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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

ACE AMERICAN INSURANCE COMPANY v. CENTRAL FREIGHT LINES, INC.

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

Case Number: 
2:12-cv-03965 Search Pacer
ACE Group party(s): 
Opposing Party: 
CENTRAL FREIGHT LINES, INC.
Court Type: 
Federal
US District Court: 
Eastern District of Pennsylvania
Date Filed: 
Jul 12 2012

"8. In 2006, Petitioner sold Respondent a high deductible, pre-funded workers' compensation insurance program, consisting of two policy years, spanning from June 28, 2006, to June 28, 2007, and June 28, 2007, to June 28,2008.

9. The insurance program was defined by several documents, the "Funded Collateral Agreement," two "Notices of Election" and two workers' compensation insurance policies, which functioned collectively as one integrated contract ("the Contract").

10. The Funded Collateral Agreement, the primary contract document, provided: Any controversy, dispute, claim or question arising out of or relating to this Agreement, including without limitation its interpretation, performance or non-performance by any party, or any breach thereof (hereinafter, collectively, Controversy) shall be referred to and resolved exclusively by three arbitrators through private, confidential arbitration conducted in Philadelphia, P A .... The majority decision of the Panel shall be final and binding upon the parties to this Agreement. Judgment may be entered upon the award of arbitrators in any court of competent jurisdiction. See a true and correct copy of the Funded Collateral Agreement, attached hereto as Exhibit "B," at Article VI, Section 5.

11. The Contract provides that at six months following the completion of a policy year, an audit is conducted, and the premium, which was estimated at the policy's outset, is recalculated. This audit and recalculation is then conducted annually thereafter.

12. Based on the results of the audits, either additional premium amounts are invoiced or a refund is returned to Respondent.

13. Based upon the results of certain of these scheduled audits, Petitioner sent Respondent invoices for additional funding. See invoices dated January 11,2010, and January 31, 2011, attached hereto as Exhibits "c" and "D" respectively.

14. Respondent refused over a period of years to pay the invoices.

15. On our about July 15,2010, Petitioner served Respondent with a Demand for Arbitration regarding the outstanding unpaid invoices.

16. Subsequently, on or about September 27,2010, pursuant to the Contract, the Demand for Arbitration was submitted to the American Arbitration Association ("AAA").

17. Respondent filed a Response and Counter-Claim, claiming damages resulting from alleged improper handling of its workers' compensation claims.

18. Each party appointed one arbitrator, and agreed to a third.

19. On or about January 7,2010, AAA formally appointed the three-member panel, consisting of Ms. Pat Bergmann, Mr. Joseph Prim and Umpire, Mr. Donald DeCarlo ("the Panel").

20. Between that time and March 2010, substantial discovery was conducted between the parties.

21. Approximately 60,000 pages of documents were exchanged, and five depositions were taken.

22. Expert reports were prepared on behalf of each party, and pre-hearing briefs were submitted to the Panel.

23. From April 2, 2012, through AprilS, 2012, a four-day hearing was conducted before the Panel at the Philadelphia office of the American Arbitration Association.

24. Petitioner presented four witnesses who provided testimony before the Panel.

25. Respondent presented three additional witnesses who provided testimony before the Panel.

26. Between the two parties, hundreds of documentary exhibits were submitted for the Panel's consideration.

27. On April 20, 2012, the parties submitted additional post-hearing briefs to the Panel, along with proposed findings of fact and conclusions of law.

28. On April 24, 2012, each party then submitted rebuttal briefs.

29. After deliberating and considering the testimony, documentary evidence, arguments of counsel and the applicable law, on May 24,2012, the Panel issued a 12-page reasoned Award. See Exhibit "A."

30. The Award was unanimous, except for one arbitrator dissenting from the amount of interest awarded to Petitioner.

31. The Panel found that since January 26, 2010, Respondent had owed Petitioner $2,140,015.63 pursuant to an invoice of the same date. See id. at p. 4, Finding of Fact 29.

32. The Panel also found that February 15,2011, Respondent had owed Petitioner an additional $593,132.28 pursuant to a second invoice. See id. at p. 5, Finding of Fact 42.

33. The Panel found that Respondent was contractually obligated to pay those two sums when due, and that Respondent breached its agreement with Petitioner by failing to pay the sums invoiced. See id. at p. 9, Conclusions of Law 13-14.

34. Finally, the Panel concluded that "[a]s a consequence of Central Freight's refusal to pay the amounts invoiced, Central Freight is bound to pay 6% interest a year on the outstanding amounts from their respective due dates." rd. at p. 9, Conclusion of Law 15.

35. The Panel did not perform a calculation of the amount of interest then due with respect to each invoice.

36. The Panel awarded $215,000.00 to Respondent on its Counter-Claim, which is to be offset against Petitioner's recovery. See id. at p. 11, Conclusion of Law 40."

The provided text is an excerpt from a document filed in this case. For a full understanding of the case, one should read the complete court file, including the response.

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