Justia Arbitration & Mediation Opinion SummariesArticles Posted in Commercial Law
Air-Con, Inc. v. Daikin Applied Latin America, LLC
The First Circuit reversed the judgment of the district court requiring the parties to arbitrate their dispute in this case, holding that the district court erred in compelling arbitration.In 2000, Air-Con signed a written distribution agreement with Daikin Industries, LTD to be an authorized distributor in Puerto Rico of air conditioning and refrigeration equipment. The agreement contained an arbitration provision requiring the parties to arbitrate any disputes in Japan. Also in 2000, Air-Con established a distribution relationship with Daikin Applied Latin America, LLC, Daikin Industries' subsidiary. In 2018, Air-Con filed suit against Daikin Applied seeking injunctive relief and damages under Puerto Rico's Dealer Protection Act. After the case was removed to federal court Daikin Applied filed a motion to compel arbitration, arguing that the written agreement between Air-Con and Daikin Industries governed Daikin Applied's relationship with Air-Con. The district court agreed with Daikin Applied. The First Circuit reversed, holding that the district court erred in concluding that Air-Con agreed to arbitrate the claims at issue in this case. View "Air-Con, Inc. v. Daikin Applied Latin America, LLC" on Justia Law
Subaru of America, Inc. v. Putnam Automotive, Inc.
Putnam purchased a service-only (satellite) Subaru facility in San Francisco. Putnam entered into a temporary “Dealer Candidate Satellite Service Facility Agreement.” Subaru and Putnam subsequently executed a Subaru Dealer Agreement for the sale and service of vehicles at a Burlingame dealership and a five-year (renewable) Satellite Service Facility Agreement, which contained an arbitration provision. In 2017, Subaru stated that it would not approve Putnam’s proposed relocation of the satellite facility and would not renew the Satellite Agreement in 2019. Putnam filed protests with the New Motor Vehicle Board. Subaru moved to compel arbitration.The trial court found that the Satellite Agreement did not come within the Motor Vehicle Franchise Contract Arbitration Fairness Act, an exception to the Federal Arbitration Act. Putnam was compelled to arbitrate claims arising from that agreement. The court denied Subaru’s request to compel Putnam to dismiss its Board protests, which were stayed pending arbitration. An arbitrator found that the Satellite Agreement was a franchise, that Subaru was required to show good cause, and that Subaru had established good cause for terminating the Satellite Agreement.The court of appeal affirmed the confirmation of the arbitration award, rejecting arguments that the arbitrator lacked jurisdiction to make a good cause determination; enforcement of the arbitration provision was illegal under the Vehicle Code; public policy underlying California’s New Motor Vehicle Board Act precluded the arbitrator from making a good cause determination; and that Putnam’s due process rights were violated when Subaru failed to provide the required notice of the reasons for termination. View "Subaru of America, Inc. v. Putnam Automotive, Inc." on Justia Law
Jorja Trading, Inc. v. Willis
The Supreme Court reversed the judgment of the circuit court denying Appellants' motion to compel arbitration pursuant to the arbitration agreement contained in the parties' installment-sales contract, holding that the contract was supported by mutual obligations and plainly stated that Appellants did not waive arbitration by obtaining a monetary judgment in the small claims division of district court.Appellees purchased a vehicle with an installment-sales contract but failed to make their scheduled payments. Appellees voluntarily surrendered the vehicle, the vehicle was sold, and Appellees' account was credited. Appellants filed a complaint in the small claims division seeking payment for the remaining balance, and the district court entered judgment against Appellees. Appellees appealed, counterclaimed based on usury and Uniform Commercial Code violations, and sought class certification. Appellants sought to compel arbitration. The circuit court denied the motion, concluding that the arbitration agreement at issue lacked mutuality of obligation and that Appellants waived the right to arbitrate by first proceeding in district court. The Supreme Court reversed, holding (1) the arbitration agreement was valid; and (2) Appellants did not waive arbitration by first seeking monetary relief in district court. View "Jorja Trading, Inc. v. Willis" on Justia Law
JPMorgan Chase Bank, N.A. v. Bluegrass Powerboats
James Taylor sued Chase Bank for failure to comply with the Uniform Commercial Code in regard to a check that had been returned for insufficient funds. The trial court concluded that there was an arbitration agreement between the parties and referred the case to arbitration. The arbitrator later granted Chase’s motion to dismiss the claim because of Taylor’s delay in filing the arbitration claim. Thereafter, the trial court set aside its earlier order finding that an arbitration agreement existed and its referral of the case to arbitration and denied Chase’s motion to confirm the arbitration award. Chase took an interlocutory appeal of the order denying its motion to confirm the arbitration order, arguing that the trial court was bound to confirm the arbitrator’s decision. The court of appeals affirmed the trial court. The Supreme Court affirmed, holding that the trial court had the authority to set aside the order compelling arbitration after the arbitrator had rendered a dispositive order because the matter was not final and there was insufficient proof of the existence of a valid arbitration agreement.View "JPMorgan Chase Bank, N.A. v. Bluegrass Powerboats" on Justia Law
Delaware Coal. for Open Gov’t v. Strine
In 2009, to “preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology,” Delaware granted the Court of Chancery power to arbitrate business disputes. That Court then created an arbitration process as an alternative to trial for certain disputes, 10 DEL. CODE tit. 10, 349; Del. Ch. R. 96-98. To qualify for arbitration, at least one party must be a business entity formed or organized under Delaware law, and neither can be a consumer. Arbitration is limited to monetary disputes that involve an amount of at least one million dollars. The fee for filing is $12,000, and the arbitration costs $6,000 per day after the first day. Arbitration begins approximately 90 days after the petition is filed. The statute and rules bar public access. Arbitration petitions are confidential and are not included in the public docketing system. Attendance at proceedings is limited to parties and their representatives, and all materials and communications produced during the arbitration are protected from disclosure in judicial or administrative proceedings. The Coalition challenged the confidentiality provisions. The district court found that Delaware’s proceedings were essentially civil trials that must be open to the public, under the First Amendment. The Third Circuit affirmed. View "Delaware Coal. for Open Gov't v. Strine" on Justia Law
Thomas Kinkade Co. v. White
The Whites were dealers of Kinkade’s artwork. The parties agreed to arbitrate disputes in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In 2002, they commenced arbitration in which Kinkade claimed that the Whites had not paid hundreds of thousands of dollars, and the Whites counterclaimed that they had been fraudulently induced to enter the agreements. Kinkade chose Ansell as its arbitrator; the Whites chose Morganroth. Together Ansell and Morganroth chose Kowalsky as the neutral who would chair the panel. The arbitration dragged on; in 2006, Kinkade discovered that the Whites’ counsel, Ejbeh, had surreptitiously sent a live feed of the hearing to a hotel room. Ejbeh’s replacement departed after being convicted of tax fraud. The Whites did not comply with discovery requests, but after closing arguments and over objections, the panel requested that the Whites supply additional briefs. The Whites and their associates then began showering Kowalsky’s law firm with business. Kinkade objected, to no avail. A series of arbitration irregularities followed, all favoring the Whites. Kowalsky entered a $1.4 million award in the Whites’ favor. The district court vacated the award on grounds of Kowalsky’s “evident partiality.” The Sixth Circuit affirmed. View "Thomas Kinkade Co. v. White" on Justia Law
Control Screening LLC v. Technological Application & Prod. Co.
CS manufactures and sells X-ray and metal detection devices for use in public facilities around the world. Tecapro is a private, state-owned company that was formed by the Vietnamese government to advanced technologies into the Vietnamese market. In 2010, Tecapro purchased 28 customized AutoClear X-ray machines from CS for $1,021,156. The contract provides that disputes shall be settled at International Arbitration Center of European countries for claim in the suing party’s country under the rule of the Center. Tecapro initiated arbitration proceedings in Belgium in November 2010. In December 2010, CS notified Tecapro of its intention to commence arbitration proceedings in New Jersey. In January 2011, CS filed its petition to compel arbitration in New Jersey and enjoin Tecapro from proceeding with arbitration in Belgium. The district court concluded that it had subject matter jurisdiction under the U.N.Convention on the Recognition and Enforcement of Foreign Arbitral Awards, that it had personal jurisdiction over Tecapro, and that Tecapro could have sought to arbitrate in Vietnam and CS in New Jersey. The latter is what happened, so “the arbitration shall proceed in New Jersey.” After determining that it had jurisdiction under the Federal Arbitration Act, 9 U.S.C. 1, the Third Circuit affirmed. View "Control Screening LLC v. Technological Application & Prod. Co." on Justia Law
Holt v. Reg’l Tr. Servs. Corp.
Appellants signed a note secured by a deed of trust on their home. Respondents, Regional Trustee Services Corporation (RTSC) and One West Bank, were the trustee and beneficiary of the deed of trust. After Appellants stopped making payments, RTSC initiated judicial foreclosure. Appellants elected mediation under the foreclosure mediation program (FMP), which provides proof of compliance with the state's law requiring mediation upon homeowner request before a nonjudicial foreclosure sale can proceed on an owner-occupied residence. When RTSC failed to attend the mediation, the district court declared RTSC in bad faith and directed that RTSC be denied the FMP certificate needed to conduct a valid foreclosure sale. RTSC later reinitiated nonjudicial foreclosure. Appellants sought to enjoin Respondents from pursuing foreclosure, arguing that the order denying the FMP certificate permanently prevented foreclosure. The district court denied Appellants' request and directed the parties to return to FMP mediation. The Supreme Court affirmed, holding that under the circumstances of this case, a lender who has been denied an FMP certificate for failing to mediate in good faith can reinitiate foreclosure by means of a new notice of default and election to sell and rescission of the original, thereby restarting the FMP process. View "Holt v. Reg'l Tr. Servs. Corp." on Justia Law
India Steamship Co. Ltd. v. Kobil Petroleum Ltd.
Plaintiff appealed from an order of the district court vacating the attachment, pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure, of a check issued by the district court clerk made payable to defendant. At issue was whether the validity of a Rule B attachment of a treasury check issued from the Southern District's Court Registry Investment System (CRIS), representing the proceeds of electronic funds transfers whose attachment was vacated under Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd. The court held that the jurisdictional defect that led to the vacatur under Jaldhi likewise precluded the attachment of the same funds in the CRIS. Accordingly, the judgment was affirmed. View "India Steamship Co. Ltd. v. Kobil Petroleum Ltd." on Justia Law
Daane v. Eighth Judicial Dist. Court
Petitioner William Daane defaulted on a loan secured by a mortgage on his residence. CR Title Services, the trustee of the deed of trust, filed a notice of default to initiate the foreclosure process. Daane opted to participate in the Foreclosure Mediation Program (Program). The district court later found that CitiMortgage, the beneficiary of the deed of trust, had participated in the mediation in bad faith. After the foreclosure process was reinitiated, Daane again elected for mediation in the Program. Daane subsequently brought a petition for a writ of prohibition, seeking to preclude the Program from proceeding with further mediations or issuing a letter of certification. The Supreme Court denied the writ, holding that a writ of prohibition was unwarranted to preclude the Program from conducting further proceedings with respect to Daane's residence because he had an adequate remedy in the ordinary course of law. View "Daane v. Eighth Judicial Dist. Court" on Justia Law