Allied Professionals Insurance v. Joanne Kong ( 2012 )

FILED
NOT FOR PUBLICATION AUG 16 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
ALLIED PROFESSIONALS No. 10-56968
INSURANCE COMPANY, an Arizona
corporation, D.C. No. 8:10-cv-00414-AG-MLG
Plaintiff - Appellee,
MEMORANDUM *
v.
JOANNE KONG, an individual,
Defendant - Appellant.
Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted May 11, 2012
Pasadena, California
Before: NOONAN and FISHER, Circuit Judges, and GRITZNER, Chief District
Judge.**
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable James E. Gritzner, Chief United States District Judge
for the Southern District of Iowa, sitting by designation.
Joanne Kong appeals the district court’s order affirming an arbitration award
in favor of Allied Professionals Insurance Company. We have jurisdiction under
28 U.S.C. § 1291, and we affirm.
I. Middle District of Florida Ruling
As an initial matter, because “appeals from reviewable decisions of the
district . . . court[] shall be taken to . . . the court of appeals for the circuit
embracing the district,” 28 U.S.C. § 1294 (emphasis added), we do not reach
Kong’s assertion that the District Court for the Middle District of Florida erred by
denying Kong’s motion to remand and by granting Allied’s motion to compel
arbitration. Accordingly, this disposition has no preclusive effect on Kong’s
arguments that this case should be remanded to Florida state court because the
District Court for the Middle District of Florida lacked subject matter jurisdiction
under 28 U.S.C. § 1332(c); and that under the McCarran-Ferguson Act, 15 U.S.C.
§ 1012(b), Florida’s insurance law reverse preempts the Federal Arbitration Act
(“FAA”), 9 U.S.C. §§ 1-16, and prohibited the District Court for the Middle
District of Florida from compelling arbitration in Orange County, California.
II. Central District of California Ruling
The appeal from the order of the District Court for the Central District of
California enforcing the arbitration award is properly before this court and is
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reviewed de novo. See New Regency Prods., Inc. v. Nippon Herald Films, Inc.,
501 F.3d 1101, 1105 (9th Cir. 2007). “A federal court may vacate an award if the
arbitrator engages in misbehavior that prejudices a party, or if the arbitrator
exceeds his powers in rendering such an award.” Schoenduve Corp. v. Lucent
Techs., Inc., 442 F.3d 727, 731 (9th Cir. 2006) (citing 9 U.S.C. § 10(a)(3)-(4)).
Under § 10 of the FAA, “[a]rbitrators exceed their powers in this regard not when
they merely interpret or apply the governing law incorrectly, but when the award is
completely irrational, or exhibits a manifest disregard of law.” Id. (quoting
Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir.
2003) (en banc)). To vacate an arbitration award for manifest disregard of the law,
“[i]t must be clear from the record that the arbitrators recognized the applicable
law and then ignored it.” Lagstein v. Certain Underwriters at Lloyd’s, London,
607 F.3d 634, 641 (9th Cir. 2010) (alteration in original) (citation and internal
quotation marks omitted).
We reject Kong’s allegation that the District Court for the Central District of
California lacked subject matter jurisdiction. Diversity of citizenship provides an
independent basis of subject matter jurisdiction. See Moses H. Cone Mem’l Hosp.
v. Mercury Const. Corp., 460 U.S. 1, 25 n.32 (1983). Complete diversity exists
here because Kong is a Florida resident and Allied is an Arizona corporation. See
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28 U.S.C. § 1332(a). The amount in controversy requirement is also satisfied
because the subject of the arbitration was whether the Allied policy at issue
covered an injury Kong suffered and the enforceability of an agreement between
Kong and Allied’s insured purportedly awarding Kong $1,115,000 compensatory
damages and assigning Kong the right to enforce the award against Allied. See id.Kong’s personal jurisdiction challenge is similarly deficient because the
policy’s forum selection clause provided the district court with personal
jurisdiction, see United States v. Park Place Assocs., Ltd., 563 F.3d 907, 929 n.14
(9th Cir. 2009), and venue was proper because Orange County, California, is
within the Central District of California, see 9 U.S.C. § 9 (stating that an
application for the enforcement of an arbitration award “may be made to the
United States court in and for the district within which such award was made”).
Kong’s final argument that the arbitrator demonstrated manifest disregard of
the law by allowing the report of Allied’s expert witness in violation of Federal
Rule of Evidence 26 is unavailing. Even if such a violation occurred, it would not
constitute a basis upon which to vacate the arbitration award. See U.S. Life Ins.
Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167, 1173 (9th Cir. 2010) (“[W]hen
interpreting and applying the FAA, we are mindful not to impose the federal
courts’ procedural and evidentiary requirements on the arbitration proceeding;
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rather, our responsibility is to ensure that the FAA’s due process protections were
afforded.”).
Kong has failed to demonstrate that the arbitration award constitutes
manifest disregard of the law.
III. Motion for Sanctions
Following oral argument, Allied filed a motion under Federal Rule of
Appellate Procedure 38 and 28 U.S.C. §1927 requesting that we impose sanctions
on Kong’s attorney for filing a frivolous appeal. We note that Kong has not taken
the most prudent course in prosecuting her case, has been sanctioned at other
stages of this litigation, and has caused undue delay in other forums. In addressing
Kong’s appeal from the enforcement of the arbitration award that is before this
court, however, we cannot say that Kong’s “arguments of error are wholly without
merit.” Winterrowd v. Am. Gen. Annuity Ins. Co., 556 F.3d 815, 828 (9th Cir.
2009) (citation and internal quotation marks omitted).
Allied’s Motion for Sanctions is denied.
AFFIRMED.
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