Gellman v. Hunsinger

District Court, S.D. California·Decided September 20, 2021·No. 3:18-cv-02641·Unknown

Opinion

PETER GELLMAN, et al., Case No. 18-cv-2641-BAS-AGS

Petitioners, ORDER: v. (1) GRANTING PETITIONERS’ ANDREA HUNSINGER, et al., MOTION TO CONFIRM Respondents. ARBITRATION AWARD (ECF No. 22); AND

(2) DENYING RESPONDENTS’ MOTION TO VACATE ARBITRATION AWARD (ECF No. 23).

Peter Gellman and Palmerston LLC (together, Petitioners) and Andrea Hunsinger and Advanced Wealth Plan (together, Respondents) are financial advisors in the business of selling life insurance policies. The parties entered an arbitration following a dispute on dividing the commissions from the sales of certain life insurance policies. The Arbitrator entered an award in favor of Petitioners on all claims, finding that Respondents owe Petitioners compensatory damages, emotional distress damages, and punitive damages, in addition to legal fees incurred by Petitioners to compel arbitration. Respondents ask the Court to vacate the arbitration award, arguing that the award exceeds the arbitrator’s powers pursuant to Section 10(a)(4) of the Federal Arbitration Act (“FAA”) for two reasons: (1) the Arbitrator expressed a manifest disregard of California law that prohibits solicitation of life insurance without a license; and (2) the Arbitrator’s award of attorney’s fees, emotional distress damages, and punitive damages is not allowed under the terms of the contract or is in manifest disregard of the law. Because none of the arguments raised by Respondents fall within the narrow ground on which the Court may vacate an arbitration award under the FAA, the Court DENIES Respondent’s motion to vacate the award. (ECF No. 23.) The Court finds the requirements for confirming the arbitration award are met and GRANTS Petitioners’ motion to confirm the award. (ECF No. 22.) Peter Gellman and Andrea Hunsinger are both in the business of providing financial planning services, including selling life insurance policies to individual clients. Gellman is the Managing Member of Palmerston LLC, which is based in New Jersey. Hunsinger is the president and sole shareholder of a California corporation registered as Andrea Hunsinger Jolly An Insurance Services Corporation, under the fictitious business name, Advanced Wealth Plan. A. The Commission Sharing Agreement Hunsinger met Gellman in 2016, at a symposium. (Gellman Dep. 14:22–24, 18:7– 9, ECF No. 23-4 at 187, 191.) On or about January 26, 2017, Hunsinger entered into a Commission Sharing Agreement with Gellman “and/or” Palmerston LLC. (“Agreement,” ECF No. 1-2, at 26.) The Agreement provides, in pertinent part, that the parties be “jointly listed as agent or broker” on insurance contracts placed by Gellman/Palmerston LLC, and that the parties share commissions equally. (Id. ¶¶ 2, 4.) The Agreement defines the parties’ relationship as that of independent contractors and negates the creation “of a relationship of employee and employer, principal and agent, co-venturer or partner between the [p]arties.” (Id. ¶ 9.) The Agreement includes an arbitration provision, which states: “[A]ll disputes between the Parties and any claims which may be brought against either Party shall be settled by arbitration administered by the American Arbitration Association. . . . Each party shall bear its own fees, costs and expenses and an equal share of the arbitrators’ and administrative fees of arbitration.”

(Id. ¶ 17.) The Agreement also provides the following: “Each Party warrants and represents to the other that the Party . . . is properly licensed and/or certified to solicit and/or transact insurance business pursuant to applicable federal, state, local laws and regulations, and shall maintain in good standing all licenses and permits as may be required under the applicable laws . . . .”

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