Milan Express Co. v. Applied Underwriters Captive Risk Assurance Co.
672 F. App'x 553
| 6th Cir. | 2016Background
- Milan Express sued Applied Underwriters in federal court (diversity) over a reinsurance participation agreement containing a Nebraska forum-selection clause and Nebraska choice-of-law clause.
- This Court previously vacated a district-court order that had stopped arbitration, holding arbitrability was for the arbitrator to decide under Rent-A-Center; the case was remanded and the parties arbitrated in Tennessee.
- The arbitration panel issued an award finding the arbitration clause unenforceable under Nebraska law.
- Applied Underwriters filed, in district court, a motion to vacate the arbitration award and a contemporaneous motion to dismiss based on the parties’ forum-selection clause; the district court granted dismissal but did not rule on the vacatur motion.
- Applied Underwriters treated the district court’s silence as an implied denial and sought to appeal the unaddressed vacatur motion; Milan did not challenge appellate jurisdiction but defended the award’s validity.
- The Sixth Circuit declined to treat the district court’s silence as an appealable denial, enforced the forum-selection clause, and dismissed the appeal for lack of appellate jurisdiction to decide the vacatur issue in the first instance.
Issues
| Issue | Milan's Argument | Applied Underwriters' Argument | Held |
|---|---|---|---|
| Whether the district court’s silence on the motion to vacate equals an implied denial that merged into the dismissal and is appealable | The court’s enforcement of the forum clause controls; no appeal of an undecided motion necessary | Silence should be treated as an implied denial, making the vacatur ruling appealable | Court held silence is not an implied denial; no appealable ruling on vacatur |
| Whether the forum-selection clause required dismissal and transfer of adjudication of the arbitration award to Nebraska courts | Forum clause is valid and controls where enforcement/attack on award must occur | Agreed dismissal was proper (Applied sought dismissal) but still wanted appellate review of vacatur | District court properly enforced the Nebraska forum-selection clause and dismissed |
| Whether this Court should decide the validity of the arbitration award in the first instance on appeal | Milan preferred resolution in Nebraska per the forum clause; argued reasonable debate exists on legal issues | Asked the Court to decide the vacatur issue now as a pure legal question fully briefed | Court declined to exercise discretion to decide an issue not passed on below; dismissed appeal |
| Whether arbitrators exceeded powers / manifestly disregarded law (Mastrobuono) such that vacatur is warranted | The arbitrators’ construction of Mastrobuono is reasonably debatable; no manifest disregard | Applied argued award directly conflicted with Mastrobuono, warranting vacatur | Court did not reach merits; declined to review vacatur claim on appeal |
Key Cases Cited
- Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995) (addressed interpretation of arbitration clauses and award remedies)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitrability threshold can be delegated to arbitrator by contract)
- Singleton v. Wulff, 428 U.S. 106 (1976) (appellate courts generally do not consider issues not passed upon below)
- Pinney Dock & Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445 (6th Cir. 1988) (discretion to deviate from general rule only in exceptional cases)
- Hayward v. Cleveland Clinic Found., 759 F.3d 601 (6th Cir. 2014) (noting the appellate court’s rare exercise of discretion to decide issues not ruled on below)