Justia Arbitration & Mediation Opinion Summaries

In 2005, U.S. Home Corporation entered into a contract to purchase two contiguous tracts of land, one of which was owned by West Pleasant-CPGT, Inc. Under the contract, West Pleasant and the other landowner were to gain certain approvals permitting development of the properties. Pursuant to the contract, U.S. Home paid advances to the landowners totaling over $1.5 million. As security for the advances, West Pleasant executed a mortgage and note on its property; the other landowner did not. When a contract dispute arose in 2006, U.S. Home sought to terminate the contract and get a return of its total advance. U.S. Home prevailed in arbitration and was awarded a judgment in the full amount of the advance, plus interest. The Appellate Division affirmed the judgment in 2009. When the judgment was not satisfied, U.S. Home commenced foreclosure actions against the properties. The foreclosure proceedings were stayed when West Pleasant and the other property owner filed for bankruptcy. In West Pleasant’s bankruptcy action, U.S. Home moved to dismiss and for relief from the automatic stay. West Pleasant and U.S. Home executed a Consent Order, in which West Pleasant dismissed its bankruptcy proceeding, waived a fair market valuation and its right to object to a sheriff’s sale of its property, and released U.S. Home from any claims in law or equity. U.S. Home never proceeded with any deficiency action against either landowner. Nonetheless, the landowners commenced the affirmative litigation that gave rise to this appeal, seeking a declaration that the arbitration award was fully satisfied, as well as compensation “in the amount of the excess fair market value of the properties obtained by defendant[] U.S. Home over the amount of its outstanding judgment.” The second property owner then assigned its rights to West Pleasant. After trial, the court valued the second property as worth almost $2.4 million and West Pleasant’s property as worth almost $2 million. The court ordered U.S. Home to pay the fair market value of the West Pleasant property, plus interest, and extinguished the arbitration award on the second property. On appeal, the Appellate Division determined that West Pleasant had waived its right to a fair market valuation on its property but that it was owed a fair market value credit for the second property. The Appellate Division remanded the matter to the trial court for recalculation of damages. The New Jersey Supreme Court reversed, finding use of fair market value credit by this debtor to obtain a money judgment against a creditor, in the absence of a deficiency claim threatened or pursued or any objection being raised at the time of the sheriff’s sales, was "inconsistent with sound foreclosure processes and, moreover, inequitable in the circumstances presented." The judgment of the Appellate Division was reversed and the matter remanded for further proceedings. View "West Pleasant-CPGT, Inc. v. U.S. Home Corporation" on Justia Law

The Second Circuit affirmed the district court's denial of a petition for discovery pursuant to 28 U.S.C. 1782(a), seeking discovery from four investment banks related to their work as underwriters in the Tencent Music IPO. Petitioner alleged that he intended to use the documents in his pending CIETAC arbitration against the Ocean Entities and its founder.28 U.S.C. 1782(a) authorizes federal courts to compel the production of materials "for use in a proceeding in a foreign or international tribunal" upon "the application of any interested person." In In National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2d Cir. 1999) ("NBC"), the court held that the phrase "foreign or international tribunal" does not encompass "arbitral bod[ies] established by private parties."The court held that nothing in the Supreme Court's decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), alters its prior conclusion in NBC that section 1782(a) does not extend to private international commercial arbitrations. Furthermore, the arbitration at issue here is a non-covered, private, international commercial arbitration. View "In re: Application and Petition of Hanwei Guo" on Justia Law

In this cattle-feeding dispute, the Supreme Court affirmed the judgment of the court of appeals overturning the trial court's denial of Appellees' post-judgment motion to compel arbitration, holding that a party does not forfeit its right to challenge a ruling on appeal from a final judgment simply by choosing not to pursue an interlocutory appeal of that ruling.Appellants brought this action alleging fraud, unjust enrichment, and other claims. Appellees moved to dismiss the suit and compel arbitration, arguing that the claims were subject to the agreement's arbitration clause. The trial court denied the motion, and Appellees did not challenge the court's ruling through an interlocutory appeal. After the trial court rendered judgment Appellees appealed, arguing that the trial court erred when it denied their motion to compel arbitration. The court of appeals reversed and remanded with instructions that the trial court order the parties to arbitration. The Supreme Court affirmed, holding (1) the court of appeals had jurisdiction to consider the trial court's denial of Appellees' motion to compel arbitration; and (2) on the merits, the court of appeals did not err in ordering arbitration. View "Bonsmara Natural Beef Co. v. Hart of Texas Cattle Feeders, LLC" on Justia Law

The Private Attorney General Act (Labor Code 2698) allows an employee, as a proxy for state enforcement agencies, to sue an employer on behalf of herself and other aggrieved employees for Labor Code violations. When the parties have an arbitration agreement, California law blocks the employer from enforcing that agreement with respect to representative PAGA claims for civil penalties; the agreement may be enforceable with respect to other claims, including claims for victim-specific relief (like unpaid wages). Lime rents electric scooters. Olabi entered into an agreement to locate, recharge, and redeploy Lime's scooters. The agreement required the parties to arbitrate “any and all disputes,” including Olabi’s classification as an independent contractor but contained an exception for PAGA representative actions.Olabi sued, alleging Lime intentionally misclassified him and others as independent contractors, resulting in Labor Code violations; he included claims under the Unfair Competition Law and PAGA. Lime petitioned to compel arbitration, arguing Olabi was required to arbitrate independent contractor classification disputes and that the PAGA exception did not cover the unfair competition claim or the PAGA claim to the extent that Olabi sought victim-specific relief. Olabi voluntarily dismissed his unfair competition claim and disavowed any claim for victim-specific relief. The trial court denied Lime’s petition and granted Olabi leave to amend. The court of appeal affirmed. The language of the arbitration agreement broadly excludes PAGA actions View "Olabi v. Neutron Holdings, Inc." on Justia Law

In November 2007, Marten performed surgery on Doe’s face and neck. In June 2008, Doe sent Marten a letter stating she was considering suing him and demanded that he preserve her documents, files, and photos. In November, Doe’s attorney served Marten with a written demand for arbitration pursuant to a Physician-Patient Arbitration Agreement. In January 2009 Marten’s counsel responded, identifying an arbitrator, without questioning the origin of the agreement or disputing that Marten had signed it. The applicable one-year statute of limitations ran in March 2009. (Code Civ. Proc.340.5) In May 2009, Merten subpoenaed and obtained the records of Dr. Daniel, whom Doe earlier consulted. Located within Daniel’s records was a signed arbitration agreement. Nearly three years later, Marten’s counsel first confronted Doe with the arbitration agreement and refused to continue with the arbitration.Doe sued for medical malpractice and medical battery. The court overruled dismissal motions, finding triable issues as to whether equitable tolling or equitable estoppel disallowed the statute of limitations defense. The court imposed sanctions after hearing evidence that Marten destroyed electronically stored information. After the close of evidence, the trial court dismissed the medical battery claim. On the malpractice claim, the jury awarded over $6.3 million in damages. The court then found the malpractice claim time-barred. The court of appeal reversed in part. The medical malpractice claim was not time-barred because Merten’s conduct actually and reasonably induced Doe to refrain from filing a timely action. View "Doe v. Marten" on Justia Law

Jeoung Lee filed a putative class action lawsuit against her former employer, King County Public Hospital District No. 2 d/b/a Evergreen Hospital Medical Center1 (Evergreen). Lee alleged Evergreen failed to give rest and meal breaks in accordance with Washington law. After nine months of litigation and the addition of a second named plaintiff, Evergreen moved to compel arbitration, alleging that the claims were covered under the collective bargaining agreement (CBA) between Evergreen and the Washington State Nurses Association (WSNA) that governs nurse employment. The trial court denied the motion to compel arbitration, and the Court of Appeals affirmed. The Washington Supreme Court affirmed the Court of Appeals on the ground that Evergreen waived the right to compel arbitration, and remanded to the superior court for further proceedings. Because it affirmed on the ground of waiver, the Supreme Court declined to reach the issue of whether the claims were statutory or contractual under the CBA. View "Lee v. Evergreen Hosp. Med. Ctr." on Justia Law

ThyssenKrupp entered into contracts with F. L. for the construction of mills at ThyssenKrupp’s Alabama steel manufacturing plant. Each contract contained an arbitration clause. F. L. entered into a subcontract with GE for the provision of motors. After the motors allegedly failed, Outokumpu (ThyssenKrupp's successor) sued GE, which moved to compel arbitration, relying on the arbitration clauses in the F. L.-ThyssenKrupp contracts. The Eleventh Circuit concluded that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards allows enforcement of an arbitration agreement only by the parties that actually signed the agreement.A unanimous Supreme Court reversed. The Convention does not conflict with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by nonsignatories. The Federal Arbitration Act (FAA) grants federal courts jurisdiction over actions governed by the Convention and provides that “Chapter 1 applies to actions and proceedings brought under this chapter to the extent that [Chapter 1] is not in conflict with this chapter or the Convention,” 9 U.S.C. 208. Chapter 1 does not “alter background principles of state contract law regarding the scope of agreements (including the question of who is bound by them).” The state-law equitable estoppel doctrines permitted under Chapter 1 do not “conflict with . . . the Convention,” which is silent on whether nonsignatories may enforce arbitration agreements under domestic doctrines such as equitable estoppel. Nothing in the Convention could be read to conflict with the application of domestic equitable estoppel doctrines. The court, on remand, may address whether GE can enforce the arbitration clauses under equitable estoppel principles and which body of law governs that determination. View "GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC" on Justia Law

Russell Construction of Alabama, Inc. ("Russell"), appealed a circuit court order that vacated an arbitration award in favor of Russell and against Christopher Peat. In 2015, Russell and Peat entered into a contract pursuant to which Russell agreed to construct a residence for Peat on "a cost plus a fee basis." The documents executed in connection with the contract provided, in the event of a controversy or dispute, first for mediation and then for arbitration in accordance with the rules of the American Arbitration Association. Upon completion of the residence, a dispute arose between Russell and Peat regarding Russell's performance and the balance due Russell under the contract. In January 2018, Russell filed a formal demand for arbitration, seeking $295,408 allegedly due from Peat for the construction of the residence. Peat counterclaimed, alleging breach of fiduciary duty and breach of contract and disputing his consent to costs incurred by Russell; Peat sought specific performance and an award of $255,000 on his counterclaims. Thereafter, in May 2018, the parties reached, as a result of mediation, a settlement agreement. In essence, the settlement agreement required Russell to make certain repairs to the residence; required Peat to pay Russell $245,408 on or before June 15, 2018, at which time Russell agreed to release its recorded lien; and required Peat to deposit into escrow an additional $50,000 to ensure completion, by the end of August 2018, of a "punch-list" to the satisfaction of a third-party "Construction Consultant." The Alabama Supreme Court determined the circuit court did not err to the extent that it set aside the judgment entered pursuant to the arbitrator's Final Award. The Court affirmed the trial court's July 25, 2019 order to the extent that it vacated any judgment on the arbitrator's Final Award related to Russell's and Peat's breach of the provisions of the settlement agreement that remained in effect after the Modified Partial Final Award and the distribution of the outstanding $50,000 at issue. The Court reversed that same order to the extent it purported to vacate any judgment on the Modified Partial Final Award of $258,959.89 and remanded this case for further proceedings. View "Russell Construction of Alabama, Inc. v. Peat" on Justia Law

The Fifth Circuit denied defendant's motion for sanctions against Sun Coast under Federal Rule of Appellate Procedure 38 for pursuing a frivolous appeal. The court noted that the case for Rule 38 sanctions is strongest in matters involving malice, not incompetence.The court found that Sun Coast acted with incompetence, not malice, and therefore exercised its discretion in not granting defendant's request to impose sanctions under Rule 38. In this case, where Sun Coast failed to disclose that it cited Opalinski II rather than Opalinski I to the arbitrator, the court observed that the best that may be said for Sun Coast is that it badly misreads the record. Furthermore, where Sun Coast misunderstood the federal appellate process in its demand for oral argument, Sun Coast acted with incompetence, not malice. View "Sun Coast Resources, Inc. v. Conrad" on Justia Law

The Louisiana Supreme Court granted review in this case to determine whether the Louisiana Commissioner of Insurance was bound by an arbitration clause in an agreement between a health insurance cooperative and a third-party contractor. The Louisiana Health Cooperative, Inc. (“LAHC”), a health insurance cooperative created in 2011 pursuant to the Patient Protection and Affordable Care Act, entered an agreement with Milliman, Inc. for actuarial and other services. By July 2015, the LAHC was out of business and allegedly insolvent. The Insurance Commissioner sought a permanent order of rehabilitation relative to LAHC. The district court entered an order confirming the Commissioner as rehabilitator and vesting him with authority to enforce contract performance by any party who had contracted with the LAHC. The Commissioner then sued multiple defendants in district court, asserting claims against Milliman for professional negligence, breach of contract, and negligent misrepresentation. According to that suit, the acts or omissions of Milliman caused or contributed to the LAHC’s insolvency. Milliman responded by filing a declinatory exception of lack of subject matter jurisdiction, arguing the Commissioner must arbitrate his claims pursuant to an arbitration clause in the agreement between the LAHC and Milliman. The Supreme Court concluded, however, the Commissioner was not bound by the arbitration agreement and accordingly could not be compelled to arbitrate its claims against Millman. The Court reversed the appellate court's judgment holding to the contrary, and remanded the case for further proceedings. View "Donelon v. Shilling" on Justia Law