Justia Contracts Opinion Summaries

First State Insurance Company and New England Reinsurance Corporation (collectively, First State) entered into several reinsurance and retrocession agreements with a reinsurer, National Casualty Company (National). First State demanded arbitration under eight of these agreements to resolve disputes about billing disputes and the interpretation of certain contract provisions relating to payment of claims. The arbitrators handed down a contract interpretation award that established a payment protocol under the agreements. First State filed a petition pursuant to the Federal Arbitration Act to confirm the contract interpretation award, and National filed a cross-petition to vacate the award. A federal district court summarily confirmed both the contract interpretation award and the final arbitration award. After noting that “a federal court’s authority to defenestrate an arbitration award is extremely limited,” the First Circuit affirmed, holding that the arbitrators “even arguably” construed the underlying agreements and, thus, acted within the scope of their contractually delineated powers in confirming the contract interpretation award. View "First State Ins. Co. v. Nat’l Cas. Co." on Justia Law

William Gross executed an agreement with David Fiala, Ltd. (FuturesOne) setting forth the terms of Gross’ employment with FuturesOne. The agreement contained an arbitration provision. FuturesOne later filed a complaint against Gross and three other individuals who had signed similar agreements with FuturesOne, alleging that after the defendants had resigned from FuturesOne they failed to pay amounts owed to FuturesOne and violated the agreement by competing with FuturesOne. Gross moved to compel arbitration. The district court denied the motion, concluding that the claims in this action were not subject to arbitration under the arbitration provision of the agreement. The Supreme Court reversed, holding that the district court erred as a matter of law when it failed to determine that the arbitration provision was ambiguous and to thereafter resolve the ambiguity by considering appropriate extrinsic evidence. Remanded. View "David Fiala Ltd. v. Harrison" on Justia Law

Atwood Health Properties, LLC contracted with Calson Construction Company to construct a medical office building. Calson engaged Gem Plumbing & Heating Co., Inc. (GEM) as a subcontractor to design and install a heating, ventilation, and air conditioning (HVAC) system. Five years after the project was completed, Atwood sold the building to Atwood Medical Properties, LLC (AMP). When AMP experienced compressor failures in the HVAC system, AMP filed suit against Atwood. Atwood paid for a new HVAC system and initiated arbitration proceedings against Calson to recover its costs. Calson, in turn, initiated an arbitration proceeding against GEM for indemnification under the parties’ contract. The two arbitration proceedings were consolidated. The arbitrator concluded that Calson should pay Atwood $358,223 and that GEM should pay Calson that same amount. The superior court confirmed the arbitration award. GEM appealed. The Supreme Court affirmed, holding that the trial justice properly confirmed the arbitration award. View "Atwood Health Props., LLC v. Calson Constr. Co." on Justia Law

James Stanley, Barbara Stanley and Northeast Marine Services, Inc. (collectively, “Stanley”) were parties to a binding arbitration with Michael Liberty and five corporations under his control (“the Liberty corporate entities”) regarding contractual and fiduciary disputes arising from Stanley’s tenure as an officer and director of the Liberty corporate entities. Many of Stanley’s claims were rejected, but the three main issues relevant to this appeal were decided in favor of Stanley. The business and consumer docket affirmed the arbitration award in full. The Supreme Court affirmed, holding (1) in challenging the arbitrator’s findings that Stanley had not engaged in a breach of fiduciary duty regarding transactions involving the Liberty corporate corporate entities, Liberty and the Liberty corporate entities asked the court to review fact-findings by the arbitrator, and such findings were not reviewable; (2) Liberty and the Liberty corporate entities did not demonstrate that the arbitrator exceeded his broad authority in interpreting the retirement contract that generated this litigation; and (3) the arbitrator did not exceed his authority by deciding to pierce the corporate veil and make Liberty personally liable for obligations of his closely-controlled corporations. View "Stanley v. Liberty" on Justia Law

Shaun Trabert purchased a used vehicle from an automobile dealer. Trabert signed a preprinted industry-drafted installment sales contract. The dealer then assigned the contract to Consumer Portfolio Services, Inc. Portfolio later repossessed Trabert's vehicle, and Trabert filed a class action complaint alleging Portfolio's repossession/default notices were defective under consumer statutes. This appeal was the second time the issue of an automobile purchaser who brought consumer claims against the creditor-assignee of the parties' sales contract came before the Court of Appeal. The first appeal involved the enforceability of an arbitration agreement in the contract. In "Trabert I," the Court held the arbitration agreement contained certain unconscionable provisions, and remanded for the court to determine whether these provisions could be severed from the remaining agreement. On remand, the trial court declined to sever the provisions and denied the creditor-assignee's motion to compel arbitration. Portfolio challenged the trial court's last order in this second appeal. After review, the Court of Appeal concluded the trial court erred in denying Portfolio's motion. "The unconscionable provisions concern only exceptions to the finality of the arbitration award, and can be deleted without affecting the core purpose and intent of the arbitration agreement. The deletion of these exceptions creates a binding arbitration award and promotes the fundamental attributes of arbitration, including speed, efficiency, and lower costs." The Court reversed and remanded with directions for the court to sever the unconscionable provisions from the arbitration agreement and granted Portfolio's motion to compel arbitration. View "Trabert v. Consumer Portfolio Services" on Justia Law

Entergy Arkansas, Inc. and Entergy Operations, Inc. (collectively, “Entergy”) entered into an agreement with Siemens Energy, Inc. (“Siemens”) under which Siemens was to provide Entergy with services at three nuclear facilities. The agreement included an arbitration provision. Pursuant to the agreement, Entergy and Siemens agreed that Siemens would replace a large component of a generator at Entergy’s Arkansas Nuclear One (“ANO”) facility. Siemens had a separate, long-term agreement with Bigge Crane and Rigging Co. and Claus Frederiksen (collectively, “Bigge”) under which Bigge would prove crane services for Siemens at ANO. After a crane built and operated by Bigge collapsed at ANO, killing one person, injuring ten others, and causing significant damages to ANO, Entergy filed suit against Bigge and others, alleging several tort claims. Bigge moved to compel arbitration of Entergy’s claims against Bigge as a purported third-party beneficiary of the agreement between Entergy and Siemens. The circuit court denied Bigge’s motion. The Supreme Court affirmed, holding that the circuit court did not err in concluding (1) that, under the facts of this case, issues of arbitrability were matters for judicial determination; and (2) that Bigge could not invoke arbitration. View "Bigge Crane & Rigging Co. v. Entergy Ark. Inc." on Justia Law

Plaintiffs, former employees of Pacific Bell, took early retirement, with the option to take a pension or a lump sum payment. All chose the lump sum, persuaded to do so by Kearney, with whom each plaintiff had significant interaction, having first learned of her from presentations made at the Pacific Bell premises. All became clients of Kearney, in connection with which they signed some documents, by which Kearney came to manage and invest their retirement proceeds, in some cases for years. Dissatisfied, plaintiffs sued Kearney and AIG Financial Advisors, the successor to the company where Kearney originally worked. AIGFA filed a petition to compel arbitration, supported in part by a declaration of Kearney. Without holding an evidentiary hearing, the trial court granted the petition. That arbitration occurred, with the arbitrators ultimately issuing an award rejecting plaintiffs’ claims. After judgment was entered on the award, plaintiffs appealed. The court of appeal reversed and remanded for an evidentiary hearing. View "Ashburn v. AIG Fin. Advisors, Inc." on Justia Law

Before it was acquired by DirecTV, 180 Connect entered into an employment arbitration agreement with Marenco, which prohibited filing a class or collective action, or a representative or private attorney general action. After acquiring 180 Connect, DirecTV retained employees, including Marenco. Marenco later filed suit, alleging that DirecTV had issued debit cards in payment of wages to a putative class of employees. Plaintiffs who used their cards to withdraw cash at ATM machines were required to pay an activation fee and a cash withdrawal fee, resulting in DirecTV’s failure to pay plaintiffs’ full wages in violation of the Unfair Competition Law and Labor Code 212. DirecTV moved to compel arbitration of Marenco’s individual claims, and stay the class claims. Marenco argued that DirecTV lacked standing to enforce the agreement and that the agreement was unconscionable and unenforceable under California law. The U.S. Supreme Court then issued its 2011 decision, AT&T Mobility v. Concepcion, holding that the Federal Arbitration Act preempts the California rule of unconscionability. The trial court ordered arbitration of Marenco’s individual claims, holding that DirecTV had standing; the class action waiver is not unconscionable; and prohibition of representative actions does not violate the National Labor Relations Act (29 U.S.C. 157). The court of appeal affirmed. View "Marenco v. DirecTV, LLC" on Justia Law

Ironwood Country Club appealed an order that denied its motion to compel arbitration of the declaratory relief action brought by plaintiffs William S. Cobb, Jr., and Elizabeth Richards, who were former members of Ironwood, and Patrick J. Keeley and Helen Riedstra, who were then-current members. The motion to compel was based on an arbitration provision Ironwood incorporated into its bylaws four months after plaintiffs' complaint was filed. In 1999, the Club entered into an agreement with each of its 588 members, whereby each member loaned the club $25,500 to fund the Club's purchase of additional land. The members were given the option of paying the funds in a lump sum or by making payments over a period of 20 years into a "Land Purchase Account." In connection with the loans, the Club represented that if any member sold his or her membership before the loan was repaid, the Club would be "absolutely obligated to pay the Selling Member the entire amount then standing in the Member's Land Purchase Account." Moreover, any new member would be required to pay, in addition to the regular initiation fee, an amount equal to the hypothetical balance in a Land Purchase Account, as well as the "remaining unamortized portion of the Land Purchase Assessment." In reliance on the Club's representations, the members voted to approve the land purchase and enter into the loan agreements. Three of the plaintiffs paid the lump sum, and one plaintiff elected to make monthly payments into a Land Purchase Account. In April 2012, Ironwood represented that it had repaid the $25,500 Land Purchase Assessment to 10 resigned members whose memberships were subsequently purchased by new members, since 2003. However, plaintiffs alleged that despite the Club's initial description of how the funds would be generated to reimburse resigning members, it "inexplicably failed" to require new members to pay the equivalent of the Land Purchase Assessment when they joined. The trial court held that Ironwood's subsequent amendment of its bylaws was insufficient to demonstrate that any of these plaintiffs agreed to arbitrate this dispute, and that if Ironwood's basic premise were accepted, it would render the agreement illusory. Ironwood argued: (1) that its new arbitration provision was fully applicable to this previously filed lawsuit because the lawsuit concerned a dispute which was "ongoing" between the parties; and (2) that its right to amend its bylaws meant that any such amendment would be binding on both current and former members. The Court of Appeal agreed with the trial court's conclusions, and affirmed the order. View "Cobb v. Ironwood Country Club" on Justia Law

This case stemmed from a dispute between Citigroup and ADIA regarding an Investment Agreement under which ADIA invested billions of dollars in Citigroup. At issue is the arbitration clause contained in the Agreement. The court held that the extraordinary remedies authorized by the All Writs Act, 28 U.S.C. 1651(a), cannot be used to enjoin an arbitration based on whatever claim-preclusive effect may result from the district court's prior judgment when that judgment merely confirmed the result of the parties' earlier arbitration without considering the merits of the underlying claims at issue in that arbitration. Because Citigroup has not demonstrated an adequate basis for an extraordinary injunction under the Act, the court affirmed the judgment dismissing Citigroup's complaint and compelling arbitration. View "Citigroup, Inc. v. Abu Dhabi Investment Auth." on Justia Law