Justia Arbitration & Mediation Opinion Summaries

Noatex Corp. and Kohn Law Group, Inc. appealed two district court decisions in an interpleader action brought by Auto Parts Manufacturing Mississippi, Inc. (“APMM”) that named Noatex, King Construction of Houston, L.L.C., and Kohn as claimants. Appellants claimed that the district court erred in discharging APMM from the action, enjoining all parties from filing any proceedings relating to the interpleader fund without a court order, and in denying their motion to compel arbitration. After careful consideration of the trial court record, the Fifth circuit found no reversible error and affirmed the discharge of APMM and its accompanying injunction, the denial of appellants' motion to compel arbitration and to stay proceedings pending arbitration. King Construction was dismissed from these appeals, and appellants' alternative motion to vacate the trial court's rulings was denied. View "Auto Parts Mfg MS, Inc. v. King Const of Houston,LLC" on Justia Law

James Stanley, Barbara Stanley and Northeast Marine Services, Inc. (collectively, “Stanley”) were parties to a binding arbitration with Michael Liberty and five corporations under his control (“the Liberty corporate entities”) regarding contractual and fiduciary disputes arising from Stanley’s tenure as an officer and director of the Liberty corporate entities. Many of Stanley’s claims were rejected, but the three main issues relevant to this appeal were decided in favor of Stanley. The business and consumer docket affirmed the arbitration award in full. The Supreme Court affirmed, holding (1) in challenging the arbitrator’s findings that Stanley had not engaged in a breach of fiduciary duty regarding transactions involving the Liberty corporate corporate entities, Liberty and the Liberty corporate entities asked the court to review fact-findings by the arbitrator, and such findings were not reviewable; (2) Liberty and the Liberty corporate entities did not demonstrate that the arbitrator exceeded his broad authority in interpreting the retirement contract that generated this litigation; and (3) the arbitrator did not exceed his authority by deciding to pierce the corporate veil and make Liberty personally liable for obligations of his closely-controlled corporations. View "Stanley v. Liberty" on Justia Law

Donald Porter, Marc Porter, Porter Capital Corporation, Porter Bridge Loan Company, Inc., Lowerline Corporation, Capital Partners Leasing, Inc., and Capital Partners Leasing, LLC (referred to collectively as "the Porter defendants"), appealed the denial of their motion to compel arbitration of the claims asserted against them by Byron Porter Williamson. Marc and Donald Porter are brothers; they founded Porter Capital Corporation in 1991 and thereafter established the related companies Porter Bridge Loan Company, Inc., Lowerline Corporation, CapitalPartners Leasing, Inc., and CapitalPartners Leasing, LLC. In 1992, the Porters hired their nephew Williamson as an employee of the Porter companies. In 2004, Williamson, Marc Porter, and Donald Porter entered into a shareholders agreement that made Williamson a 10% shareholder in Porter Capital Corporation, Porter Bridge Loan Company, Inc., Lowerline Corporation, and CapitalPartners Leasing, Inc. Following his termination and resignation as a shareholder of the corporations and a member of the limited liability company, Williamson demanded that his shares in the corporations and his interest in the limited-liability company be purchased by the Porter companies pursuant to the agreement. The parties, however, were unable to agree on the value of Williamson's shares and interest. Williamson sued Marc Porter, Donald Porter, and the Porter companies. Citing the arbitration provision of the agreement, the Porter defendants moved to dismiss the action without prejudice or to stay discovery and compel arbitration. Williamson opposed the motion, arguing that some or all of his claims fell within the specific-performance exception of the arbitration provision in the agreement. Following a hearing on the Porter defendants' motion to dismiss or to compel arbitration, the trial court issued an order denying the Porter defendants' motion. The Porter defendants appealed. Upon review, the Supreme Court affirmed the trial court's denial of the Porter defendants' motion to compel arbitration insofar as that motion related to Williamson's request for specific performance and injunctive relief. With regard to Williamson's remaining claims seeking rescission and alleging misrepresentation and suppression and conversion, the Court reversed the trial court's order and remanded the case with instructions for the trial court either to dismiss those claims or to grant the Porter defendants' motion to compel arbitration of them. View "Porter v. Williamson" on Justia Law

When Ameriprise Financial fired Renard, a financial adviser, for violation of the franchise agreement between the two, Ameriprise claimed that Renard owed it $530,000 on loans made to help Renard build his franchise. Renard disagreed. Ameriprise initiated arbitration under the agreement, which provides that Minnesota law governs, except “all issues relating to arbitrability,” are “governed by the terms set forth in [the] agreement, and to the extent not inconsistent with this agreement, by the rules of arbitration of” the Financial Industry Regulatory Authority. Wisconsin arbitrators rejected Renard’s counterclaims and awarded Ameriprise most of what it sought. Renard filed suit to vacate the award. The court confirmed the award and required Renard to pay additional interest. The Seventh Circuit affirmed, rejecting Renard’s argument that Ameriprise’s counsel procured the award through fraud and that the arbitrators acted in manifest disregard of the Wisconsin Fair Dealership Law and Minnesota tort law. His showing was far short of the high standard needed to upset the outcome of an arbitral proceeding. The panel did not issue a written opinion, so it was not clear how it reached its conclusions, but nothing suggested that it strayed so far that the “manifest disregard” standard was triggered. View "Renard v. Ameriprise Fin. Servs., Inc." on Justia Law

Section 747 of the Consolidated Appropriations Act of 2010 created an arbitration procedure for automobile dealerships to seek continuation or reinstatement of franchise agreements that had been terminated by Chrysler during bankruptcy proceedings, with the approval of the bankruptcy court. After an arbitral decision favoring the dealer, the manufacturer was required to provide the dealer a “customary and usual letter of intent” to enter into a sales and service agreement. After arbitrations, a trial was held to determine whether Chrysler supplied each prevailing dealer with such a letter. Most of the rejected dealers reached settlements with New Chrysler. The court determined that the remaining dealers had received “customary and usual” letters. The Sixth Circuit agreed that section 747 does not constitute an unconstitutional legislative reversal of a federal court judgment and that the only relief it provides to successful dealers is the issuance of a letter of intent. The letters at issue were “customary and usual,” except one contractual provision that required reversal. Contrary to the district court’s conclusion application Michigan and Nevada state dealer acts is preempted by section 747, because those acts provide for redetermination of factors directly addressed in federally-mandated arbitrations closely related to a major federal bailout. View "Chrysler Grp. LLC v. Sowell Auto., Inc." on Justia Law

Plaintiffs sought declaratory and injunctive relief against defendants in this action. But the complaint explicitly acknowledged it was “ancillary to” contemplated private arbitration of disputes arising out of the parties’ contractual relationship. The trial court denied plaintiffs’ motion for a preliminary injunction and the parties stipulated to stay the action “pending arbitration.” Plaintiffs voluntarily dismissed this action (purportedly without prejudice) after the claims were submitted to an arbitrator for final resolution and the arbitrator had issued an interim award in favor of defendants. The interim arbitral award was made final without substantive revision, except for adding plaintiff’s attorney fees and costs incurred in the arbitration. The trial court denied defendants’ motion to vacate the dismissal, reasoning that the arbitration and this case were separate proceedings and that plaintiffs had dismissed this action before trial commenced. After its review, the Court of Appeal disagreed with this reasoning and reversed: this lawsuit was based on the same causes of action submitted to the arbitrator; it differed only in the remedies sought. Once the hearing on the merits of the parties’ dispute commenced at the arbitration, it was too late for plaintiffs to dismiss this action without prejudice and thereby avoid an attempt by defendants to recover attorney fees as the prevailing party in this action. View "Mesa Shopping Center-East v. O Hill" on Justia Law

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