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Arbitration / Court Decisions

CALIFORNIA ARBITRATION ROUND UP

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Class Waiver Cases Addressing Concepcion

Gutierrez v. Wells Fargo Bank, NA, Case No. 10-16959 (9th Cir. Dec. 26, 2012) (refusing to vacate district court’s judgment, rejecting argument that interim ruling of Concepcion created new right to arbitrate in this particular class action banking dispute; defendant waived right to arbitrate by litigating to judgment while Concepcion was pending, notwithstanding permissive arbitration clause)

Natalini v. Import Motors, Inc., Case No. A133236 (Cal. Ct. App. Jan. 7, 2013) (affirming denial of petition to compel individual arbitration in putative class action lawsuit; class waiver arbitration clause in motor vehicle sales contract procedurally and substantively unconscionable, notwithstanding Concepcion)

Outland v. Macy’s Department Stores, Inc., Case No. A133589 (Cal. Ct. App. Jan. 16, 2013) (affirming dismissal of putative class action lawsuit in employment dispute, citing Concepcion; underlying employment agreement contained a class waiver arbitration clause which should be upheld under FAA, notwithstanding California Gentry, Franco, and Truly Nolen decisional law holding such class waivers unenforceable)

Claim Preclusion

Casady v. The Waffle, LLC, Case No. B235553 (Cal. Ct. App. Jan. 3, 2013) (affirming denial of requests to restore and recommence civil action after arbitration was dismissed for failure of the plaintiff failed to pay share of arbitrator’s fee; dismissal of arbitration was a sanction and constituted an award on the merits)

This post written by Michael Wolgin.

See our disclaimer.

UNAVAILABILITY OF A DESIGNATED ARBITRATION FORUM DOES NOT PROVIDE AN IMPOSSIBILITY DEFENSE

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On appeal, a circuit court’s denial of a motion to compel arbitration was reversed for several reasons. First, the circuit court erred by allowing submission of parol evidence after determining that language in the arbitration agreement requiring the parties to select their arbitrators from a “nationally recognized arbitration association” was unambiguous. Second, the circuit court erred by finding the arbitration agreement to be invalid based on the argument that the contractually designated nationally recognized arbitration association would not take on the pre-dispute arbitration agreement case and the arbitration agreement was therefore impossible to perform. The appellate court found the impossibility argument to be without merit since the FAA authorizes a court to appoint arbitrators when the parties fail to name them, making arbitration possible even in the event that a designated forum will not take the case. Spring Lake NC, LLC v. Figueroa, No. 2D12-1202 (Fla. Dist. Ct. App. Dec. 14, 2012).

This post written by Abigail Kortz.

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PARTICIPATION IN NEW YORK ARBITRATION NOT AN IMPLICIT WAIVER OF SOVEREIGN IMMUNITY UNDER THE FSIA

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A pro se attorney sued his former clients, Argentina’s economic ministry and a reinsurance company owned by the Argentine government, for malicious prosecution based on the Argentine government’s criminal prosecution of the attorney for allegedly exorbitant fees. In the malicious prosecution action, the Southern District of New York decided it could not exercise subject matter jurisdiction over the defendants because none of the exceptions to sovereign immunity provided by the Foreign Sovereign Immunities Act applied. Although the court acknowledged that defendants’ retention of the attorney in connection with commercial matters qualified as commercial activity, it determined that the commercial activity exception did not apply because the activity in question was the government initiated criminal prosecution. The court also concluded that defendants’ prior consent to arbitrate the issue of alleged overbilling by the plaintiff was not an “unmistakable or unambiguous waiver” of immunity from the separate tort action of malicious prosecution. Moreira v. Ministerio de Economia y Produccion de la Republica Argentina, Case No. 10 Civ. 266 (LTS)(KNF) (S.D.N.Y. Dec. 7, 2012).

This post written by Abigail Kortz.

See our disclaimer.

COURT REFUSES TO ENJOIN ATTORNEYS WHO ALLEGEDLY BREACHED CONFIDENTIALITY AGREEMENT IN REINSURANCE ARBITRATION

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On May 1, 2012, we reported on the Second Circuit’s affirmance of a denial of Utica Mutual Insurance Company’s motion to disqualify R & Q Reinsurance Company’s attorneys in a dispute arising out of the alleged breach of three confidentiality agreements, including one entered as an order in the parties’ pending reinsurance arbitration. Utica alleged that R&Q breached the confidentiality agreement put in place in the reinsurance arbitration by improperly disclosing confidential information in a separate lawsuit against a third party. On December 14, 2012, the court adopted a magistrate’s recommendation (entered on November 6, 2012), to deny Utica’s motion for preliminary injunction enjoining R&Q from disclosing the alleged confidential information. The court found that Utica failed to demonstrate with any specificity that the alleged breach of confidentiality would cause it irreparable harm, although the court did note that Utica showed a likelihood of success on the merits of its claim that the confidentiality agreements had been breached. Utica Mutual Insurance Co. v. INA Reinsurance Co., Case No. 6:12-cv-00194 (USDC N.D.N.Y. Dec. 14, 2012).

This post written by Michael Wolgin.

See our disclaimer.

BREACH OF UBERRIMAE FIDEA – THE UTMOST DUTY OF GOOD FAITH – AFFIRMED BY SECOND CIRCUIT

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The Second Circuit recently addressed the issue doctrine of uberrimae fidea. St. Paul Fire & Marine Insurance brought suit against Matrix Posh, LLC, its insured under a policy of marine insurance, seeking to have the policy declared void ab initio due to Matrix’s alleged misrepresentations about pre-existing damage to the insured vessel. The trial court granted summary judgment and the Second Circuit affirmed. The Second Circuit held that the determination of whether the misrepresentations were material hinged not on the extent of the damage to the vessel (Matrix claimed after the fact that the damage was minor), but on whether the misrepresentation that there was no damage, precluded St. Paul from the opportunity to investigate the risk itself, prior to acceptance. This violated Matrix’s duty of utmost good faith and the policy was therefore void. St. Paul Fire & Marine Insurance Co. v. Matrix Posh, LLC, No. 12-2045-CV (2d Cir. Jan. 16 2013).

This post written by John Pitblado.

See our disclaimer.