District Court Compels Arbitration of Dispute Between Broker and Insurance Company

Chambers v. AVIVA LIFE & ANNUITY CO., Dist. Court, ND Illinois 2013 - Google Scholar:

This is a routine dispute between a broker and an insurance company. The broker was required to maintain errors and omissions insurance. He allegedly failed to do so and the insurance company brought a collection action against him for the cost of the errors and omissions insurance.

The broker then brought claims against the insurance company. However, all of his claims were dismissed because the parties had entered into an arbitration agreement, which is governed by the Federal Arbitration Act, 9 U.S.C. Section 4.

In recent years, the United States Supreme Court has decided several cases which have strengthened the Federal Arbitration Act.  These decisions serve to remove many typical civil litigation cases from the court.

Here, Judge Kendall granted the motion to dismiss and compelled arbitration pursuant to the parties' agreement.  Usually, the court stays the lawsuit while the arbitration is pending.  Here the court, based on cases decided in other circuits, elected to dismiss the entire case. This is an issue which may be litigated in the future.

The court writes:

"The FAA provides that once the Court determines that arbitration should be compelled, the Court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." 9 U.S.C. § 3. Pursuant to this provision, all of the defendants requested this Court to stay the case pending arbitration of Chambers's claims. However, the Court finds that dismissal of the case, and not a stay, is the proper remedy in this case."
Edward X. Clinton, Jr.

www.clintonlaw.net

'via Blog this'