Employers' Innovative Network, LLC et al v. Bridgeport Benefits, Inc. et al

Filing 249

MEMORANDUM OPINION AND ORDER denying Defendants' 243 Motion to Set Aside Final Arbitration Award; denying Plaintiffs' requests to remove this matter from the inactive docket and lift the October 8, 2019 stay; directing the parties to provide the Court with the Chartered Institute of Arbitrators, Bermuda Branch's ruling on the appeal and Mr. Duncan's order concerning attorney's fees and costs within 5 days of their entry; denying Defendants' request for attorney's fees. Signed by Judge Frank W. Volk on 1/17/2023. (cc: counsel of record; any unrepresented party) (btm)

Case 5:18-cv-01082 Document 249 Filed 01/17/23 Page 1 of 10 PageID #: 2939

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT BECKLEY
EMPLOYERS’ INNOVATIVE
NETWORK, LLC, et al.,
Plaintiffs,
v.

CIVIL ACTION NO. 5:18-cv-01082

BRIDGEPORT BENEFITS, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is Plaintiffs’ Motion to Set Aside Final Arbitration Award, filed on April
21, 2022. [Doc. 243]. Defendants Bridgeport Benefits, Inc., Voluntary Benefit Specialists, LLC,
Wayne Blasman, Stephen Salinas, and Casey Blasman (“the Bridgeport Defendants”) filed a
response in opposition to Plaintiffs’ motion on May 5, 2022. [Doc. 245]. Defendants Capital
Security, Ltd., Universal Risk Intermediaries, Inc., and Jeana Nordstrom (“the Nordstrom
Defendants”) also filed a response in opposition to Plaintiffs’ motion on May 5, 2022. [Doc. 246].
Plaintiffs filed a joint reply on May 12, 2022. [Doc. 247]. The matter is ready for adjudication.

I.
On April 2, 2018, Plaintiffs filed suit against these Defendants in the Circuit Court
of Wyoming County. Plaintiffs’ Complaint alleges the unauthorized practice of insurance, breach
of fiduciary duty, slander, negligence, breach of contract, fraud in the inducement, fraud in the
performance, and civil conspiracy. [Doc. 1 Ex. D]. The case was removed on June 27, 2018. [Doc.

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1].
On July 17, 2018, Plaintiffs filed a Motion for Entry of Default against the
Nordstrom Defendants. [Doc. 12]. The Clerk entered a default against the Nordstrom Defendants
on July 18, 2018. [Doc. 14]. On July 20, 2018, the Nordstrom Defendants filed a Motion to Set
Aside Default and filed a proposed Motion to Dismiss and a request to compel arbitration. [Docs.
15, 16].
On February 25, 2019, the Court granted the Nordstrom Defendants’ Motion to Set
Aside Default. [Doc. 67]. Later that day, the Nordstrom Defendants filed a Memorandum of Law
in support of their Motion to Dismiss and request to compel arbitration. [Doc. 69]. On March 11,
2019, Plaintiffs filed a response to the Nordstrom Defendants’ Motion to Dismiss and request to
compel arbitration. [Doc. 74]. The Nordstrom Defendants filed a reply to Plaintiffs’ response on
March 31, 2019. [Doc. 82].
On August 2, 2019, the Court granted the Nordstrom Defendants’ Motion to
Dismiss and compelled the parties to arbitration in Bermuda pursuant to the terms of the parties’
Client Service Agreement. [Doc. 216]. In response, the Bridgeport Defendants moved to have the
entire matter referred to arbitration based upon the principle of equitable estoppel. [Doc. 220].
Plaintiffs filed a reply in opposition to the Bridgeport Defendants’ attempt to have the entire matter
referred to arbitration. [Doc. 222].
On September 16, 2019, Plaintiffs filed a Motion to Reconsider this Court’s Order
which compelled arbitration. [Doc. 227]. Plaintiffs claimed the Nordstrom Defendants had waived
their right to arbitration by engaging in discovery and behaving in a way that was inconsistent with
the desire to arbitrate. [Id.]. On September 17, 2019, the Court denied Plaintiffs’ Motion to
Reconsider, and reasoned Plaintiffs, without good cause, failed to bring the waiver argument in

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prior briefing. [Doc. 228]. Plaintiffs then withdrew their opposition to the Bridgeport Defendants’
participation in arbitration. [Doc. 230]. The Court then referred all parties to arbitration in Bermuda
and stayed the matter pending arbitration. [Doc. 231].
On January 22, 2022, Plaintiffs were served with the Arbitration Award, which
found in favor of Defendants. [Doc. 244 at 1 n.2]. On April 21, 2022, Plaintiffs filed the motion at
issue. [Doc. 244]. In this motion, Plaintiffs are seeking to have the Bermudan Arbitration Award
set aside, once more asserting the Nordstrom Defendants waived the right to arbitration. [Id.]. In
the alternative, Plaintiffs request the Court refuse to recognize the Bermudan Arbitration Award
under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, 21 U.S.T. 2517, T.I.A.S. 6997. [Id.]. Specifically, they cite Article V(2)(b) of the
Convention, which permits a court to refuse to recognize an arbitral award, if recognition of the
award “would be contrary to the public policy” of the country where recognition is sought.
Plaintiffs’ claim the Nordstrom Defendants waived the right to arbitrate by serving
discovery prior to the Court ruling on the default and arbitration issues. [Doc. 244]. Plaintiffs
contend the Nordstrom Defendants served and received answers to numerous discovery requests.
[Id. at 8]. Moreover, Plaintiffs claim, based on the arbitration rules found in the Model Law on
International Commercial Arbitration (U.N. Comm’n on Int’l Trade Law, 2006) which governed
the arbitration proceeding, the Nordstrom Defendants would not have been entitled to the
information they received in discovery. [Id.].
Alternatively, Plaintiffs are requesting the Court refuse to recognize the arbitration
award based on the assertion it is violative of United States public policy. [Id. at 11]. Plaintiffs
claim the Arbitrator, Delroy Duncan, failed to disclose dealings which display bias in favor of the
Nordstrom Defendants. [Id. at 12]. Allegedly, Mr. Duncan is the director of a law firm that is

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currently being sued for $18,000,000 by Attorneys Keith Robinson and Sam Stevens. [Id. at 15].
Attorneys Robinson and Stevens also represented the Nordstrom Defendants in the arbitration
proceeding. [Id.]. Further, Katie Tornari, the Vice-Chair of the Chartered Institute of Arbitrators,
Bermuda Branch, the entity which appointed Mr. Duncan as Arbitrator, is alleged to be the attorney
who is representing Mr. Duncan’s firm in this lawsuit. [Id.].
Plaintiffs assert they were unaware of the litigation involving the Nordstrom
Defendants’ attorneys and Mr. Duncan until after the entry of the Arbitration Award. [Id. at 1].
When requested, Mr. Duncan allegedly failed to provide information regarding the potential
conflict of interest and its disclosure. [Id. at 19]. Upon a formal challenge, Mr. Duncan stated that
he did not think he needed to withdraw from the matter. [Id.]. Accordingly, Plaintiffs assert there
is a conflict of interest making the Arbitration Award contrary to United States public policy. [Id.
at 20].
Additionally, as a result of Mr. Duncan’s alleged conflict of interest, on May 4,
2022, Plaintiffs filed an appeal with the Chartered Institute of Arbitrators, Bermuda Branch. [Doc.
248 Ex. E]. On July 8, 2022, the Nordstrom Defendants filed a response to Plaintiffs’ appeal. [Id.
at Ex. F]. Plaintiffs filed a reply to the Nordstrom Defendants’ response on July 18, 2022. [Id. at
Ex. G]. The status of this appeal is currently unknown.
On May 5, 2022, the Bridgeport Defendants responded in opposition to Plaintiffs’
Motion to Set Aside Final Arbitration Award. [Doc. 245]. The Bridgeport Defendants first assert
the Court has no jurisdiction to set aside the arbitration award. [Id. at 2-4]. These Defendants also
claim the grounds asserted by Plaintiffs for setting aside the arbitration award are inapplicable to
them. [Id. at 4-5]. Finally, the Bridgeport Defendants contend Plaintiffs’ request for this Court to
refuse to recognize the arbitration award is premature. [Id. at 5-6].

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Also on May 5, 2022, the Nordstrom Defendants responded in opposition to
Plaintiffs’ Motion to Set Aside Final Arbitration Award. [Doc. 246]. The Nordstrom Defendants
first assert Plaintiffs’ motion violates the stay entered October 8, 2019 [Docs. 231, 246 at 5]. Next,
they claim the Court has no authority to set aside, vacate or modify the Arbitration Award. [Doc.
246 at 6-11]. The Nordstrom Defendants also contend Plaintiffs’ motion is not ripe for adjudication
because no request has been made for the Court to enforce the Arbitration Award. [Id. at 11-13].
Finally, the Defendants allege Plaintiffs motion fails to state a cognizable challenge to the
Arbitration Award. [Id. at 13-14].
Included in the responses filed by both Defendants are requests for attorney fees
and costs. In support, the Bridgeport Defendants claim “Plaintiffs filed this frivolous motion
without any good faith basis for invoking this Court’s Jurisdiction.” [Doc. 245 at 6]. While the
Nordstrom Defendants allege Plaintiffs acted in “bad faith, vexatiously, wantonly, or for
oppressive reasons in filing their motion.” [Doc. 246 at 14].
On May 12, 2022, Plaintiffs filed a joint reply to both Defendants’ responses in
opposition to their Motion to Set Aside Final Arbitration Award. [Doc. 247]. First, Plaintiffs
contend this Court does have jurisdiction to adjudicate the issues presented in their motion. [Id. at
3-4]. Next, Plaintiffs claim their motion is timely as they are required to challenge the award within
three (3) months of its issuance. [Id. at 4-6]. Finally, Plaintiffs contend the waiver and conflict of
interest issues affect all parties to the arbitration and, because the Arbitrator entered a “Final
Award,” claim the stay issued by this Court has been lifted. [Id. at 6-8].
On June 7, 2022, Plaintiffs filed a Status Report. [Doc. 248]. In the Status Report,
Plaintiffs requested the following action from the Court: (1) remove the matter from the inactive
docket and place it on the active docket, (2) lift the stay which was entered in this matter on October

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9, 2018, (3) withhold ruling on Plaintiffs’ Motion to Set Aside Final Arbitration Award until the
Institute has ruled on Plaintiffs’ appeal, and (4) order the parties to provide the Court with the
Institute’s ruling on Plaintiffs’ appeal within five (5) days of its entry. [Id. at 3].

II.
In deciding whether to grant the relief sought in Plaintiffs’ motion, the Court must
first decide whether it has jurisdiction. The Court will analyze whether the arbitration award
entered by Mr. Duncan is a “final” award and, if it is, whether the stay has been lifted. Next, the
Court will decide whether the motion is ripe for adjudication. Finally, the Court will once more
entertain Plaintiffs’ waiver argument.
A.

The Stay
The Nordstrom Defendants contend Plaintiffs’ motion is improper inasmuch as the

stay entered October 8, 2019, remains in force. [Doc. 246 at 5]. Meanwhile, Plaintiffs claim the
stay was entered “pending arbitration,” and thus Mr. Duncan’s entry of his “Final Award” has
automatically lifted the stay. [Doc. 247 at 7-8]. The Court notes the Status Report filed by Plaintiffs
on June 7, 2022, requests the Court “[l]ift the stay that was entered in this matter on October 9
[sic], 2018 [sic].” [Doc. 248 at 3].
First, as Plaintiffs apparently appreciate, there is no self-executing lift following
entry of a final arbitration award. Second, although Mr. Duncan has titled his arbitral decision as
a “Final Award,” it is clear there are unresolved issues surrounding the arbitration. For example,
Mr. Duncan must rule on the award of attorney’s fees and the appeal must be adjudicated.
Additionally, the appeal filed by Plaintiffs is pending before the Chartered Institute of Arbitrators,
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Bermuda Branch. There is thus no “Final Award” as Mr. Duncan must still resolve the issue of
award of attorney’s fees and the pending appeal must be adjudicated. The October 8, 2019 stay
remains in effect.
B.

Jurisdiction
Both the Nordstrom Defendants and Bridgeport Defendants assert that Plaintiffs’

Motion to Set Aside Final Arbitration Award is not ripe for adjudication. [Doc. 246 at 11-13, Doc.
245 at 5-6]. Moreover, in the Status Report filed June 7, 2022, Plaintiffs recommend the Court
“[w]ithold ruling on Plaintiffs’ Motion to Set Aside Final Arbitration Award until such time that
the Institute has ruled on Plaintiffs’ appeal.” [Doc. 248]. The Nordstrom Defendants contend
Plaintiffs’ Motion to Set Aside Final Arbitration Award is not ripe inasmuch as there is no pending
motion to enforce the Bermudan Arbitration Award. [Doc. 246 at 11-13]. Thus, according to the
Nordstrom Defendants, no “case or controversy” exists, and this Court has no subject matter
jurisdiction over the motion. [Id.]. The Bridgeport Defendants agree. [Doc. 245 at 5-6].
In response, Plaintiffs claim they had to file the current motion because all
challenges to the Bermudan Arbitration Award must be made within three (3) months of the Final
Award. [Doc. 247 at 4-5].
However characterized, on ripeness or other grounds, the absence of a final
arbitration award, at a minimum, precludes the relief Plaintiffs presently seek. Inasmuch as a final
arbitration award has not been entered, the three (3) month period for challenging the award has
not accrued.

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C.

Waiver
Plaintiffs again assert the decision to compel arbitration was incorrect. Despite a

ruling on the waiver issue, not once but twice, and arbitration having occurred, Plaintiffs claim
Article II(3) of the Convention provides the authority to raise the argument anew. As explained in
further detail, Plaintiffs have waived this argument by failing to assert the defense in their initial
response to the Nordstrom Defendants’ Motion to Dismiss and request to compel arbitration.
As noted, the Court has previously entertained Plaintiffs’ argument that the
Nordstrom Defendants have waived their right to arbitration. [Doc. 228]. The Honorable Irene
Berger, on September 17, 2019, denied Plaintiffs’ Motion to Reconsider the Court’s decision to
compel arbitration. [Id.]. Central to Judge Berger’s decision was the fact Plaintiffs’ Motion to
Reconsider, based on waiver of the right to arbitrate, was an argument that was available to
Plaintiffs, yet not raised, at the time of the original briefing. [Id. at 2].
This is now Plaintiffs’ second bite at the waiver apple. They assert they were
“incapable of raising this issue [waiver] at that time [March 11, 2019] as Capital Security’s conduct
evidencing the waiver occurred after the briefing on Capital Security’s motion.” [Doc. 244 at 1
n.1] (emphasis added). This assertion is wholly disingenuous due to the Nordstrom Defendants
having served discovery requests on Plaintiffs on November 2, 2018, [Docs. 50,51], over five (5)
months before Plaintiffs filed their response in opposition to the Nordstrom Defendants’ Motion
to Dismiss and request to compel arbitration. Moreover, Plaintiffs then filed a Motion for
Protective Order requesting this Court to enter a protective order regarding the discovery it had
received on November 2, 2018. [Doc. 55].
Despite knowing of these discovery requests, Plaintiffs failed to assert the waiver
argument in their March 11, 2019 response to the Nordstrom Defendants’ Motion to Dismiss and
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request to compel arbitration. Accordingly, Plaintiffs’ assertion that they were “incapable of
raising this issue [waiver] at that time [March 11, 2019] as Capital Security’s conduct evidencing
waiver occurred after the briefing on Capital Security’s motion” is quite simply not true. [Doc.
244 at 1 n.1]. Defendants’ Motion to Set Aside Final Arbitration Award is DENIED.
D.

Attorney Fee Request
Both the Bridgeport and Nordstrom Defendants are requesting an award of attorney

fees against Plaintiffs for having to respond to the Motion to Set Aside Final Arbitration Award.
While the Court is troubled by the waiver claim once more advanced by Plaintiffs, and the
assertions made in support of this claim, the Court does not believe the award of attorney’s fees is
warranted. See Harvey v. Cable News Network, Inc., 48 F.4th 257 (4th Cir. 2022) (overturning a
district court’s award of attorney’s fees when the conduct did not amount to bad faith).
Accordingly, the Court declines the requested award of attorney fees.
E.

Status Report
Regarding the relief requested in Plaintiffs’ Status Report filed on June 20, 2022,

[Doc. 248], the Court DENIES Plaintiffs’ requests to remove this matter from the inactive docket
and lift the October 8, 2019 stay. The Court does, however, ORDER the parties to provide the
Court with the Chartered Institute of Arbitrators, Bermuda Branch’s ruling on the appeal and Mr.
Duncan’s order concerning attorney’s fees and costs within five (5) days of their entry.

III.
Based upon the foregoing, the Court DENIES Plaintiffs’ Motion to Set Aside Final
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Arbitration Award and DENIES Defendants’ request for attorney’s fees.
The Clerk is DIRECTED to send a copy of this written opinion and order to
counsel of record and to any unrepresented party.

ENTER:

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January 17, 2023