Justia Arbitration & Mediation Opinion Summaries

The Alabama Supreme Court consolidated cases that arose out of an action brought by Guy Willis against three defendants: Alaska Bush Adventures, LLC ("Alaska Bush") and Hugh and Ryan Krank (collectively, the defendants). The Kranks are the owners and operators of Alaska Bush, an outfitter that provided guided hunting trips in Alaska. In December 2011, Willis entered into a written contract with Alaska Bush pursuant to which Alaska Bush would lead a guided hunting trip in Alaska. Willis also claimed that he entered into a separate oral contract to hunt black bears during that guided hunting trip. The guided hunting trip took place in September 2012. A few months after the trip, Willis sued the defendants in Alabama seeking damages for breach of contract, misrepresentation, and suppression. Willis's claims against defendants centered primarily on his allegations that the equipment Alaska Bush provided for the hunting expedition was inadequate in number, unsafe, and inoperable, and he also alleged that he lost hunting time because the defendants were providing services to other hunters who were apparently not included in the guided hunting trip. Willis claimed that he lost most of his personal hunting equipment and had to leave the trip early because he "was caused to be thrown from an improperly repaired, inspected, and/or working motorized boat ...." Willis further alleged that the defendants misrepresented the quantity of wild game that would be available on the hunt. Willis filed an application for the entry of a default judgment against Ryan, and, on the following day, he filed a similar application against Alaska Bush and Hugh. On December 21, 2012, defendants filed an answer to Willis's complaint and an objection to Willis's applications for entry of a default judgment. Thereafter, defendants filed a motion to compel Willis to arbitration pursuant to an arbitration agreement found in the written contract. Defendants then each filed an individual motion to dismiss Willis's complaint for lack of personal jurisdiction. The trial court issued an order denying the defendants' respective motions to dismiss and their motion to compel arbitration. In case no. 1130184, defendants petitioned the Alabama Supreme Court for a writ of mandamus to challenge the denial of their motions to dismiss for lack of personal jurisdiction; in case no. 1130231, they appealed the trial court's denial of their motion to compel arbitration. The Supreme Court concluded after review that defendants were not entitled to mandamus relief on the jurisdiction question, but met their burden in their motion to compel arbitration. View "Willis v. Alaska Bush Adventures, LLC et al." on Justia Law

The Everetts formerly operated a PDRI franchise. After that franchise was terminated, they violated a non-compete clause. Only Mr. Everett and the Everetts’ corporation actually signed the franchise agreement. PDRI sought to bind Ms. Everett to an arbitration award pursuant to the franchise agreement. Although Everett was a non-signatory to the franchise agreement, PDRI asserted she was subject to arbitration under the doctrine of direct benefits estoppel. The district court determined that the benefits Everett received were filtered through her ownership interest in their corporation or through her husband and were therefore indirect. The Seventh Circuit reversed, holding that Everett did receive a direct benefit. It is clear that the Everetts’ corporation was formed to gain the benefit of the franchise agreement and was used only to conduct the business of the franchise; Ms. Everett had a 50% ownership and played an active role in running the corporation. View "Everett v. Paul Davis Restoration, Inc." on Justia Law

Plaintiff CB Richard Ellis, Inc. (CBRE), pursuant to a 2004 listing agreement, sought a commission after the 2005 sale of 38 acres of land in Murrieta. Arbitration proceedings between CBRE and the seller, Jefferson 38, LLC resulted in a confirmed arbitral award in CBRE’s favor, but no monetary satisfaction for CBRE because Jefferson had no assets by the time of the arbitral award and judgment. The issue this case presented to the Court of Appeal centered on CBRE’s attempt to recover damages from Jefferson’s individual members. A jury trial resulted in a $354,000 judgment in favor of CBRE. Both defendants and CBRE appealed the judgment, citing alleged errors pertaining to jury instructions, the admissibility of evidence, juror misconduct, attorney fees, and prejudgment interest. Upon review, the Court of Appeal rejected the parties’ contentions, except with regard to CBRE’s entitlement to attorney fees. View "CB Richard Ellis v. Terra Nostra Consultants" on Justia Law

The issue this case presented to the Delaware Supreme Court centered on the circumstances under which an arbitration award could be vacated where it was argued that the arbitrator manifestly disregarded the law. The parties to a corporate acquisition agreed to arbitrate disputes about the acquired company’s balance sheet on the effective date of the transaction. They retained an arbitrator to decide whether a workers' compensation reserve had been calculated correctly. The arbitrator decided, without any analysis, that there would be no adjustment to the balance sheet. The Court of Chancery vacated the arbitrator's decision, finding that the arbitrator did not follow the relevant provision of the parties’ share purchase agreement. But the test for “manifest disregard for the law” was not whether the arbitrator misconstrued the contract (even if the contract language is clear and unambiguous). "To vacate an arbitration award based on 'manifest disregard of the law,' a court must find that the arbitrator consciously chose to ignore a legal principle, or contract term, that is so clear that it is not subject to reasonable debate." Because the record did not support such a finding, the arbitrator’s award was reinstated. View "SPX Corporation v. Garda USA, Inc., et al." on Justia Law

Southeast Construction, L.L.C. ("SEC") appealed a Circuit Court order enforcing, a previous judgment entered by that court based on an arbitration award in favor of WAR Construction, Inc ("WAR"). Upon review of the facts of this case, the Supreme Court affirmed in part, reversed in part, and remanded for further proceedings. The Court concluded the circuit court erred in finding in a January 9 order that "all liens and claims against SEC ... from WAR's subcontractors/suppliers that filed a lien on the project ... ha[d] been released and/or adequate security ha[d] been provided." Furthermore, the Court concluded the circuit court erred in finding that WAR had "attempt[ed] to comply with what the Supreme Court ordered the circuit court to implement as of May 13, 2011," and that WAR was entitled to have the interest owed under the arbitrators' award and the May 9 judgment calculated from that date. View "Southeast Construction, L.L.C. v. WAR Construction, Inc. " on Justia Law

Defendants-Appellants Chesapeake Exploration, L.L.C., and Chesapeake Investments appealed a district court judgment awarding Plaintiff-Appellee BP America Production Company $22,265,302 plus interest, and a district court order compelling Chesapeake to pay $1,403,669.38 in attorneys' fees and disbursements. BP cross-appealed the district court order confirming an arbitration award. This dispute arose out of a purchase and sale agreement ("PSA") entered into by Chesapeake as seller and BP as purchaser of oil and gas properties for $1.75 billion. The PSA contained three arbitration provisions. After closing, the parties agreed on title defects. Less the aggregate threshold, the parties agreed BP was owed $81,234,556. At the same time, disputed title defects and benefits were submitted to title arbitration. BP sought approximately $46 million for disputed title defects, and Chesapeake sought approximately $22 million for disputed title benefits and "credits." While the title arbitration was pending, BP submitted a proposed final accounting statement reflecting the agreed title defects of approximately $80 million. Chesapeake responded with an exception report changing the $80 million to $58 million. When BP asked why, Chesapeake responded that it had applied a $22 million offset based on its pending claims in the title arbitration; Chesapeake did not dispute the $80 million in agreed title defects, but temporarily withheld the $22 million because it might recover that amount in title arbitration. Though the accounting arbitration ended, the title arbitration continued. The arbitration panel issued an award finding $11,526,434 in title defects (favoring BP), and $3,727,031 in title benefits (favoring Chesapeake). The arbitration panel noted that it made no determination of whether these amounts exceeded the aggregate threshold, or whether its ruling would actually cause any money to exchange hands. If the parties could not agree on the effect of the panel's ruling on the ultimate purchase price adjustment, they could submit their positions on that issue to further arbitration. Shortly thereafter, BP requested payment from Chesapeake. Because a $3 million in title benefits awarded to Chesapeake did not exceed the aggregate threshold, Chesapeake received no price adjustment to offset the $22 million it previously withheld. The parties filed competing motions to confirm in the district court. The court ultimately entered judgment in favor of BP for $22,265,302 plus interest. Chesapeake appealed that judgment. The district court later granted in part BP's motion for attorneys' fees and costs and awarded $1,403,669.38 against Chesapeake for fees and disbursements. Chesapeake appealed that judgment too. Upon review of the matter, the Tenth Circuit affirmed both awards in Chesapeake's direct appeals and dismissed BP's cross-appeal. View "BP America Production Company v. Chesapeake Exploration, LLC, et al" on Justia Law

The Practice-Monroeville, P.C., is a medical-practice group located in Monroeville. Allscripts Healthcare, LLC, based in North Carolina with no Alabama offices, sells health-care software to health-care providers. Jackson Key Practice Solutions, LLC is a certified "sales-and-service partner" of Allscripts, selling and servicing Allscripts software, and Anderton is an employee and partial owner of Jackson Key. In May 2011, the Practice and Allscripts entered into a written contract in which the Practice purchased health-care software called "MyWay" from Allscripts through Jackson Key. The contract contained an arbitration provision, which stated in pertinent part: "Any dispute or claim arising out of, or in connection with, this Agreement shall be finally settled by binding arbitration in Raleigh, NC, in accordance with the then-current rules and procedures of the American Arbitration Association ...." The Practice became dissatisfied with the performance of the MyWay software and unsuccessfully attempted to cancel its contract with Allscripts. The Practice sued Jackson Key and Anderton, but not Allscripts, in circuit court. Jackson Key and Anderton moved to compel arbitration based on the arbitration provision in the contract. Anderton and Jackson Key appealed the Circuit Court's order denying their motion to compel arbitration. After review, the Supreme Court found the circuit court erred in its decision, reversed and remanded the case for further proceedings. View "Anderton v. The Practice-Monroeville, P.C. " on Justia Law

Dr. Rueben C. Setliff, III filed a derivative action against several Managers individually and in their capacities as members of the management committee of Black Hills Surgical Physicians, LLC (BHSP), alleging that the Managers breached their fiduciary duties under BHSP’s operating agreement. The circuit court ruled that the dispute was subject to arbitration. The arbitrator ordered that Setliff recover attorney’s fees and costs against the Managers and ruled that the Managers were entitled to be indemnified by BHSP under the operating agreement. The circuit court concluded that the arbitrator did not exceed her authority in making the award of fees and costs and confirmed Setliff’s award. The Supreme Court reversed the circuit court’s order affirming the award, holding that the arbitrator exceeded her powers in awarding Setliff his attorney’s fees and expenses in direct violation of BHSP’s operating agreement. View "Black Hills Surgical Physicians v. Steliff" on Justia Law

Steak n Shake owns and operates 415 restaurants and grants about 100 franchises for the operation of Steak n Shake restaurants by others. The operators of franchises in Missouri, Georgia, and Pennsylvania claim that since 1939, franchisees have set their own menu prices and participated in corporate pricing promotions at their option. After a corporate takeover in 2010, Steak n Shake enacted a new policy that requires them to adhere to company pricing on every menu item and to participate in all promotions. They also must purchase all products from a single distributor at a price negotiated by Steak n Shake. The policy had an adverse effect on revenues. The franchisees sought a declaratory judgment. About a month later, Steak n Shake adopted an arbitration policy requiring the franchisees to engage in nonbinding arbitration at Steak n Shake’s request and moved to stay the federal lawsuits. The district court refused to compel arbitration. Although each franchise agreement (except one) contained a clause in which Steak n Shake “reserve[d] the right to institute at any time a system of nonbinding arbitration or mediation,” the district court concluded that any agreement to arbitrate was illusory. The Seventh Circuit affirmed, agreeing that the arbitration clauses are illusory and unenforceable under Indiana law, and declining to address whether the disputes were within the scope of the arbitration agreements or whether nonbinding arbitration fits within the definition of arbitration under the Federal Arbitration Act. View "Druco Rests., Inc. v. Steak N Shake Enters., Inc." on Justia Law

This issue before the Supreme Court in this case arose from a dispute between a general partner and limited partners over the proceeds from the dissolution of their partnership. Appellant Alfred Lunde sought to reverse an arbitration award and a trial court order that assessed attorney’s fees and receivership fees and costs against his share of the partnership assets. The partnership agreement was for a thirty-year term that expired on December 31, 2009. At that time, the general partner was to liquidate the partnership’s assets “as promptly as is consistent with obtaining the fair value thereof.” The agreement called for fifty percent of the net proceeds to be distributed to the general partner and the remainder to be distributed to the limited partners. The partnership agreement included an arbitration clause that required arbitration of “[a]ny dispute or controversy arising in connection with this Agreement or in connection with the dissolution of the Partnership.” Lunde did not promptly liquidate the partnership’s assets after the agreement expired, and in February 2011 the limited partners filed suit in superior court seeking to have a receiver appointed to wind up the partnership, liquidate the assets, and distribute the proceeds. In March 2011 the trial court appointed a receiver who proceeded to wind down the business and sell the assets. A few months later the court removed Lunde as general partner after he failed to cooperate with the receiver, jeopardizing both the reauthorization of the apartment complex as Section 8 housing and the sale of the asset. Lunde filed a pro se demand for arbitration with the American Arbitration Association (AAA). Plaintiffs filed a motion to stay the arbitration. The court denied the motion, holding that the arbitration clause governed the parties’ dispute. The court’s order denying the motion to stay created two exceptions for issues that it reserved for its own decision: plaintiffs’ claim of fraudulent conveyance concerning the transfer of certain funds by Lunde, and plaintiffs’ claim for attorney’s fees “incurred in connection with all proceedings [in the trial court] with respect to the application to appoint a Receiver, through to conclusion of the Receiver’s duties pursuant to court order(s) . . . .” After its review of the matter, the Supreme Court affirmed on the legal issues, but remanded for a further hearing on a narrow issue regarding the amount of attorney’s fees assessed against Lunde. View "O'Rourke, et al. v. Lunde and The Housing Group Limited Partnership" on Justia Law