Arbitration / Court Decisions

ARBITRATION PANEL’S ORDER TO SIGN SECURITY AGREEMENT AFFIRMED

July 21, 2009 by Carlton Fields

After a coverage decision by the arbitration panel, the parties disagreed as to the terms of the security interest agreement as stated in the “Memo of Understanding.” The panel subsequently issued an order directing Robinson Outdoors, Inc. (“Robinson”) to sign the other party’s proposed security agreement, which the trial court confirmed. Before the appellate court, Robinson argued that the panel exceeded its authority when it ordered Robinson to sign the agreement. However, the appellate court found that the record demonstrated that the panel had such authority because: (1) the memo expressly provided for a security agreement; (2) the language in the memo did not limit the scope of arbitration; (3) holding the parties to a broad reading of the scope of arbitration was fair; and (4) such authority was necessary in order to effectuate the intent of the memo. American Employers Ins. Co. v. Robinson Outdoors, Inc., Case No. 25-06-702 (Minn. Ct. App. June 9, 2009).

This post written by Dan Crisp.

COURT GRANTS LIMITED PRE-ARBITRATION DISCOVERY OF NON-PARTY

July 20, 2009 by Carlton Fields

A New York State Court allowed the issuance of judicial subpoenas to non-parties at the request of Petitioner corporations in a pre-arbitration discovery action. The Petitioners and Respondents had agreed to arbitrate under FINRA rules, but the arbitration had not yet commenced, as Petitioners sought discovery to determine if other parties should be joined in the arbitration.

The Court noted that FINRA provides a comprehensive discovery scheme, and allows for the issuance of arbitral subpoenas, but is ambiguous as to pre-arbitral discovery. The Court also noted a general judicial reluctance to order discovery where the parties have agreed to arbitrate, but ruled that it was nonetheless appropriate for the limited purpose of determining whether any other parties exist that should be brought into the arbitration. VP Trader Pro, LLC v. Joseph Azevedo Pires, No 102334-09 (N.Y. Sup. Ct. April 21, 2009).

This post written by John Pitblado.

DEAL OF THE CENTURY (INDEMNITY COMPANY): REINSURANCE DISPUTE SETTLED

July 16, 2009 by Carlton Fields

Century Indemnity Company has settled and voluntarily dismissed its lawsuit against Munich Re. Century’s complaint alleged that Munich Re failed to pay amounts due under several facultative reinsurance certificates through which it reinsured Century. Specifically, Munich Re agreed to indemnify Century’s predecessor in interest, Insurance Company of North America, for payments made pursuant to various insurance policies covering asbestos losses. Century sought nearly $2.26 million in unpaid reinsurance billings. As part of the settlement, Century dismissed that portion of its complaint seeking a declaratory judgment that Munich Re was obligated to pay all future billings. Century Indemnity Co. v. Munich Reinsurance Am., Inc., Case No. 2:08-CV-5666-LDD (USDC E.D. Pa. May 22, 2009).

This post written by Brian Perryman.

FORMER EMPLOYEES COMPEL BEAR STEARNS TO ARBITRATION

July 15, 2009 by Carlton Fields

Bear Stearns filed suit in New York state court against two former employees to recover funds it alleges was due and owing on promissory notes executed by the former employees. The defendants removed the action to the Southern District of New York and subsequently moved to compel arbitration pursuant to their employee agreements. Noting the presumption in favor of arbitration, the district court explained that even though the forum clause included in the promissory notes was not exclusive and made no mention of arbitration, such disputes fell within the scope of the employment agreements’ arbitration clause. The court stayed all proceedings pending the conclusion of arbitration. Bear Stearns & Co. v. Gordon, 08 Civ. 8596 (S.D. N.Y. Jul. 1, 2009); Bear Stearns & Co v. Cohen, 08 Civ. 8597 (S.D. N.Y. Jul. 1, 2009).

This post written by John Black.

FIRST CIRCUIT REVERSES AND REMANDS DISTRICT COURT’S DENIAL OF ARBITRATION ATTORNEYS’ FEES AWARD

July 14, 2009 by Carlton Fields

The First Circuit Court of Appeals recently considered whether a Massachusetts statute entitling a party to attorneys’ fees following a successful arbitration entitles the same party to attorneys’ fees incurred in successfully defending against an attempt to overturn the arbitral award in court. The arbitration panel had originally awarded attorneys’ fees under Mass. Gen. Laws. ch. 93A § 9(4) & 11. The Court of Appeals first determined, after reviewing Massachusetts state cases, that the district court was not prohibited from awarding attorneys’ fees under the statute. However, based on state cases and statutory language, the Court of Appeals concluded that an award of attorneys’ fees was not mandatory under the statute. Because the district court failed to explain the basis for its denial of the attorneys’ fees award, the Court of Appeals held that there was an abuse of discretion and reversed and remanded for further proceedings consistent with the opinion. Scott v. Tobin, No. 08-1863 (1st Cir. Jul. 8, 2009).

This post written by John Black.