Allstate Insurance v. Elzanaty
929 F. Supp. 2d 199
E.D.N.Y2013Background
- Allstate sues Uptown and related entities alleging a scheme to fraudulently bill No-Fault insurance for medical services.
- Uptown counterclaims for unpaid No-Fault reimbursements and asserts its right to arbitrate under contract and NY law.
- No-Fault arbitration clause § 5106(b) and related regulations govern disputes about first-party benefits; the court must decide arbitration scope.
- Plaintiffs move to dismiss and stay the counterclaim; Uptown moves to compel arbitration and seeks to arbitrate pending and future claims.
- The court analyzes waiver, the appropriate forum (FAA control), and whether pending or future arbitrations should be stayed.
- The court ultimately grants Uptown’s motion to compel arbitration and stays/arbitrations pending resolution of the case; related case 12-cv-6058 is closed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Uptown can compel arbitration of its claims. | Allstate argues arbitration not available for these claims. | Uptown asserts right to arbitrate under contracts and § 5106(b). | Uptown's motion to compel arbitration granted. |
| Whether Uptown waived its right to arbitrate. | Uptown waited in court, causing prejudice and delay. | Waiver analysis should be governed by FAA; no prejudice shown. | Waiver not found; FAA governs and waiver not established. |
| Whether the court should stay/arbitrate pending arbitration for pending and future claims. | Stays would undermine contract rights and risk inconsistent judgments. | Stays are appropriate to prevent piecemeal adjudication and conserve resources. | Court granted a temporary stay and injunction against new arbitrations. |
| Whether the court should dismiss and/or stay adjudicated counterclaims. | Already adjudicated claims should be dismissed to avoid relitigation. | No objection to dismissal of adjudicated issues; focus is stay/arbitration of unresolved claims. | Adjudicated counterclaims dismissed; other claims stayed. |
| Whether the related 12-cv-6058 action should remain open. | Action duplicates issues already before the court. | Not addressed here; arbitration issues separate. | Related case closed; not pursued further. |
Key Cases Cited
- Allstate Ins. Co. v. Lyons, 843 F. Supp. 2d 358 (E.D.N.Y. 2012) (arbitration scope excludes claw-back fraud claims)
- Liberty Mut. Ins. Co. v. Excel Imaging, P.C., 879 F. Supp. 2d 243 (E.D.N.Y. 2012) (pending claims may be arbitrated; stay possible to avoid inconsistent judgments)
- In re American Express Financial Advisors Secs. Litig., 672 F.3d 113 (2d Cir. 2011) (FAA may permit stay of arbitration only under limited circumstances)
- Klay v. United Healthgroup, Inc., 376 F.3d 1092 (11th Cir. 2004) (comment on arbitration-related stays and related authority)
- Louisiana Stadium & Exposition Dist. v. Merrill Lynch, Pierce, Fenner & Smith Inc., 626 F.3d 156 (2d Cir. 2010) (prejudice and delay factors in waiver analysis; emphasis on context)
- Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213 (Supreme Court 1985) (FAA requires courts to enforce arbitration agreements)
- Krantz & Berman LLP v. Dalal, 472 F. App’x 76 (2d Cir. 2012) (no rigid rule; exceptions to 12(g) bar on successive motions)