Justia Arbitration & Mediation Opinion Summaries

West commenced this diversity action to recover expenses incurred in defending Miller in a garnishment action, asserting tort claims under Missouri law against RLI for vexatious refusal to pay, bad faith refusal to pay, and prima facie tort, and claims of negligence and negligent misrepresentations against RLI's independent claims agent, ASCK. West also sought a declaration that it owed no duty to protect RLI in the underlying arbitration. RLI counter claimed, alleging that, prior to the arbitration, West negligently and in bad faith refused to settle the underlying claims for less than its policy limits. West's response added claims for indemnification and contribution against ASCK. The court reversed the grant of summary judgment dismissing RLI's refusal-to-settle counterclaim and remanded for further proceedings. The court declined to review the district court's grant of summary judgment dismissing West's affirmative defenses to the counterclaim. In all other respects, the court affirmed the district court's orders and judgment. View "West American Ins. Co. v. RLI Ins. Co., et al" on Justia Law

An Illinois driver alleged that she was injured in an accident with an uninsured motorist in Wisconsin in 2007. In Illinois proceedings her insurer, Country Preferred, sought a declaration of noncoverage and she unsuccessfully moved to compel arbitration. Uninsured motorist coverage was part of the policy, but the policy also provided that “any suit, action or arbitration will be barred unless commenced within two years from the date of the accident.” The insurer contended that the driver had not met this requirement, and the circuit court agreed. The appellate court reversed, persuaded by the driver’s theory that public policy was violated by virtue of the fact that the applicable statute of limitations in Wisconsin is three years, unlike Illinois (and the policy), where it is two years. The Illinois Supreme Court reversed, noting that the insured never initiated any type of legal action to settle her claim within the policy’s applicable time frame. There is no public policy violation in requiring the insured driver to bring her suit, action, or arbitration request within two years, the same time period as the Illinois statute of limitations, even though the limitation period in Wisconsin, the state where the accident occurred, is longer.View "Country Preferred Ins. Co. v. Whitehead" on Justia Law

National Union appealed from the district court's award of consequential damages to plaintiffs, following a jury trial, for National Union's breach of its duty to defendant plaintiffs in a securities arbitration. At issue was whether consequential damages, which were traditionally available for breach of contract claims, were also available for a claim of breach of a duty to defend an insured under Connecticut law, and if so, whether they could include damages for harm to reputation and loss of income. Absent a precedential decision from the Connecticut courts, the court certified the two issues. View "Ryan v. Nat'l Union Fire Ins." on Justia Law

A home remodeling contractor (Contractor) received a demand for arbitration regarding allegedly defective work it performed on a remodeling project. Contractor's insurer (Insurer) accepted defense of the claim under a reservation of rights. The arbitrator issued an arbitration award in favor of the homeowners. When Insurer refused to pay the award, Contractor paid the homeowners and sued Insurer for indemnification under the policy. The district court granted Contractor's motion for summary judgment, concluding that a vague arbitration award made it impossible to determine whether the insurance policy covered any of the homeonwers' successful claims and was directly attributable to the inaction of the attorney appointed by Insurer to represent Contractor. The court of appeals reversed. The Supreme Court reversed, holding (1) a portion of the homeowners' claim may be covered under the policy; (2) Insurer was not vicariously liable of the absence of an explanation of the arbitration award; and (3) Insurer was directly liable to Contractor for the failure of the attorney to request an explanation of the arbitration award to determine what portion of the award, if any, was for the covered claim. Remanded. View "Remodeling Dimensions, Inc., v. Integrity Mut. Ins. Co." on Justia Law

Lexington Insurance Company and Chartis, Inc. appealed a circuit court order that appointed a third arbitrator to the arbitration panel established to settle a dispute between Lexington and Southern Energy Homes, Inc. ("SEH"). From January 1, 2002, through October 31, 2004, SEH purchased from Lexington three commercial general-liability ("CGL") policies. An endorsement to a CGL policy insuring SEH from January 1, 2002, through December 31, 2002, provided that SEH is responsible for a $100,000 self-insurance retention ("SIR") "per occurrence." Endorsements to two successive CGL policies that together provided coverage to SEH through October 31, 2004, provide that SEH is responsible for a $250,000 SIR per occurrence. The SIR applied both to costs of defense incurred by SEH and to amounts SEH pays in settlement or pursuant to a judgment. From January 1, 2002, through October 31, 2004, SEH was named as a defendant in 46 lawsuits alleging property damage and personal injury resulting from SEH's using a vinyl-on-gypsum product in the homes it manufactured. SEH gave notice of these lawsuits to Lexington, and that it had exhausted its SIR amounts in the litigation and was entitled to reimbursement from Lexington. More than 120 days passed without SEH receiving a decision from Lexington as to whether it agreed with SEH's claim for this amount. SEH made an arbitration demand pursuant to the arbitration clauses of the CGL policies, including the SIR endorsement to the 2002 policy. Upon review of the policies in question, the Supreme Court concluded that the circuit court erred in appointing the third arbitrator. The order was reversed and the case was remanded for further proceedings. View "Lexington Insurance Co. v. Southern Energy Homes, Inc. " on Justia Law

Alpine Glass, Inc. appealed the district court's partial denial of Alpine's motion to consolidate 482 short-pay claims for arbitration against the Country Mutual Insurance Co. and five of its subsidiaries. The Eighth Circuit Court of Appeals dismissed Alpine's appeal for lack of appellate jurisdiction, holding (1) the Court lacked jurisdiction to hear the appeal under 28 U.S.C. 1291 because the district court's order was not a final order; and (2) the denial of a motion to consolidate arbitrations does not imperil a substantial public interest sufficient to warrant jurisdiction under the collateral order doctrine, and therefore, the order was not appealable under the collateral order doctrine. View "Alpine Glass, Inc. v. Country Mut. Ins. Co." on Justia Law

The issue before the Fourth Circuit concerned commercial arbitration of insurance disputes in foreign tribunals. Appellant-Cross-Appellee ESAB Group, Inc. contended that South Carolina law "reverse preempts" federal law (namely, a treaty and its implementing legislation) pursuant to the McCarran-Ferguson Act. ESAB Group faced numerous products liability suits arising from alleged personal injuries caused by exposure to welding consumables manufactured by ESAB Group or its predecessors. These suits presently were proceeding in numerous state and federal courts in the United States. ESAB Group requested that its insurers defend and indemnify it in these suits. Several, including Zurich Insurance, PLC (ZIP), refused coverage. As a result, ESAB Group brought suit against its insurers in South Carolina state court. The district court then found that ZIP had the requisite minimum contacts with the forum to permit the exercise of personal jurisdiction and that the exercise of jurisdiction over ZIP was otherwise reasonable. Because it had referred to arbitration all claims providing a basis for subject-matter jurisdiction, the district court declined to exercise supplemental jurisdiction over the remaining claims. ESAB Group timely appealed the district court's exercise of subject-matter jurisdiction. ZIP filed a cross-appeal, challenging the district court’s exercise of personal jurisdiction and its authority to remand the nonarbitrable claims to state court. Upon review, the Fourth Circuit affirmed as to the district court’s exercise of subject-matter jurisdiction, and found no error in the district court's order compelling arbitration. Likewise, the Court rejected ZIP's arguments that the district court erred in exercising personal jurisdiction over it and in remanding nonarbitrable claims to state court. View "ESAB Group, Incorporated v. Zurich Insurance PLC" on Justia Law

Plaintiffs-Appellees Wheeling Hospital and Belmont Hospital along with other medical providers, filed this putative class action in West Virginia state court against the Ohio Valley Health Services and Education Corporation, Ohio Valley Medical Center and East Ohio Regional Hospital, (collectively, the "OV Health System Parties"), and Appellant The Health Plan of the Upper Ohio Valley, Inc. The plaintiffs sued in order to collect amounts allegedly owed to them by employee benefit plans established by the OV Health System Parties, for which The Health Plan acted as administrator. After pretrial activity, The Health Plan moved to dismiss the claims brought against it by the hospital plaintiffs pursuant to an arbitration agreement between the parties. The district court denied this motion, holding that The Health Plan had defaulted on its right to arbitrate. The Health Plan appealed. Upon review, the Fourth Circuit concluded that the district court erred in its determination that The Health Plan defaulted on its right to arbitrate. The Court therefore reversed the district court’s denial of The Health Plan’s motion to dismiss. View "Wheeling Hospital, Inc. v. Health Plan of the Upper Ohio Valley, Inc. " on Justia Law

Cogswell purchased the vacant paper mill in a tax foreclosure sale for $70,000. The site has more than 20 buildings, covering 440,700 square feet. Evanston issued first-party property insurance with a building coverage limit of $1,000,000, subject to coinsurance at 80%. On the first day of coverage, 15,700 square feet (less than 4%) were damaged by fire. Evanston determined that actual cash value of the buildings at the time of loss was $10,223,384.80; under the coinsurance provision, Cogswell was required to carry insurance of $8,178,707.84. Cogswell carried only $1 million. Evanston determined that it was liable for 12.23% ($1 million/ $8,178,707.84); calculated cash value of loss at $342,836.46; and determined that it was liable for $36,918.27 ($342,836.46 times 12.23% less $5,000 deductible). An umpire, appointed under the contract determined actual cash value of $1,540,000.00 and damage at $736,384.89. Cogswell demanded $554,553.49, the net amount under the appraisal after application of the coinsurance provision and deductible. The district court vacated the appraisal and granted Evanston judgment on a second appraisal. The Sixth Circuit affirmed. The provision calling for appointment of an umpire is not governed by the Federal Arbitration Act, 9 U.S.C. 1, which would require deference; the parties agreed to the process under Michigan law.View "Evanston Ins. Co. v. Cogswell Props., LLC" on Justia Law

These consolidated appeals arose from the same facts: in 1990, Richard L. Parker applied to American Family Life Assurance Company of Columbus (Aflac) for a cancer-indemnity insurance policy. Aflac issued Parker a policy. The term of the 1990 policy was month-to-month; the monthly premium was $28.50. Aflac received payments for the 1990 policy from August 25, 1990, to August 17, 1996. Parker applied for a new policy in May 1996 for when the 1990 policy was set to terminate. The 1996 policy took effect August 16, 1996, and used the same number as the 1990 policy. Parker renewed the policy once again in 2009, but the 2009 policy contained an arbitration clause. By a special waiver, the 2009 policy's language stated that Parker would give up his "current" policy and its benefits for the benefits in the new one. Parker paid according to the term of the 2009 policy. But in 2010, Parker sued Aflac asserting a claim of bad faith for Aflac's alleged failing to pay policy benefits owed under the 1990 policy. Aflac responded by filing a motion to compel arbitration according to the terms of the 2009 policy. The circuit court conducted a hearing on the motion and denied it. Upon review, the Supreme Court concluded that Aflac satisfied its burden of proving that an arbitration agreement existed that applied to Parker's claims against it. Because there was no issue as to whether the contract containing the arbitration agreement affected interstate commerce, the burden then shifted to Parker to offer evidence refuting the evidence offered by Aflac and Hunter; Parker offered no evidence to refute that evidence and presented "no persuasive argument" that Aflac failed to meet its burden. The Court reversed the circuit court's decision and remanded the case for further proceedings. View "American Family Life Assurance Company of Columbus v. Parker " on Justia Law