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You are here: Home / Archives for Arbitration / Court Decisions / Confirmation / Vacation of Arbitration Awards

Confirmation / Vacation of Arbitration Awards

After Reviewing the Arbitration Record, Court Enters Default Judgment Confirming Default Arbitration Award

September 3, 2019 by Michael Wolgin

Plaintiff Choice Hotels International Inc. filed an application to confirm arbitration award and a motion for default judgment against a fanchisee company and its owner in connection with an arbitration initiated before the AAA as a result of the franchisees’ failure to pay royalties and fees under the governing franchise agreement. Choice Hotels alleged that it sent notices of the arbitration to the defendants “by regular mail, certified mail and/or overnight FedEx delivery,” but “Defendants failed to appear or participate during any proceeding.” The arbitrator noted that the defendants had “failed to respond” and “failed to submit documents after due notice by mail in accordance with the Rules.” The arbitrator awarded $83,726.63 in damages, and $2,750 for reimbursement of fees.

The court found that Choice Hotels was entitled to a default judgment because it met its obligation under the FAA to show that it was entitled to confirmation of the award as a matter of law. The court explained that Choice Hotels’ claims were properly before the AAA pursuant to the arbitration clause in the parties’ franchise agreement and that Choice Hotels was authorized under the AAA’s rules to present its evidence by supporting documentation and the submission of an affidavit. The court found that, after “having fully reviewed and considered” this evidence, the arbitrator entered its award, and there was “no reason in the record” to question its validity. The court therefore ruled that the confirmation of the award was proper and granted the default judgment in favor of Choice Hotels.

Choice Hotels Int’l, Inc. v. Laxmee, Inc., No. 8:18-cv-01818 (D. Md. Aug. 9, 2019).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

NDNY Finds Party Waived Right to Pursue Employment-Related Claims and Confirms Arbitration Award

August 27, 2019 by Nora Valenza-Frost

The plaintiff voluntarily signed an employment agreement that provided that any and all employment-related disputes arising out of the plaintiff’s employment would be subject to confidential arbitration. Following his termination, the plaintiff filed suit, asserting claims of retaliation and discrimination, which action was stayed pending arbitration. The employment agreement “clearly and expressly states that, by signing the agreement, Plaintiff agrees to arbitrate all claims regarding his employment against Defendant under the terms of the” agreement. “Plaintiff has not provided any reason as to why this agreement is somehow unenforceable. As a result, the Court finds that the Arbitrator had jurisdiction to preside over the parties’ dispute.” The court affirmed the arbitration award, as the plaintiff failed to show the existence of grounds to vacate the award.

McNeill v. Ramours Furniture Co., No. 6:15-cv-01473 (N.D.N.Y. Aug. 1, 2019).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

Maryland Federal Court Denies Untimely Request to Vacate Arbitration Award

August 5, 2019 by Nora Valenza-Frost

Pursuant to the FAA, a motion to vacate, modify, or correct an arbitration award must be served within three months after the award is filed or delivered. 9 U.S.C. § 12. Thus, a Maryland federal court held that the defendants’ request, via its answer on August 27, 2018, to vacate an arbitration award issued on January 31, 2018, was untimely.

The court also rejected the defendants’ argument that there was a genuine dispute of material fact regarding the existence of the franchise agreement based on the date of the subject franchise agreement referenced in the plaintiff’s papers. The defendants admitted that they entered into the franchise agreement attached to the plaintiff’s motion for summary judgment to confirm the arbitration award. The agreement contained the arbitration clause underlying their dispute. Thus, the court held that the “[p]laintiff’s failure to reference the accurate franchise agreement date in both their application to confirm arbitration award and motion for summary judgment does not create a genuine issue of material fact regarding the franchise agreement’s existence.”

Choice Hotels Int’l, Inc. v. Gopi Hosp., LLC, No. 8:18-cv-01680 (D. Md. July 18, 2019).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

Court Refuses to Treat Unopposed Petition to Confirm Arbitration Award as a Motion for Default Judgment, Reviews the Merits of the Petition, and Enters Order Confirming the Award and Legal Fees

July 24, 2019 by Benjamin Stearns

The case involved an AAA arbitration centering on the lack of performance under an exclusive distributorship agreement (EDA) that a medical supplier signed with a product manufacturer. The supplier failed to order sufficient amounts of the product under the EDA, but contended that the manufacturer fraudulently induced the supplier to enter into the EDA by making representations that the product was unique. The EDA, however, included an integration clause stating that the agreement constituted the entire agreement between the parties. The arbitrator ruled in favor of the manufacturer, finding that the supplier was barred by the parol evidence rule from asserting that it was fraudulently induced into signing the EDA.

The manufacturer then filed a petition with a district court to confirm the award. Although the supplier failed to file a response to the manufacturer’s petition, the court refused to simply enter a default judgment, holding that a default is not appropriate on a petition to confirm an arbitration award. The court then found that the evidence and the law showed that the arbitrator’s decision was more than “colorable” and confirmed the award. Included in the award was an award of attorneys’ fees. On review, the court found that the manufacturer’s attorneys complied with evidentiary requirements, including submission of an affidavit describing their experience, rate, amount of time spent on the case, and a statement that the requested rates are reasonable in their community. As a result, the district court confirmed the requested amount of fees in their entirety, noting specifically that the supplier had not presented any evidence to the contrary.

Intellisystem, LLC v. McHenry, No. 2:19-cv-01359 (E.D. Pa. June 26, 2019).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

Eighth Circuit Vacates Confirmation Over Lack of Personal Jurisdiction

July 16, 2019 by Brendan Gooley

The Eighth Circuit recently vacated a judgment confirming an arbitration award after concluding that the district court lacked personal jurisdiction over the defendant.

Federated Mutual Insurance Co., a Minnesota insurer, owns various trademarks containing the word “Federated.” A Florida insurer changed its name to Federated National Holding Co. After Federated Mutual expressed concern about possible confusion related to its marks, the insurers entered into an agreement requiring Federated National to adopt a new name, inform Federated Mutual of its new name, and provide Federated Mutual with an opportunity to object. Federated National adopted the name “FedNat,” continued to use the name Federated National as well, and failed to give Federated Mutual the required notice and opportunity to object. Federated Mutual initiated arbitration.

The arbitrator allowed FedNat to continue using FedNat, but ordered it to stop using “Federated.” Federated Mutual filed a petition to confirm the award in the U.S. District Court for the District of Minnesota. Federated Mutual’s petition was successful.

FedNat appealed, and the Eighth Circuit vacated the award and remanded with instructions to dismiss the petition based on a lack of personal jurisdiction over FedNat. It ruled that the agreement between the parties, despite being relevant, did not give rise to personal jurisdiction merely because the agreement contained a Minnesota choice-of-law provision. The court also explained that FedNat had no meaningful connection to Minnesota: It did not do business or have a physical presence there, and the fact that FedNat’s name disrupted Federated Mutual’s business in Minnesota did not create contacts on the part of FedNat with Minnesota. Finally, the panel disagreed with the district court’s conclusion that the agreement between the parties contemplated regular communications in Minnesota. The agreement only required notice of Federated National’s new name and was silent as to where the notice was to be given. Such sporadic communications were not enough to establish personal jurisdiction in Minnesota.

Federated Mut. Ins. Co. v. FedNat Holding Co., No. 18-2430 (8th Cir. June 27, 2019).

Filed Under: Arbitration / Court Decisions, Confirmation / Vacation of Arbitration Awards

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