John Pitblado

CALIFORNIA DISTRICT COURT FINDS PETITIONER’S DEFENSES TO CONFIRMATION ARE BARRED BY THE STATUTE OF LIMITATIONS

June 9, 2016 by John Pitblado

Since a motion to vacate, modify, or correct an award must be served within 3 months after the award is filed or delivered (9 U.S.C. § 12), and Plaintiff filed its opposition to confirmation nearly four months after the award was signed by the arbitrator, the Eastern District Court of California found Plaintiff’s defenses were barred by the statute of limitations, and the award was confirmed.

Plaintiff’s action in Federal Court was stayed as the parties were compelled to arbitrate. Although Plaintiff commenced AAA arbitration, the arbitrator ordered Plaintiff to add the corporation he owned as a party and secure counsel. Plaintiff did not meet the deadline, despite numerous extensions and as a result, the arbitrator issued an order dismissing the Complaint with prejudice if Plaintiff failed to provide AAA with a letter of representation within 20 days. When Plaintiff again failed to obtain counsel, Defendants moved to confirm the arbitration award.

Plaintiff opposed confirmation because: (1) the order of dismissal did not constitute an award under 9 U.S.C. § 11(b); and (2) the arbitrator exceeded her power because she refused to hear material evidence. The Court disagreed on statute of limitations grounds, and the award was confirmed.

Dinh Nguy v. Cinch Bakery Equipment, LLC, et al., 2:13-cv-02283 (USDC E.D. Cal. May 5, 2016)

This post written by Nora A. Valenza-Frost.

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NINTH CIRCUIT AFFIRMS DISTRICT COURT’S DECISION THAT BANKRUPTCY COURT DID NOT ABUSE ITS DISCRETION IN DENYING MOTION TO COMPEL ARBITRATION

June 8, 2016 by John Pitblado

This appeal is from an order by a district court in California, affirming a bankruptcy court’s denial of a motion to compel arbitration in a Chapter 7 bankruptcy trustee’s adversary proceeding, in which the trustee sought avoidance of fraudulent transfers.

The trustee for EPD Investment Co. and Jerrold Pressman (collectively “EPD”) had filed an adversary proceeding against defendant John Kirkland, an attorney who acted as counsel for EPD, claiming that Kirkland transferred assets from EPD, a purported Ponzi scheme, to a family trust named the “Bright Conscience Trust.” Kirkland moved the bankruptcy court to compel arbitration of the bankruptcy proceeding, which was denied. Kirkland then appealed the bankruptcy court’s decision to the California district court, which affirmed the bankruptcy court’s decision, and an appeal followed to the Ninth Circuit.

The Ninth Circuit noted that the bankruptcy court has jurisdiction over “core proceedings,” and that in a core proceeding, “a bankruptcy court has discretion to decline to enforce an otherwise applicable arbitration provision only if arbitration would conflict with the underlying purposes of the Bankruptcy Code.” The Ninth Circuit agreed with the bankruptcy court that the trustee’s causes of action for fraudulent conveyance, subordination, and disallowance were core proceedings, “thereby giving the bankruptcy court discretion to weigh the competing bankruptcy and arbitration interests at stake.” The Ninth Circuit found that the bankruptcy court did not abuse its discretion by determining that the arbitration provisions in Kirkland’s agreements with EPD conflicted with the Bankruptcy Code’s purposes of having bankruptcy law issues decided by bankruptcy courts, of centralizing resolution of the dispute and protecting parties from piecemeal litigation, and thus affirmed the district court’s ruling.

In the Matter of EPD Investment Co., No. 14-56478 (9th Cir. May 9, 2016).

This post written by Jeanne Kohler.

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PENNSYLVANIA INSURANCE DEPARTMENT AMENDS REQUIREMENTS FOR QUALIFIED AND CERTIFIED REINSURERS TO CONFORM WITH NAIC’S MODEL LAW AND REGULATION

June 7, 2016 by John Pitblado

On May 14, 2016, Pennsylvania issued Bulletin No. 16-819, advising that the Pennsylvania Insurance Department amended Chapter 161 of the Pennsylvania Insurance Code related to the requirements for qualified and certified reinsurers. The change made to the Chapter was deleting the requirement that a reinsurer be listed on the successor list to the Non-Admitted Insurance Listing (now known as the ”Quarterly Listing of Alien Insurers”) published by the National Association of Insurance Commissioners (NAIC) to be considered for qualification under Section 319.1 of the Code. This amendment conforms Pennsylvania’s regulation to the model law and regulation developed by the NAIC entitled ”Credit for Reinsurance Model Law” and ”Credit for Reinsurance Model Regulation.” The change to the Pennsylvania Insurance Code will take effect on June 13, 2016.

This post written by Jeanne Kohler.
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THIRD TIME’S THE CHARM: EASTERN DISTRICT OF MICHIGAN REMANDS ARBITRATION AWARD FOR FAILING TO ALLOW PARTY TO PRESENT EVIDENCE

May 19, 2016 by John Pitblado

On motion to vacate an arbitration award, a Michigan federal court held that the award lacked fundamental fairness and remanded to the same arbitrator with instructions to allow Plaintiffs their “opportunity to present pertinent and material evidence.”

The parties had agreed to submit to the arbitrator the threshold issue of whether a certain indemnity agreement was enforceable. However, the arbitrator did not address Plaintiffs’ alternative claims that if the indemnity agreements were unenforceable: (1) Plaintiffs were fraudulently induced to enter into an agreement Defendant believed to be void; and, (2) Defendant should be estopped from denying its indemnification obligations, as Plaintiffs relied to their detriment on Defendant’s indemnification promises.

For additional background and appellate history, see our prior post here.

Bernard J. Schafer, et al. v. Multiband Corp., No. 12-cv-13152 (USDC E.D. Mich. April 27, 2016).

This post written by Nora A. Valenza-Frost.

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NEBRASKA DEPARTMENT OF INSURANCE ISSUED NOTICE OF ADOPTION OF AMENDMENTS TO CREDIT FOR REINSURANCE RULES

May 18, 2016 by John Pitblado

On February 25, 2016, the Nebraska Department of Insurance issued a notice to all insurers that amendments to Chapter 65, “Credit for Reinsurance”, of the Insurance Department Rules, have been filed with the Secretary of State for adoption. The amendments are to implement the recent statutory changes to sections pertaining to credit for reinsurance that were enacted in the 2015 Legislative Session and to reflect the changes made by the NAIC to the Credit for Reinsurance Model Act. A copy of the revised Chapter 65 is attached hereto, which shows in redline form the changes to it.

This post written by Jeanne Kohler.

See our disclaimer.