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Arbitration / Court Decisions

COURT ALLOWS INTERVENTION OF “TOLLING SUB-CLASS” IN RESPA CLASS ACTIONS REGARDING PMI REINSURANCE

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We have previously reported on a case styled Munoz v. PHH Corp., No. 1:08-CV-0759 (E.D. Cal.), and other similar suits alleging putative class actions under the Real Estate Settlement Procedures Act (“RESPA”), arising from purported “sham” reinsurance transfers covering private mortgage insurance. In Munoz, where a class of consumers was certified, an intervening plaintiff sought intervention in order to certify a sub-class of consumers whose claims would be time-barred under the statute of limitations, but who sought to create a “tolling sub-class” of similarly situated claimants. The court granted the motion for intervention, and the defendants sought reconsideration. Finding the prior order not “clearly erroneous or contrary to law,” the court denied the motion for reconsideration. Munoz v. PHH Corp., No. 1:08-CV-0759 (USDC E.D. Cal. Oct. 29, 2013)

This post written by John Pitblado.

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PROPOSED ALTERNATIVE UMPIRE SELECTION REJECTED BY COURT

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Addressing the method of appointing a tie-breaking umpire-arbitrator in a series of reinsurance coverage arbitrations commenced by insurer Arrowood Indemnity Company, the Southern District of New York recently ordered that the parties’ already chosen arbitrators follow the steps provided in the “excess of loss” reinsurance agreements in selecting the third arbitrator. Although the relevant reinsurance treaties specified a method for such selection, Arrowood sought an alternative approach, which included the nomination by each party of up to eight candidates and a voir dire-like objection and selection process. However, the Court, acting under authority granted by Section 5 of the Federal Arbitration Act, denied that alternative, ordering that the present arbitrators select an umpire in accordance with the treaties’ requirements. Then, the Court would regard that selection as “presumptively appropriate,” albeit rebuttable, for appointment by the Court as umpire for the remaining arbitrations of the series. Employers Insurance Co. of Wausau v. Arrowood Indemnity Co., No. 12-cv-08005-LLS (USDC S.D.N.Y. Oct. 25, 2013).

This post written by Kyle Whitehead.

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BRITISH COURT REFUSES TO ENJOIN U.S. REINSURANCE LAWSUIT, OR STAY BRITISH SUIT, BETWEEN SAME PARTIES REGARDING SAME ISSUES.

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The claimant, the Insurance Company of the State of Pennsylvania, sued Equitas under certain reinsurance contracts that provided cover of $15 million, excess of $5 million in underlying insurance for ICP-issued policies covering the Dole Food Co. Dole faced more than $30 million in liabilities arising from alleged personal injuries caused by its use of certain pesticides in its fruit farming operations. Equitas claimed that ICP failed to timely notify Equitas of the claims, barring coverage under the reinsurance contracts. ICP brought suit first in New York, and Equitas filed its own later action in London, arguing that venue in the U.S. was improper, and seeking to enjoin the U.S. action. The English court declined to enjoin the U.S. action. However, it also denied ICP’s motion to stay the English proceeding, leaving the litigation proceeding on parallel tracks in New York and London. Insurance Co. of Pa. v. Equitas, [2013] EWHC 3713 (U.K. High Court of Justice, Comm. Div. Nov. 29, 2013)

This post written by John Pitblado.

See our disclaimer.

ARBITRATION AWARD ROUNDUP

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Comity

Corporacion Mexicana de Mantenimieneto Integral v. Pemex-Exporacion y Produccion, Case No. 1:10-cv-00206 (USDC S.D.N.Y. Aug. 27, 2013) (confirming $400 million Mexican arbitration award; refusing to enforce Mexican judgment nullifying award; Mexican judgment “violated basic notions of justice in that it applied a law that was not in existence at the time the parties contract was formed and left [the party in arbitration] without an apparent ability to litigate its claims”)

Manifest Disregard/Exceeding Authority

Dewan v. Walia, Case No. 12-2175 (4th Cir. Oct. 28, 2013) (vacating judgment that confirmed award in favor of former employee and remanding to district court with instructions to vacate the award; award was “manifest disregard of the law; “neither linguistic gymnastics, nor a selective reading of Maryland contract law, could support [the arbitrator’s] conclusion that the Release was enforceable but that [employee’s] claims were arbitrable anyway”)

Wells Fargo Advisors, LLC v. Watts, Case No. 12-1464 (4th Cir. Oct. 1, 2013) (affirming order confirming award for unpaid balance on employee loan; reversing ruling vacating arbitration panel’s grant of attorney’s fees; no fraud or manifest disregard of the law; “a court must defer to arbitrators’ factual findings on attorneys’ fees even if the arbitrators do not explain a basis for the precise amount”)

Walter v. Mark Travel Corp., Case No. 6:09-cv-01019 (USDC D. Kan. Sept. 18, 2013) (confirming $1.1 million award; denying motion to vacate award; court properly compelled arbitration against assignee of signatory; request for court to revisit order compelling arbitration was untimely; arbitrators did not exceed powers, nor was there a manifest disregard of the law)

Neshgold LP v. New York Hotel & Motel Trades Council, Case No. 1:13-cv-02399 (USDC S.D.N.Y. Sept. 19, 2013) (denying motion to vacate; granting motion to confirm award; award finding liability against employer in labor dispute did not exceed arbitrator’s authority, nor violate public policy; award determining relief due to labor union did not reflect manifest disregard of the law)

Phoenix Bulk Carriers, Ltd. v. American Metals Trading, LLP, Case No. 1:10-cv-02963 (USDC S.D.N.Y. Oct. 31, 2013) (granting motion to confirm award in favor of carrier against iron supplier; denying motion to vacate award; panel did not act in manifest disregard of the law nor exceed its authority because award was based on panel’s interpretation of shipping contract and findings of fact)

Evident Partiality/Fraud

DuBois v. Macy’s Retail Holdings, Inc., Case No. 12-3980-cv (2d Cir. Oct. 4, 2013) (affirming judgment denying pro se motion to vacate award rejecting claim for employee discrimination; confirming the award and granting dismissal of complaint; appellant failed to present any evidence to support the claim that the award was obtained through corruption, fraud, or undue means, that arbitrator exhibited evident partiality, or that arbitrator exceeded his powers)

Stone v. Bear, Stearns & Co., Case No. 12-2827 (3d Cir. Oct. 29, 2013) (affirming order denying petition to vacate FINRA award that rejected claim for millions of dollars in losses under investment; granting cross-petition to confirm the award; no evidence of exceeding powers or evident partiality against appellant based on arbitrator’s undisclosed family relation to well-connected finance professor)

Venue

First State Insurance Co. v. National Casualty Co., Case No. 1:13-cv-00704 (USDC S.D.N.Y. Sept. 27, 2013) (transferring venue of petition to confirm the arbitration panel’s final order regarding interpretation of reinsurance contract; forum selection clause in arbitration agreement unambiguously selected venue; clause was “unambiguous and specifically excludes alternative venue for the petition to confirm the final order”)

This post written by Michael Wolgin.

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RESPA CLAIMS BARRED BY STATUTE OF LIMITATIONS IN PRIVATE MORTGAGE INSURANCE KICKBACK CASE

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In a case we have posted on before, plaintiffs lost the battle over whether their RESPA claims alleging a kickback scheme against private mortgage insurers and mortgage lenders’ captive insurers were equitably tolled. The court concluded, in a summary judgment setting, that plaintiffs did not diligently pursue their claims because they did not decide to engage in litigation until they were approached by attorneys who believed they had claims. Additionally, there was no reason plaintiffs could not have earlier discovered their claims because there were a number of cases alleging identical schemes filed years prior to plaintiffs’ closings. The court also concluded that defendants did not actively mislead plaintiffs because “[p]laintiffs’ argument – that the statute of limitations should be equitably tolled because Defendants failed to disclose they were violating RESPA – is unpersuasive” and “circular.” Riddle v. Bank of America Corporation, Case No. 12-1740 (E.D. Pa. Nov. 18, 2013).

This post written by Abigail Kortz.

See our disclaimer.