Mave Enterprises, Inc. v. Travelers Indemnity Co.

BACKGROUND

The allegations and facts in this appeal are taken from the complaint and the papers submitted in connection with (1) the motions to confirm and vacate the arbitration award, and (2) the insurer‘s motion for a stay of the proceedings below. A. The Complaint The complaint alleged as follows. Plaintiff Mave Enterprises, Inc. (Mave), makes high quality Kosher foods. It is a California corporation and has its manufacturing plant in North Hollywood. On or about February 1, 2006, The Travelers Indemnity Company of Connecticut (Travelers) issued a property casualty insurance policy to Mave. The policy covered property damage to Mave‘s manufacturing equipment and its inventory, business interruption losses, property damage, and lost business income. On September 25, 2006, a severe fire occurred at Mave‘s manufacturing facility, which was covered under the Travelers policy. Mave submitted claims to Travelers. Travelers did not make timely payments to cover the losses. Travelers would either deny the claim, delay payment by conducting unreasonable investigations, or take unreasonable positions such as requiring Mave to pay for its large losses and then seek reimbursement…

Concurring in the judgment:

I agree that the superior court did not abuse its discretion by declining to issue a stay. I also agree that the judgment should be affirmed, but I write separately because my reasoning differs from the majority’s.

Apart from the stay, the threshold issue is whether the proceedings in the superior court to confirm, vacate, or modify the award should have been governed by the California Arbitration Act (CAA) or the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.). Under Valencia v. Smyth (2010) 185 *1442 Cal.App.4th 153, 174 [ 110 Cal.Rptr.3d 180 ], “the procedural provisions of the CAA apply in California courts by default,” and “the FAA’s procedural provisions ... do not apply unless the contract contains a choice-of-law clause expressly incorporating them.” (Italics & citations omitted.)

The superior court was therefore correct to apply the CAA unless the parties expressly agreed that the FAA would govern. But the parties did expressly agree in writing to be bound by the JAMS Comprehensive Arbitration Rules & Procedures, including rule 25, which provides as follows: “Proceedings to enforce, confirm, modify or vacate an Award will be controlled…

In this case, an insured filed a bad faith action against its insurer in the Los Angeles Superior Court. After spending a substantial amount of time litigating the case in the superior court, the parties stipulated to have their disputes resolved through binding arbitration. The terms of the stipulation were placed on the record, and the superior court retained jurisdiction, requiring the parties to submit periodic status reports about the arbitration proceedings. The parties entered into a separate, written stipulation to arbitrate under the auspices of a sponsoring organization.

The arbitrator found in favor of the insured and awarded $3,696,414. The insurer filed a petition to vacate, modify, or correct the award in the United States District Court for the Central District of California based on diversity of citizenship. For its part, the insured filed a motion to confirm the award in the superior court. The insurer then filed a motion in the superior court, requesting that it stay its proceedings pending a decision by the federal district court. Oppositions were filed to each motion. Before the federal district court had issued a decision, the superior court denied…