• Court Denies Motions to Reargue and to Compel Arbitration: National Union Fire Co. of Pittsburgh v Source One Staffing
  • August 21, 2012 | Author: Adam M. Rafsky
  • Law Firm: Farrell Fritz, P.C. - Uniondale Office
  • In a July 25, 2012 decision by Justice Bransten, the court denied the petitioner’s (“National Union”) motions for reargument and to compel arbitration. The respondent (“Source One”) claimed that National Union, its worker’s compensation insurance provider, failed to reasonably adjust claims under its Policy and made improper demands for increased collateral under the associated Payment Agreement. National Union then filed a demand for arbitration pursuant to an arbitration clause in the Payment Agreement, and Source One argued that the arbitration clause was unenforceable under a section of the California Insurance Code (“CIC”). The court denied the initial demand for arbitration with leave to replead, holding that National Union failed to show that the Federal Arbitration Act (“FAA”) preempted the CIC and that the parties failed address whether the Payment Agreement and an addendum thereto could be considered policies or components of polices under the CIC. National Union then filed an amended petition and sought: to reargue, pursuant to CPRL 2221(d), the court’s determination that the McCarren-Ferguson Act (“MCFA”) permits the CIC to preempt the FAA; and pursuant to CPLR 7503, to compel arbitration.

    On its motion for reargument, National Union argued that the court previously overlooked governing law that established that the MCGA does not permit the CIC to preempt the FAA. Denying the motion, the court held that National Union failed to demonstrate that the court overlooked or misapplied any controlling principle(s) of law because it had “merely restate[d] the same arguments that were already considered and rejected in the original decision.”

    The court then denied National Union’s motion to compel arbitration based on its findings that: 1) National Union had admitted in prior litigation that its policies and attendant payment agreements are to be taken as a single agreement, as is required to be considered a policy or component of a policy within the CIC; and 2) that in order to be enforceable, California law requires any collateral agreement to be attached to the policy to which it applies and so the Payment Agreement, which contained the arbitration clause, was “plainly a collateral agreement...[and therefore] was required to have been attached and made part of the Policies.” Because the Payment Agreement was not attached, the court denied National Union’s motion to compel arbitration.

    National Union Fire Co. of Pittsburgh, P.A. v Source One Staffing, LLC, Sup Ct, New York County, July 25, 2012, Bransten, J., Index No. 652366/10