The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge
In May 2008, during the pendency of arbitration proceedings between Petitioners Insurance Company of North America (now known as Century Indemnity Company) and INA Reinsurance Company (now known as R&Q Reinsurance Company) (collectively, "INA") and Respondent and Cross-Petitioner Public Service Mutual Insurance Company ("PSMIC"), INA's party-appointed arbitrator John D. Sullivan ("Sullivan") learned that he had cancer that required immediate and intensive treatment. As a consequence, Sullivan resigned from the three-person panel. When the parties could not agree about how to address Sullivan's resignation, this litigation ensued. On December 10, 2008 I issued an Opinion and Order (the "Order") applying the "general rule" in the Second Circuit that when a party-arbitrator dies in the middle of arbitration proceedings the arbitration must commence anew. Order at 9 (citing Marine Products v. MT Globe Galaxy, 977 F.2d 66 (2d Cir. 1992) ("Marine Products"). In January 2009, PSMIC's counsel learned that not only had Sullivan's health improved to the point that he was actively seeking appointment as an arbitrator, but thathis recovery preceded issuance of myOrder. On the basis of this newinformation, PSMIC moves for relief from the Order pursuant to Fed. R. Civ. P. 60(b)(2) and (6). Because the Order expressly assumed that Sullivan's illness was so serious that the "general rule" applied but as it turned outSullivan was eventhen actively seeking work as an arbitrator, and for the further reasons set forth below, PSMIC's motion for relief pursuant to Fed. R. Civ. P. 60(b)(2) is GRANTED.
As set forth in detail in my December 2008 Order, Sullivan's resignation came on the heels of the arbitral panel's issuance of a unanimous summary judgment opinion that, inter alia,disposed of INA's chief legal defense and set the stage for further discovery and a hearing on INA's other defenses to PSMIC's claim for payment under certain reinsurance contracts. See Order at 3. INA's motion for reconsideration of the panel's summary judgment order was pending at the time Sullivan announced his resignation. There has been no suggestion that Sullivan's cancer diagnosis and treatment were anything other than legitimate and serious, but on the other hand, having lost on their primary legal defense INA certainly stood to benefit from "another bite at the apple." In the correspondence that followed Sullivan's resignation and before this Court, INA has argued vigorously that the arbitration must commence anew pursuant to the rule espoused by the Second Circuit in Marine Products, 977 F.2d at 66. PSMIC, for its part, argued that the panel's summary judgment decision constituted a "partial final award," which under the Second Circuit's decision in Trade & Transport v. Natural Petroleum Charterers, 931 F.2d 191, 194 (2d Cir. 1991) constitutes "special circumstances" warranting a departure from the general rule. At oral argument on the cross-petitions, INA's counsel stressed the severity of Sullivan's diagnosis and treatment but his health was not otherwise discussed. See Tr. of November 13, 2008 Hearing ("Tr.") at 12.
In the Order, I first found applicable decisions that considered the death of an arbitral panelist "because neither party dispute[d] that Mr. Sullivan resigned for legitimate and serious health reasons." Order at 5 n. 3. I went on to distinguish Trade & Transport because in this case the arbitral panel's summary judgment was not a "partial final award" that "conclusively decide[d] every point" that the parties had submitted to thepanel for resolution. Id. at 6 (quoting Trade & Transport, 931 F.2d at 193). Citing the Second Circuit's decision in Zeiler v. Deitsch, 500 F.3d 157, 167 (2d Cir. 2007), I noted the troubling incentives for "bad faith manipulation of the arbitration process" arguably created by a rule that requires an arbitration to commence anew upon the resignation of one party's panelist and expressed my sensitivity to the "potential for wasted resources where an arbitration must be redone from scratch." Order at 8. As a consequence of these considerations, I took care to note that "my decision [was] expressly premised on the unique facts of this case where the resignation occurred while pending before the panel was a motion for reconsideration of an order that itself cannot be fairly considered a 'final partial award.'" Id. (quoting Trade & Transport, 931 F.2d at 195). I specifically noted the unfairness of requiring INA to submit its motion for reconsideration to "a panel comprised of two arbitrators who heard argument on, and ultimately decided the summary judgment motion for which reconsideration is requested and one arbitrator who did not." Id. at 8-9.
Through its counsel, PSMIC learned in January 2009 that Sullivan's health had improved to the point that he was again actively seeking employment as an arbitrator. (Another client of PSMIC's counsel had proposed Sullivan as an arbitrator in a wholly separate arbitration and Sullivan had indicated that he was available.) Upon further investigation, PSMIC's counsel learned that Sullivan had attended an arbitration conference on November 6 and 7, 2008, after the parties' cross motions in this litigation were fully briefed but before oral argument was heard on November 13, 2008. INA's counsel attended the same conference. Needless to say, none of this was brought up at oral argument.
On January 14, 2009, PSMIC's counsel wrote to Sullivan via email to inquire whether he was available to rejoin the panel from which he had resigned in May 2008. Hargraves Decl. Ex. E. Before Sullivan replied, INA's counsel responded, copying Sullivan on an email that declared that INA was "unwilling to agree to allow Mr. Sullivan to rejoin the prior, defunct panel." Hargraves Decl. Ex. F. A few days later, Sullivan responded to PSMIC's counsel, stating that his resignation in May 2008 "was final and not conditional or provisional" and that "[he was] not willing to put [his] name forward because [he] believe[d] that [he had] no right to do so." Id. at Ex. K. INA did not serve a demand for arbitration before a new panel, as authorized by my December 2008 Order until January 20, 2009, after PSMIC's counsel had inquired about Sullivan's recovery and INA's counsel had refused to accept his reappointment. Id. at Ex. H.
"Rule 60(b) provides a mechanism for extraordinary judicial relief available only if the moving party demonstrates exceptional circumstances, and relief under the rule is discretionary." Motorola Credit Corp. v. Uzan, 561 F.3d 123, 126 (2d Cir. 2009) (internal quotation marks and citations omitted). Consequently, "[t]he party seeking relief from judgment has an onerous standard to meet." United States v. Int'l. Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001) ("Teamsters"). In order toestablish that it is entitled to relief from judgment on the basis of newly discovered evidence pursuant to Rule 60(b)(2)*fn1 'the movant must demonstrate that (1) the newly discovered evidence was of facts that existed at the time of trial or other dispositive proceeding, (2) the movant must have been justifiably ignorant of them despite due diligence, (3) the evidence must be admissible and of such importance that it probably would have changed the outcome, and (4) the evidence must not be merely cumulative or impeaching.'
Id. (quoting United States v. IBT, 179 F.R.D. 444, 447 (S.D.N.Y. 1998)).
A. Relief From Judgment Pursuant to Rule 60(b)(2)
Here, PSMIC satisfies each of the elements required to establish entitlement to relief from the Order pursuant to Rule 60(b)(2). First, the newly discovered evidence is of facts that existed at the time of both oral argument on the parties' cross petitions and the Order that resolved them. INA does not seriously dispute that Sullivan's health had improved by November 2008. Indeed, in opposition to the instant motion for relief from the Order, INA states that "at least a month prior to the oral argument... it was public knowledge that Mr. Sullivan was actively re-engaged in his profession as an arbitrator." Mem. in Opp'n. at 5.
Rather, INA argues that PSMIC failed to exercise "reasonable diligence" and thus cannot claim to be "justifiably ignorant" of Sullivan's recovery in satisfaction of the second element of a claim for relief under Rule 60(b)(2). "To succeed on a motion pursuant to Rule 60(b)(2) the evidence presented must be 'truly newly discovered or... could not have been found by due diligence.'" Kurzweil v. Philip Morris Companies, Inc., No. 94 Civ. 2373 (MBM), 1997 WL 167043, *4 (S.D.N.Y. Apr. 9, 1997) (quoting United States v. Potamkin, 697 F.2d 491, 493 (2d Cir.), cert. denied, 462 U.S. 1144 (1983)). Here, PSMIC's counsel declares under penalty of perjury that he first learned that Sullivan had recovered to the point he was seeking appointment as an arbitrator on January 14, 2009, and INA ...