Federal Cases
Nonsignatory Fails in Attempt to Compel Arbitration of Dispute Arising from Separate Agreement
Chastain v. Union Security Life Insurance Co., No. CV-06-5885, 2007 WL 2302416 (C. D. Cal. Aug. 3, 2007)
8/3/2007
In deciding whether the doctrine of equitable estoppel permitted a nonsignatory to enforce an arbitration agreement, a federal district court in California ruled that an insurance company could not enforce an arbitration clause in a related credit card agreement because the insurance company’s duty to pay benefits – the duty allegedly breached – arose from the insurance policy, not from the credit card agreement.
In Chastain v. Union Security Life Insurance Co., No. CV-06-5885, 2007 WL 2302416 (C. D. Cal. Aug. 3, 2007), Chastain bought insurance policies in connection with his acquisition of two credit cards. The insurance policies were supposed to cover minimum payments on the credit cards if Chastain were somehow disabled. Union Security was the underwriter... Full Story
No Arbitration for Dispute Outside the Scope of the Contract Containing the Arbitration Agreement
Mundi v. Union Sec. Life Ins. Co., No. CV-F-06-1493 OWW/TAG, 2007 WL 1574871 (E.D. Cal. May 30, 2007)
5/30/2007
Denying a non-signatory insurance company's request to compel arbitration, a California federal court held that a non-signatory cannot compel arbitration when the claims against the non-signatory do not arise under the agreement containing the arbitration clause.
In Mundi v. Union Sec. Life Ins. Co., No. CV-F-06-1493 OWW/TAG, 2007 WL 1574871 (E.D. Cal. May 30, 2007), Mundi's husband had obtained a home equity line of credit from Wells Fargo. Wells Fargo offered life insurance designed to pay off the line of credit up to $50,000. Mundi's husband purchased the insurance and Mundi cosigned. A year later, Mundi's husband was murdered... Full Story
Arbitration Agreement Choice-of-Law Provisions Do Not Require Application of State Procedural Law That Would Block Arbitration
Mechanical Power Conversion, L.L.C. v. Cobasys, L.L.C., Civ. No. 07-12325, 2007 WL 2335507 (E.D. Mich. Aug. 16, 2007)
8/16/2007
According to a federal district court in Michigan, a choice of law provision in an arbitration agreement does not require the application of state procedural law without that intent being clearly expressed in the agreement, especially when arbitration would be completely denied once state procedural law is applied.
In Mechanical Power Conversion, L.L.C. v. Cobasys, L.L.C., Civ. No. 07-12325, 2007 WL 2335507 (E.D. Mich. Aug. 16, 2007), Mechanical Power Conversion (MPC) agreed to provide goods and services to Cobasys through several purchase orders. A dispute arose over Cobasys's alleged failure to provide certain software to a third-party contractor. This led Cobasys to cancel one of the purchase orders with MPC... Full Story
Payment of Arbitration Fees by the Adverse Party Renders Unconscionability Allegation Moot
Schiano v. MBNA, No. Civ. A. 05-1771(JLL), 2007 WL 2363165 (D. N.J. Aug 14, 2007)
8/14/2007
In a case where a party argued that an arbitration agreement was unconscionable based on supposedly "high filing fees," the adverse party's payment of those fees rendered the unconscionability argument moot, according to a federal district court in New Jersey.
In Schiano v. MBNA, No. Civ. A. 05-1771(JLL), 2007 WL 2363165 (D. N.J. Aug 14, 2007), Schiano defaulted on two MBNA credit card accounts. MBNA initiated arbitration with the National Arbitration Forum (FORUM) and obtained an award for approximately $35,000. After MBNA filed a court action to enforce the award, MBNA and Schiano reached a settlement on the matter. Pursuant to the settlement agreement, Schiano satisfied the defaulted accounts... Full Story
Disputes Arising Out of Bankruptcy Cases Are Arbitrable Absent Contrary Congressional Intent, but Cost-Shifting to the Filer Can Be Unconscionable
In re Herrington, No. 06-14433bif, Adv. 07-0009, 2007 WL 2318135 (Bankr. E.D. Pa. Aug. 8, 2007)
8/8/2007
Without contrary evidence of congressional intent embodied in the Bankruptcy Code, disputes arising out of bankruptcy cases are arbitrable; however, cost-shifting to the party filing bankruptcy can render that portion of the agreement unconscionable, according to a federal bankruptcy court in Pennsylvania.
In In re Herrington, No. 06-14433bif, Adv. 07-0009, 2007 WL 2318135 (Bankr. E.D. Pa. Aug. 8, 2007), Herrington filed for Chapter 13 bankruptcy. Herrington initiated proceedings against creditor Delta and assignee Wells Fargo, bringing claims arising from a loan transaction... Full Story
State Cases
Purchase Agreement Arbitration Clause Does Not Extend to Dispute Arising from Separate Non-Competition Agreement
Bess v. C & B Chrysler-Jeep, Inc., No. E041264, 2007 WL 2258709 (Cal. Ct. App. August 8, 2007)
8/8/2007
Affirming a trial court's denial of a motion to compel arbitration, a California appellate court held that a purchase agreement's arbitration clause signed by a company president did not bind him to arbitrate a dispute arising from a separate non-competition agreement.
In Bess v. C & B Chrysler-Jeep, Inc., No. E041264, 2007 WL 2258709 (Cal. Ct. App. August 8, 2007), C & B purchased an automobile dealership from Norco. As part of the purchase agreement, C & B, Norco, and Norco president James Bess agreed to enter into a separate non-competition agreement. The non-competition agreement, which the parties signed in November 2004, prohibited Bess from operating a Chrysler Jeep dealership in Riverside, Los Angeles, and San Bernardino for three years in return for C & B providing Bess with a vehicle for three years... Full Story
Arbitrability of Claims Determined in Court Without Clear and Unmistakable Language to the Contrary
Burlington Resources Oil & Gas Co. LP v. San Juan Basin Royalty Trust, No. 01-06-00485-CV, 2007 WL 2332661 (Tex. Ct. App. Aug. 16, 2007)
8/16/2007
Without "clear and unmistakable language" to the contrary, the arbitrability of claims is an issue for the court and not one for the arbitrator, allowing a court to review the arbitrability of claims de novo, according to the Texas Court of Appeals.
In Burlington Resources Oil & Gas Co. LP v. San Juan Basin Royalty Trust, No. 01-06-00485-CV, 2007 WL 2332661 (Tex. Ct. App. Aug. 16, 2007), Burlington and San Juan agreed to arbitrate certain audit disputes. The agreement specifically stated that only the disputes listed in an attached exhibit would be subject to the agreement to arbitrate. After the agreement was entered and the arbitration had commenced, San Juan brought a new claim seeking recovery of a portion of certain settlement proceeds from Burlington. Burlington objected that the new claim was not listed as arbitrable in the exhibit and was therefore outside the scope of the agreement... Full Story
Satisfaction of Conditions Precedent and Unconscionability of Entire Contracts Are Arbitrable Issues
In re SSP Partners, No. 13-07-031-CV, 2007 WL 2318131 (Tex. App. Aug. 14, 2007)
8/14/2007
Both the satisfaction of conditions precedent to an obligation to arbitrate and unconscionability challenges to an entire contract are arbitrable issues, according to the Texas Court of Appeals.
In In re SSP Partners, No. 13-07-031-CV, 2007 WL 2318131 (Tex. App. Aug. 14, 2007), Torres was hired by SSP as an employee at one of its Circle K convenience stores. Upon being hired, Torres, illiterate in English and Spanish, signed an Election and Arbitration Agreement after having it translated by her daughter... Full Story
Agreement to Non-Binding Arbitration Not an Arbitration Agreement Under Louisiana Law
Timber Source, LLC v. Cahaba Valley Timber Co., No. 06-9239, 2007 WL 2332318 (D. La. Aug. 13, 2007)
8/13/2007
In a case where the parties had agreed to non-binding arbitration, a federal district court in Louisiana held that the parties did not agree to arbitrate within the meaning of the Louisiana Arbitration Law because arbitration under that statute is, by definition, a binding procedure.
In Timber Source, LLC v. Cahaba Valley Timber Co., No. 06-9239, 2007 WL 2332318 (D. La. Aug. 13, 2007), Timber Source and Cahaba Valley entered into a contract for the purchase of pine lumber. The contract contained a provision for non-binding arbitration... Full Story
ADR Legislation & Regulation
LEGISLATION
NC H 820
SAME AS: NC S 845
AUTHOR: Allen L [D]
TITLE: Natural Resources Laws
INTRODUCED: 03/15/2007
ENACTED: 08/31/2007
DISPOSITION: Enacted
Commentary:
Directs the Environmental Review Commission to study issues related to the transfer of water from one river basin to another river basin; amends the laws governing the transfer of water from one river basin to another river basin. Amendments include: (h) Settlement Discussions, which allows for the appointment of a mediation officer on request of an applicant. Directs the mediation officer to make a reasonable effort to initiate settlement discussions. Provides that "[e]vidence of statements made and conduct that occurs in a settlement discussion...shall not be subject to discovery and shall be inadmissible in any subsequent proceeding." Affords the Commission the authority to "adopt rules to govern the conduct of the mediation process."
REGULATION
No new regulations.
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