Justia Arbitration & Mediation Opinion Summaries

Nicole Tausend, the beneficiary of a trust together with her father, Ronald, commenced a N.Y.C.P.L.R. 78 proceeding against Ronald and the partnership (NJR) formed by Ronald for the purpose of acquiring and selling property. Nicole commenced the proceeding in order to obtain access to the partnership documents and an accounting of its finances. In response, NJR issued a demand for arbitration. Supreme Court ordered the parties to arbitration, and the appellate division affirmed. Nicole appeared in the arbitration and asserted several counterclaims, which lead to NJR's commencement of this court proceeding seeking to stay arbitration of the counterclaims on the basis of the expiration of the statute of limitations. Supreme Court granted the petition and stayed arbitration of the counterclaims. The appellate division modified by dismissing NJR's petition to stay arbitration of the counterclaims, reasoning that the partnership was precluded from obtaining a stay because it had initiated and participated in the arbitration. The Court of Appeals affirmed, holding that because NJR initiated and participated in the arbitration of issues stemming from the dispute, its timeliness challenge to the counterclaims must be decided by an arbitrator. View "N.J.R. Assocs. v. Tausend" on Justia Law

In 2011, FSRO filed a Demand for Arbitration against Fantastic Sam's Franchise Corporation, on behalf of its members, who are franchisees, holding individual license agreements with Fantastic Sams. FSRO alleged that the Corporation had breached those license agreements. The Corporation filed a petition pursuant to the Federal Arbitration Act, 9 U.S.C. 4, to stay FSRO's arbitration and to compel FSRO members to arbitrate their claims individually. The district court allowed the petition as to license agreements that specifically prohibit class-arbitration. The decision in favor of the Corporation was not appealed. The court denied relief as to other agreements, which state: “Any controversy or claim arising out of or relating in any way to this Agreement or with regard to its formation, interpretation or breach shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association." The First Circuit affirmed. Whether the language permits group arbitration, as requested by FSRO, is a question for the arbitrators. View "Fantastic Sams Franchise Corp. v. FSRO Ass'n, Ltd." on Justia Law

This case arose from a foreign shipping contract billing dispute between Consorcio Ecuatoriano de Telecomunicaciones S.A. (CONECEL) and Jet Air Service Equador S.A. (JASE). CONECEL filed an application in the Southern District of Florida under 28 U.S.C. 1782 to obtain discovery for use in foreign proceedings in Ecuador. According to CONECEL, the foreign proceedings included both a pending arbitration brought by JASE against CONECEL for nonpayment under the contract, and contemplated civil and private criminal suits CONECEL might bring against two of its former employees who, CONECEL claims, may have violated Ecuador's collusion laws in connection with processing and approving JASE's allegedly inflated invoices. CONECEL's application sought discovery from JASE's United States counterpart, JAS Forwarding (USA), Inc. (JAS USA), which does business in Miami and was involved in the invoicing operations at issue in the dispute. The district court granted the application and authorized CONECEL to issue a subpoena. Thereafter, JASE intervened and moved to quash the subpoena and vacate the order granting the application. The district court denied the motion, as well as a subsequent motion for reconsideration. JASE appealed the denial of both. After thorough review and having had the benefit of oral argument, the Eleventh Circuit affirmed the orders of the district court. the Court concluded that the panel before which which JASE and CONECEL's dispute was pending acts as a first-instance decisionmaker; it permits the gathering and submission of evidence; it resolves the dispute; it issues a binding order; and its order is subject to judicial review. The discovery statute requires nothing more. The Court also held that the district court did not abuse its considerable discretion in granting the section 1782 discovery application over JASE's objections that it would be forced to produce proprietary and confidential information. The application was narrowly tailored and primarily requested information concerning JASE's billing of CONECEL, which was undeniably at issue in the current dispute between the parties." Finally, the district court did not abuse its discretion in denying JASE's motion for reconsideration. View "In re: Application of Consorcio Ecuatoriano" on Justia Law

Plaintiff-Appellant Waterford Investment Services, Inc. appealed the district court’s ruling that it must arbitrate certain claims that a group of investors brought before the Financial Industry Regulatory Authority (FINRA). The investors alleged in their FINRA claims that they received bad advice from their financial advisor, George Gilbert. The investors named Gilbert, his current investment firm, Waterford, and his prior firm, Community Bankers Securities, LLC (CBS), among others as parties to the arbitration. In response, Waterford filed this suit asking a federal district court to enjoin the arbitration proceedings and enter a declaratory judgment that Waterford need not arbitrate the claims. The district court, adopting the recommendations of a magistrate judge, concluded that because Gilbert was an "associated person" of Waterford during the events in question, Waterford must arbitrate the investors' claims. Upon review of the matter, the Fourth Circuit affirmed, finding that Gilbert was inextricably an "associated person" with Waterford, and that the district court did not abuse its discretion in adopting the magistrate judge's opinion. View "Waterford Investment Services v. Bosco" on Justia Law

David Bennett and Bennett & Bennett Construction, Inc. ("Bennett") appealed the trial court's denial of their motion to compel arbitration of the claims alleging fraud in the inducement and the tort of outrage brought against them by Barbara and Leotes Skinner. The Skinners entered into a construction-services contract with Bennett, pursuant to which Bennett was to renovate and remodel their residence located in Oxford. After disagreements developed between the parties, the Skinners sued Bennett, alleging claims of breach of contract; breach of warranty; fraud in the inducement; assault and battery; the tort of outrage; and negligence, wantonness and recklessness. Bennett moved to compel arbitration of all claims, arguing that, because each of the claims alleged by the Skinners arose from the construction-services contract or were related to the construction-services contract, the claims were subject to arbitration. Furthermore, Bennett argued that the tort-of-outrage claim arose out of a disagreement concerning the construction-services contract and that the Skinners should not be allowed to avoid arbitration because they cast their claim as a tort. The Skinners responded, arguing that their agreement to the arbitration clause in the contract was obtained fraudulently. The trial court denied Bennett's motion. Upon review, the Supreme Court concluded that the Skinners' tort-of-outrage claim arose out of a disagreement concerning the construction-services contract and thus was a proper claim for arbitration. The Court reversed the trial court's ruling and remanded the case for further proceedings. View "Bennett v. Skinner " on Justia Law

Cogswell purchased the vacant paper mill in a tax foreclosure sale for $70,000. The site has more than 20 buildings, covering 440,700 square feet. Evanston issued first-party property insurance with a building coverage limit of $1,000,000, subject to coinsurance at 80%. On the first day of coverage, 15,700 square feet (less than 4%) were damaged by fire. Evanston determined that actual cash value of the buildings at the time of loss was $10,223,384.80; under the coinsurance provision, Cogswell was required to carry insurance of $8,178,707.84. Cogswell carried only $1 million. Evanston determined that it was liable for 12.23% ($1 million/ $8,178,707.84); calculated cash value of loss at $342,836.46; and determined that it was liable for $36,918.27 ($342,836.46 times 12.23% less $5,000 deductible). An umpire, appointed under the contract determined actual cash value of $1,540,000.00 and damage at $736,384.89. Cogswell demanded $554,553.49, the net amount under the appraisal after application of the coinsurance provision and deductible. The district court vacated the appraisal and granted Evanston judgment on a second appraisal. The Sixth Circuit affirmed. The provision calling for appointment of an umpire is not governed by the Federal Arbitration Act, 9 U.S.C. 1, which would require deference; the parties agreed to the process under Michigan law.View "Evanston Ins. Co. v. Cogswell Props., LLC" on Justia Law

At issue in this construction lawsuit was whether the circuit court erred in refusing to compel a plaintiff corporation to arbitrate its claims against three defendant corporations. The circuit court had previously entered two orders in which it found the arbitration clauses in Defendants' contracts with Plaintiff were unconscionable. Further, the circuit court found it would be inequitable to fracture Plaintiff's lawsuit into multiple "piecemeal" arbitrations and lawsuits against Defendants. Defendants petitioned the Supreme Court for a writ of prohibition to halt enforcement of the circuit court's orders and to compel Plaintiff to arbitrate its claims. The Court granted the requested writ of prohibition as moulded, holding (1) the arbitration agreements were not unconscionable, and therefore, the circuit court erred in refusing to enforce the agreements; (2) the FAA requires that if a lawsuit presents multiple claims, some subject to an arbitration agreement and some not, the former claims must be sent to arbitration even if this leads to piecemeal litigation; and (3) the circuit court's refusal to enforce the arbitration clauses ran afoul of the FAA. View "State ex rel. Johnson Controls, Inc. v. Circuit Court (Tucker) " on Justia Law

This case was a consolidation of three separate wrongful death lawsuits. Each lawsuit arose from a nursing home's attempt to compel a plaintiff to participate in arbitration pursuant to a clause in a nursing home admission contract. The Supreme Court (1) ruled that the arbitration clauses were unconscionable and unenforceable in two of the cases, and (2) held that the Nursing Home Act could not be relied upon to bar enforcement of the arbitration clause in the third case. The U.S. Supreme Court reversed and remanded to consider whether the arbitration clauses were enforceable under state common law principles that were not specific to arbitration and pre-empted by the FAA. On remand, the Supreme Court (1) held that the doctrine of unconscionability that the Court explicated in Brown I was a general, state, common-law, contract principle that was not specific to arbitration and did not implicate the FAA; (2) reversed the trial courts' prior orders compelling arbitration in two of the cases and permitted the parties to raise arguments regarding unconscionability anew before the trial court; and (3) found the issue of unconscionability in the third case was not considered by the trial court but may be raised on remand. View "Brown v. Genesis Healthcare Corp." on Justia Law

Leete & Lemieux, P.A. (L&L) provided legal services to James Horowitz and Oxford Aviation, Inc. (collectively, Horowitz) for several years. When L&L stopped receiving payments for its services, it filed a four-count complaint against Horowitz for failure to pay $10,917 for legal services rendered, plus interest. The district court stayed the action until resolution by the fee arbitration commission. A fee arbitration panel determined that Horowitz owed L&L the full amount of the unpaid fees charges plus interest. The district court affirmed the award of the panel. Horowitz appealed, arguing that the court (1) was required to vacate the arbitration award because the panel allegedly determined that it did not have the power to decide whether L&L's claim was time-barred, and (2) erred in confirming the award because it remained within the trial court's authority to decide a statute-of-limitations defense that was not subject to arbitration and was not decided during arbitration. The Supreme Court affirmed because Horowitz did not preserve a statute-of-limitations defense at the proper procedural stage of the proceedings, and therefore, the statute-of-limitations defense was waived. View "Leete & Lemieux, P.A. v. Horowitz" on Justia Law

GSS Group brought this action to confirm a foreign arbitration award against the Port Authority of Liberia. The district court dismissed the petition for lack of personal jurisdiction after concluding that the Port Authority did not have sufficient contacts with the United States. The court concluded that the Port Authority claimed to be an independent juridical entity in its motion to dismiss, and GSS Group failed to contest that characterization. GSS Group's omission left in tact the Bancec presumption, First National City Bank v. Banco Para el Comercio Exterior de Cuba, which, under TMR Energy v. State Property Fund of Ukraine, guaranteed the Port Authority treatment as a separate "person" entitled to due process protection. That protection included the right to assert a minimum contacts defense. GSS Group had not identified any connection between the Port Authority and the United States and conceded that none existed. Therefore, the district court correctly dismissed the petition for lack of personal jurisdiction. View "GSS Group Ltd v. National Port Authority" on Justia Law