Bits & Pieces


United States District Court,

E.D. Kentucky.






Filed: 03/29/2016





*1 This matter is before the Court on the defendants’ motion for summary judgment on all claims pursuant to Federal Rule of Civil Procedure 56(a). [DE 25]. For the reasons stated below, the Court will grant the defendants’ motion.




Defendant Cottingham & Butler Insurance Services, Inc., is an insurance broker that obtains insurance coverage for its clients. [DE 25-1, Mot. for Summ. J. at 4.] Seth Maxwell, the other defendant in this matter, is a Vice President of Cottingham & Butler. [DE1, Complaint ¶ 5.] Plaintiff Hammond Transportation, Inc. (“HTI”) is a trucking company engaged in the business of hauling freight. [DE 1-1, Complaint at ¶ 2.]


The relationship between the parties began in late 2011, when Mr. Maxwell met with Tony Hammond1 of HTI on two occasions to discuss HTI’s insurance coverage and solicit new insurance business. [DE 25-1 at 4; DE 26, Plaintiff’s Response at 2.] During the meetings, Mr. Maxwell told Mr. Hammond that Cottingham & Butler would provide HTI with the “best insurance” available and also assist in training HTI’s drivers. [DE 26-2, Exhibit 2, Deposition of Tony Hammond in his capacity as plaintiff’s corporate representative at 70:7-9.]


After the meetings, HTI decided to change its insurance “broker of record” from a previous agency to Cottingham & Butler. [DE 25-2 at 36:13-20.] With Mr. Hammond’s authorization, Cottingham & Butler procured several different insurance policies for HTI, including an auto liability policy, a physical damages policy, a cargo policy, and a workers compensation policy. [DE 25-1 at 4-5.] The auto liability policy is the main focus of this case, and, to a much lesser degree, the physical damages policy is also relevant.


Mr. Maxwell transmitted a letter dated January 23, 2012 (“January 23, 2012 letter”) [DE 26-1, Deposition Exhibit 3 at 33] and Cottingham & Butler marketing materials [DE 26-1, Deposition Exhibit 50 at 44] to Mr. Hammond. It is not clear whether these materials were sent to Mr. Hammond before HTI agreed to use Cottingham & Butler as its insurance broker or after the agreement was formed. Either way, Mr. Hammond never signed the January 23, 2012 letter and insists he “did not agree” to its terms. [DE 26 at 5.]


An auto liability policy covers costs for bodily or property damage to others caused by the insured. [DE 26 at 2.] In order to acquire this insurance policy for HTI, Cottingham & Butler needed a projected mileage estimate for HTI’s fleet of trucks for the upcoming year. [DE 25-1 at 5.] A mileage estimate was required on the auto liability policy application and is used to set premiums. HTI’s Vice President of Operations, Randy Minnicks, provided a mileage estimate of 10,524,800 miles to Cottingham & Butler. [DE 25-1 at 5; DE 26 at 6.] Mr. Maxwell incorporated this mileage estimate into an application for auto liability insurance, which Mr. Minnicks signed on behalf of HTI. [DE 25-1 at 6.]


Using the application that contained the 10,524,800 mile estimate, Mr. Maxwell arranged for an auto liability policy with Illinois National Insurance Company (referred to by the parties as “Chartis”), with an annual premium of $339,900. [DE 25-1 at 6-7; DE 26 at 4.] Mr. Maxwell did not have a personal appointment to sell insurance [DE 26 at 21.], but his employer, Cottingham & Butler, was an appointed agent of Chartis at all relevant times. [DE 27 at 11.]


*2 HTI was unable to pay the entire $339,900 at one time, so it entered into a Premium Finance Agreement (“financing agreement”) with Imperial Credit Corporation (“Imperial”). [DE 25-1 at 8.] Under the terms of the financing agreement, HTI was to make an initial down payment of $50,985.00 and nine monthly installments of $32,502.92 to Imperial. [DE 25-1 at 8-9.] The agreement gave Imperial “full authority, in the event of default, to (i) cancel [the Chartis policy]” and further provided that Imperial “may cancel [the Chartis policy] after providing at least 10 days written notice of intent to cancel … if the insured does not pay any installment …” [DE 25-1 at 8.]


While securing the auto liability policy and financing, the parties also discussed Cottingham & Butler’s fee. The parties continue to dispute the precise amount of the fee. Cottingham & Butler asserts that HTI agreed to pay a $27,000 fee [DE 25-1 at 7.] HTI maintains that where Cottingham & Butler received a fee directly from Chartis, HTI was not required to pay anything to Cottingham & Butler, but if Cottingham & Butler received nothing from Chartis, HTI would pay a fee equal to 6% of the premium amounts. [DE 26 at 5.] It is also unclear when exactly HTI agreed to pay a fee, as Mr. Hammond never agreed to the terms of the January 23, 2012, letter that contained a fee schedule [DE 26 at 5.], but later acknowledged that a fee was owed when he told Mr. Maxwell in an email that he had “every intention of paying you your fees.” [DE 25-1 at 7.] Cottingham & Butler brought a counterclaim for payment of its fee, but is not seeking summary judgment on that claim. [DE 25-1 at 7-8.]


HTI’s first installment payment to Imperial under the financing agreement was due on February 25, 2012. [DE 25-9, Exhibit 8, Imperial Account Ledger for Hammond Transportation.] HTI paid the February installment late, on March 9, 2012. [DE 25-9, Exhibit 8.] HTI also did not make its March premium payment [DE 25-9, Exhibit 8.]


On April 9, 2012, Mr. Hammond emailed Mr. Maxwell to inform him that HTI had overstated the estimated mileage used in the auto liability policy application. [DE 25-1 at 9; DE 26 at 6.] This was important to HTI, as a lower estimated mileage would yield a lower premium. Cottingham & Butler negotiated a mid-term change to the policy with Chartis, which would reduce the estimated mileage from 10,524,800 miles to 8,400,000 miles. [DE 25-1 at 10; DE 26 at 6.] In turn, the annual premium would be reduced from $339,900 to $271,992, a difference of $67,908. Once the change became effective, HTI would also receive a refund from Chartis for past premium amounts paid in excess of the new amended premium rate.


Mr. Hammond testified during his deposition that Mr. Maxwell told him to hold payment on the Imperial financing agreement while the change to the auto liability policy was being negotiated. [DE 26 at 7.] HTI did not pay Imperial the April installment when it was due. [DE 25-9, Exhibit 8.]


At this point, in May, 2012, Imperial, who had the power to cancel the Chartis policy for missed premiums under the financing agreement, insisted on receiving the missed March and April premium payments before allowing the mid-term change to go into effect. [DE 25-1 at 10-11.] Mr. Maxwell told Mr. Hammond to issue a check for $66,549.74 to Imperial for the outstanding March and April installments. [DE 26 at 7.] HTI tendered a check to Imperial for that amount. This allowed the mid-term change to the Chartis auto liability policy to go into effect on or about May 30, 2012. [DE 25-1 at 11.] Mr. Hammond believed that HTI was going to receive the refund of excess premium payments from Chartis before it had to pay the $66,549.74 to Imperial. [DE 25-2 at 84:14-23.] When it became evident to Mr. Hammond that this would not happen, HTI “put a stop payment on the $66,549.74” check it gave to Imperial. [DE 25-2 at 84:22-23.] Then, when Cottingham & Butler eventually received the refund from Chartis in mid-June in the amount of $69,130, it transferred the full amount of the refund to Imperial, which applied it toward the missed installments. [DE 26-9, Exhibit 8.]


*3 After this refund was transferred to Imperial, HTI made no further installment payments directly to Imperial. [DE 25-1 at 11.] Therefore, Imperial exercised its right under the financing agreement to cancel HTI’s auto liability policy with Chartis.


On June 19, 2012, Mr. Maxwell sent an email to Mr. Hammond, stating: “Tony: per our discussion, please see attached. We will continue to work on the financing and ultimate re-instatement of the policy.” [DE 25-11, Exhibit 10.] Attached was a letter informing Mr. Hammond that HTI’s auto liability policy had been cancelled effective June 20, 2012. [DE 25-11, Exhibit 10.] Mr. Hammond replied with an email, which stated: “I understand. Thanks.” [DE 25-11, Exhibit 10.] HTI now disputes that the letter was actually attached to the email [DE 26 at 11.] and asserts that Mr. Hammond did not learn of the cancellation until twelve days later [DE 26 at 9.], but it is undisputed that HTI’s auto liability policy was in fact cancelled on June 20, 2012. [DE 25-1 at 11-12; DE 26 at 7.]


On the same day, June 20, 2012, HTI wired Cottingham & Butler $70,000 in an unsuccessful attempt to maintain its auto liability coverage. [DE 25-1 at 12; DE 26 at 8.] Ultimately, $54,795.56 of the $70,000 was sent to Imperial, and $15,204.44 “was applied to the outstanding C&B Fee Agreement invoices.” [DE 26-1, Exhibit 1, Deposition Exhibit 53 at p.68.]


While all of this was occurring, Chartis also apparently cancelled HTI’s physical damages policy. [DE 1-1, Complaint at ¶ 30.] The parties do not provide any elaboration on the circumstances surrounding the cancellation of that policy. However, Cottingham & Butler received a second $72,021 refund from Chartis due to this cancellation. [DE 25-2 at 133:14 – 135:15.] Cottingham & Butler transferred $58,822.75 to First Insurance Funding, which presumably financed the physical damages policy, and remitted the remaining $13,198.22 back to HTI. [DE 25-2 at 13:14 – 135:15.]


Finally, on August 2, 2012, HTI terminated Cottingham & Butler as its insurance broker and hired Brower Insurance Agency as its new broker. [DE 25-1 at 12; DE 26 at 14.] Brower obtained auto liability coverage for HTI with the same insurer, Chartis, “within a day or so.” [DE 26 at 9.] HTI sued Cottingham & Butler and Mr. Maxwell in state court, seeking damages for hauling business HTI lost due to its lack of auto liability insurance coverage [DE 1-1, Complaint at ¶ 47.] and for overpayment of premiums under the original Chartis policy [DE 1-1, Complaint ¶ 58.]. The Defendants removed the case to this Court then filed the current motion for summary judgment.




Summary judgment is appropriate when “there is no genuine issue as to any material fact” regarding any essential element of plaintiff’s case and the moving party is “entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery … against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).


There is no genuine issue of material fact when no “reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, it is incumbent upon the nonmoving party to come forward with “specific facts showing that there is a genuine issue for trial.” Liberty Lobby, 477 U.S. at 248; Andrews v. Hickman County, Tenn., 700 F.3d 845, 852 (6th Cir. 2012); see also Fed. R. Civ. P. 56(c). Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no “genuine issue for trial.” Matsushita Elec. Indus. Co., 475 U.S. at 587.




*4 HTI asserts claims against Cottingham & Butler and Mr. Maxwell in his personal capacity for breach of contract, negligence, disgorgement, and premium refund.



  1. Individual Liability of Mr. Maxwell

At all times, Mr. Maxwell was acting as an agent of Cottingham & Butler, a disclosed principal. HTI was clearly aware that Mr. Maxwell was working for Cottingham & Butler. Therefore, Mr. Maxwell cannot be held personally liable to HTI.


Under Kentucky law, the agent of a disclosed principal cannot be held liable for acts done within the scope of their agency. Summit Petroleum Corp. of Ind. v. Ingersoll-Rand Fin. Corp., 909 F.2d 862, 868 (6th Cir. 1990) (“Kentucky law insulates agents from liability for ‘acts done within the scope of [their agency] on behalf of a disclosed principal.’ ”); N. Ridge Farms, Inc. v. Stathatos, 760 S.W.2d 89, 91 (Ky. App. 1988); Am. Collectors Exchange, Inc. v. Ky. State Democratic Central Comm., 566 S.W.2d 759, 761-62 (Ky. App. 1978).


Here, Mr. Maxwell was employed as a Vice President of Cottingham & Butler. [DE 1-1, Complaint ¶ 5.] There is no question that from the start HTI knew of Cottingham & Butler’s existence and understood that Mr. Maxwell was an employee. HTI does not claim that Mr. Maxwell exceeded the scope of his agency. Therefore, HTI cannot sue Mr. Maxwell individually for his acts on behalf of a disclosed principal.


HTI argues that “when Mr. Maxwell sold an insurance policy he was not properly appointed to sell, he became personally liable to HTI as the insured for any damages suffered by HTI as a result of that sale.” [DE 26 at 27.] However, Mr. Maxwell did not act as the “seller” in any personal capacity. He dealt on behalf of Cottingham & Butler at all times. This is reflected by the fact that Cottingham & Butler was listed as the “Producer”2 on the Chartis auto liability policy. [DE 27 at 10.] Furthermore, Cottingham & Butler was properly appointed by Chartis. [DE 27 at 9-10.] HTI does not dispute that Cottingham & Butler was properly appointed. Whether Mr. Maxwell was personally appointed is not dispositive, as he was acting within the scope of his employment for a disclosed principal that was the properly appointed agent of an insurer.


For this reason, HTI’s four causes of action cannot be asserted against Mr. Maxwell personally, but only against Cottingham & Butler.



  1. Contract Claim

HTI asserts that Cottingham & Butler “breached their agreement with Plaintiff to procure the best liability insurance coverage available” in two ways: (1) “[B]y having the Chartis Policy written with an incorrectly stated amount for Estimated Mileage,” and (2) “[B]y failing to timely and fully advise Plaintiff on paying the Chartis Policy Premium and in general on keeping the coverage provided under the Chartis Policy in effect during the policy period.” [DE 1-1, Complaint at ¶ 52.]



  1. Estimated Mileage

HTI provided the overstated mileage estimate of 10,524,800 miles to Mr. Maxwell in order to secure the Chartis auto liability policy. Therefore, no reasonable jury could find that Cottingham & Butler breached any contractual duty it might have owed to HTI by including this estimate in the insurance policy application.


*5 All of the evidence, both testimonial and documentary, clearly shows it was HTI that provided the mileage estimate to Cottingham & Butler. [DE 25-3, Exhibit 2, Deposition of Randy Minnicks at 43:18 – 48; DE 25-4, Exhibit 3, Auto Liability Application.] Even HTI acknowledges that it provided the estimate. [DE 26 at 6.] (“Minnicks gave Cottingham & Butler the number 10,500,00 for the estimated annual mileage during the year term of the Chartis Auto Policy.”).


Since it is undisputed that HTI provided the mileage estimate to Cottingham & Butler for the purpose of securing an auto liability policy, there are no facts upon which a jury could find that Cottingham & Butler breached by “having the Chartis Policy written with an incorrectly stated amount for Estimated Mileage.” [DE 1-1, Complaint at ¶ 52.] Cottingham & Butler simply utilized the mileage estimate supplied by HTI.



  1. Failure to Advise

HTI’s second breach of contract argument also fails because HTI cannot prove that that Cottingham & Butler had a contractual obligation to advise HTI about paying the Chartis policy premium or “in general” about maintaining coverage under the policy. Without a contractual duty to provide advice, Cottingham & Butler cannot be liable to HTI for breach of contract.


To prove a breach of contract, a plaintiff must establish three things: (1) existence of a contract; (2) breach of that contract; and (3) damages flowing from the breach of that contract. Barnett v. Mercy Health Partners –Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. App. 2007). “[T]o be enforceable, a ‘contract must contain definite and certain terms setting forth promises of performance to be rendered by each party.’ ” Id. (citing Kovacs v. Freeman, 957 S.W.2d 251, 254 (Ky. 1997)).


Based on the evidence presented, a rational jury could not find that Cottingham & Butler had a contractual obligation to provide ongoing advisement to HTI. There is no final, signed contract memorializing the terms of the agreement in this case. Rather, HTI argues that several items in the record show a contractual duty to advise: “1) the January 23, 2012 letter, 2) the Cottingham & Butler solicitation materials, 3) Defendants’ specific promises to HTI, and 4) email exchanges between Maxwell and Hammond.” [DE 26 at 16.] Even taken together, these materials do not show that Cottingham & Butler entered into an agreement in which it was contractually required to advise HTI on paying and maintaining its auto liability coverage.


First, although the word “advise” appears in the January 23, 2012, letter, HTI expressly stated in its Response opposing summary judgment that Mr. Hammond “never signed the letter” and is adamant that he “did not agree to that.” [DE 26 at 5.] Therefore, HTI cannot rely on the letter as the basis of a contractual duty when it also asserts it did not agree to the terms presented in the letter. It is true that Mr. Hammond was more concerned with the fee amounts listed in the letter when he refused to accept it, but Mr. Hammond nevertheless failed to accept HTI’s proposed terms. A single line in an unaccepted offer cannot be the only foundation for an otherwise unsupported contract obligation. In fact, because Mr. Hammond further negotiated with Cottingham & Butler about its fee, it is probably most accurate to say that HTI actually made a counter offer and thereby rejected the offer Cottingham & Butler made in the January 23, 2012 letter.


Furthermore, Mr. Hammond’s deposition testimony undermines the assertion that Cottingham & Butler promised to advise HTI. When asked what he understood Cottingham & Butler had agreed to do, Mr. Hammond stated that they were “supposed to provide me the best insurance, and quotable insurance, they could find. And was going to help train our drivers.” [DE 25-2 at 70: 7-9.] Mr. Hammond made no mention of ongoing advisement in relation to the policy.


*6 As to the solicitation materials, nothing therein suggests that Cottingham & Butler promised to advise HTI about paying its premiums or maintaining its coverage. [DE 26-1, Deposition Exhibit 50 at pp. 44-65.]


Third, it is unclear what exactly HTI means by “defendants’ specific promises” since it does not cite to anything in particular. This most likely refers to statements that Mr. Maxwell made during the meetings with Mr. Hammond. Once again though, Mr. Hammond’s deposition testimony indicates that there was no “specific promise” to advise, but rather only a contract to provide the “best insurance” available and assist in training drivers. [DE 25-2 at 70: 7-9.] Mr. Hammond stated that these were the things Mr. Maxwell mentioned in their face to face meeting. [DE 25-2 at 70: 16-18.] Therefore, a contract duty to advise cannot be inferred from Mr. Maxwell’s statements during the in-person meetings with Mr. Hammond, nor has this Court been made aware of any other “specific promises” that might give rise to such a duty.


Fourth, the email exchanges between Mr. Maxwell and Mr. Hammond do not provide any insight into contract terms. The emails show that HTI and Cottingham & Butler were attempting to maintain HTI’s insurance coverage and secure new coverage, but do not contain evidence of contract terms. The fact that Cottingham & Butler tried to keep HTI’s insurance in place is not evidence that a contract obligation to do so existed.


There is no genuine issue of fact regarding the Plaintiff’s contract claim because a jury could not find that Cottingham & Butler was contractually obligated to advise HTI on paying the Chartis premiums or otherwise maintaining the insurance policy. Based on the above mentioned evidence, a jury might reasonably find that Cottingham & Butler promised to procure the best liability coverage available for HTI, but an obligation to obtain the best insurance coverage would not automatically encompass a duty to provide ongoing advice to HTI for the duration of the policy. A jury could not reasonably conclude that a “definite and certain” contract term requiring Cottingham & Butler to advise existed. Kovacs, 957 S.W.2d at 254. HTI’s breach of contract claim cannot proceed without evidence showing the existence of such a contract term.



  1. Negligence Claim

HTI also asserts a negligence claim against Cottingham & Butler. HTI claims that Cottingham & Butler “owed a duty to … competently and completely present the facts regarding the operation of [HTI’s] business to Chartis and to present the facts and the options available to [HTI] on paying the Chartis premium [and] obtaining appropriate liability insurance.” [DE 1-1, Complaint at ¶ 54.] Here, HTI is once again alleging a duty to advise. HTI expressly characterizes the duty as such in its Response. See [DE 26 at 23, 25.] Cottingham & Butler did not owe HTI a duty to advise, so Cottingham & Butler is entitled to summary judgment on the negligence claim.


“To succeed on a claim of negligence, the plaintiff must establish that (1) the defendant owed a duty of care to the plaintiff, (2) the defendant breached its duty, and (3) the breach proximately caused the plaintiff’s damages. Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245, 247 (Ky. 1992). “The United States District Court for the Western District of Kentucky recently summarized the Kentucky law of negligence, as it applies to insurance brokers or agents and their clients as follows:

*7 The Supreme Court of Kentucky has held that, in general, insurance brokers and agents owe only a standard duty of reasonable care to their clients. See Associated Ins. Serv[.], Inc. v. Garcia, 307 S.W.3d 58, 63 (Ky. 2010). However, “an insurer may assume a duty to advise an insured when: (1) he expressly undertakes to advise the insured; or (2) he impliedly undertakes to advise the insured.” Mullins, 839 S.W.2d at 248; see also Dotson v. Grange Mut. Cas. Co., [No.2009–CA000482–MR,] 2010 WL 1133337 (Ky. Ct. App. Mar. 26, 2010). “An implied assumption of duty may be present when: (1) the insured pays the insurance agent consideration beyond a mere payment of the premium; (2) there is a course of dealing over an extended period of time which would put an objectively reasonable insurance agent on notice that his [advice] is being sought and relied on; or (3) the insured clearly makes a request for advice.” Mullins, 839 S.W.2d at 248.”

Hardy Oil Co. v. Nationwide Agribusiness Ins. Co., No. 5:11-CV-00075, 2013 WL 5561039 (E.D. Ky. Oct. 8, 2013) (citing Helton v. American General Life Ins. Co., Civil Action No. 4:09-cv-0018-JHM, 2013 WL 2242773, *12 (W.D.Ky. May 21, 2013)), aff’d, 587 F. App’x 238 (6th Cir. 2014).


Throughout its argument on its negligence claim, HTI mistakenly characterizes Mr. Maxwell as the insurance agent in this case. [DE 26 at 22-25.] (“Maxwell marketed, contracted and acted, at all times relevant, as the insurance broker/agent to HTI, the insured.”). HTI argues that Mullins is inapplicable because “the key fact in Mullins, and the determining factor of that decision, was that the insurance agent was the agent of the insurer … Here, Maxwell was not an agent for the insurer when he sold the Chartis Auto Policy to HTI, because the insurer had not appointed Maxwell …” This argument is erroneous because, as already explained, Cottingham & Butler was the properly appointed agent of Chartis, and Mr. Maxwell was an employee working on behalf of Cottingham & Butler. See supra pp. 7-8. Indeed, KRS 304.9-270(3), which HTI cites, requires that an insurance agent be appointed by an insurer before placing applications for insurance. This statute was satisfied because Cottingham & Butler was properly appointed as an insurance agent by Chartis, so Mullins and the legal rule from Hardy Oil outlined above applies in this case to determine whether Cottingham & Butler owed HTI a duty to advise.


Moreover, the alignment of the parties involved in Hardy Oil is analogous to the present case. In Hardy Oil, Nationwide Agribusiness Insurance Company was the insurer, and Wells Fargo, through its agent, Rollie Lehnus, obtained the policy for Hardy Oil. 2013 WL 5561039 at *1. The insured, Hardy Oil, asserted a negligence claim against Wells Fargo based on the actions of its agent, Lehnus. Id. at *2. In this case, Chartis is the insurer, and Cottingham & Butler, through its agent, Mr. Maxwell, obtained the policy for HTI. Likewise, HTI is asserting a negligence claim against Cottingham & Butler based on Mr. Maxwell’s actions. The parties in this case line up precisely with the parties involved in Hardy Oil, which further indicates that Mullins is the correct legal standard to apply in this case.


Returning now to the Mullins analysis, the key question is whether Cottingham & Butler impliedly assumed a duty to advise HTI. The question of duty presents an issue of law. Mullins, 839 S.W.2d at 248 (citing 57A Am.Jur.2d Negligence § 20; Prosser and Keeton on Torts, § 37 (5th ed. 1984)). HTI has the burden of proving that Cottingham & Butler assumed a duty to advise. Id.


First, Cottingham & Butler could have impliedly assumed a duty to advise by taking payment from HTI “beyond a mere payment of the premium.” Mullins, 839 S.W.2d at 248. On July 20, 2012, HTI wired $70,000 to Cottingham & Butler. Of that amount, $15,204.44 “was applied to the outstanding C&B Fee Agreement invoices of #329477 ($13,500) and #330577 ($1,704.44 partial payment).” [DE 26-1, Exhibit 1, Deposition Exhibit 53 at p.68.] Thus, on July 20, 2012, HTI paid Cottingham & Butler a fee.


*8 However, Mullins does not stand for the proposition that the payment of any sort of fee whatsoever automatically creates a duty to advise. Rather, under Mullins the payment of a fee beyond a premium may indicate that an insurance broker impliedly assumed a duty to advise.3 Here, the fee HTI paid to Cottingham & Butler did not create a duty to advise. Put simply, nothing about the fee suggests that Cottingham & Butler assumed a duty to advise HTI.


HTI’s description of the fee agreement undermines its argument that the fee created a duty to advise. Mr. Hammond testified that he understood the fee agreement “to be that where the insurer paid a fee to Cottingham & Butler directly, HTI would itself pay nothing directly to Cottingham & Butler for any fee or commission. Otherwise, Hammond understood that if the premium payment by HTI to the insurer was ‘net of fees,’ HTI would pay Cottingham & Butler a fee equal to 6% of the premium.” [DE 26 at 5.] According to Mr. Hammond, HTI owed Cottingham & Butler a fee only if Cottingham & Butler did not receive payment directly from Chartis. It does not make sense for a fee that allegedly created a duty to advise to be contingent upon Chartis not paying a commission. Rather, HTI’s explanation of the fee arrangement actually supports Cottingham & Butler’s argument that the fee was contemplated merely “in lieu of” a direct premium commission from Chartis and was not additional special compensation. [DE 25-1 at 21; DE 27 at 12.]


Moreover, other decisions have noted the difference between a fee that triggers a duty to advise and a fee paid for some other purpose. In Settle v. Kentucky Farm Bureau Ins. Co., No. 2003-CA-000999-MR, 2004 WL 1093713, at *3 (Ky. Ct. App. May 14, 2004), the court held that a $25 yearly fee paid to an insurer was nothing more than an annual membership fee in a mutual insurance company and did not create an affirmative duty to advise the insureds. While HTI paid Cottingham & Butler a fee much greater than $25, the same logic applies here. HTI’s bare payment of the fee, without any other evidence indicating that the fee was paid to secure Cottingham & Butler’s advisement or other special assistance, does not show that Cottingham & Butler assumed a duty to advise by taking the payment.


The second way an insurance agent may impliedly assume a duty to advise is by “a course of dealing over an extended period of time which would put an objectively reasonable insurance agent on notice that his [advice] is being sought and relied on.” Mullins, 839 S.W.2d at 248. While the question of duty generally presents an issue of law, whether such a special relationship existed is a question of fact. See Hardy Oil, 2013 WL 5561039 at n.5; St. Paul Fire & Marine Ins. Co. v. CEI Florida, Inc., 864 F. Supp. 656, 673 (E.D. Mich. 1994) (“The existence of a special relationship is a question of fact.”). In the present case, HTI and Cottingham & Butler were involved for less than a year – from “late 2011” to August 2, 2012. [DE 26 at 2, 14.] There is no evidence that anything beyond a standard insurance broker to insured arrangement existed. This was the first time they did business together, so there is no prior course of dealing between the parties. No reasonable juror could find that a duty to advise arose from this short-lived relationship.


*9 Third, a duty to advise may be present when “the insured clearly makes a request for advice.” Mullins, 839 S.W.2d at 248. HTI did not make a clear request for advice. A request for the “best policy,” which HTI made in this case, does not impose a duty to advise. Id. at 249. The emails and other communications between HTI and Cottingham & Butler also do not reveal a clear request for advice. See [DE 26 at 11-14.] These communications show that HTI and Cottingham & Butler were trying to maintain the Chartis coverage and, after its cancellation, restore it or acquire new coverage, but neither HTI nor Mr. Hammond made a clear request seeking advice about the Chartis auto liability policy.


Summary judgment on HTI’s negligence claim is warranted because Cottingham & Butler did not owe a duty to advise.



  1. Disgorgement Claim

HTI claims that Cottingham & Butler “wrongfully withheld $20,500 … on a refund from Chartis on the Property Damages Policy.”


In its Response opposing summary judgment, HTI does not offer any reasons why summary judgment should not be granted on this claim. In fact, the evidence shows that of the $72,021 refund related to the physical damages policy, Cottingham & Butler sent $58,822.78 to First Insurance Funding and transmitted the remaining $13,198.22 back to HTI. [DE 25-2 at 133:14-135:15.] Thus, contrary to HTI’s assertion that Cottingham & Butler withheld $20,500 of the property damages policy refund, Cottingham & Butler actually retained no part of that refund. Since it did not keep any of this money, Cottingham & Butler has nothing to disgorge. Accordingly, summary judgment is appropriate on this claim.



  1. Premium Refund Claim

Finally, HTI alleges that Cottingham & Butler “improperly paid Imperial an amount in excess of what should be due to Chartis on the Amended Chartis Policy Premium because the Estimated Mileage is overstated by at least 1,000,000 miles.” [DE 1-1, Complaint at ¶ 58.]


Like the Disgorgement claim, HTI does not specifically defend its Premium Refund claim in its Response. Once again, it was HTI’s representative that provided the overstated mileage estimate to Cottingham & Butler. See supra pp.7-8. Therefore, Cottingham & Butler did not cause any loss that HTI suffered based on the overstatement of miles, including any premium overpayment to Imperial. Summary judgment on this claim is also appropriate.


In addition, this Court has already held that HTI’s breach of contract and negligence claims may not proceed, so HTI cannot recover any alleged excess premium payments as a component of damages under either of those claims.




There is no issue of material fact regarding HTI’s breach of contract, negligence, disgorgement, or premium refund claims and the defendants are entitled to judgment in their favor on each claim. Accordingly, IT IS HEREBY ORDERED that the defendants’ motion for summary judgment [DE 25] is GRANTED.


All Citations

Slip Copy, 2016 WL 1255718





Tony Hammond “runs” HTI, but no official title is provided. [DE 26 at 2.]


See, e.g., Ky. Rev. Stat. Ann. § 304.3-400 (West) (defining “producer” as an entity that “acts or aids in any manner in soliciting, negotiating, or procuring the making of any insurance contract on behalf of an insured…”).


The Court believes this concept may be more properly classified as a contract duty rather than a negligence principle. It seems that paying a fee for a higher standard of care, i.e. a duty to advise, is actually an exchange of consideration that would create a contractual agreement rather than a duty of care. See Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388, 403 (Ariz. 1984) (explaining that limiting the liability of an insurance agent to those situations in which the insured provided separate consideration for the agent’s advice “confuses contract and tort principles and is irrelevant to the allegation of negligence.”). However, since Mullins is the controlling Kentucky law, the Court will proceed to analyze this issue in terms of negligence.

Pavel Battles, Plaintiff, v. American Van Lines, Inc., Defendant

United States District Court,

S.D. Florida.

Pavel Battles, Plaintiff,


American Van Lines, Inc., Defendant.

Case No. 15-cv-62247-BLOOM/Valle


Signed March 30, 2016


Filed 03/31/2016





*1 THIS CAUSE is before the Court upon Plaintiff’s Complaint, ECF No. [1] (the “Complaint” or “Compl.”), to vacate the judgment against him in the underlying arbitration, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. The Court has carefully reviewed the Complaint, and all exhibits attached thereto, the record, and the applicable law, and is otherwise fully advised.1 For the following reasons, the Court finds that vacatur is not warranted.



  1. Background

Plaintiff Pavel Battles (“Plaintiff” or “Battles”) first filed a Complaint against the Defendant American Van Lines, Inc. (“Defendant”), on December 12, 2012, alleging claims for breach of contract and unpaid wages as a driver for the Defendant pursuant to the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (“FLSA”). See Case No. 12-cv-62477-WJZ. Defendant is a motor carrier involved in interstate commerce. ECF No. [1-3] (“Motion to Dismiss”). According to the Complaint, in the initial case before another district court in the Southern District of Florida in March 2013, “Defendant produced for the first time an agreement to arbitrate the wage claim. [Even though] the agreement to arbitrate was not executed by either party, and a portion of the agreement missing (including the material term of how payment was to be made to Petitioner), Petitioner consented to move the wage claim to the American Arbitration Association [the ‘Association’] for a fair and full adjudication of this matter.”2 Compl. at 2. Before the appointment of an arbitrator in this matter, Defendant filed its Motion to Dismiss, which set forth affirmative defenses as well as an argument for dismissal of Plaintiff’s FLSA claim based on the expiration of the applicable statute of limitations. Id. at 2-3.


The Complaint states that, after the appointment of Arbitrator Richard J. DeWitt (“Arbitrator” or “DeWitt”), the parties conducted a preliminary hearing by phone on December 3, 2014, before DeWitt. Id. at 3. Plaintiff represents that all parties were prepared for and participated in this call, although the Arbitrator appears to dispute this fact. Id.During the call, the Arbitrator instructed Battles3 to file an amended Statement of Claim by December 16, 2014, and entered an order directing the same (“Order No. 1”). Id. After allegedly failing to receive Order No. 1, on December 24, 2014, Plaintiff sent an email inquiring as to the status of the Order: “I believe the [p]arties were directed to submit further information regarding the claim, however, I do not see a due date for same.” Id. On December 29, 2014, a copy of Order No. 1 was resent to all parties. Id. Plaintiff then filed a Memorandum of Law and Statement of Claim, ECF No. [1-5] (“Statement of Claim”), on January 8, 2015, sending copies to Bryan Corbett, the Case Administrator from the Association (“Corbett”), and Defendant. Id.


*2 A few months later, on April 27, 2015, Corbett offered proposed dates to the parties for which to schedule another status hearing by phone. Id. at 3. Realizing that no date had been set, on May 12, 2015, Plaintiff, through counsel, inquired as to the status of the call via correspondence to Corbett. Id. at 3-4. On May 14, 2015, Corbett advised that he needed to request a new set of dates from DeWitt. Id. at 4. Plaintiff, through counsel, again followed up with Corbett on May 26, 2015, to which Corbett responded on May 27, 2015, with additional availability for the call. Id. On the same date, Plaintiff confirmed his availability for certain proposed dates, while Defendant advised the parties that it was unavailable for all of the dates proposed. Id. Accordingly, Plaintiff requested that Corbett provide “new dates in short order.” Id. It was not until July 14, 2015, however, that the parties received a new set of dates. Upon receiving this correspondence, Plaintiff advised that any of the proffered dates worked for him as he “wished to move this arbitration forward to finally resolve this matter.” Id. The parties eventually settled on July 24, 2015, at 10:30 a.m.


However, according to the Complaint, the email containing this final date was inadvertently sent to Plaintiff’s spam folder. Plaintiff did not discover the error until after July 24, 2015 – thus, he missed the status call. He “sincerely apologized” to the Arbitrator and the Defendant “for not being aware of, and missing,” the call. Id. Nevertheless, as a result of Plaintiff’s failure to attend, DeWitt entered an Order, ECF No. [1-4] (“Order No. 2”), dismissing Plaintiff’s Complaint with prejudice. Id. This Order represents that, in addition to missing the call, Plaintiff was “not prepared to proceed and requested a postponement” of the initial December 3rd call and “failed to file an amended Statement of Claim by the required date or to file one at all.” Id. Moreover, “[a]fter 15 minutes waiting for [Plaintiff] to join the hearing[,] the Association contacted [Plaintiff’s c]ounsel by telephone and was advised that he was not available to participate in the [ ] call.” Id. DeWitt, ultimately, found that Plaintiff “failed to proceed with [his] Claims and therefore [ ] abandoned them.” Accordingly, he granted Defendant’s Motion to Dismiss Plaintiff’s FLSA claim, although he did not state on which basis proffered by Defendant, and dismissed Plaintiff’s breach of contract claim sua sponte. Both claims were dismissed with prejudice.


Believing that this dismissal with prejudice was unjust and premised on faulty reasoning, Plaintiff filed a Motion for Reconsideration, ECF No. [1-7] (“Motion for Reconsideration”), which the Arbitrator denied in subsequent Order, ECF No. [1-8] (“Order No. 3”). In his Motion for Reconsideration, Plaintiff challenged the veracity of a number of DeWitt’s findings. First, Plaintiff alleged that he was in fact prepared for and participated in the December 3rd call. Any representation to the contrary, he contended, was belied by DeWitt’s statements in Order No. 2 confirming his attendance. Order No. 2 (“A Status Hearing was held by telephone on December 3, 2014, at 2:00 p.m. (EST) before Arbitrator DeWitt. Appearing at the hearing was Brian J. Militzok, Esq. on behalf of the [Plaintiff]…and Elias Hilal Esq. on behalf the [Defendant]… and Bryan Corbet, Case Manager, on behalf of the Association.”). Second, he disputed the finding that he failed to file an amended Statement of Claim, explaining that he had filed the requested document. Third, Plaintiff maintained that DeWitt’s claim that he failed to cooperate in efforts to reschedule the second hearing were patently untrue – “The record clearly indicates otherwise as [Plaintiff] always provided a prompt response to scheduling and was the only party seeking to push this arbitration forward.” Compl. at 7. Last, Plaintiff argued that dismissal was improper because it was based upon Defendant’s Motion to Dismiss, which argues, inter alia, a statute of limitations defense that fails to resolve the entirety of Plaintiff’s FLSA claim when properly applied – and is also an inherently factual inquiry. The Court notes, however, that regardless of the applicability of the Motion to Dismiss, DeWitt specifically dismissed both of Plaintiff’s claims with prejudice. Order No. 2.


*3 In Order No. 3, DeWitt conceded that Plaintiff had in fact filed an amended Statement of Claim, albeit untimely and incomplete. Id. (noting that the amended Statement of Claim failed to address whether Battles was employed by a third-party contractor). In addition to Plaintiff’s failure to participate in the second hearing, Order No. 3 goes on to introduce two alleged inconsistencies in Plaintiff’s arguments as additional justifications for dismissal:

  1. [Plaintiff] made untrue contradictory assertions in his abbreviated Amended Claim vis-à -vis his initial Statement of Claim. In his initial Claim [, Plaintiff] asserted that the parties entered into an Independent Contractor Operating Agreement[,] which had an arbitration provision and was the basis for this Arbitration. [Plaintiff] uploaded the Agreement to the Association’s website in connection with his initial Claim. In his Amended Claim, [Plaintiff] asserted that though [Defendant] asserted that the parties were working pursuant to an Independent Contractor Operating Agreement, [Defendant] was unable to produce the Independent Contractor Operating Agreement that [Plaintiff] had previously entered on the record.
  2. [Plaintiff] further asserted that the inability to review the Independent Contractor Operating Agreement was the basis for his FSLA claim [,] notwithstanding the fact that he had uploaded the agreement to the Association’s WebFile system.

Id. (concluding that Plaintiff’s claims “are contradictory; moreover, he has demonstrated a total disregard for efficiently pursuing these claims, he imposed unnecessary costs[,] and interposed delay of over eight (8) months by failing to cooperate in the arbitration process”).


In his Complaint, Plaintiff alleges that he pleaded his two claims in the alternative pending Defendant’s search for an executed agreement between the parties, which was ultimately unfruitful. The agreement that Plaintiff uploaded to the Association’s WebFile system was a general template that was not executed by either party. Further, Plaintiff argues that, regardless of whether such a contract ever existed, proper resolution of the instant claims necessarily required a factual determination by DeWitt as to whether Battles was properly classified as an employee or independent contractor. See Compl. at 9-10. Accordingly, Plaintiff requests that the Court vacate DeWitt’s judgment on two bases pursuant to the FAA – first, that his actions amount to misconduct and, second, that he exceeded his powers as an arbitrator.



  1. Standard of Review

The FAA governs this case because the subject of the arbitration “evidences a transaction involving interstate commerce.” 9 U.S.C. § 2; see also Brown v. Rauscher Pierce Refsnes, Inc., 994 F.2d 775, 778 (11th Cir. 1993) (“Our review of commercial arbitration awards is controlled by the Federal Arbitration Act.”); see generally Motion to Dismiss. This statute “imposes a heavy presumption in favor of confirming arbitration awards,” Riccard v. Prudential Ins. Co. of Am., 307 F.3d 1277, 1288 (11th Cir. 2002), such that “federal courts should defer to an arbitrator’s decision whenever possible.” Frazier v. CitiFinancial Corp., LLC, 604 F.3d 1313, 1321 (11th Cir. 2010) (citation omitted); see Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 (2008) (“Congress enacted the FAA to replace judicial indisposition to arbitration with a national policy favoring it and placing arbitration agreements on equal footing with all other contracts.”) (citations omitted and alterations adopted). “[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his position.” Pochat v. Lynch, 2013 WL 4496548, at *5 (S.D. Fla. Aug. 22, 2013) (quoting United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38 (1987)). “Accordingly, the Eleventh Circuit has described courts’ confirmations of arbitration awards as ‘usually routine or summary.’ +” Id. (quoting Riccard, 307 F.3d at 1288); see Cat Charter, LLC v. Schurtenberger, 646 F.3d 836, 843 (11th Cir. 2011) (“[A]rbitrators do not act as junior varsity trial courts where subsequent appellate review is readily available to the losing party.”) (citation and internal quotation marks omitted). “Indeed, ‘judicial review of arbitration decisions is among the narrowest known to the law.’ +” Pochat, 2013 WL 4496548, at *6 (quoting AIG Baker Sterling Heights, LLC v. American Multi-Cinema, Inc., 508 F.3d 995, 1001 (11th Cir. 2007)) (citation and internal quotation marks omitted).


*4 “Section 9 of the FAA provides that, upon application of any party to the arbitration, the court mustconfirm the arbitrator’s award unless it is vacated, modified, or corrected in accordance with sections 10 and 11 of the statute.”4 Frazier, 604 F.3d at 1321 (emphasis in original) (holding that the statutory grounds for vacatur set out in FAA are exclusive); see 9 U.S.C. § 9. Section 10 permits vacatur of arbitration awards only in four narrow circumstances, two of which are alleged here:

(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. § 10(a).5 In applying these grounds, the Eleventh Circuit has instructed district courts to “bear in mind that the basic policy of conducting arbitration proceedings is to offer a means of deciding disputes expeditiously and with lower costs than in ordinary litigation.” Schmidt v. Finberg, 942 F.2d 1571, 1573 (11th Cir. 1991); see Scott v. Prudential Secs., Inc., 141 F.3d 1007, 1016 (11th Cir. 1998), overruled in part on other grounds by Hall St., 552 U.S. 576 (“[W]e must recall the basic policy behind arbitration, which is to permit parties to resolve their disputes in an expeditious manner without all the formalities and procedures that might attend full fledged litigation.”). Through this lens, the Court addresses the instant Complaint.



III. Discussion

Plaintiff seeks vacatur of the arbitration award pursuant to sections 10(a)(3) and (4), contending, respectively, that DeWitt acted with misconduct and/or exceeded his powers by failing to allow further prosecution of his underlying claims. See 9 U.S.C. §§ 10(a)(3), (4). These arguments are unavailing.


Plaintiff first avers that DeWitt engaged in affirmative misconduct by “refusing to hear evidence pertinent and material to the controversy,” 9 U.S.C. § 10(a)(3) – instead, ruling against him based on his failure to attend the second hearing, before he had the opportunity to fully present his case. This third ground for vacatur of an arbitration award concerns the manner in which the arbitrator conducted the hearing, authorizing vacatur where: (1) the arbitrators refused to postpone the hearing upon the showing of sufficient cause; (2) the arbitrators refused to hear pertinent and material evidence; or (3) the arbitrators were guilty of any other misbehavior that resulted in prejudice to the rights of any party. See 9 U.S.C. § 10(a)(3). To amount to misconduct under this section, an arbitrator must have acted in bad faith or committed an error so gross “as to amount to affirmative misconduct.” United Paperworks, 484 U.S. at 40. In other words, “a mere difference of opinion between the arbitrators and the moving party as to the correct resolution of a procedural problem will not support vacatur under section 10(a)(3).” Scott, 141 F.3d at 1016. As the Eleventh Circuit has explained, “arbitration proceedings ‘need not follow all the ‘niceties’ of the federal courts.’ +” Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1443 (11th Cir. 1998) (quoting Grovner v. Georgia-Pacific, 625 F.2d 1289, 1290 (5th Cir. 1980)). To the contrary, arbitrators “enjoy wide latitude in conducting an arbitration hearing,” and they “are not constrained by formal rules of procedure or evidence.” Id. at 1443-44 (citation omitted). “Although [arbitration] procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (citation and internal quotation marks omitted).


*5 Nevertheless, “courts have also emphasized that any efficiency in the arbitral process is constrained by the arbitrators’ obligation to provide each party a fundamentally fair hearing.” Chem-Met Co. v. Metaland Intern. Inc., 1998 WL 35272368, at *4 (D.C. March 25, 1998); see also Talel Corp. v. Shimonovitch, 84 So. 3d 1192, 1994 (Fla. 4th DCA 2012). “A fundamentally fair hearing is one that ‘meets the minimal requirements of fairness’ – adequate notice, a hearing on the evidence, and an impartial decision by the arbitrator.” Generica Ltd. v. Pharmaceutical Basics, Inc., 125 F.3d 1123, 1130 (7th Cir. 1997) (quoting Sunshine Mining Co. v. United Steelworkers, 823 F.2d 1289, 1295 (9th Cir. 1987)) (internal quotation marks omitted). “When the exclusion of relevant evidence actually deprived a party of a fair hearing, therefore, it is appropriate to vacate an arbitral award.” Id.; see, e.g., Hall v. Eastern Air Lines, Inc., 511 F.2d 663, 664 (5th Cir. 1975) (refusing to enforce award because arbitration board refused to give weight to plaintiff’s previously untendered alibi defense); cf. Generica, 125 F.3d at 1131 (“We conclude that the arbitrator did not abuse his discretion in his handling of this evidentiary ruling. He had before him ample evidence upon which to decide the dispute. He weighed the conflicting evidence (without considering [third-party testimony at issue] ) and decided that [defendant] had breached the [a]greement.”).


The Court finds Fowler v. Ritz-Carlton Hotel Co., LLC, 579 F. App’x 693 (11th Cir. 2014), instructive in interpreting the threshold “minimal requirements of fairness.” In that case, the plaintiffs failed to meet a number of deadlines, which resulted in the defendant’s decision to file a motion to dismiss the arbitration based on their failure to prosecute. Id. at 694. Although choosing to deny defendant’s motion to dismiss, the arbitrator warned that “any further delay created by the [p]laintiffs or their counsel will not be tolerated in the absence of written proof of ‘good cause’ and will result in dismissal of the [plaintiffs’] claims with prejudice.” Id. at 695 (alterations adopted). Eventually, the defendant filed a motion for summary judgment on all claims for which plaintiffs were required to respond on December 28, 2012. Id. They missed this deadline, however, and, instead, almost two months later, on February 25, 2013, the plaintiffs filed a motion requesting an additional five days to respond to the summary judgment motion. Id. “The arbitrator denied the motion, finding that the [p]laintiffs had waived the right to respond.” Id. On April 30, 2013, the arbitrator issued awards in favor of defendant. Id.


The plaintiffs challenged the conduct of the arbitrator on these facts. Pursuant to the inquiry presented by section 10(a)(3), the Eleventh Circuit found the plaintiffs’ argument frivolous. Id. at 698. Explaining its conclusion, the Court reasoned that “[t]he arbitrator allowed both parties a full and fair opportunity to present evidence,” even though “[t]he [p]laintiffs did not take advantage of this opportunity, but instead filed a response to [defendant’s] summary judgment motion almost two months late. Nevertheless, the arbitrator still reviewed the entire record in deciding the summary judgment motion.” Id. at 698. Because an award is only vacated for refusal to consider evidence when an arbitrator’s error is “in bad faith or so gross as to amount to affirmative misconduct,” the Eleventh Circuit held that these allegations failed to meet the requisite high standard for vacatur. Id. (quoting United Paperworkers, 484 U.S. at 40).


The facts in the instant matter are similar and, therefore, militate that the Court reach a congruous result. As in Fowler, DeWitt chose to penalize the Plaintiff’s repeated failure to participate in the arbitration process. Although the Arbitrator set December 16, 2014, as the deadline for the Plaintiff to file an amended statement of claim, Plaintiff did not file the amended Statement of Claim until three weeks after the deadline, on January 8, 2015. Compl. at 3. Nevertheless, for this Amended Statement, the Arbitrator requested additional information on “Plaintiff’s claims in detail,” including “the specific legal and factual issues addressed at the [p]reliminary [h]earing.” Order No. 2. The parties corresponded for over eight months before finally settling on July 24, 2015, as the operative date for the second hearing. Blame for this initial delay may fall properly on both parties – but, regardless, it was only Plaintiff who then failed to attend on the scheduled date, despite notice being provided. “After 15 minutes waiting for [the Plaintiff] to join the hearing[,] the Association contacted [Plaintiff’s c]ounsel by telephone and was advised that he was not available to participate in the [ ] call.” Order No. 2. DeWitt found that this conduct, in sum, amounted to a failure to prosecute. Id. For this reason, he granted Defendant’s Motion to Dismiss Plaintiff’s FLSA claim and dismissed Plaintiff’s remaining contract claim sua sponte, both with prejudice. Order No. 2.6


*6 Plaintiff is correct that, to the extent that DeWitt intended to rely on Defendant’s argument for dismissal of the FLSA claim as time-barred, a proper application of the governing statute of limitations does not nullify the entirety of the FLSA claim.7 See 29 U.S.C. § 255(a) (“[I]f the cause of action accrues on or after May 14, 1947[, it] may be commenced within two years after the cause of action accrued,…except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.”). But, what Plaintiff fails to point out is that if he entered into a contract with Defendant or a third party as an independent contractor, as the pleadings suggest, then no FLSA claim can exist under these facts. So, although DeWitt did not clarify the grounds for his granting of the Motion to Dismiss specifically, it may very well have been for the simple reason that DeWitt could not make sense of Plaintiffs’ claims.


DeWitt further explained his reasoning, relying on the merits of the controversy, in Order No. 3. Importantly, he also demonstrated review of the original and amended Statements of Claim therein. Id. (noting that Battles failed to “address the issue regarding his employment by a third party contractor” in the amended Statement of Claim). The Order provided further analysis on the instant dispute, highlighting the problematic circularity of the claims. Order No. 3 cites as grounds for dismissal, “among other discrepancies,” a conflict between the FLSA and contract claims, insofar as one (the breach of contract claim) relies on the stipulation that the parties entered into an Independent Contractor Operating Agreement and the other (the FLSA claim) cannot exist without an employee relationship – which is directly counter to an independent contractor relationship. See id. (“In his Amended Claim, [Plaintiff] asserted that though [Defendant] asserted that the parties were working pursuant to an Independent Contractor Operating Agreement, [Defendant] was unable to produce the Independent Contractor Operating Agreement that [Plaintiff] had previously entered on the record….[Plaintiff] further asserted that the inability to review the Independent Contractor Operating Agreement was the basis for his FSLA claim.”).


Although this explanation alone is less than thorough, again, the Court’s scope of review of an arbitration award is exceedingly narrow. The FAA did not require that DeWitt review every piece of evidence that Battles wished to submit without an attendant demonstration that this evidence was material to his claims. Rather, “[an arbitrator, like DeWitt,] need only give each party the opportunity to present its arguments and evidence.” Robbins v. Day, 954 F.2d 697, 685 (11th Cir. 1992), overruled on other grounds, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 948 (1995); see Booth v. Hume Pub., 902 F.2d 925, 932 (“[T]he Federal Arbitration Act allows arbitration to proceed with only a summary hearing and with restricted inquiry into factual issues.”) (citation omitted); cf. Hall v. Eastern Air Lines, Inc., 511 F.2d 663, 664 (5th Cir. 1975) (refusing to enforce award because arbitration board refused to give weight to plaintiff’s previously untendered alibi defense). “[B]y agreeing to arbitrate, a party ‘trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.’ +” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (quoting Mitsubishi Motors, Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)). Thus, section 10(a)(3) “does not…invite hindsight evaluations of the correctness of the judgment of an arbitration panel in managing the presentation of evidence during an arbitration,” or the like. Id. (quoting Marshall & Co. v. Duke, 941 F. Supp. 1207, 1211 (N.D. Ga. 1995)). Rather, it is reserved for cases in which a plaintiff can show that an arbitrator’s handling of a matter “was in bad faith or so gross as to amount to affirmative misconduct, effectively depriving the plaintiff of a fundamentally fair proceeding.” Id. This is not such a case. Accordingly, Plaintiff’s argument is foreclosed by binding precedent.


*7 Plaintiff attempts to make the same argument under section 10(a)(4), claiming that DeWitt exceeded his authority “by failing to allow testimony by [Battles].” Compl. at 11. An arbitration award may be vacated “where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). However, “[i]t is only when [an] arbitrator strays from interpretation and application of the agreement and effectively dispense[s] his own brand of industrial justice that his decision may be unenforceable.” White Springs Agricultural Chemicals, Inc. v. Glawson Investments Corp., 660 F.3d 1277, 1281 (11th Cir. 2011) (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671 (2010)) (second and third alterations in original) (quotation marks and citation omitted). No allegations of the sort exist here. Plaintiff’s argument that the Arbitrator refused to hear pertinent and material evidence, therefore, is an argument more appropriately invoked under subsection (3), rather than subsection (4). See 9 U.S.C. § 10(a)(3). Regardless, as discussed infra, Battles cannot “surmount the high hurdle” necessary for vacating an arbitration under either section. See, e.g., Southern Mills, Inc. v. Nunes, 586 F. App’x 702, 704 (11th Cir. 2014).



  1. Conclusion

The Court sympathizes with Battles’ claim that DeWitt’s handling of the arbitration was suboptimal; nevertheless, the FAA does not afford relief for such a claim. Eleventh Circuit precedent counsels that DeWitt’s decision to dismiss the Plaintiff’s claim at a duly-noticed hearing – before Plaintiff had presented additional evidence on his claims – does not amount to misconduct so egregious as to warrant vacatur. DeWitt gave Battles the opportunity to present further arguments and evidence at a second hearing – although Battles failed to capitalize on this opportunity. The Court must, therefore, defer to the Arbitrator’s decision. Accordingly, it is ORDERED AND ADJUDGED as follows:

  1. The arbitration award, see ECF Nos. [1-4] and [1-8], is CONFIRMED.
  2. Plaintiff’s Motion to Quash Arbitration Award, ECF No. [1], is DISMISSED.
  3. The Clerk is directed to enter judgment in accordance with the arbitration award and CLOSE the above-styled case.
  4. Any pending motions are hereby DENIED AS MOOT.


DONE AND ORDERED in Miami, Florida, this 30th day of March, 2016.


All Citations

Slip Copy, 2016 WL 1258597





Defendant, defined below, failed to respond to the Complaint by the applicable response deadline pursuant to the Federal Rules of Civil Procedure. After the response deadline, the Court entered Orders to Show Cause, ECF Nos. [8], [9], [10], providing Defendant with three additional opportunities to respond. The Orders cautioned that, if Defendant failed to respond, the Court would consider the merits of the Complaint without the benefit of a response. See id. Nevertheless, despite these multiple warnings, Defendant has yet to respond to the Complaint or request additional time within which to do so. Accordingly, the Court considers the instant Complaint without the benefit of a response.


There is some dispute as to whether a valid and operative agreement to arbitrate existed between the parties; nevertheless, Plaintiff’s voluntary consent to the instant arbitration renders this issue moot. Plaintiff does not provide the Court with a copy of any such agreement.



Plaintiff and Plaintiff’s counsel are referred to interchangeably throughout this opinion, as the Complaint does not clearly distinguish between them.


Section 11 of the FAA provides that arbitration awards may be corrected or modified in three situations, none of which are relevant to the instant dispute. 9 U.S.C. § 11.


Until recently, the Eleventh Circuit has recognized additional non-statutory grounds for relief, which Plaintiff does not invoke here, including (1) manifest disregard of the law by the arbitrator; (2) the award was arbitrary and capricious; and (3) enforcement of the award would violate public policy. See Frazier v. CitiFinancial Corp., LLC, 604 F.3d 1313, 1322 (11th Cir. 2010) (“Although our prior precedents have recognized these three non-statutory grounds for vacatur,…Hall Street casts serious doubt on their legitimacy.”).


Nevertheless, Order No. 2 is concerning to the extent that DeWitt does not make any finding on the merits of the underlying dispute therein. Because Battle missed the second hearing, the Arbitrator simply concluded that Battles had “abandoned” his claims. Id. He then took the “extreme” action, see Compl. at 6, of dismissing Plaintiff’s claims with prejudice. Order No. 2. Furthermore, as Plaintiff points out, DeWitt does not clarify on which basis he is granting Defendant’s Motion to Dismiss the FLSA claim. Indeed, the Motion to Dismiss first presents an argument for dismissal on the basis of statute of limitations, and then lists eight specific affirmative defenses to Plaintiff’s claims. See Motion to Dismiss at 3-4. Accordingly, the Court may have been persuaded to grant vacatur on Order No. 2, standing alone, particularly as the Association’s Non-Binding Consumer Arbitration Rules dictate that “[a]n award cannot be made only because of the default of a party.” Rule 38, “Arbitration in the Absence of a Party or Representative”; see also Chem-Met Co. v. Metaland Intern. Inc., 1998 WL 35272368, at *2-4 (D.C. March 25, 1998) (vacating arbitration award where plaintiff was not given opportunity to present its case at a hearing on the evidence and arbitrators entered judgment without a written opinion).


Here, Plaintiff represents that he entered into a contract with Defendant on July 24, 2011, and the instant Arbitration was initiated on August 23, 2014. Thus, although potentially dependent upon additional facts not currently within the purview of the Court, presumably, any damages incurred in the three-year time window before August of 2014 are available for recovery.

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