Opinion ID: 2973016
Heading Depth: 3
Heading Rank: 1

Heading: Contract R is a contract of reinsurance.

Text: 2. The Addendum to Contract R, by necessary inference, imposed on Home a duty to supervise Rutty’s inward and outward claim handling in respect of Nationwide’s fixed pool share only but not a duty to otherwise replace Nationwide in the runoff or to fund Rutty. 3. In relation to Nationwide’s fixed pool share of inward and outward claims, Home and Rutty agreed to deal only with each other. In relation to all other matters, Nationwide retained responsibility to supervise Rutty. 4. Home had a duty to pay accounts within a reasonable time from receipt. In that regard, Home also had the right to make reasonable inquiries and conduct reasonable inspections. 5. In exercising those rights and fulfilling those duties, Home was obligated to act in good faith and with fair dealing. 6. Although many of Home’s queries and inspections were appropriate and legitimate, others were excessive and inappropriate. Likewise, many of Home’s claim payments were timely but others were not. To the extent that some queries and inspections were excessive, and to the extent that some claim payments (including the Excess claim) were untimely, they constituted breaches of duty by Home. 7. Home’s breaches of duty did not amount to bad faith. 8. Nationwide has failed in most respects to sustain its burden of demonstrating specific damages flowing from specific breaches by Home. The Panel nevertheless believes that some damage necessarily resulted from Home’s breaches, and concludes in its discretion that it would be wrong to deprive Nationwide of any recovery at all. We accordingly award to Nationwide the sum of $750,000 in respect of Home’s breaches of duty. 9. Home is awarded the sum of $1,250,000 in respect of its counterclaims for administrative costs and interest. 10. Nationwide is awarded a contribution from Home of $500,000 toward Nationwide’s costs. 11. Home is awarded a contribution from Nationwide of $1,250,000 toward Home’s costs. 12. All other claims and counterclaims between the parties are dismissed. No. 04-4344 Nationwide Mutual v. Home Insurance Co. Page 3 “fronting share administrative costs” (FSAC) and part of its costs in the arbitration. Home opposed the vacatur application and sought confirmation of the final order. On September 24, 2004, the district court issued an opinion and order denying Nationwide’s vacatur application, granting Home’s cross-motion for confirmation of the arbitration award, and entering a final judgment in favor of defendant Home Insurance. Nationwide now appeals the district court’s denial of its vacatur application, primarily on the ground of evident partiality based on an arbitrator’s alleged nondisclosure of certain business and social relationships with Home.