Justia Arbitration & Mediation Opinion Summaries

CCC and Tractable use algorithms and data generated by repair centers to provide estimates of the cost to repair damaged vehicles. Tractable dispatched its employee to obtain a license for CCC’s software. Using a false name, the employee purported to represent “JA,” a small, independent appraiser. CCC issued a license. The contract forbids assignment of the license without consent and represents that JA is acting on its own behalf, not as an agent for any third party, and forbids disassembly of the software or its incorporation into any other product. Tractable disassembled the software and incorporated some features into its own product. In CCC’s subsequent suit, Tractable moved for arbitration under the agreement between CCC and JA., arguing that “JA” is a name that Tractable uses for itself. The Seventh Circuit affirmed the denial of the motion. Tractable is not a party to the agreement. CCC could not have discovered that Tractable uses the name “JA.” Contractual meaning reflects words and signs exchanged between the negotiators, not unilateral, confidential beliefs. If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent.. The identity of CCC’s trading partner was a vital element of the deal. View "CCC Intelligent Solutions Inc. v. Tractable Inc." on Justia Law

SUNZ Insurance Company (“SUNZ”) appealed from the denial of its motion to dismiss or, in the alternative, to compel arbitration of the crossclaims filed in a complex insurance dispute. SUNZ argued the district court lacked subject matter jurisdiction over the crossclaims between non-diverse parties in the underlying interpleader action and otherwise erred by denying arbitration.   The Eighth Circuit reversed and remanded the district court’s denial of Defendant’s motion to compel arbitration of the crossclaims. The court explained arbitration agreements are generally favored under federal law. Further, a court may not rule on the potential merits of the underlying claim that is assigned by contract to an arbitrator, even if it appears to be frivolous.Here, the Program Agreement sets forth the terms and conditions of the Policy and contains the disputed statements pertaining to collateral, costs, and fees. The Policy cannot be read without the Program Agreement, which explicitly controls the administration of the Policy and only becomes binding and enforceable after its execution. While the other party’s crossclaim alleges that SUNZ breached the Policy, it is the Program Agreement that drives the question of liability. And, under the Program Agreement, both parties agreed to submit to arbitration any disagreement regarding its terms. This is a challenge to the contract’s validity that, under Buckeye, shall be considered by an arbitrator, not a court. Thus, the district court erred when it denied SUNZ’s alternative motion to compel arbitration. View "SUNZ Insurance Company v. Butler American Holdings Inc." on Justia Law

After a construction project fell through, Plaintiff sued Defendant. Defendant filed a motion to compel arbitration. At issue in this case is whether the party who signed the contract on behalf of Plaintiff had authority to do so. The district court concluded they did not and the Eighth Circuit affirmed.The Eighth Circuit found that the signing party neither had actual or apparent authority to sign the contract containing the arbitration agreement. Apparent authority is created by the conduct of the principal, not of the agent. View "GP3 II, LLC v. Litong Capital, LLC" on Justia Law

The Supreme Court reversed the order of the district court denying SR Construction, Inc.'s motion to compel arbitration because its master subcontract agreement (MSA) with Peek Brothers Construction, Inc. constituted a valid arbitration provision that applied to the parties' underlying dispute, holding that the dispute was arbitrable.On appeal, SR argued that the district court erred in holding that the underlying dispute fell outside the bounds of the parties' arbitration agreement.The Supreme Court agreed and reversed, holding (1) as applied, the MSA provision was broad, and an attendant presumption of arbitrability applied; and (2) Peek's dispute was presumptively arbitrable under the parties' agreement. View "SR Construction, Inc. v. Peek Brothers Construction, Inc." on Justia Law

Corporacion AIC, SA (“AICSA”) and Hidroelectrica Santa Rita S.A. (“HSR”), signed a contract for the construction of a hydroelectric power plant in Guatemala. Under the contract, AICSA was responsible for creating a new power plant for HSR. However, AICSA had to discontinue the project because HSR issued a force majeure notice. HSR sought reimbursement for the advance payments it had made to AICSA and ultimately commenced arbitration proceedings.   AICSA sought dismissal of HSR’s claims, counterclaimed and sought to enjoin a subcontractor. A split, three-member arbitration panel denied AICSA’s request to join the subcontractor to the arbitration and ruled for HSR on the merits claims. The district court denied AICSA’s petition seeking to vacate the arbitral award on the basis that the arbitration panel had exceeded its powers. It said that Eleventh Circuit precedent foreclosed AICSA’s claim that a party to a New York Convention arbitration could challenge an arbitration panel’s decision on the exceeding powers ground.   The Eleventh Circuit noted that the Circuit is out of line with Supreme Court precedent, however, the court affirmed the district court’s determination. On appeal the relevant questions were whether: (1) an arbitration panel exceeded its powers in a non-domestic arbitration under the New York Convention?  And if so, (2) did the arbitration panel in this case indeed exceed its powers. The court held it was compelled to say, under Inversiones, that it may not vacate the arbitration award in this case on the exceeding powers ground. Consequently, the court could not the reach the merits of whether vacatur would be appropriate in the case. View "Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A." on Justia Law

James P. Key, Jr. appealed a circuit court order denying his motion to compel arbitration of his claims against Warren Averett, LLC, and Warren Averett Companies, LLC (collectively, "WA"). Key alleged that he was a certified public accountant who had been employed by WA for 25 years and had been a member of WA for 15 years; that he had executed a personal-services agreement ("PSA") with WA that included a noncompete clause; and that WA had sent him a letter terminating his employment. Key sought a judgment declaring "that the Non-Compete Clause and the financial penalty provision contained in the PSA is not applicable to Key and is an unlawful restraint of Key's ability to serve his clients as a professional." The Alabama Supreme Court found that whether Key's claims against WA had to be arbitrated was a threshold issue that should not have been decided by the circuit court; nor was it appropriate for the Supreme Court to settle the issue in this appeal. Accordingly, the circuit court's order was reversed, and the case was remanded for the circuit court to enter an order sending the case to arbitration for a determination of the threshold issue of arbitrability and staying proceedings in the circuit court during the pendency of the arbitration proceedings. View "Key v. Warren Averett, LLC, et al." on Justia Law

The Terminix International Co., L.P., and Terminix International, Inc. (collectively, "Terminix"), and Ken Stroh, an agent and employee of Terminix, appealed court orders appointing arbitrators, which were entered in two separate actions. The first action was commenced by Dauphin Surf Club Association, Inc. ("DSC"), an incorporated condominium owners' association, and multiple members of that association who owned individual condominium units. The second action was brought by Stonegate Condominium Owners' Association, Inc. ("Stonegate"), and multiple members of that association who owned individual condominium units. In 2006 and 2007, respectively, Terminix entered into contracts with DSC and Stonegate to provide protection from termites for the properties owned by DSC and Stonegate and their members. Both of those contracts included, among other things, an arbitration clause. After disputes regarding termite damage arose between Terminix and DSC and Stonegate, the DSC and Stonegate plaintiffs each petitioned for the appointment of an arbitrator to resolve the disputes. Defendants filed motions in opposition to the petitions, asserting that, because the National Arbitration Forum ("the NAF"), which had been designated as the arbitral forum in the arbitration agreement, was no longer administering consumer arbitrations, the claims could not be arbitrated by the NAF, as the parties had expressly agreed in the arbitration agreement, and that they could not be compelled to arbitrate in a manner inconsistent with the terms of the arbitration agreement. Plaintiffs countered that the contracts containing the arbitration agreement also contained a severability clause that should have been applied; the Federal Arbitration Act ("FAA") governed the agreement; language in the agreement demonstrated Terminix's primary intent was to arbitrate disputes (and that the choice of the NAF as the arbitral forum was an ancillary matter); and that defendants should have been judicially estopped from arguing that the selection of the NAF as the arbitral forum was integral to the arbitration agreement because they had taken the position in prior judicial proceedings that the courts presiding over those proceedings were authorized to appoint substitute arbitrators under the FAA. The Alabama Supreme Court agreed that the designation of the NAF as the arbitral forum in the agreement was ancillary rather than an integral and essential part of the agreements, the trial court therefore correctly granted plaintiffs' petitions to compel arbitration under the FAA. View "The Terminix International Co., L.P., et al. v. Dauphin Surf Club Association, Inc., et al." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming in part and reversing in part the judgment of the trial court holding that the settlement agreement between the parties in this case barred the claims asserted in this suit and in an arbitration proceeding, holding that the trial court did not err.A billion-dollar break-up between two large corporations engaged in the international petroleum business resulted in numerous claims and lawsuits, which the parties finally resolved through a comprehensive settlement agreement. The trial court concluded that the settlement agreement, including its release provisions and a disclaimer of reliance, were valid and enforceable and barred the claims asserted in both this lawsuit and in the arbitration proceeding. The court of appeals reversed in part, concluding that the settlement agreement did not bar certain claims. The Supreme Court reversed and reinstated the final judgment of the trial court, holding that the parties fully and finally resolved the current claims through their comprehensive settlement agreement. View "Transcor Astra Group S.A. v. Petrobras America Inc." on Justia Law

Roe invented a nozzle that transforms gas into liquid. Roe assigned the nozzle to Nano Gas, in exchange for 20% equity in Nano and a board seat. The relationship floundered. Roe left Nano, taking a prototype machine and some of Nano’s intellectual property produced by Hardin, another employee, and continued to develop the technology.An arbitrator determined that Roe should compensate Nano ($1,500,000) but that Roe deserved compensation for his work ($1,000,000) in the form of an offset against Nano's award. The arbitrator noted that Roe remained a Nano shareholder and could benefit financially in the future, then ordered Roe to return the Hardin work-papers to Nano, or, if unable to do that, to pay Nano $150,000. Nano sought to enforce the award and obtained judgment for $650,000. Nano filed a turnover motion seeking Roe’s Nano stock, valued at approximately $117,000. Roe argued that the award explicitly stated he could pay the remaining amount “in such manner as Roe chooses,” and provided he would remain a shareholder.The district court reasoned that Roe could choose how to pay the $500,000 award, but ordered Roe to turn over the stock or identify other assets to satisfy the $150,000 award. The Seventh Circuit reversed regarding Roe’s discretion to satisfy the $500,000 award and affirmed the $150,000 award for the Hardin papers. The award is devoid of any language indicating Roe shall remain a shareholder indefinitely or that Roe has complete discretion to decide if, when, and how Roe pays the award. View "Nano Gas Technologies, Inc. v. Roe" on Justia Law

Dual Diagnosis Treatment Center, Inc., d/b/a Sovereign Health of San Clemente, and its owner, Tonmoy Sharma, (collectively Sovereign) appealed the trial court's denial of Sovereign's motion to compel arbitration of claims asserted by Allen and Rose Nelson for themselves and on behalf of their deceased son, Brandon. The Nelsons alleged a cause of action for wrongful death, and on behalf of Brandon, negligence, negligence per se, dependent adult abuse or neglect, negligent misrepresentation, and fraud. According to the complaint, despite concluding that 26-year-old "Brandon requires 24 hour supervision ... at this time" after admitting him to its residential facility following his recent symptoms of psychosis, Sovereign personnel allowed him to go to his room alone, where he hung himself with the drawstring of his sweatpants. The trial court denied Sovereign's motion to compel arbitration because: (1) the court found Sovereign failed to meet its burden to authenticate an electronic signature as Brandon's on Sovereign's treatment center emollment agreement; and (2) even assuming Brandon signed the agreement, it was procedurally and substantively unconscionable, precluding enforcement against Brandon or, derivatively, his parents. Sovereign challenged the trial court's authentication and unconscionability findings. Finding no reversible error, the Court of Appeal affirmed the trial court's judgment. View "Nelson v. Dual Diagnosis Treatment Center" on Justia Law