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Arbitration / Court Decisions

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

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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.

"UNAUTHORIZED" INSURER’S SUIT AGAINST REINSURERS SURVIVES

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A Florida appellate court recently reversed a trial court’s decision to dismiss Advantage General Insurance Company's suit against its reinsurers, KILN and QBE Int’l. The trial court dismissed the suit finding that, under Florida statute § 626.903, Advantage was an unauthorized insurer and was barred from bringing suit in Florida courts. The Court of Appeals, however, ruled that in the reinsurance transaction at issue Advantage was the insured, not the insurer. Further, the Court of Appeals determined that the suit between Advantage and KILN & QBE did not “arise out of” Advantage’s alleged unauthorized sale of insurance to the original insured. Accordingly, the Court of Appeals held that it was improper to bar Advantage from access to the courts, and reversed and remanded the case. Advantage Gen. Ins. Co., Ltd. v. KILN/QBE Int’l, Case No. 4D08-1944, (Fla. Dist. Ct. App. Apr. 9, 2009).

This post written by John Black.

"UNAUTHORIZED" INSURER'S SUIT AGAINST REINSURERS SURVIVES

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A Florida appellate court recently reversed a trial court’s decision to dismiss Advantage General Insurance Company's suit against its reinsurers, KILN and QBE Int’l. The trial court dismissed the suit finding that, under Florida statute § 626.903, Advantage was an unauthorized insurer and was barred from bringing suit in Florida courts. The Court of Appeals, however, ruled that in the reinsurance transaction at issue Advantage was the insured, not the insurer. Further, the Court of Appeals determined that the suit between Advantage and KILN & QBE did not “arise out of” Advantage’s alleged unauthorized sale of insurance to the original insured. Accordingly, the Court of Appeals held that it was improper to bar Advantage from access to the courts, and reversed and remanded the case. Advantage Gen. Ins. Co., Ltd. v. KILN/QBE Int’l, Case No. 4D08-1944, (Fla. Dist. Ct. App. Apr. 9, 2009).

This post written by John Black.

PRE-ARBITRATION SUBPOENAS ISSUED TO HELP IDENTIFY PROPER PARTIES TO CONTEMPLATED ARBITRATION

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A court granted a petition for pre-arbitration issuance of judicial subpoenas to enable the petitioners to learn the names of potential parties against whom they may have a claim in their contemplated arbitration. Although the contemplated arbitration was to be governed by the Financial Industry Regulatory Authority’s Code of Arbitration Procedure, those rules were silent as to pre-arbitration discovery. However, a New York civil procedure statute specifically permitted pre-action discovery “to aid in arbitration.” That statute had been invoked where application was made to discover the identity of potential parties against whom an action may exist, so the petition was held proper. Petition of VTrader Pro LLC, Index No. 102334/09 (N.Y. Sup. Ct. Apr. 21, 2009).

This post written by Brian Perryman.

PETITION TO VACATE ARBITRATION AWARD FILED IN WRONG COURT

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Following an unfavorable decision by an arbitrator, the Pacific Northwest Regional Council of Carpenters (“PNRCC”) filed suit in the Western District of Washington to vacate the arbitrator’s award to the Laborers’ International Union of North America (“LIUNA”). LIUNA filed a motion to transfer PNRCC’s action to D.C. federal court, arguing that PNRCC was bound to consent to D.C. jurisdiction by the collective bargaining agreement. Finding that the action could clearly have been brought in D.C., the district court focused on the “convenience of the parties” and “interests of justice” requirements for a §1404(a) transfer. The court noted that both LIUNA and PRNCC’s parent union were headquartered in Washington, D.C. and that all relevant records were in D.C. where all of the operative facts of the case occurred. For these reasons, the court held that D.C. was the more convenient forum.

The court also held that the interests of justice supported the transfer. LIUNA had filed a suit seeking enforcement of the arbitration award in D.C. and the court noted that it would be inefficient and duplicative to examine the same issues in separate cases. Ultimately, the court granted the motion to transfer, explaining that whether the agreement properly bound PNRCC was irrelevant in the §1404(a) analysis. LIUNA had met their burden by showing that D.C. was the most appropriate forum to decide all issues based on the traditional §1404(a) considerations. Pacific Northwest Reg'l Council of Carpenters v. Laborers Int'l Union of N. Am., Case No. C09-420 (W.D. Wash. June 5, 2009).

This post written by John Black.