Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

Appellants sought arbitration with BBVA Securities of Puerto Rico, Inc. and one of its securities brokers, asserting several claims under both federal and Puerto Rico law. An arbitration panel issued an award denying Appellants’ claims. Appellants then filed a complaint in the Puerto Rico Court of First Instance requesting that the court vacate or modify the arbitration award, seeking relief under the Puerto Rico Arbitration Act. Defendants removed the case to the U.S. District Court of the District of Puerto Rico, arguing that the district court had federal question jurisdiction and also had supplemental jurisdiction over the state law claims. Appellants moved to remand the case to Puerto Rico state court for lack of jurisdiction. The district court denied the motion after applying the look-through approach and determining that the underlying statement of claim alleged federal claims. The district court subsequently confirmed the award. The First Circuit affirmed, holding (1) the look-through approach was the correct test in this case; (2) federal jurisdiction existed; and (3) the district court did not err in refusing to vacate the award and in confirming it. View "Ortiz-Espinosa v. BBVA Securities of Puerto Rico, Inc." on Justia Law

The litigation resulting in these consolidated appeals stemmed from disputes within the Cohen family. Maurice placed his assets the “Maurice Trust,” and after he died, the trust assets were passed to trust (“the QTIP Trust”), and to a charitable organization (“Fund”). After Maurice’s wife died, the remaining assets of the QTIP Trust rolled over to the Fund. Later, half of the Fund’s assets were given to a new charity, the C-S Foundation (“C-S”). The Fund’s successor, the FPE Foundation (“FPE”) filed this federal case against the Cohens’ two children, one of their spouses, and the advisor to the co-trustees of the QTIP Trust. FPE filed this federal case against members of the Cohen family, alleging that certain Defendants exceeded their powers as co-trustees of the QTIP trust and that the co-trustees’ advisor breached his fiduciary duty to that trust. C-S intervened and counterclaimed against FPE. Defendants filed a motion to dismiss and to compel arbitration, relying on an arbitration clause contained in the Maurice Trust. The district court allowed the motion. The First Circuit affirmed, holding (1) Defendants did not waive their right to arbitration, and thus, dismissal was appropriate; and (2) C-S’s counterclaim was subject to the arbitration clause in the Maurice Trust. View "FPE Found. v. Cohen" on Justia Law

Plaintiff entered into a salvage contract with Defendant to obtain help when his boat went aground one night. Plaintiff later attempted to rescind the contract, claiming that he signed the contract under duress and disputing the sum owed to Defendant. The parties submitted the dispute to a panel of arbitrators pursuant to a binding arbitration clause in the salvage contract. Plaintiff then filed this lawsuit seeking a preliminary injunction against the arbitration and a declaration that the salvage contract was unenforceable. The district court denied the motion and stayed the case pending the outcome of the arbitration. The arbitration panel found in favor of Defendant and ordered Plaintiff to pay a salvage award. The district court affirmed the award. Plaintiff appealed, arguing that the district court erred in confirming the arbitration award without first addressing his claim that the arbitration clause was unenforceable. The First Circuit affirmed, holding that, where Plaintiff’s challenge to the validity of the arbitration clause itself came only after Defendant moved to confirm the panel’s award, the district court had no proper basis on which to refuse to confirm the arbitration panel’s award. View "Farnsworth, III v. Towboat Nantucket Sound, Inc." on Justia Law

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

Appellant was associated with Appellee, Raymond James Financial Services, as a securities broker. After Appellee decided to terminate Appellant’s contract, Appellant brought an arbitration proceeding before the Financial Industry Regulatory Authority, alleging that he had been fired because of his sexual orientation and his status as a recovering alcoholic, in violation of Vermont law. After granting the parties’ request that Florida law be applied to the proceedings, an arbitration panel awarded Appellant $600,000 in back pay on his claim of discrimination based on disability. The district court vacated the award, concluding that the arbitrators lacked authority to grant the remedy because Appellant brought no claims under Florida law. The First Circuit reversed, holding that although the arbitration decision may have been incorrect as a matter of law, the arbitrators’ decision to impose liability on Appellee under Florida law did not willfully flout the governing law or otherwise exceed the bounds of the arbitrators’ authority to resolve the parties’ dispute. Remanded for entry of an order confirming the arbitration award. View "Raymond James Fin. Servs., Inc. v. Fenyk" on Justia Law

Russ Irwin brought an arbitration proceeding against Lyman Morse Boatbuilding, Inc. (LMB) of Maine and Cabot Lyman, the controlling owner of LMB, claiming damages related to the allegedly defective construction of a luxury yacht. After Northern Assurance Company of America, the insurer for LMB and Lyman, refused the insureds’ request for defense, LMB and Lyman filed this federal suit seeking to recover the costs and attorneys’ fees they incurred in the arbitration proceeding. The district court concluded that Northern Assurance had a duty to defend Lyman but did not have a duty to defend LMB. The First Circuit affirmed in part, reversed in part, and remanded for entry of judgment in favor of Northern Assurance, holding that, under Maine law, the insurer did not owe a duty to defend LMB or Lyman in the underlying arbitration proceeding. View "Lyman Morse Boatbuilding Inc. v. N. Assurance Co." on Justia Law

Plaintiff and Defendant entered into an asset purchase agreement (the Agreement) that contained a provision requiring submission of all disputes concerning the “validity, interpretation and enforcement” of the Agreement to an arbitrator for binding resolution. Plaintiff sued Defendant in federal district court, asserting claims for fraud and breach of contract arising out of the Agreement. Defendant answered the complaint, and the parties began discovery. Several months later, Plaintiff moved to stay proceedings pending arbitration. A magistrate judge denied the motion to stay on the ground that Plaintiff had waived its arbitral rights. The district judge summarily affirmed the denial of the stay. The First Circuit affirmed, holding that the district court did not err in concluding that Plaintiff, through its conduct, waived its right to demand arbitration. View "Joca-Roca Real Estate, LLC v. Brennan, Jr." on Justia Law

David Efron and his former wife, Madeleine Candelario-Del-Moral, were engaged in long-running litigation related to their high-stakes divorce. In 2006, a Puerto Rico court in which the divorce proceedings were pending issued an order attaching the funds held in Efron’s UBS Financial Services Inc. accounts. The court subsequently made a ruling that may or may not have vacated the attachment. UBS treated the attachment as void and dispersed the bulk of the funds. Candelario sued UBS in federal district court for negligently releasing the attached funds. Ultimately, at the district court’s suggestion, UBS and Candelario opted to undertake mediation. Thereafter, Efron moved to intervene as of right in the Candelario-UBS litigation. The district court denied the motion. The First Circuit Court of Appeals affirmed the denial of the motion and denied Candelario’s motion for appellate sanctions, holding (1) the Court had jurisdiction to hear and determine Efron’s interlocutory appeal; (2) the district court did not abuse its discretion in deeming Efron’s motion to intervene untimely and in refusing to grant it; and (3) although Efron’s case for intervention was weak, it was not frivolous. View "Candelario-Del-Moral v. Efron" on Justia Law

For twenty years, Defendants, various entities of OneBeacon American Insurance Company (collectively, “OneBeacon”), had a program known as Multiple Line Excess Cover (“MLEC Program”) under which OneBeacon entered into reinsurance contracts (“MLEC Agreements”) with various reinsurers. Employers Insurance Company of Wausau, National Casualty Company, and Swiss Reinsurance America Corporation (“Swiss Re”) participated as reinsurers in the MLEC Program. Some of the MLEC Agreements Wausau entered into with OneBeacon were practically identical to OneBeacon’s MLEC Agreements with Swiss Re. In 2007, OneBeacon demanded arbitration with Swiss Re seeking reinsurance recovery for losses arising out of claims against OneBeacon by policyholders. The arbitration panel decided in favor of Swiss Re. In 2012, OneBeacon demanded arbitration with Wausau and National Casualty for, according to Wausau, the same claims OneBeacon arbitrated and lost against Swiss Re. Wausau and National Casualty petitioned for a declaratory judgment that the prior arbitration award between OneBeacon and Swiss Re had preclusive effect on the arbitration pending between OneBeacon and Wausau. The district court denied the petition. The First Circuit Court of Appeals affirmed, holding that judicial confirmation of an arbitration award “does not warrant deviation from the general rule that the preclusive effect of a prior arbitration is a matter for the arbitrator to decide.” View "Nat'l Cas. Co. v. OneBeacon Am. Ins. Co." on Justia Law

When Plaintiff retained a Maine law firm to represent him in a legal action, he signed an attorney-client engagement letter that contained an arbitration provision. Plaintiff later sued the law firm and individual defendants (collectively, Defendants) for malpractice and violations of Maine's Unfair Trade Practices Act. Defendants moved to compel arbitration and dismiss the action. The district court granted the motion under the Federal Arbitration Act (FAA). Plaintiff appealed, arguing that the district court erred in enforcing the arbitration clause. The First Circuit Court of Appeals affirmed, holding that the district court did not err in granting the motion to compel arbitration and dismissed the action, as (1) Maine professional responsibility law for attorneys permits arbitration of legal malpractice claims so long as there is no prospective limitation on the law firm's liability; and (2) Maine law, like the FAA, is not hostile to the use of the arbitration forum, and Maine would enforce the arbitration of malpractice claims provision in this case. View "Bezio v. Draeger" on Justia Law