Savers Property and Casualty Insurance Company et al v. National Union Fire Insurance Company of Pittsburg, Pa.

Filing 33

ORDER DISMISSING Motions and Administratively Closing Case 20 MOTION to Expedite to Intervene for Clarification of the Preliminary Injunction Order filed by Jonathan Rosen, 27 MOTION to Stay filed by National Union Fire Insurance Company of Pittsburg, Pa. Signed by District Judge Victoria A. Roberts. (CPin)

UNITED STATE DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

STAR INSURANCE COMPANY,
SAVERS PROPERTY & CASUALTY
INSURANCE COMPANY, AMERITRUST
INSURANCE CORPORATION and
WILLIAMSBURG NATIONAL INSURANCE
COMPANY,
Plaintiffs,
vs

Case No: 13-13807
Honorable Victoria A. Roberts

NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA,
Defendant.
____________________________________/
ORDER
Plaintiffs entered into a contract (the “Treaty”) with National Union Fire Insurance
Company of Pittsburgh (“National Union”). The Treaty required arbitration of claims
before arbitrators who are not under the control of any party to the Treaty. A dispute
arose; the parties selected a tripartite panel for arbitration.
While arbitration was ongoing, Plaintiffs filed a motion challenging the impartiality
of an arbitrator, alleging that the panelist was under the control of National Union. On
September 12, 2013, the Court granted Plaintiffs’ Motion for Temporary Restraining
Order and Preliminary Injunction, recognizing that this case invokes an exception to the
general rule preventing courts from interfering in arbitration proceedings. The injunction
precludes the arbitration panel from issuing any more decisions and from ex parte
communications with the parties; this is to preserve the status quo while a determination
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is made concerning the nature of the arbitrator’s relationship with one of the attorneys
for National Union, and whether that relationship was hidden while the panel was being
assembled, in breach of the Treaty.
Jonathan Rosen, an arbitrator on the panel, filed a motion to intervene on
September 19, 2013. In Rosen’s motion to intervene, he asks the Court to alter its
injunction. On September 23, 2013, National Union appealed the injunction ruling.
After filing the appeal, National Union filed a motion asking the Court to stay
proceedings.
National Union says the issue on appeal is whether the Court had jurisdiction to
issue the injunction in the first place; it contends that the Court must grant the stay
because no issue is collateral to that appeal issue.
The issue before this Court is whether it has jurisdiction to decide the motions to
stay and to intervene. Plaintiffs did not respond to Rosen’s motion to intervene, but in
its response to National Union’s motion to stay, they argue that the Court has
jurisdiction to proceed on the merits because the issues raised by the motions are
collateral to the issue on appeal.
The Court does not have jurisdiction to decide either motion. When National
Union filed an appeal, that divested this Court of jurisdiction of all issues related to the
appeal, until litigation in the Sixth Circuit is complete. Taylor v. KeyCorp, 680 F.3d 609
(6th Cir. 2012)(“The filing of a notice of appeal is an event of jurisdictional significance-it
confers jurisdiction on the court of appeals and divests the district court of its control
over those aspects of the case involved in the appeal.”)(quoting Griggs v. Provident
Consumer Disc. Co., 459 U.S. 56, 58, 103 S. Ct. 400 (1982)).
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With respect to the motion to intervene, the Taylor court ruled on this precise
issue: whether a district court retains jurisdiction to decide a motion to intervene filed
days before a notice of appeal. The Taylor court held that once an appeal is filed, a
district court does not have jurisdiction to decide such a motion -- even if it was filed
prior to the notice of appeal. Id. at 616.
Further, post appeal, Rosen cannot intervene for the purpose of altering the
Court’s order. Following an appeal, a district court may only enforce its judgment, City
of Cookeville, Tenn. v. Upper Cumberland Elec. Membership Corp., 484 F.3d 380, 394
(6th Cir. 2007); it may not “alter or enlarge the scope of its judgment pending appeal.”
City of Cookeville, Tenn. v. Upper Cumberland Elec. Membership Corp., 484 F.3d 380,
394 (6th Cir. 2007)(emphasis added).
Accordingly, Rosen’s motion to intervene is dismissed.
Turning to the stay, Plaintiffs cite law which says that “an appeal from an
interlocutory order does not divest the trial court of jurisdiction to proceed with the action
on the merits.” Moltan Co. v. Eagle-Picher Indus., Inc., 55 F.3d 1171, 1174 (6th Cir.
1995). Moltan was an action involving defamation, disparagement, and other claims.
Id. In Moltan, the district court entered an injunction ordering Moltan to stop making
alleged false claims. Id. Moltan appealed the injunction. Id. While the appeal was
pending, the district court decided the case on the merits. Id. On appeal, Moltan
argued that his appeal divested the district court of jurisdiction to decide the case on the
merits. The Sixth Circuit held it did not because the merits of the case were collateral to
the injunction. Moltan did not involve an appeal of arbitrability.
While the Sixth Circuit has not explicitly said that a district court is divested of
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jurisdiction if issues impacting arbitrability are on appeal, at least one judge in this
district has considered the issue and concluded there is no jurisdiction to even decide a
motion to stay proceedings, once an appeal challenging arbitrability is filed. Dental
Assocs., P.C. v. Am. Dental Partners, Inc., No. 11-11624, 2012 U.S. Dist. LEXIS 59960
( E.D. Mich. Apr. 30, 2012).
In Dental Assocs., plaintiff filed an action for, among other things, breach of
contract. Id. Defendants filed a motion to dismiss and to compel arbitration. Id. The
court denied the motion. Id. Defendants filed a notice of appeal challenging arbitrability.
Id. Defendants claimed that the district court did not have jurisdiction to hear the
plaintiff’s claims because the contract required arbitration. Id. After filing a notice of
appeal, defendants sought a motion to stay. Id. The court held that because the appeal
challenged arbitrability, the appeal completely divests district courts of jurisdiction; it did
not have jurisdiction to decide the stay. Id.
Dental Assocs. is more on point. The issue on appeal here is arbitrability
(whether the Court had jurisdiction to enter the stay), not solely whether the criteria to
enter an injunction was met, unlike Moltan.
On appeal, National Union maintains that arbitration must be finalized before the
court intervention; it challenges this Court’s interruption of arbitration proceedings. The
Sixth Circuit has said that a district court loses its jurisdiction over matters related to the
appeal. Arbitrability is directly related to the merits. If the Court did not have jurisdiction
to grant injunctive relief, it does not have jurisdiction to decide the merits. Because the
merits are contingent on the appeal issue, this Court cannot decide the motion to stay.
These motions are DISMISSED. This Court no longer has jurisdiction over the
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case.
This case is administratively closed pending appeal.
IT IS ORDERED.

S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: January 14, 2014
The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
January 14, 2014.
s/Linda Vertriest
Deputy Clerk

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