Confirmation / Vacation of Arbitration Awards

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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FEDERAL DISTRICT COURT CONFIRMS ARBITRATION AWARD IN HOSPITAL SERVICES DISPUTE

May 31, 2016 by Carlton Fields

Weirton Medical Center, Inc. (“WMC”), a hospital in West Virginia, entered into an agreement with QHR Intensive Resources, LLC, under which QHR provided hospital administrative services. WMC ultimately terminated the agreement and refused to pay QHR’s invoices. As a result, QHR commenced arbitration in accordance with the arbitration provision in the operative agreement, alleging that WMC was in breach of contract for failing to reimburse QHR for amounts owed thereunder and seeking to recover those amounts.

After three years of discovery and an evidentiary hearing on the merits, the arbitrator issued an award in favor of QHR. WMC then brought an action in the U.S. District Court for the Northern District of West Virginia to vacate the award under Section 10 of the Federal Arbitration Act, and QHR cross-moved for confirmation. The Court ruled in QHR’s favor, finding that the arbitrator did not exceed his powers in basing the award on the proposed findings of fact and conclusions of law submitted by QHR in lieu of those submitted by WMC, as there was sufficient evidence to support the arbitrator’s decision, and it was apparent he considered the claims and defenses asserted by WMC. Moreover, the Court held that the arbitrator’s ruling was not in manifest disregard of the law, as he did not refuse to apply a legal principle that was clearly defined and not subject to reasonable debate. Last, the Court found that the award was not procured by fraud, corruption or undue means based on QHR’s having paid four of its fact witnesses for the time spent traveling to and preparing for their testimony at the arbitration, as WMC did not show by clear and convincing evidence that the witnesses were paid for their testimony, the arrangements did not materially influence the outcome of the hearing, and WMC failed to address this issue before the award was rendered, even though it was aware of the situation. Weirton Medical Center, Inc. v. QHR Intensive Resources, LLC, No. 5:15CV131 (USDC N.D.W.Va May 12, 2016).

This post written by Rob DiUbaldo.

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COURT CONFIRMS ARBITRATION AWARD RELATING TO THREE ARBITRATION AGREEMENTS AND ORDERS CERTAIN DOCUMENTS UNSEALED

May 4, 2016 by Carlton Fields

The court confirmed a final arbitration award in favor of the Petitioner, Employers Insurance Company of Wausau (“Wausau”), pursuant to Section 9 of the Federal Arbitration Action (FAA). Wausau and Ace Property and Casualty Insurance Company (“ACE”) were parties to three separate reinsurance agreements that contained individual arbitration clauses. In January 2014, ACE demanded arbitration relating to various issues. The three-person panel concluded its arbitration and issued an order resolving all remaining issues. Without opposition from ACE, the court confirmed the arbitration award.

Accompanying its petition seeking confirmation, Wausau filed a motion to keep all case filings under seal. It is typically “unnecessary to unseal documents that relate solely to the substance of the arbitration,” but other documents for which Wausau did not provide a basis to keep them under seal, were ordered unsealed. Emp’rs Ins. Co. of Wausau v. Ace Prop. & Cas. Is. Co., Case No. 2016-cv-00097 (W.D.Wis. Feb. 17, 2016); Emp’rs Ins. Co. of Wausau v. Ace Prop. & Cas. Is. Co., Case No. 16-cv-97-bbc (W.D.Wis. Mar. 22, 2016).

This post written by Joshua S. Wirth.

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NEW YORK FEDERAL COURT CONSIDERS PROCEDURAL ATTACKS TO ARBITRATION CONFIRMATION PROCEEDINGS

April 19, 2016 by Carlton Fields

Late last month, a federal district court in New York tackled procedural challenges to an arbitration confirmation proceeding. The arbitration arose from a dispute between an insurer and its reinsurer over the amount due to the insurer following a claim. Following an arbitration in which the insurer was awarded over $1 million by the arbitrator, the reinsurer tried to procedurally attack the court’s ability to confirm the arbitration award, arguing that the court lacked subject-matter jurisdiction to hear the confirmation proceeding because: 1) the amount in controversy requirement for diversity jurisdiction was not met; 2) there was no controversy remaining; and 3) the arbitration agreement does not include consent to a confirmation proceeding.

As to the amount in controversy requirement for diversity jurisdiction, the court followed the “demand approach,” in which the amount demanded in the arbitration serves as the amount in controversy; thus, it found no merit in the argument. Regarding the mootness argument, the court found that there was still a dispute until the court had confirmed the award; thus, there was no merit in this argument either. Finally, the court found that because the Federal Arbitration Act allows confirmation, any parties that include an arbitration provision implicitly agree to confirmation of the same. National Casualty Co. v. Resolute Reinsurance Co., Case No. 15-cv-09440-DLC (USDC S.D.N.Y. Mar. 24, 2016).

This post written by Zach Ludens.

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FEDERAL COURTS LACK JURISDICTION OVER ENFORCEMENT OF FOREIGN JUDGMENTS, EVEN WHERE JUDGMENT IS INCONSISTENT WITH EARLIER ARBITRATION AWARD OR AGREEMENT TO ARBITRATE

April 14, 2016 by Carlton Fields

Plaintiff Albaniabeg, power plant operator, sought enforcement of an Albanian judgment in a New York state court against defendant Italian power companies. Section 205 of the FAA permits removal of an action that relates to an arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The defendants sought to remove the case to federal court, claiming that the action related to the original arbitration because the Albanian judgment was obtained in violation of the parties’ arbitration clause and award. Albaniabeg moved to remand to state court due to lack of federal subject matter jurisdiction. The court held that removal was improper because the issue was unrelated to the arbitration agreement or the arbitral award; rather, the issue related to enforcement of a foreign judgment. The court held that, while certain defenses to the award may involve claims relating to the prior arbitration, the Convention does not provide subject matter jurisdiction over actions to enforce a foreign court’s judgment, even where a party contends that the foreign court’s judgment is inconsistent with an earlier arbitration award or agreement to arbitrate. Albaniabeg Ambient Sh.p.k. v. Enel S.P.A., Case No. 15 Civ. 3283 (USDC S.D.N.Y. Mar. 11, 2016).

This post written by Joshua S. Wirth.

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