this charge was anything but straightforward inasmuch as 

the two well-credentialed and articulate principal expert 

witnesses offered opinions of treaty interpretation that were 

totally at odds on the two central issues. 

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3. There is well-founded precedent in the law which favors 

resolving ambiguous contract language in insurance 

contracts in favor of finding coverage and against the 

contract drafter, which in this case the evidence showed was 

Everest. 

(Id. at 4, ¶¶2-3, Pg. ID 185.) 

The Panel then explained that based upon its review of the testimony, 

evidence, and case law, it had determined that the Direct Access Treaty did allow 

Amerisure to aggregate the individual losses that comprised the Amerisure 

Asbestos Losses into a single “occurrence”: 

4. The only percipient witness who testified about drafting 

some treaty language was Everest’s former underwriter 

[Person A], and he testified substantially in favor of 

Amerisure’s treaty interpretations and in support of 

Amerisure’s demand for payment. In support of Everest’s 

position, two other Everest underwriters ... testified about 

how they would interpret the treaty language in question, but 

neither of them was involved in the treaty underwriting, and 

neither of them denied that [Person A] knew more about it. 

5. Everest offered the opinion testimony of experienced expert 

witness (and former broker) John Chaplin to rebut [Person 

A’s] fact testimony and to rebut opinion testimony from 

Amerisure’s experienced expert witness (and former 

underwriter) James Macdonald. Mr. Chaplin’s testimony 

was largely based on sources which we find to be 

considerably less authoritative than he did. We also find 

unpersuasive his responses to questioning about how – given 

the restrictive interpretation of the undefined word ‘event’ in 

the treaty’s occurrence definition – products liability 

coverage could ever apply to latent injury losses such as 

from asbestos. We find that placing the product into the 

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19 

stream of commerce was the ‘event’ for purposes of the 

reinsurance cession. 

6. Having considered all of the conflicting interpretations 

presented on the treaty’s occurrence definition (and the 

absence of an event definition[)], we find that is commonly 

accepted in the business that the extension of event-based 

language to include occurrences, where applicable to 

underlying product liability exposures, covers a single 

occurrence the insured’s liability for an asbestos-containing 

product for each policy year. We reach this outcome ... 

because this is the way we believe much of the industry has 

come to define such excess of loss reinsurance coverage and 

because it is the only way that any reasonable understanding 

of casualty reinsurance coverage can apply to the emergence 

of continuous-injury asbestos products liability exposures. 

We also find support in International Surplus Lines Ins. Co. 

v. Certain Underwriting Syndicates at Lloyd’s, 868 F. Supp. 

917 (S.D. Ohio 1994) and Employers Ins. Co. of Wausau v. 

Certain Underwriters at Lloyd’s, 552 N.W.2d 420 (Wis. Ct. 

App. 1996). 

7. We do not find that Amerisure’s claim is precluded or 

undercut by the fact that the underlying claims were settled 

as individual losses. Clearly, the occurrence language of 

[Amerisure’s insurance policies with [Company X] and the 

occurrence definition in the [Direct Access Treaty] are 

completely different, and the latter in no way depends or is 

dictated by the former .... The Everest claim handler’s view 

on this point, as it applied to the cession in this case 

(Transcript pp. 2788-2789), supports this finding. 

(Id. at 4-5, ¶¶5-7, Pg. ID 185-186.) 

The Panel next turned to whether the Asbestos Exclusion prohibited 

Amerisure’s claim for indemnification for the Amerisure Asbestos Losses. The 

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20 

Panel explained that in considering that issue, it had to analyze both the exclusion 

itself and whether an exception to the exclusion applied: 

8. The drafting history is more complete on the other principal 

issue of interpretation, i.e., the applicability of the modified 

asbestos exclusion added to the treaty terms in 1987 [i.e., the 

Asbestos Exclusion]. The documentary evidence and 

testimony indicates that, after years of treaty coverage with 

no asbestos exclusion at all, Everest proposed an absolute 

asbestos exclusion, which Amerisure rejected. The modified 

exclusion eventually adopted contained a significant 

exception to the exclusion [i.e., the Incidental Exception 

Language in the Asbestos Exclusion]. Its wording raises 

two questions: Did the insured’s operations, at the time of 

policy issuance, present known and/or generally 

recognizable asbestos exposures? And, Was [sic] that 

exposure incidental to the insured’s overall operations? 

(Id. at 5, ¶8, Pg. ID 186.) 

The Panel concluded that [Company X] did not present “known and/or 

generally recognizable asbestos exposures” and that the Asbestos Exclusion 

therefore did not bar Amerisure’s claim for indemnification: 

9. The fact testimony from the Amerisure, [Company X], and 

broker witnesses was that the asbestos claims started in 1992 

for [Company Y] and 1998 for [Company X] – years after 

the addition of the [Asbestos Exclusion]. Everest did offer a 

few documents which appear to show that Amerisure may 

very well have been aware by 1987 of the fact that 

[Company X’s] steam traps contained an encapsulated 

asbestos gasket. A couple even indicated that by 1987 there 

could have been a few very small asbestos losses. On the 

other hand, [Company X’s] workers’ compensation 

insurance was written by Amerisure during the relevant 

timeframe, and it experienced no claims for asbestos related 

injury, and the Manufacturing Safety Data Sheet issued to 

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21 

the gasket manufacturer also indicated that the product was 

safe. In sum, it appears that it was Amerisure’s subjective 

underwriting judgment, as manifested by the absence of an 

exclusion in its policies, that the encapsulated asbestos 

gaskets [Company X] used did not constitute a known 

exposure. 

10. On the question of whether [Company X’s] products 

presented a generally recognizable asbestos exposure ... 

both [of Everest’s expert witnesses] expressed their belief 

that, by the mid-1980s, it was already well known in the 

insurance marketplace that the mere existence of any 

asbestos-containing product contained a generally 

recognizable exposure. [Amerisure’s expert witness] had 

already testified to the contrary, and his recollections 

conform more closely with our own. 

(Id. at 5-6, ¶¶9-10, Pg. ID 186-187.) 

Importantly, the Panel then ruled that even if the Asbestos Exclusion 

otherwise applied, Amerisure could nonetheless avoid that exclusion by operation 

of the Generally-Applicable Incidental Exception to the Treaties’ Exclusions. (See 

id., ¶12, Pg. ID 187.) The Panel quoted that exception verbatim and held that it 

was “applicable.” (Id.) 

Finally, the Panel discussed whether Amerisure could avoid the Asbestos 

Exclusion by operation of a second exception to that exclusion – namely, the 

Incidental Exception Language in the Asbestos Exclusion: 

11. Given [our ruling that the Asbestos Exclusion does not 

apply], we may not even need to reach the issue raised by 

the ‘incidental’ exception drafted into the modified 

exclusion [i.e., the Incidental Exception Language in the 

Asbestos Exclusion]. Nevertheless, despite Everest’s 

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22 

argument and its expert’s opinion that the exception as 

intended to apply only to certain named exposures, namely, 

from contractors, we find that the ‘not limited to’ language 

indicates that the contractors example was not intended to be 

exhaustive. Moreover, we view this interpretation of the 

exception in light of the push-back from Amerisure – 

seeking more protection for its underwriting objections – on 

the exclusion generally. 

(Id. at 6, ¶11, Pg. ID 187.) 

 The Panel did not award Amerisure all of the relief that it sought. For 

example, the Panel, by a unanimous vote, “[d]enie[d] Amerisure’s demands for 

interests and attorney fees.” (Id. at 7, ¶g, Pg. ID 188.) 

N. Amerisure and Everest Filed Dueling Motions in This Court 

 On July 31, 2014, Amerisure filed its Motion to Confirm Final Arbitration 

Award in this Court. (See the “Motion to Confirm,” ECF #2.) Everest filed its 

Motion to Vacate Final Arbitration Award on October 24, 2014. (See the “Motion 

to Vacate,” ECF #23.) 

 Everest moves to vacate the Final Award on four primary grounds: (1) Moak 

displayed “evident partiality” and was biased against Everest, (2) the Panel denied 

Everest a fair hearing; (3) the Panel exceeded its powers when it ruled that 

Amerisure could aggregate the individual asbestos losses that comprised the 

Amerisure Asbestos Losses and that the Asbestos Exclusion did not preclude 

coverage; and (4) the Panel exceeded its powers when it awarded damages for 

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23 

amounts Amerisure paid to [Company Y]. The Court heard arguments on both 

motions on February 11, 2015. 

ANALYSIS 

A. Governing Law and Standard of Review: The Federal Arbitration Act 

vs. Michigan Law 

The Final Award covers seven reinsurance treaties – and various revisions 

and endorsements – that the parties executed during their relationship. All of the 

contracts involve interstate commerce and are thus subject to the Federal 

Arbitration Act (the “FAA”), 9 U.S.C. § 1 et seq. See Uhl v. Komatsu Forklift Co., 

Ltd., 512 F.3d 294, 303 (6th Cir. 2008). But even where the FAA applies, parties 

may contractually agree that state law governs their arbitration proceedings, and 

federal courts will generally enforce such an agreement. See Savers Prop. & Cas. 

Ins. Co. v. Nat’l Union Fire Ins. Co., 748 F.3d 708, 715-716 (6th Cir. 2014). 

Here, one of the reinsurance treaties – the original 1979 Direct Access 

Treaty – provides that “the law of the State of Michigan shall govern any 

arbitration proceedings.” (Direct Access Treaty at 34, Pg. ID 273.) This provision 

arguably requires application of Michigan law to a motion to confirm and/or vacate 

an award issued pursuant to the Direct Access Treaty. See Savers, 748. F.3d at 

715-716 (holding that similar provision required application of Michigan law 

concerning judicial review of arbitration awards). The other six reinsurance 

treaties – the Woods Treaties – say nothing about Michigan law (or the law of any 

2:14-cv-13060-MFL-MJH Doc # 49 Filed 03/18/15 Pg 24 of 60 Pg ID 2571
24 

State). In the absence of a reference to state law, the FAA supplies the governing 

standard of review for an award issued under those treaties. See, e.g., id. at 716 

(“The central inquiry in this choice-of-law determination is whether the parties 

unambiguously intended to displace the FAA with state rules of arbitration”). 

These divergent choice of law provisions could create a thorny conflicts 

question. But they do not. “The first imperative of a conflict-of-laws problem is: a 

conflict. When all roads lead to the same result, there is no conflict to resolve.” In 

Re Dow Corning Corp., --- F.3d ---, 2015 WL 716299, at *8 (6th Cir. Feb. 20, 

2015) (Sutton, J. dissenting). And here, there is scant conflict between Michigan 

arbitration law and the FAA. Indeed, “Michigan’s arbitration law is almost 

identical to the FAA in all relevant respects.” Uhl, 512 F.3d at 303. 

Everest acknowledges that “Michigan law is similar to the FAA as to the 

legal standards governing” essentially all of its challenges to the Final Award – 

those based upon the “evident partiality [of the Umpire], the panel’s refusal to hear 

evidence, the panel’s conduct of the hearing, and the panel’s consideration of posthearing information on damages.” (Everest’s Supp. Br., ECF #45 at 3, Pg. ID 

2476.) Since the “choice-of-law determination bears little impact on [the Court’s] 

analysis or disposition” of those challenges to the Final Award, the Court need not 

decide whether Michigan law displaces the FAA with respect to them. Savers, 748 

F.3d at 716. The Court will analyze them under the FAA. 

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25 

 But this Court must “consider specific application of Michigan law where 

the relevant provisions [of that law and the FAA] differ in substance.” Id. Everest 

insists that Michigan law and the FAA differ with respect to “the standard of 

review applicable to whether the panel exceeded its powers in ruling in 

Amerisure’s favor on the occurrence and asbestos exclusion issues under the Direct 

Access Treaty.” (Everest’s Supp. Br. at 3, Pg. ID 2476.) Everest argues that 

Michigan law permits a much more searching review of whether an arbitrator 

exceeded his authority. (Id.) (citing Detroit Auto. Inter-Insurance Exch. v. Gavin, 

331 N.W.2d 418, 430 (Mich. 1982)). However, the difference, if any, between 

Michigan law and the FAA with regard to reviewing whether the Panel exceeded 

its powers is not nearly as significant as Everest suggests. 

 Under the FAA, “[t]he burden of proving that the arbitrators exceeded their 

authority is very great....” Solvay Pharmaceuticals, Inc. v. Duramed 

Pharmaceuticals, Inc., 442 F.3d 471, 476 (6th Cir. 2006) (quoting Nationwide 

Mutual Insurance Company v. Home Insurance Company, 330 F.3d 843, 846 (6th 

Cir. 2003)). “The terms of the contract define the powers of the arbitrator, and ‘as 

long as the arbitrator is even arguably construing or applying the contract and 

acting within the scope of his authority, that a court is convinced he committed 

serious error does not suffice to overturn his decision.’” Id. (quoting United 

Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987)); see also 

2:14-cv-13060-MFL-MJH Doc # 49 Filed 03/18/15 Pg 26 of 60 Pg ID 2573
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Michigan Sugar Co. v. Bakery, Confectionary, Tobacco Workers, and Grain 

Millers International Union, 278 Fed. App’x 623, 628 (6th Cir. 2008) (no basis to 

vacate arbitration award “even if the Arbitrator made a ‘bizarre’ and ‘unsupported’ 

finding because [courts] are directed to tolerate even ‘serious, improvident, or 

silly’ legal or factual errors”) (quoting Michigan Family Resources, Inc. v. SEIU 

517M, 475 F.3d 746, 753 (6th Cir. 2007)). 

 Likewise, under Michigan law, “[h]istorically, judicial review of arbitration 

awards [has been] highly limited.” Miller v. Miller, 707 N.W.2d 341, 345 (Mich. 

2005) (citing Gavin, 331 N.W.2d at 418).5

 Courts applying Michigan law take a 

cautious approach to claims that arbitrators have exceeded their powers. Indeed, 

the Michigan Supreme Court has directed courts to “carefully evaluate[]” a party’s 

“allegation that the arbitrators have exceeded their powers ... in order to assure 

that this claim is not used as a ruse to induce the court to review the merits of the 

                                                            

5

 Like the FAA, Michigan law precludes a court from “‘review[ing] an arbitrator's 

factual findings or decision on the merits.’ A reviewing court is also prohibited 

from engaging in contract interpretation, which is an issue for the arbitrator to 

determine.” Muskegon Central Dispatch 911 v. Tiburon, Inc., 462 Fed. App’x 

517, 524 (6th Cir. 2012) (quoting City of Ann Arbor v. AFSCME Local 369, 771 

N.W.2d 843, 854 (Mich. Ct. App. 2009)). “Nor may a court substitute its 

judgment for that of the arbitrator. [...] If, in granting the award, the arbitrator did 

not disregard the terms of his or her employment and the scope of his or her 

authority as expressly circumscribed in the contract, judicial review effectively 

ceases. Thus, as long as the arbitrator is even arguably construing or applying the 

contract and acting within the scope of his authority, a court may not overturn the 

decision even if convinced that the arbitrator committed a serious error.” City of 

Ann Arbor, 771 N.W.2d at 854 (internal citations and punctuation omitted) 

(emphasis added).

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arbitrators’ decision.” Gordon Sel-Way, Inc. v. Spence Brothers, Inc., 475 N.W.2d 

704, 701 (Mich. 1991). A court applying Michigan law must presume that an 

arbitration award is “within the scope of the arbitrators’ authority absent express 

language to the contrary” and should be “reluctant to vacate or modify an award 

when the arbitration agreement does not expressly limit the arbitrators’ power in 

some way.” Id. (Emphasis added.) Under Michigan law, arbitrators run a “high 

risk” of exceeding their powers only where they disregard “express and 

unambiguous contract terms.” Gavin, 331 N.W.2d at 430. 

 Given the substantial similarities between Michigan law and the FAA, there 

is no need to determine whether Michigan law displaces the FAA with respect to 

Everest’s claim that the Panel exceeded its powers in interpreting the Treaties. 

However, out of an abundance of caution, the Court will analyze Everest’s 

argument that the Panel exceeded its powers under both the FAA and Michigan 

law.6

                                                            

6 If forced to choose between the FAA and Michigan law in reviewing whether the Panel 

exceeded its powers, the Court would choose the FAA. As noted above, the Final Award 

covers all seven Treaties between the parties, and only the Direct Access Treaty mentions 

Michigan law. Thus, there is an ambiguity as to which law the parties intended to govern 

review of a single arbitration award that applied to both a treaty incorporating Michigan 

law (the Direct Access Treaty) and treaties governed under the FAA (the Woods Treaties). 

In the face of such an ambiguity, the FAA applies. See, e.g., Martis v. DISH Network 

Services, LLC, --- Fed. App’x ---, 2015 WL 74712, at *3 (6th Cir. Jan. 7, 2015) 

(“Ambiguities [between whether the FAA or state law applies] are resolved in favor of the 

federal standard”). And it makes more sense to apply the FAA given that six of the seven 

Treaties at issue in the Final Award say nothing about Michigan law.

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B. Everest is Not Entitled to Relief From the Final Award Based Upon 

Moak’s Alleged Evident Partiality 

Everest first moves to vacate the Final Award on the ground that “Moak 

exhibited evident partiality.” (Everest Br., ECF #32 at 11, Pg. ID 1091.) 

Specifically, Everest argues that: 

 Moak “developed a social relationship with Maneval” – 

Amerisure’s chosen arbitrator – and was “tilted” toward 

Amerisure in order to curry favor with, and receive additional 

umpire appointments from, Maneval and Amerisure’s 

counsel. (Id. at 11-13, Pg. ID 1091-1093.); 

 Moak “repeatedly criticized Everest’s counsel” for seeking an 

adjournment of the originally-scheduled May 2013 hearing, 

and he held this request against Everest throughout the 

arbitration proceedings. (Id. at 13-15, Pg. ID 1093-1095.); 

and

 Moak “conducted the hearing in a manner that exhibited 

evident partiality for Amerisure and bias and animosity 

against Everest.” Among other things, Moak precluded 

Everest from introducing certain exhibits, interfered with its 

examination of witnesses (including expert witnesses), and 

repeatedly ruled in favor of Amerisure during the arbitration. 

(Id. at 15-24, Pg. ID 1095-1104.)

Everest cites Moak’s May 14, 2013, e-mail as further evidence of Moak’s 

partiality. According to Everest, the e-mail shows that Moak was initially inclined 

to rule in its favor, but that he “changed on his minds on the merits” and “ruled 

against Everest in all material respects” in retaliation for the criticisms Everest 

levied against him. (Id. at 24-25, Pg. ID 1104-1105.) 

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1. Everest Has Failed to Preserve Its Evident Partiality Challenge 

 “As a general rule, a grievant must object to an arbitrator’s partiality at the 

arbitration hearing before such an objection will be considered by the federal 

courts.” Apperson v. Fleet Carrier Corporation, 879 F.2d 1344, 1358-1359 (6th 

Cir. 1989); see also Questar Capital Corporation v. Gorter, 909 F.Supp.2d 789, 

814 (W.D. Ky. 2012) (“A party cannot remain silent as to perceived or actual 

partiality or bias and then later object after the [arbitration] panel reaches an 

unfavorable decision”). Everest did not object to Moak’s partiality during the 

arbitration. On the contrary, when given a clear opportunity to claim that it had 

been harmed by Moak’s partiality – at the close of the arbitration hearing, when 

Moak asked Everest directly if Everest had been given a sufficient “opportunity to 

present [its] arguments and [its] evidence” – Everest said nothing about any 

alleged partiality. (See Arb. Tr. at 3655-3656, ECF #40-6 at Pg. ID 1992-1993.) 

To be sure, Everest did vigorously object to the merits of many rulings made by 

Moak – before, during, and after the arbitration hearing – but an objection that an 

arbitrator or umpire made an incorrect legal ruling is manifestly different from an 

objection to that individual’s ability to be fair. 

 At the motion hearing before this Court, Everest suggested that its failure to 

object to Moak’s alleged partiality should be excused. Everest cited the Sixth 

Circuit’s decision in Thomas Kinkade Company v. White, 711 F.3d 719, 724-725 

2:14-cv-13060-MFL-MJH Doc # 49 Filed 03/18/15 Pg 30 of 60 Pg ID 2577
30 

(6th Cir. 2013), for the proposition that objecting to a neutral arbitrator’s partiality 

may offend the neutral, and Everest suggested that it acted reasonably in 

withholding an objection to Moak’s partiality. But Kinkade does not authorize this 

Court to review Everest’s evident partiality claim even though Everest failed to 

raise the issue with Moak. The Sixth Circuit in Kinkade simply emphasized that a 

neutral arbitrator should not engage in conduct that places a party in the 

uncomfortable position of having to object to his partiality. The court did not take 

the additional step – urged by Everest here – of holding that an objection to a 

neutral’s partiality may be excused because it is awkward to make. Indeed, the 

party seeking to vacate the award in Kinkade did object to the neutral arbitrator’s 

partiality, and the Sixth Circuit did not disturb the district court’s ruling that, 

pursuant to Apperson, a contemporaneous objection was a pre-requisite to federal 

court review. See Thomas Kinkade Company v. Lighthouse Galleries, LLC, 09-

10757, 2010 WL 436604, at *6 (E.D. Mich. Jan. 27, 2010) (following rule that 

parties objecting to arbitrator’s partiality must “make an objection if they wished to 

preserve the issue for review, even at the risk of contributing to [the arbitrator’s] 

disfavor of their cause”). While it is undoubtedly uncomfortable for a party to 

argue to a neutral umpire that he is partial, Kinkade simply cannot be read as 

 

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overruling Apperson and permitting federal court review absent an objection.7

 For 

all of these reasons, Everest’s failure to timely object to Moak’s alleged partiality 

cannot be excused. 

Since Everest did not object to Moak’s partiality during the arbitration, 

Everest has failed to preserve essentially all of its partiality challenge. At a 

minimum, it has no right to challenge Moak’s partiality based upon events 

occurring before and/or during the arbitration hearing because such a challenge 

could have been presented to Moak prior to the Final Award. The only aspect of 

Everest’s evident partiality claim that is preserved is Everest’s argument that 

Moak’s post-hearing, pre-deliberation e-mail establishes his evident partiality. 

2. On the Merits, Everest’s Evident Partiality Claim Fails 

Even though the Court concludes that Everest has preserved only a tiny 

fraction of its evident partiality claim, the Court will review the entire claim on the 

merits. The claim fails. 

                                                            

7

 The concept that a party must raise a bias objection with the allegedly-biased 

decision-maker is not new. Nor is it limited to arbitration proceedings. Indeed, 

despite any perceived awkwardness, it is well-recognized in both state and federal 

courts that a party must object to a decision-maker’s partiality in order to preserve 

the partiality issue for review. See, e.g., Goward v. United States, 569 Fed. App’x 

408, 410 (6th Cir. 2014) (“A motion to disqualify [a judge] must first be presented 

to the judge whose impartiality is questioned” before it can be reviewed on 

appeal); see also In Re Forfeiture of $53.00, 444 N.W.2d 182, 189 (Mich. Ct. App. 

1989) (claim of judicial bias was “not properly before” appellate court because 

party had failed to move to disqualify the judge during a bench trial).

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32 

An arbitration award may be vacated on the basis of evident partiality only 

where “a reasonable person would have to conclude that an arbitrator was partial to 

the other party to the arbitration.” Apperson, 879 F.2d at 1358. In order to warrant 

relief, “[t]he alleged partiality must be direct, definite, and capable of 

demonstration, and the party asserting evident partiality must establish specific 

facts that indicate improper motives on the part of the arbitrator.” Andersons, Inc. 

v. Horton Farms, Inc., 166 F.3d 308, 329 (6th Cir. 1998) (internal quotation marks 

omitted). Simply put, a claim of evident partiality requires two showings: (1) a 

motive for the alleged bias and (2) “concrete actions in which [the arbitrator] 

appeared to actually favor” the disadvantaged party. Kinkade, 711 F.3d at 724. 

Everest has shown neither. 

 Everest has failed to establish that Moak had any motive to favor Amerisure. 

Everest hypothesizes that Moak treated Amerisure better because he wanted to 

secure additional umpire engagements from Amerisure and its counsel (see Everest 

Br., ECF #32 at 12-13, Pg. ID 1092-93), but this theory is both illogical and 

unsupported by the facts in this record. If, as Everest claims, Moak was interested 

in securing more work as a neutral umpire, then unfairly favoring Amerisure would 

have been decidedly counterproductive. The selection of a neutral umpire often 

requires the consent of both parties (as it did here), and thus a neutral who earns a 

reputation as favoring insurers over reinsurers (or, indeed, a reputation of playing it 

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33 

any way other than “straight down the middle”) would quickly find himself with 

less work, not more. Simply put, a neutral “arbitrator is in a private business 

enterprise. His or her reputation for neutrality is a badge of honor, and an essential 

credential in getting business.” Commentary, “ADR v. The Bench: Why Are 

Neutrality Standards Different,” 25 Alternatives to the High Cost of Litigation 65, 

74 (April 2007) (emphasis added). And case law confirms that in the very type of 

arbitration at issue here – one involving a reinsurance dispute – neutral umpires 

appear to be selected based upon their “reputation for legal acumen and 

impartiality.” Sphere Drake Ins. Ltd. v. All American Life Ins. Co., 307 F.3d 617, 

619 (7th Cir. 2002) (explaining basis for repeated selection of a neutral umpire in 

reinsurance arbitrations) (emphasis added).8

 The relevant financial incentives 

would have pushed Moak to be fair to both sides, not to favor Amerisure. 

 Everest also lacks evidentiary support for its claim that Moak had a motive 

to favor Amerisure. There is no evidence in this record that Moak knew which 

party nominated him as the umpire nor that he knew how he was ultimately 

selected to serve in that capacity. Moreover, as Everest acknowledged on the 

record during the arbitration proceedings, neutral umpires may often not know 

                                                            

8 See also Malone v. Superior Court, 173 Cal. Rptr. 3d 241, 255, n. 19 (Cal. App. 

2014) (“A less pessimistic view would take the position that an arbitrator with a 

reputation for bias would have a short career indeed; arbitrators with reputations 

for fair resolution of disputes regardless of their own short-term financial interests 

would be in greater demand in the long run”).

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34 

which party nominated them. (Arb. Tr. at 307, ECF #41-2 at Pg. ID 2152.) Everest 

has failed to show that Moak had any reason to believe that favoring Amerisure 

would benefit him financially down the road. 

Moreover, there is no evidence that Moak attempted to hide any arbitration 

engagements involving Amerisure’s counsel and/or Amerisure’s party-arbitrator 

(Maneval). In fact, the record establishes just the opposite: Moak disclosed his 

relationships with the other arbitrators and the lawyers, and he even e-mailed the 

parties over the Fourth of July weekend to inform them he was chosen as an 

umpire in another case in which Maneval was an arbitrator. It is telling that during 

the arbitration hearing, Everest never suggested that any of Moak’s disclosed 

engagements gave him a motive to favor Amerisure.9

 

 And Everest makes far too much of Moak’s May 14th e-mail. Everest views 

the e-mail as a “smoking gun” – as definitive proof that Moak must have ruled 

against Everest based upon his animus toward the company. Everest’s argument is 

as follows: (1) Moak’s e-mail shows that he was inclined to rule in favor of Everest 

at the close of the nine-day arbitration hearing; (2) the key event following the 

                                                            

9

 Likewise, the fact that Moak may have had a social relationship with Amerisure’s 

party-arbitrator (Maneval) and that he gave Maneval a tour of an art museum falls 

well short of establishing that Moak was biased against Everest. Indeed, 

“[a]rbitrators are often chosen for their expertise and community involvement, so 

‘[t]o disqualify any arbitrator who had professional dealings with one of the parties 

(to say nothing of a social acquaintanceship) would make it impossible, in some 

instances, to find a qualified arbitrator at all.’” Uhl, 512 F.3d at 308 (quoting 

Nationwide, 429 F.3d at 646-647).

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35 

conclusion of hearing was Everest’s sanctions motion containing the criticisms of 

Moak’s rulings; (3) after being “piss[ed] off” by Everest’s accusations, Moak ruled 

against Everest; and (4) Moak’s change of heart can only be explained by his anger 

with Everest. 

 There are two fundamental flaws in Everest’s argument. First, in the e-mail, 

Moak said that even after Everest’s “accusations,” he was “still ... inclined” to 

rule in Everest’s favor, and he committed that he would “put aside” his frustration 

with Everest “whenever we get to deliberate.” (ECF #32-27 at 4, Pg. ID 1260; 

emphasis added.) Thus, Moak’s statements in his e-mail, when read in their 

entirety, undercut Everest’s claim that its accusations and criticisms led Moak to 

change his mind. 

 Second, Everest’s argument omits a critical event that occurred between 

Moak’s e-mail and the Final Award: the face-to-face deliberations between and 

among the Panel. Everest too quickly dismisses the possibility that the 

deliberations could have been meaningful; that Amerisure’s party arbitrator, 

Maneval, may have been more persuasive than Everest’s party arbitrator; and that 

Moak may have discarded his initial inclination in favor of Everest after carefully 

reviewing the evidence and considering Maneval’s views. 

 Everest also places far too much emphasis on Moak’s statement that he was 

“piss[ed] off.” The fact that Moak may have been frustrated (even extremely 

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36 

frustrated) with Everest as he headed into deliberations does not mean he lost the 

capacity to fairly evaluate Everest’s position on the merits. Indeed, it is not 

uncommon for decision-makers like arbitrators and judges to grow frustrated with 

attorneys for a wide variety of reasons, including criticisms of their rulings. 

Feeling that frustration is a natural part of the job; it is not evidence that the 

decision-maker cannot fulfill his oath and duty to be fair. See, e.g., Consolidated 

Rail Corp. v. Yashinsky, 170 F.3d 591, 597 (6th Cir. 1999) (“A court’s statement to 

counsel that indicates frustration with counsel’s behavior is not enough to establish 

bias or prejudice”). 

 Everest has also failed to show that Moak materially favored Amerisure in 

an unfair manner. Everest likens this case to Kinkade in which the Sixth Circuit 

held that an arbitrator unfairly favored one party. In Kinkade, “the coincidences all

[broke] one way.” Kinkade, 711 F.3d at 720 (emphasis added). That did not 

happen here. Indeed, Everest’s own complaints of unfair treatment show 

conclusively that Moak did not always favor Amerisure. For instance, Everest 

complains that Moak held a grudge because Everest moved to adjourn the 

originally May 2013 hearing date, but Everest cannot escape the fact that Moak 

granted Everest’s urgent request for the adjournment, and reopened discovery – all 

over Amerisure’s vigorous objections. Similarly, Everest complains that at the 

start of the hearing, Moak refused to admit into evidence a substantial number of 

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37 

documentary exhibits proposed by Everest. But Moak did allow Everest to offer 

the documents into evidence individually during the course of the hearing (with 

him ruling on their admissibility as they were offered) and Moak denied

Amerisure’s request to exclude the exhibits. (See ECF #32-30, Pg. ID 1271.) 

Likewise, Everest claims that Moak wrongly allowed Amerisure to present the 

Panel with a post-hearing submission supporting Amerisure’s interest calculation, 

but the Panel ultimately rejected Amerisure’s demand for interest. Finally, the 

Panel denied Amerisure’s request for attorneys fees. 

 For all of these reasons, the Court concludes that even if Everest’s evident 

partiality claim is preserved for review, there is no basis to vacate the Final Award 

based on Moak’s supposed partiality. 

C. Everest is Not Entitled to Relief From the Final Award Based on How 

the Panel Conducted the Arbitration Proceedings 

 Everest argues that the Court should vacate the Final Award because the 

Panel’s allegedly-erroneous procedural and evidentiary rulings deprived Everest of 

a fair hearing. Everest complains that the Panel wrongfully refused to allow 

Everest to introduce certain exhibits at the arbitration, interfered with its 

examination of lay and expert witnesses, unfairly favored and helped rehabilitate 

Amerisure’s experts, and generally favored Amerisure at every opportunity. (See 

Everest Br., ECF #32 at 15-25, Pg. ID 1095-1105.) The short answer to this 

argument is that Everest’s broad criticisms of the Panel are fundamentally 

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38 

inconsistent with Everest’s answer to Moak’s end-of-hearing question as to 

whether the Panel had given Everest a fair opportunity to present its case. As 

noted above, Everest identified only a single complaint in response to that inquiry. 

(Arb. Tr. at 3655-3566, ECF #40-6 at Pg. ID 1992-1993.) Everest is thus on 

extremely weak ground when it now claims to have been deprived of a fair 

arbitration hearing in myriad ways. 

 The longer answer is that “evidentiary decisions of arbitrators should be 

viewed with unusual deference,” Terk Technologies Corp. v. Dockery, 86 

F.Supp.2d 706, 709 (E.D. Mich. 2000) (internal quotation marks omitted), and 

Everest has fallen far short of showing that the Panel’s evidentiary and procedural 

errors deprived Everest of a fair arbitration hearing.10 Indeed, many of Everest’s 

complaints about the hearing ring hollow: 

 Everest argues that Moak “fawned” over Amerisure’s 

expert witnesses, but Amerisure has identified portions of 

the arbitration transcript that show Moak questioning the 

qualifications of Amerisure’s expert (see Arb. Tr. at 

1795, ECF #33-26 at Pg. ID 1527); 

 Everest argues that the Panel prevented it from offering 

exhibits into evidence, but as described in detail above, 

the Panel actually refused to grant Amerisure’s motion to 

strike the exhibits and expressly allowed Everest the 

                                                            

10 See also U.S. Life Ins. Co. v. Superior Nat. Ins. Co., 591 F.3d 1167, 1175 (9th 

Cir. 2010) (“[a]rbitrators enjoy ‘wide discretion ... to admit or exclude evidence, 

how and when they see fit.’”) (quoting Indus. Risk Insurers v. M.A.N. 

Gutehoffnungshutte GmbH, 141 F.3d 1434, 1444 (11th Cir. 1998)). 

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39 

opportunity to move the admission of the exhibits on an 

individual basis (see ECF #32-30, Pg. ID 1271); and 

 Everest complains that the Panel allowed Amerisure to 

file a post-hearing submission supplementing the 

evidentiary record related to Amerisure’s claim for 

interest (see ECF #31-38, Pg. ID 1057-1059 describing 

and objecting to Amerisure’s submission), but the Panel 

ultimately declined to award any interest. 

 

Everest has failed to show that the Panel conducted the hearing in an unfair 

manner and/or that it suffered any unfair prejudice as a result of the manner in 

which the Panel conducted the hearing. 

D. Everest Has Failed to Show That the Panel Exceeded Its Powers in a 

Manner Warranting Vacatur of the Final Award 

The Panel faced two primary issues of contract interpretation and 

application: (1) did the Direct Access Treaty permit Amerisure to aggregate the 

individual losses that comprised the Amerisure Asbestos Losses into a single claim 

for indemnification and (2) did the Asbestos Exclusion bar Amerisure’s claim for 

indemnification? The Panel ruled that Amerisure could aggregate the individual 

losses that comprised the Amerisure Asbestos Losses and that the Asbestos 

Exclusion was no bar to indemnification. Everest argues that in so ruling, the 

Panel exceeded its powers and dispensed its “own brand of industrial justice.” The 

Court disagrees. As explained below, the Panel did not exceed its powers in 

allowing Amerisure to aggregate, and while one aspect of the Panel’s ruling on the 

Asbestos Exclusion did exceed the Panel’s powers, the ruling was supported by an 

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40 

alternative ground that was within the Panel’s powers. 

1. The Panel’s Conclusion That Amerisure Could Aggregate the 

Individual Losses That Comprised the Amerisure Asbestos Losses 

Under the Direct Access Treaty 

The Panel ruled that the individual losses that comprised the Amerisure 

Asbestos Losses could be treated as a single “occurrence” or “series of occurrences 

arising out of one event.” (Final Award at 4-5, Pg. ID 185-186.) Under the FAA, 

this Court must affirm that ruling so long as, in reaching the ruling, the Panel was 

“even arguably construing or applying the contract and acting within the scope of 

[its] authority.” Nationwide, 429 F.3d at 643. It was. 

As described in detail above, the Panel first determined that the definition of 

“occurrence” – with its use of the undefined term “event” – was ambiguous as to 

whether it permitted aggregation. (See Final Award at 4, ¶¶2-3, Pg. ID 185.) This 

conclusion is hardly surprising, and is defensible, in light of the fact that “the two 

well-credentialed and articulate principal expert witnesses offered opinions of 

treaty interpretation that were totally at odds.” (Id. at ¶2.) Indeed, given that each 

side asked the Panel to look beyond the “four corners” of the Direct Access Treaty 

and to consider expert testimony about the meaning of terms “occurrence” and 

“event,” the Panel had every right to find the language ambiguous.11 

                                                            

11 Everest highlights that “[n]either party argued [at the arbitration hearing] that 

[the “occurrence” definition] was ambiguous.” (Everest Br., ECF #31 at 17, Pg. 

ID 523.) But “the fact that both parties argue that [a] contract is unambiguous does 

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41 

The Panel then “considered all of the conflicting interpretations presented on 

the treaty’s occurrence definition (and the absence of an event definition),” and it 

found the interpretation offered by witness [Person A] (“[Person A]”) to be the 

most persuasive. (Id. at 4, ¶¶4-5, Pg. ID 185.) The Panel stressed that [Person A] 

was the “only percipient witness” – the only person with a connection to the 

drafting of the language in question – and that he “testified substantially in favor of 

Amerisure’s treaty interpretations and in support of Amerisure’s demand for 

payment.” (Id. at ¶4.) Simply put, [Person A] testified that aggregation was fully 

consistent with the definition of “occurrence” and ”event”: 

Q: Turn again to the treaty ... And I’m going to direct your 

attention to [where the treaty defines the word occurrence]. 

Is that an example of an occurrence definition which permits 

the combination of multiple losses? 

A: Yes it does. 

Q: And how so? 

A: It provides for losses arising out of occurrence, whether it be 

multiple insured’s or multiple coverage parts and arising out 

of one event. 

                                                                                                                                                                                               

not preclude ... [a] finding [that] the contract [is] ambiguous.” Pitcher v. Principal 

Mutual Life Insurance Company, 870 F.Supp. 903, 907, n. 1 (S.D. Ind. 1994); see 

also E.R. Squibb & Sons, Inc. v. Lloyd’s & Companies, 241 F.3d 154, 179 (2d Cir. 

2001) (“reject[ing] both parties’ positions” that endorsement in insurance contract 

was unambiguous). Indeed, the fact that the parties offered starkly different 

definitions and supported those definitions with expert testimony and with detailed 

and reasonable arguments tends to confirm the Panel’s ruling that the term is 

susceptible to different interpretations – that it is ambiguous. 

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42 

Q: Okay. Do you see the reference there to a series of accidents 

or occurrences? 

A: Yes. 

Q: And do you believe that allows for more than one accident 

or occurrence, more than one claim to be combined into a 

single occurrence if they all arise out of the same event? 

A: I do, yes. 

Q: Do you believe that a series of products losses can arise 

out of one event? 

A: Yes. 

Q: And as you read this clause, can the manufacture of a 

product that includes an asbestos component constitute an 

event? 

A: Yes. 

[....] 

Q: Do you have an understanding as to whether [an] event [as 

defined in the treaty] could be something that occurs over a 

period of time? 

A: Event is a very broad word. And it could be something that 

occurs over a period of time, yes. 

Q: And when you say ‘over a period of time,’ how long could 

that be? Could that be multiple years? 

A: It could be, sure. 

(Arb. Tr. at 503-506; 511-512, ECF #42-6 at Pg. ID 2223-2224.) The Panel found 

[Person A’s] testimony in support of Amerisure’s interpretation especially 

persuasive because he was employed by Everest when the Direct Access Treaty 

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43 

was drafted. (See Final Award at 4, ¶4, Pg. ID 185.) The Panel also relied upon 

case law that, in its view, supported its conclusion that aggregating losses was 

consistent with the definitions of “occurrence” and “event.” (See id. at 4-5, ¶6, Pg. 

ID 185-186.) 

The Panel further considered and rejected the evidence that Everest offered 

in support of its argument that the Direct Access Treaty did not allow the 

aggregation of the individual losses that comprised the Amerisure Asbestos Losses. 

The Panel found that evidence substantially less persuasive than the evidence 

offered by Amerisure. (See id. at ¶6.) 

In short, the Panel followed a customary interpretive path. It first 

determined that an ambiguity allowed it to look beyond the four corners of the 

Direct Access Treaty. It then analyzed the competing extrinsic evidence as to the 

meaning of the terms “occurrence” and “event” and as to whether aggregation of 

the individual losses that comprised the Amerisure Asbestos Losses was consistent 

with those terms, as Amerisure argued. It found Amerisure’s evidence more 

persuasive and adopted the interpretation supported by that evidence. That is 

classic – and reasonable – contract interpretation. Such interpretation fell squarely 

within the Panel’s authority. The FAA bars this Court from upsetting that 

interpretation. 

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44 

 Everest counters that another passage in the Final Award proves that the 

Panel impermissibly deviated from the plain language of the “occurrence” 

definition. Everest points to the Panel’s statements that allowing the aggregation 

of the individual losses that comprised the Amerisure Asbestos Losses (1) “is

commonly accepted in the business” and (2) comports with how “much of the 

industry has come to define such excess of loss reinsurance coverage.” (Id.; 

emphasis added.) Everest argues that the Panel’s use of the present tense shows 

that the Panel was answering the wrong question: instead of determining the intent 

of the parties when they used the terms “occurrence” and “event” in the Direct 

Access treaty more than twenty years ago, the Panel rested its decision on how the 

relevant terms could be understood under current industry standards. 

The Court acknowledges that the Panel’s use of the present tense is a bit 

confounding. The Panel did not draw a connection between the current meaning 

of the disputed terms and the commonly accepted meaning of those terms when the 

parties entered into the Direct Access Treaty. Without such a link, the current 

meaning is not relevant to the issue that the Panel was asked to resolve: namely, 

when the parties executed the Direct Access Treaty, did they intend to allow 

aggregation of individual losses, like those that comprised Amerisure Asbestos 

Losses, into a single claim for indemnification? 

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45 

Although the Panel did appear to consider the current meaning of the 

disputed terms, the Court is not convinced that the Panel actually rested its ruling 

on that meaning rather than upon their meaning when the parties entered the Direct 

Access Treaty. As described above, the Panel expressly relied on the testimony of 

a percipient witness who had a connection to the original drafting of the disputed 

language and upon the testimony of experts as to what that language meant. The 

Court is convinced that even though the Panel used some imprecise language in the 

Final Award, the Panel did engage in proper contract interpretation, and the Court 

cannot disturb that interpretation under the FAA. See, e.g., Solvay, 442 F.3d at 476. 

Nor does Michigan law permit the Court to upset the Final Award on the 

ground that the Panel exceeded its powers in allowing aggregation of the 

individual losses that comprised the Amerisure Asbestos Losses. As explained in 

detail above, the Panel’s resolution of the aggregation issue is not plainly at odds 

with any express and unambiguous term of the Direct Access Treaty, and, more 

specifically, is not fundamentally irreconcilable with the treaty’s definition of 

“occurrence.” Indeed, interpreting ambiguous contractual terms, as the Panel did 

in this case, is a far cry from exceeding an express contractual term in violation of 

Michigan law. See Muskegon Central Dispatch 911, 462 Fed. App’x at 524-25 

(explaining that an arbitrator does not exceed his powers under Michigan law 

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46 

where he “engag[es] in contract interpretation” but does exceed his powers when 

he ignores the “plain language” of a contract). 

At bottom, Everest’s argument that the Panel exceeded its authority by 

allowing aggregation is nothing more than an invitation to review the merits of the 

Panel’s contract interpretation. The Michigan Supreme Court has directed courts 

to reject such an invitation. See Gordon Sel-Way, 475 N.W.2d at 704. This Court 

heeds that direction here, as it must. 

2. The Panel’s Conclusion That the Asbestos Exclusion Did Not 

Preclude Indemnification 

As described in detail above (see pp. 2-5), the Direct Access Treaty (as 

amended in 1987) and the Woods Treaties both contained the Asbestos Exclusion 

and two possibly applicable exceptions to the Asbestos Exclusion. These 

exceptions were the Incidental Exception Language in the Asbestos Exclusion and 

the Generally-Applicable Incidental Exception to the Treaties’ Exclusions. 

The Panel considered both whether the Asbestos Exclusion applied and

whether, even if the Amerisure Asbestos Losses would otherwise fall within that 

exclusion, Amerisure was nonetheless entitled to indemnification by operation of 

one of the two above-described exceptions to the exclusion. (See Final Award at 

5-6, ¶¶ 8-12, Pg. ID 186-187.) The Panel resolved both issues in Amerisure’s 

favor. The Panel first determined that the Asbestos Exclusion did not apply 

because [Company X’s] asbestos exposure was neither known to Amerisure nor 

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47 

generally-recognized. (See id. at ¶¶ 9-10.) The Panel then ruled that even if the 

Asbestos Exclusion would otherwise apply (and bar indemnification), Amerisure 

was still entitled to indemnification because the Generally-Applicable Incidental 

Exception to the Treaties’ Exclusions was “applicable.” (Id. at 6, ¶12, Pg. ID 187.) 

Everest argues that these rulings exceeded the Panel’s powers. 

The Court agrees with Everest that the Panel exceeded its powers when it 

concluded that Amerisure could avoid the Asbestos Exclusion on the ground that it 

did not know about [Company X’s] asbestos exposure. However, Everest has 

failed to show that the Panel exceeded its powers in ruling that the GenerallyApplicable Incidental Exception to the Treaties’ Exclusions was “applicable,” such 

that Amerisure was entitled to coverage even if the Asbestos Exclusion otherwise 

applied and precluded indemnification. 

a. Everest Has Established That the Panel Exceeded its 

Powers When it Ruled That [Company X’s] Operations Did 

Not Present a Known Asbestos Exposure 

 The Panel acted directly contrary to the plain language of the Asbestos 

Exclusion – and thereby exceeded its powers – when it ruled that Amerisure could 

avoid the Asbestos Exclusion because it did not know about [Company X’s] 

asbestos exposure. The Panel acknowledged that documents introduced by Everest 

“appear[ed] to show that that Amerisure may very well have been aware by 1987 

[before the parties executed the Direct Access treaty] of the fact that [Company 

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48 

X’s] steam traps contained an encapsulated asbestos gasket.” (Id. at 5, ¶9, Pg. ID 

186.) The Panel also acknowledged that other documents “even indicated that by 

1987 there could have been a few very small asbestos losses.” (Id.) The Panel, 

however, dismissed these documents because “[Company X’s] workers’ 

compensation insurance was written by Amerisure during the relevant timeframe,” 

and Amerisure “experienced no claims for asbestos-related injury” and did not 

include in [Company X’s] workers’ compensation policy an exclusion for 

asbestos-related claims. (Id.) The Panel announced its holding on the knowledgeof-exposure issue as follows: “In sum, it appears that it was Amerisure’s 

underwriting judgment as manifested by the absence of an exclusion in its policies, 

that the encapsulated asbestos gaskets [Company X] used did not constitute a 

known exposure.” (Id.; emphasis added.) 

 But the relevant question under the Asbestos Exclusion has nothing to do 

with Amerisure’s subjective “underwriting judgment.” The question is whether 

Amerisure objectively knew about [Company X’s] asbestos exposures. The Panel 

did not answer that question. Instead, it replaced the contractually-mandated 

inquiry into Amerisure’s knowledge of the exposure with its own inquiry into 

Amerisure’s subjective assessment about the extent of the exposure. Even under 

the deferential review mandated by the FAA, such a wholesale departure from the 

plain language of the contract cannot stand. See, e.g., Michigan Family Resources,

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49 

475 F.3d at 753 (“[W]e cannot ignore the specter that an arbitration decision could 

be so ignorant of the contract's plain language as to make implausible any 

contention that the arbitrator was construing the contract”) (internal citation and 

punctuation omitted). And it certainly cannot withstand review under Michigan’s 

law which requires vacatur where an arbitrator acts contrary to unambiguous 

contractual language. See Gavin, 331 N.W.2d at 430. 

 Amerisure attempts to insulate the Panel’s treatment of the knowledge issue 

from review. It argues that the Panel made a “factual finding” that Amerisure 

lacked knowledge, and it insists that under both the FAA and Michigan law, this 

Court may not review such a finding. (Amerisure Opposition Brief, ECF #40 at 19-

20, Pg. ID 1959-1960.) If the Panel had made such a finding, Amerisure would be 

right. But the Panel made no such finding. As described above, instead of finding 

that Amerisure did not know about [Company X’s] asbestos exposure, the Panel 

found “that it was Amerisure’s underwriting judgment” that there was no “known 

exposure.” (Final Award at 5, ¶9, Pg. ID 185.) And the Court is unwilling to hold 

– in the face of the Panel’s statement that it resolved the knowledge issue based on 

Amerisure’s underwriting judgment – that the Panel made some sort of implicit or 

unstated factual finding that Amerisure lacked knowledge. For all of these 

reasons, the Panel exceeded its powers when it ruled that Amerisure could avoid 

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50 

the Asbestos Exclusion on the ground that it did not know that [Company X’s] 

operations presented a known asbestos exposure. 

b. Everest Has Failed to Establish That the Panel Exceeded its 

Powers When it Ruled That the Generally-Applicable 

Incidental Exception to the Treaties’ Exclusions Was 

“Applicable” 

 As described in detail above, the Generally-Applicable Incidental Exception 

to the Treaties’ Exclusions provided that even if one of the Treaties’ enumerated 

exclusions would preclude indemnification for a loss caused by a product, Everest 

would nonetheless indemnify Amerisure if the product in question was a minor and 

incidental part of an insured’s total products. (See Direct Access Treaty at 40-41, 

Pg. ID 279-280.) The Panel ruled that this exception was “applicable” and, thus, 

that the Asbestos Exclusion did not bar Amerisure from receiving indemnification 

from Everest. (Final Award at 6, ¶12, Pg. ID 187.) Everest has barely attempted 

to show – and certainly has not demonstrated – that the Panel exceeded its powers 

in concluding that the Generally-Applicable Incidental Exception to the Treaties’ 

Exclusions was “applicable.” 

Indeed, even though Amerisure’s briefing urged this Court to uphold the 

Panel’s ruling that the Generally-Applicable Incidental Exception to the Treaties’ 

Exclusions was “applicable” – and to confirm the Final Award, in part, on the basis 

of that ruling (see Amerisure Br., ECF #40 at 20-21, Pg. ID 1961-1962) – 

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Everest’s primary briefs do not even mention the exception.12 Nor did Everest’s 

oral argument to the Court demonstrate an error in the Panel’s ruling that the 

exception was “applicable.” During argument, the Court twice specifically asked 

Everest’s counsel about this aspect of the Panel’s ruling. In response to the first 

question, counsel focused on the separate Incidental Exception Language in the 

Asbestos Exclusion.13 In response to the second question, Everest’s counsel said 

                                                            

12 The Panel’s ruling on the Generally-Applicable Incidental Exception to the 

Treaties’ Exclusions is included in paragraph 12 of the Final Award. The only 

reference to this paragraph of the Final Award in Everest’s primary briefs (i.e., all 

of its briefs filed before the motion hearing before this Court) is included in 

footnote 11 of Everest’s brief in support of its Motion to Vacate. (See ECF #31 at 

26, n. 11, Pg. ID 532.) This footnote states, in its entirety: “The panel majority 

also did not attempt to interpret the so-called ‘escape clause,’ merely concluding 

that it was ‘applicable.’” (Id.) This footnote confuses the Panel’s ruling on the 

“escape clause” with its ruling on the separate Generally-Applicable Incidental 

Exception to the Treaties’ Exclusions. In the very paragraph of the Final Award 

cited by Everest, the Panel unanimously held, contrary to Everest’s claim, that the 

“escape clause” did not apply: “The panel is unanimous in rejecting Amerisure’s 

argument that the so-called ‘escape clause,’ the last paragraph of the [Direct 

Access Treaty] [] applies in this case.” (Final Award at 6, ¶12, Pg. ID 187.) In 

that same paragraph of the Final Award, the Panel held, by a 2-1 vote, that the 

Generally-Applicable Incidental Exception to the Treaties’ Exclusions was 

“applicable.” Everest’s briefs do not contain any argument concerning this latter 

holding. 

13 The Court asked Everest’s counsel at the motion hearing how Everest could “get 

around the fact that even if [Everest won] on the known exclusion[,] [it would] lose 

under the incidental exception to the exclusion as [the Panel] note[ed] in paragraph 

12 of the award on page 6 of the award?” (The “Motion Transcript,” ECF #44 at 

95, Pg. ID 2444.) In response, Everest’s counsel referred the Court to “the litany 

of types of activities that were stated in the first paragraph of the exclusion.” (Id.) 

The Generally-Applicable Incidental Exception to the Treaties’ Exclusions did not 

consist of multiple paragraphs; it was a single sentence. (Direct Access Treaty at 

41, Pg. ID 280.) In contrast, the Incidental Exception Language in the Asbestos 

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52 

only that the Panel’s finding that the exception was “applicable” was not “tethered 

to the contract in any respect.” (Mot. Tr. at 97, Pg. ID 2446.) This conclusory 

response falls short of the showing required to establish that the Panel exceeded its 

powers. Indeed, this response does not identify any specific language in the 

Treaties that expressly conflicts with the Panel’s holding that the GenerallyApplicable Incidental Exception to the Treaties’ Exclusions was “applicable” to 

the Asbestos Exclusion. 

Finally, in its post-hearing supplemental brief “addressing whether the FAA 

or Michigan arbitration law” governs, Everest complained in passing that the Panel 

“inexplicably rul[ed] that [Company X’s] undisputed main product (asbestoscontaining steam traps) was a ‘minor and incidental part of [its] total ... 

products.’” (Everest Supp. Br., ECF #45 at 5, Pg. ID 2478; emphasis in original.) 

But under Michigan law (which Everest asks this Court to apply), Everest may not 

attack the Panel’s factual findings in these proceedings. See Muskegon Central 

Dispatch 911, 462 Fed. App’x at 524 (quoting City of Ann Arbor, 771 N.W.2d at 

854). Likewise, Everest’s perfunctory attack on the Panel’s “minor and incidental” 

finding is not sufficient to warrant setting it aside under federal law. See DBM 

                                                                                                                                                                                               

Exclusion appears in two paragraphs. (Id. at 7, Pg. ID 246.) Moreover, the 

Incidental Exception Language in the Asbestos Exclusion identifies specific 

activities; the Generally-Applicable Incidental Exception to the Treaties’ 

Exclusions does not. Thus, counsel’s reference to the specified activities shows 

beyond any doubt that he was referring to the Incidental Exception Language in the 

Asbestos Exclusion. 

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53 

Technologies, Inc. v. Local 227, United Food & Commercial Workers Int’l Union, 

257 F.3d 651, 657 (6th Cir. 2001) (reaffirming that standard governing review of 

arbitrator’s factual findings “is even more stringent” than already-deferential 

standard of review for awards and that even “silly” fact-finding “is an insufficient 

basis to vacate an arbitrator’s award”). And to the extent the sentence fragment 

quoted above from Everest’s post-hearing brief is an argument that the Panel 

exceeded its powers, it falls well short of the required showing.

Everest has simply not carried its heavy burden to show that the Panel 

exceeded its powers when it concluded that the Generally-Applicable Incidental 

Exception to the Treaties’ Exclusions – which, on its face, applies to all of the 

listed exclusions14 – was “applicable” to the Asbestos Exclusion and to 

Amerisure’s claim.15

                                                            

14 The Court recognizes that there may be a reasonable argument that the 

Generally-Applicable Incidental Exception to the Treaties’ Exclusions does not 

apply to asbestos-related claims. One could argue that the Incidental Exception 

Language in the Asbestos Exclusion is the relevant exception with respect to 

asbestos-related claims (and controls over the Generally-Applicable Incidental 

Exception to the Treaties’ Exclusions) because it is more directly-applicable and is 

located in the Asbestos Exclusion itself. But Everest has not made this argument. 

Thus it is not before the Court, and the Court need not consider it. Cf. Kuhn v. 

Washtenaw Cnty., 709 F.3d 612, 624 (6th Cir. 2013) (“This court has consistently 

held that arguments not raised in a party's opening brief, as well as arguments 

adverted to in only a perfunctory manner, are waived”). And even if the Panel’s 

reading of the Generally-Applicable Incidental Exception to the Treaties’ 

Exclusions is not the best reading – and even if a court may have interpreted the 

exception differently –the Panel’s reading of the exception does not expressly 

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E. Everest Is Not Entitled to Relief on the Ground That the Panel 

Exceeded Its Powers by Ruling That the [Company Y] Losses Were “In 

the Case” 

 The Final Award required Everest to indemnify Amerisure for amounts that 

Amerisure paid to [Company Y], an affiliate of [Company X] (the “[Company 

Y] Losses”). Everest argues that the Panel “had no jurisdiction” to award that 

relief because “Amerisure’s arbitration demand and position statement only 

referenced [Company X].” (ECF #31 at 26-27, Pg. ID 532-533.) Everest 

presented this argument to the Panel, and, “after due deliberation,” the Panel 

rejected it, holding “on the morning of the hearing’s final day that the [Company 

Y Losses] were ‘in the case.’” (Final Award at 2, Pg. ID 183.) Everest insists that 

this Court may review the Panel’s ruling on the [Company Y] Losses de novo

(albeit with a “thumb on the scale in favor of arbitration”) because that ruling 

related to the Panel’s “jurisdiction.” (Mot. Tr. at 105; quoting Solvay, 442 F.3d 

                                                                                                                                                                                               

conflict with the plain language of the Treaties. Thus, the Panel did not exceed its 

powers. 

15 As noted above, the Panel also discussed whether the Incidental Exception 

Language in the Asbestos Exclusion applied and whether, for that independent 

reason, the Asbestos Exclusion did not bar Amerisure’s claim. (See Final Award at 

6, ¶11, Pg. ID 188.) But while the Panel discussed this issue, it did not clearly rule 

on it. The Panel said that it “may not need to reach the issue,” and while the 

Panel’s comments appear to indicate that it was inclined to find that the exception 

did apply and did allow for coverage despite the Asbestos Exclusion, the Panel did 

not expressly state its conclusion. (Id.) At oral argument on the motions, 

Amerisure urged the Court to confirm the Final Award, in part, on the basis of the 

Panel’s discussion of this exception. However, since it is not clear to the Court 

that the Panel made any ruling on this exception, the Court declines to address 

whether that exception applies. 

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471.) Everest contends that the Panel’s assumption of jurisdiction over the 

[Company Y] Losses cannot withstand such review. The Court disagrees with 

Everest’s proposed standard of review and its conclusion. 

 The Panel’s ruling that the [Company Y] Losses were “in the case” is not 

subject to de novo review simply because it related to the Panel’s “jurisdiction.” 

An arbitration panel has “jurisdiction” over a dispute if two conditions are met: (1) 

the dispute is subject to arbitration under the parties’ contract and (2) the parties 

have, in fact, submitted the dispute to the panel. It is the first “jurisdictional” 

question – whether a dispute is arbitrable – that receives independent, de novo

review in federal court. See Solvay, 442 F.3d at 476-477. In sharp contrast, an 

arbitrator’s determination of the second “jurisdictional” question – whether the 

parties in fact submitted an arbitrable claim for arbitration – is entitled to great 

deference. Indeed, “[t]he extraordinary deference given to an arbitrator’s ultimate 

decision on the merits applies equally to the arbitrator’s threshold decision that the 

parties have indeed submitted a particular issue for arbitration.” International 

Association of Machinists and Aerospace Workers v. Tennessee Valley Authority, 

155 F.3d 767, 772 (6th Cir. 1998) (quoting Champion International Corp. v. 

United Paperworkers International Union, 779 F.2d 328, 335 (6th Cir. 1985)). 

This rule applies with full force in the context of arbitration proceedings involving 

reinsurance disputes. See United States Life Insurance Company v. Superior 

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National Insurance Company, 591 F.3d 1167, 1178 (9th Cir. 2010) (holding in 

dispute between insurer and reinsurer over scope of arbitration demand that 

arbitration “panel’s understanding of its scope of authority is entitled to the same 

level of great deference as its determination on the merits”) (internal punctuation 

omitted). 

 Here, the “jurisdictional” issue before the Court is not one of arbitrability 

that the Court reviews de novo. Indeed, the dispute over Everest’s liability for the 

[Company Y] Losses undoubtedly falls within the scope of the Treaties’ broad 

arbitration provisions and is thus plainly subject to arbitration. Everest does not 

contend otherwise. Instead, the “jurisdictional” issue here is whether the parties 

submitted their admittedly-arbitrable dispute about the [Company Y] Losses to the 

Panel for resolution. The Panel’s answer to that question – that the parties did 

submit their dispute over the [Company Y] Losses to arbitration – is entitled to 

“extraordinary deference.” International Association of Machinists and Aerospace 

Workers, 155 F.3d at 772 

 The Court declines to disturb the Panel’s ruling that the parties submitted 

their dispute over the [Company Y] Losses for decision. Amerisure explained to 

the Panel that while its original demand may not have used the name “[Company 

Y],” the amounts included in that demand did include payments that Amerisure 

made to [Company Y]. Everest did not dispute that assertion before the Panel and 

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did not dispute it before this Court. (See Mot. Tr. at 113-114, Pg. ID 2462-2463.) 

Moreover, Amerisure filed a letter brief with the Panel in which it set forth in 

detail the many ways in which the parties addressed the [Company Y] losses in 

the proceedings leading up to the arbitration hearing (including discovery and prehearing filings). (See Amerisure Letter Brief, ECF #40-11, Pg. ID 2127-2133.) 

Amerisure’s detailed showing amply supports the Panel’s conclusion that the 

parties submitted their dispute over the [Company Y] Losses for decision. 

 Everest admittedly had some support for its argument to the Panel that the 

[Company Y] Losses were not sufficiently identified in Amerisure’s demand for 

arbitration and were not part of the arbitration proceedings. Everest explained to 

the Panel that Amerisure objected to a discovery request concerning [Company Y] 

on the ground that [Company Y] was “not at issue in this arbitration.” (Discovery 

Response, ECF #33-5 at 5, Pg. ID 1382). However, Amerisure explained to the 

Panel that it made this objection early in the proceedings – nearly a year before the 

originally scheduled June 2013 arbitration hearing – that it withdrew the objection; 

and that in the many months following the objection, the parties proceeded on the 

clear understanding that the [Company Y] Losses were at issue. (See Amerisure’s 

Letter Brief, ECF #40-11, Pg. ID 2127-2133.) The Panel accepted Amerisure’s 

explanation, and that decision by the Panel was not objectively unreasonable. The 

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Court will not vacate that portion of the Final Award which requires Everest to 

indemnify Amerisure for the [Company Y] Losses. 

F. The Court Must Confirm the Final Award 

For all of the reasons stated above, the Court finds no justification to vacate, 

modify, or correct the Final Award. Accordingly, the Court must confirm the Final 

Award. See 9 U.S.C. § 9; Barcume v. City of Flint, 132 F. Supp. 2d 549, 555 (E.D. 

Mich. 2001); Gordon Sel-Way, 475 N.W.2d at 709 (“In this context, the court rules 

provide the court with three options: it may confirm, modify or correct, or vacate 

the award”). 

CONCLUSION 

 For all the reasons stated above, IT IS HEREBY ORDERED that 

Amerisure’s Motion to Confirm (ECF #2) is GRANTED and Everest’s Motion to 

Vacate (ECF #23) is DENIED.

IT IS FURTHER ORDERED that within seven calendar days, Amerisure 

shall submit to the Court through the Utilities function of CM/ECF, a proposed 

Judgment that confirms the Final Award. Amerisure shall also serve a copy of the 

proposed Judgment on Everest and file a Proof of Service with this Court. Everest 

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shall have seven calendar days from the date of service to file an objection with the 

Court to the form of the proposed Judgment. 

       s/Matthew F. Leitman 

 MATTHEW F. LEITMAN 

Dated: March 18, 2015 UNITED STATES DISTRICT JUDGE 

 I hereby certify that a copy of the foregoing document was served upon the 

parties and/or counsel of record on March 18, 2015, by electronic means and/or 

ordinary mail. 

 s/Holly A. Monda 

 Case Manager 

 (313) 234-5113 

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