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


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 or contact the clerk of the relevant court.

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Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 1 of 9
CIVIL ACTION NO. Petition to Confirm Arbitration Award (9 U.S.C.§9)
Petitioner, ACE American Insurance Company, a Pennsylvania corporation, for its Petition to Confirm Arbitration Award against Respondent, Central Freight Lines, Inc., avers as follows:
1. ACE American Insurance Company ("ACE" or "Petitioner") is a corporation
organized under the laws of the state of Pennsylvania, with its principal place of business in Philadelphia, Pennsylvania. 2. Upon information and belief, Central Freight Lines, Inc. ("Central Freight" or
"Respondent") is corporation, organized under the laws of the State of Nevada, with its principal place of business in Waco, Texas.
3. This Court has jurisdiction pursuant to 28 U.S.C.A. § 1332 (a), as ACE is a
citizen of the State of Pennsylvania. 4. ACE is informed and believes, and thereon alleges, that Central Freight is a
citizen of the State of Texas, and the amount in controversy in this matter exceeds $75,000.
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Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 2 of 9
Furthermore, this Court also has jurisdiction pursuant to the Federal Arbitration
Act, 9 U.S.C.A. §9. 6. Venue is proper in this District pursuant to the Federal Arbitration Act, 9
U.S.C.A. §9, because it is the District in which the Award of Arbitrators ("the Award") was made. See a true and correct copy of the Award, attached hereto as Exhibit "A." 7. Respondent is subject to the personal jurisdiction of this Court under the Federal
Rule of Civil Procedure Rule 4(e).
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, PA .... 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.
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Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 3 of 9
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. 15. Respondent refused over a period of years to pay the invoices. 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. 19. Each party appointed one arbitrator, and agreed to a third. 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. the parties. 21. were taken. Approximately 60,000 pages of documents were exchanged, and five depositions Between that time and March 2010, substantial discovery was conducted between
Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 4 of 9
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. 25. the Panel. 26. Between the two parties, hundreds of documentary exhibits were submitted for Petitioner presented four witnesses who provided testimony before the Panel. Respondent presented three additional witnesses who provided testimony before
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. 29. On April 24, 2012, each party then submitted rebuttal briefs. 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.
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Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 5 of 9
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. BAD FAITH 37. On June 1,2012, Petitioner's counsel demanded payment of$2,862,235.05, in
accordance with the Award and then current accrued interest, within 15 days. See a true and correct copy of a letter to Respondent's counsel, dated June 1, 2012, attached hereto as Exhibit
"E. "
One June 18,2012, having not received said payment, nor any response
whatsoever from Respondent, Petitioner's counsel inquired via e-mail as to Respondent's intentions to satisfy the Award. See a true and correct copy of an e-mail to Respondent's counsel, dated June 18,2012, attached hereto as Exhibit "F." 39. Respondent finally provided some communication via e-mail on July 2, 2012,
indicating that it still had no intention to satisfy the Award.
Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 6 of 9
At no time has Respondent ever asserted that the parties' disputes were not
properly the subject of binding private arbitration; nor would any such assertion, ifmade, have any basis in law or fact. 41. Rather, Petitioner submits that Respondent's failure to satisfy the Award or even
respond to communications from Petitioner's counsel does not arise out of any belief that Petitioner is not entitled to the relief afforded by Panel, but rather out of a bad faith blatant refusal to pay anything to Petitioner, regardless of its known legal obligations. 42. Prior to the commencement of the arbitration hearing, Respondent's counsel had
stated in an e-mail that "[i]f ACE were to win - CFL still won't pay." 43. 44. To date, Respondent has delivered on that promise. Respondent's failure to comply with its legal obligation to satisfy the Award is a
bad faith effort to frustrate the legal rights of Petitioner and force Petitioner to engage in additional expensive litigation. 45. "[I]t is unquestioned that a federal court may award counsel fees to a successful
party when his opponent has acted 'in bad faith, vexatiously, wantonly, or for oppressive reasons .... ' In this class of cases, the underlying rationale of 'fee shifting' is, of course, punitive, and the essential element in triggering the award of fees is therefore the existence of 'bad faith' on the part of the unsuccessful litigant." Hall v. Cole, 412 U.S. 1,5 (1973) 46. Respondent's bad faith conduct warrants an award of attorneys' fees associated
with the filing of the instant Petition and any related hearings and/or additional filings required, as well as the fees associated with the execution of the Court's judgment entered on this Petition, including asset discovery and further proceedings in this or any other Court required to effectuate this Court's Order.
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Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 7 of 9
In addition, pursuant to 28 U.S.C. § 1920, Petitioner is also entitled to all costs
associated with the filing and prosecution of the instant Petition and any subsequent litigation necessary to procure satisfaction of the Order confirming the Award. 48. This Petition is authorized by the terms of the Contract and by Section 9 of the
Federal Arbitration Act. 49. This Petition is timely under Section 9 of the Federal Arbitration Act, as it is filed
within one year from the date of the Award.
WHEREFORE, Petitioner prays for relief as follows:
1. That the Court issue an order confirming the Award, as authorized by Section 9 of the Federal Arbitration Act;
2. That the Court enter judgment in favor of Petitioner that conforms to the Award;
3. That ACE be awarded its attorneys fees and costs incurred in association with the prosecution of the instant Petition and the subsequent enforcement of the judgment entered by this Court; upon further submission to this Court of a bill of costs and fees; and 4. That the Court issue such other and further relief/orders as the Court deems just and proper under the circumstances. Respectfully submitted,
By: ,Esq. (Pa. ar 0 817) ZacharYR. Magid, Esq. (Pa. Bar No. 205834) Marks, O'Neill, O'Brien & Courtney, P.C. 1800 John F. Kennedy Blvd., Suite 1900 Philadelphia, PA 19103 (215) 564-6688 Attorneys for Petitioner, ACE American Insurance Company Dated this 12'M day of July, 2012.
Pa~ ~
Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 8 of 9
Robert M. Turrin, Esquire, being first duly sworn, deposes and states:
. _..
- --
That he is the Assistant General Counsel of Petitioner ACE American Insurance Company, Petitioner in the above-captioned action; that he has read the foregoing Petition and
knows that contents thereof, and the same are true and correct, except for those matters alleged
upon information and belief, and as to those mattep;-;-,tre'""bd~~tlrerm:ui>e true.
t- _ __
Robert M. Turrin, Esquire
SUBSCRIBED AND SWORN to before me this
/,1 ~
day of July, 2012.
cJ;u~(? d1~~
Notary Public in and for said County and State
NOTARIAL SEAL MARIE C. MORRILL, Notary Public City of PhHadelphia. Phila. County My CommissIon Expires JUly 14.2014
Case 2:12-cv-03965-JD Document 1 Filed 07/12/12 Page 9 of 9
AND NOW, this day of , upon consideration of the Petition
of ACE American Insurance Company to Confirm the May 24,2012, Arbitration Award entered Central Freight Lines, Inc., and Respondent's failure to show cause why the Arbitration Award should not be confirmed and judgment entered, it is hereby ORDERED that: 1. The Award of Arbitrators, dated May 24,2012, in the matter of ACE American Insurance Company v. Central Freight Lines, Inc., is confirmed and judgment is entered thereupon; that 2. Judgment is entered in favor of Petitioner, ACE American Insurance Company, and against Respondent, Central Freight Lines, Inc., in the amount of $2,862,235.05; 3. Petitioner may submit a bill of costs and associated with the filing of its Petition and subsequent efforts required to enforce the judgment, which may also be awarded to Petitioner, payable by Respondent; and 4. Petitioner shall be awarded post-judgment interest on the Award until such time as it is satisfied.

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