Justia Arbitration & Mediation Opinion Summaries

Hennessy, a car parts manufacturer, beset by asbestos-related personal injury claims, sought coverage by National Union. The companies entered into a cost sharing agreement in 2008. As claims occurred, Hennessy asked National Union to indemnify its settlement and defense costs. To resolve their differences about what was owed, Hennessy demanded arbitration under the agreement, which instructs arbitrators to apply Illinois law. Hennessy filed suit under the Illinois Insurance Code 215 ILCS 5/155(1), which provides that, in cases involving vexatious and unreasonable delay, the court may award reasonable attorney fees, other costs, plus an additional amount. Hennessy claimed that National Union’s delays in providing coverage were vexatious and unreasonable. The district judge declined to dismiss, acknowledging a provision that “the arbitrators shall not be empowered or have jurisdiction to award punitive damages, fines or penalties,” but expressing a belief that Hennessy’s claim arose under statutory law rather than under the cost-sharing agreement. National Union appealed under 9 U.S.C. 16(a)(1)(A), (B), the Federal Arbitration Act. The Seventh Circuit reversed. Hennessy waived any right to ask the arbitrator to award punitive damages, fines, or penalties for an allegedly unreasonable delay. Having submitted a dispute to arbitration that explicitly excludes a particular remedy, a party cannot sue in court for that remedy. View "Hennessy Indus., Inc. v. Nat'l Union Fire Ins. Co." on Justia Law

This case concerned a dispute between an insurance carrier (Plaintiff) and its insured (Defendant) regarding Plaintiff’s obligation to pay underinsured motorist benefits. An arbitration panel concluded that the issue of whether the relevant policy provisions provided coverage for the claim should be resolved under the choice of law rules governing claims sounding in tort, rather than claims sounding in insurance and contract, and therefore, that New Jersey law rather than Connecticut law governed Defendant’s claim for uninsured motorist benefits under the policy. The trial court vacated the arbitration award, and the Appellate Court affirmed. The Supreme Court affirmed, holding that the Appellate Court, in its opinion adopting the decision of the trial court, properly applied sections 6(2), 188 and 193 of the Restatement (Second), contract choice of law, to determine that Connecticut law governed the claim. View "Gen. Accident Ins. Co. v. Mortara" on Justia Law

America's Home Place, Inc. ("AHP") appealed a Circuit Court order denying AHP's motion to compel arbitration of the claims brought by the plaintiff below, Gregory Rampey. In August 2012, Rampey and AHP entered into a contract, the terms of which provided that AHP would construct a house for Rampey in Chambers County. AHP constructed the house; however, after he took possession of the house, Rampey began to notice "settlement and sinking of the foundation," which, according to Rampey, resulted in significant structural and other damage to the house. AHP attempted to stabilize the foundation and to repair the damage to the house that had occurred as a result of the unstable foundation; those efforts were unsuccessful. Upon review of the parties' arguments on appeal, the Supreme Court concluded the trial court erred in denying AHP's motion to compel arbitration. Therefore, the Court reversed the trial court's order and remanded the case with instructions to vacate the order denying the motion to compel arbitration and to enter an order granting AHP's motion to compel arbitration. View "America's Home Place, Inc. v. Rampey" on Justia Law

After the Town of Athol unilaterally increased copayment amounts that members of the Professional Firefighters of Athol, Local 1751, I.A.F.F. (Union) pay for medical services under their health insurance plans, the Union filed a grievance under the parties’ collective bargaining agreement (CBA). An arbitrator determined that the Town violated the CBA by making the changes unilaterally. The Town filed a complaint in the superior court seeking to vacate the award and other relief. The superior court confirmed the portion of the award compelling the parties to collectively bargain over changes to copayment rates and vacated two remedial aspects of the award. The Supreme Judicial Court reversed in part, holding that the superior court judge erred in vacating any portion of the award. Remanded for entry of a judgment confirming the award in its entirety. View "Town of Athol v. Prof’l Firefighters of Athol, Local 1751, I.A.F.F." on Justia Law

This case arose after the City of Redfield and Quam entered into a construction contract and issues arose regarding the subsurface ground conditions. On appeal, Quam challenged the district court's order denying its motion to compel arbitration for contract disputes between Quam and the City. The court concluded that the district court properly found that no agreement to arbitrate was made between the parties and, therefore, the court affirmed the denial of Quam's motion to compel. View "Quam Construction Co., Inc. v. City of Redfield" on Justia Law

Plaintiff-respondent Network Capital Funding Corporation filed a declaratory relief action alleging its arbitration agreement with defendant-appellant Erik Papke required Papke to arbitrate his wage and hour claims on an individual basis rather than the classwide basis he sought in his pending arbitration proceeding. According to Papke, the broad language in the parties’ arbitration agreement required the arbitrator, not the court, to decide whether the agreement authorized class arbitration. The trial court denied Papke’s petition, concluding it must decide whether the arbitration agreement authorized class arbitration, and in doing so found this particular agreement did not allow class arbitration. Papke appealed. After review, the Court of Appeal agreed with the trial court: "[d]eciding whether the parties’ arbitration agreement authorizes class arbitration does not simply determine what arbitration procedures the parties agreed to use, but rather whose claims the parties agreed to arbitrate. Supreme Court precedent requires courts to decide whose claims are covered by an arbitration agreement unless the parties clearly and unmistakably agree to have the arbitrator decide that question. Because Papke’s and Network Capital’s arbitration agreement does not clearly and unmistakably designate the arbitrator to determine whether the agreement authorizes class arbitration, we conclude the trial court properly decided that question." Furthermore, the Court concluded the trial court properly determined Papke’s and Network Capital’s arbitration agreement did not authorize class arbitration. View "Network Capital Funding Corp. v. Papke" on Justia Law

Flintkote was a major supplier of asbestos-based products and was covered by insurance policies from London insurance firms, including Aviva, one of the world’s largest insurers. It became apparent that claims under these policies would result in protracted disputes regarding the scope of coverage. In 1985, Flintkote and several insurers, but not Aviva, entered into the Wellington Agreement, which required that coverage disputes be resolved through ADR consisting of open mediation, binding arbitration, and an expedited appellate process; that the insurers make payments to Flintkote; and that Flintkote reimburse with interest, if it also received those same payments from another insurer. In 1989, Flintkote and Aviva entered into a separate agreement, similar to the Wellington Agreement, including as to reimbursement for claims also paid by other insurers. The1989 Agreement explicitly reserves each party’s right to resolve disputes through litigation. Flintkote filed for bankruptcy in 2004. In 2006, invoking the Wellington Agreement, Flintkote initiated coverage-related mediation with the insurers. Aviva, although not obligated to participate, opted to join. During mediation, Flintkote reached settlements with some insurers, but not with Aviva. In 2012, Aviva and the remaining other insurers sought reimbursement or off-set with respect to prior payments and interest under the Wellington Agreement. Flintkote took no action. Aviva, acting separately, moved to lift the automatic bankruptcy stay. Before the Bankruptcy Court ruled on Aviva’s motion, Flintkote moved to compel arbitration pursuant the Federal Arbitration Act. The district court granted Flintkote’s motion to compel arbitration, concluding that Aviva was equitably estopped from avoiding arbitration by virtue of its participation in the lengthy mediation process. The Third Circuit reversed. View "Flintkote Co v. Aviva PLC" on Justia Law

After Sining Mao left his employment with Seagate Technology, LLC, Mao joined Seagate’s competitor, Western Digital Corporation. Seagate subsequently commenced a district court action alleging that Mao stole Seagate’s trade secrets and confidential information and provided it to Western Digital. Western Digital invoked an arbitration clause in Mao’s employment agreement with Seagate. Before the arbitration hearing, Seagate brought a motion for sanctions against Western Digital and Mao (Appellants) based on alleged fabrication of evidence. An arbitrator issued an award against Appellants in an amount exceeding $500 million. The district court vacated the award in part, but the court of appeals reinstated the award. On appeal, Appellants argued that the arbitrator’s exceeded his authority by issuing punitive sanctions and prejudiced Appellants by refusing to hear evidence material to the controversy. The Supreme Court affirmed the court of appeals’ decision reinstating and confirming the arbitration award in full, holding that the arbitrator did not exceed his authority or refuse to hear material evidence as required for vacatur. View "Seagate Tech., LLC v. W. Digital Corp." 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

Lacie Smith worked for Express Check Advance of Mississippi, LLC. A condition in her employment papers was that she agreed to submit “any employment-related dispute” to arbitration. Later, in response to her termination, Smith sued Express Check in circuit court. The trial judge compelled arbitration and Smith appealed. Finding no reversible error, the Supreme Court affirmed. View "Smith v. Express Check Advance of Mississippi, LLC" on Justia Law