Universitas Educ. LLC v. Nova Group Inc.

Nova is the trustee and fiduciary of the Charter Oak Benefit Plan. A participating employer took out insurance policies on its employee’s (Spencer) life, totaling $30 million, and placed them into the Plan. Spencer named Universitas as the sole, irrevocable beneficiary. After Spencer’s death, the insurer paid $30 million to the Plan. Nova denied Universitas’s claim for the proceeds. In binding arbitration, an arbitrator held Nova liable for $26,558,308. Nova declined to pay, filing suit to vacate the arbitration award. The court confirmed the award. Nova moved for reconsideration and for a stay of post‐judgment discovery, then moved to dismiss for lack of subject matter jurisdiction. All were rejected. The district court granted Nova’s application to reinstate the motion to dismiss, but warned of potential penalties. Nova’s then‐counsel withdrew the motion; new counsel filed an amended motion, arguing complete diversity was lacking because Charter Oak was a citizen of New York, as was Universitas. Charter Oak was not a party; Nova argued that it was “a real and substantial party to the controversy.” The district court dismissed the motion. Nova refused to pay or to cooperate in discovery of its assets. The Second Circuit affirmed, awarding costs. The district court then sanctioned Nova by requiring it to deposit $30,181,880, the amount of the outstanding judgment, with the court. The Second Circuit vacated, holding that the court may not collect damages owed to a party by imposition of a sanction. View "Universitas Educ. LLC v. Nova Group Inc." on Justia Law