Federal Cases
Third Circuit: No Bias Where Arbitrators May Have Learned a Party Intended to Not Pay Arbitration Fee
HSM Construction Services, Inc. v. MDC Systems, Inc., No. 06-2584, 2007 WL 2030278 (3rd Cir. July 16, 2007)
7/16/2007
In affirming confirmation of an arbitration award, the Third Circuit Court of Appeals held that a party is bound by an arbitration award when its actions clearly evince an objective intention to become a party to the arbitration. Additionally, the mere fact an arbitration panel may have learned a party intended not to pay the arbitration fee did not establish that the arbitrators had a financial stake in the arbitration's outcome.
In HSM Construction Services, Inc. v. MDC Systems, Inc., No. 06-2584, 2007 WL 2030278 (3rd Cir. July 16, 2007), HSM hired MDC to prepare expert engineering reports. HSM failed to pay MDC, claiming MDC provided an unusable expert disclosure report. In response, MDC filed an arbitration claim. During arbitration, HSM Management argued it was not a party to the contract. The arbitration panel found HSM Construction and HSM Management jointly and severally liable for $86,969... Full Story
Fifth Circuit: Nursing Home Resident Bound by Arbitration Agreement As a Third-Party Beneficiary
JP Morgan Chase & Co. v. Conegie ex rel. Lee, No. 06-60603, 2007 WL 2028926 (5th Cir. Jun 16, 2007)
6/16/2007
In remanding a case with instructions to grant a nursing home's motion to compel arbitration, the Fifth Circuit Court of Appeals held that a nursing home resident was bound by an arbitration agreement signed by her mother because the resident was a third-party beneficiary of the agreement.
In JP Morgan Chase & Co. v. Conegie ex rel. Lee, No. 06-60603, 2007 WL 2028926 (5th Cir. Jun 16, 2007), Conegie suffered from dementia psychosis and was thus admitted to a nursing home by her mother, who signed a nursing home admission agreement containing an arbitration clause. When Conegie sued for injuries sustained during her residency, JP Morgan filed a motion to compel arbitration. The district court denied the motion... Full Story
Mediation-Related Materials Not Subject to Discovery Requests When Information Is Discoverable from Other Sources
Bradley v. Fontaine Trailer Co. Inc., No. 3:06-CV-62, 2007 WL 2028115 (D. Conn. July 10, 2007)
7/10/2007
A party may not compel discovery of information from mediation proceedings through interrogatories or requests for production of documents when an in camera review reveals the relevant information in the mediation materials is readily available from other available sources, according to a Connecticut federal court.
In Bradley v. Fontaine Trailer Co. Inc., No. 3:06-CV-62, 2007 WL 2028115 (D. Conn. July 10, 2007), Fontaine moved to compel answers to interrogatories and the production of documents related to mediation proceedings between the Bradley plaintiffs and a third-party, proceedings related to the same accident which was the subject of the instant case. Bradley objected to the motion, claiming that both Conn. Gen. Stat. § 52-235d and Fed. R. Civ. P. 26 created a mediation privilege that protected such materials from discovery. In response, Fontaine argued that the circumstances of the case satisfied the exception to such protection that comes into play when the "interests of justice" outweigh the "need for confidentiality"... Full Story
District Court Holds That Claims Brought Under the Magnuson-Moss Warranty Act Are Not Arbitrable
Higgs v. Warranty Group, No. C2-02-1092, 2007 WL 2034376 (S.D. Ohio July 11, 2007)
7/11/2007
Claims brought under the Magnuson-Moss Warranty Act (MMWA) are not arbitrable, consistent with the Federal Trade Commission's (FTC's) "reasonable interpretation" that the MMWA precludes binding arbitration, according to a federal district court in Ohio.
In Higgs v. Warranty Group, No. C2-02-1092, 2007 WL 2034376 (S.D. Ohio July 11, 2007), Higgs sued Warranty Group under a contract for warranty coverage. In a previous decision, the Sixth Circuit Court of Appeals determined that the parties had entered into an arbitration agreement but remanded the case for a determination on (1) the scope of the agreement and (2) whether claims brought under the Magnuson-Moss Warranty Act are arbitrable... Full Story
FAA Reverse Preempted by State Arbitration Laws "Enacted for the Purpose of Regulating the Business of Insurance"
Patterson v. Nexion Health, Inc., Civil Action No. 2-06-CV-443 (TJW), 2007 WL 2021326 (E.D. Tex. July 9, 2007)
7/9/2007
State arbitration laws can reverse-preempt the Federal Arbitration Act (FAA) when the law has been "enacted for the purpose of regulating the business of insurance," according to a Texas federal court.
In Patterson v. Nexion Health, Inc., Civil Action No. 2-06-CV-443 (TJW), 2007 WL 2021326 (E.D. Tex. July 9, 2007), the Patterson plaintiffs brought a negligence and wrongful death suit, alleging that Nexion caused the death of Patterson while she was in Nexion's care in a nursing home facility. Nexion moved to compel arbitration of the claims, arguing that they were within the scope of a resident arbitration agreement signed by Patterson's representative when she entered Nexion's care. The Patterson plaintiffs maintained that the arbitration agreement did not comply with state arbitration law as to the wording or typeface used in the arbitration agreement. They also claimed that several of the plaintiffs were not signatories to the contract, and could not be compelled to arbitration... Full Story
State Cases
Oregon Court Relies on AAA’s Class Arbitration Policy in Holding That Arbitration Agreement Permits Class-Wide Proceedings
Sprague v. Quality Restaurants Northwest, Inc., No. A131182, 2007 WL 1829401 (Or. Ct. App. June 27, 2007)
6/27/2007
In reversing a lower court ruling that an arbitration agreement was unconscionable because of its silence on the availability of class-wide proceedings, the Oregon Court of Appeals held that the availability of class-wide proceedings is a question for the court if the agreement’s silence on the issue is the basis for an unconscionability challenge. Moreover, the Court found that the agreement permitted class-wide proceedings because the designated administrator, the American Arbitration Association, has implemented a policy whereby it will administer demands for class arbitration if an agreement is silent on the issue.
In Sprague v. Quality Restaurants Northwest, Inc., No. A131182, 2007 WL 1829401 (Or. Ct. App. June 27, 2007), Sprague brought a putative class action for unpaid wages against her former employer, Quality Restaurants. Quality Restaurants moved to compel arbitration pursuant to an arbitration agreement that was silent on the availability of class-wide proceedings. In opposing the motion, Sprague argued that the silence on class-wide proceedings rendered the arbitration agreement unconscionable and therefore unenforceable. The trial court denied the motion... Full Story
Arbitrator Must Decide Whether Party Complied with Conditions Precedent to Arbitration
BRM Construction, Inc. v. Marais Gaylord, L.L.C., No. 06CA0559, 2007 WL 1839799 (Colo. Ct. App. June 28, 2007)
6/28/2007
The Colorado Court of Appeals has followed the majority rule and held that an arbitrator, not the court, must decide whether a party has complied with conditions precedent to arbitration. This issue would not arise under the current version of the Colorado Uniform Arbitration Act because the current version expressly delegates the question to the arbitrator.
In BRM Construction, Inc. v. Marais Gaylord, L.L.C., No. 06CA0559, 2007 WL 1839799 (Colo. Ct. App. June 28, 2007), BRM Construction (BRM) and Marais Gaylord (Marais) entered into a contract whereby BRM would construct a condominium project on land owned by Marias. The contract contained an arbitration clause... Full Story
Medical Records Can Be Evidence of Implied Agency Between Spouses Sufficient to Bind the Non-Signatory Spouse to an Arbitration Agreement
Ruesga v. Kindred Nursing Centers, L.L.C., No. 2 CA-CV 2006-0114, 2007 WL 2045458 (Ariz. Ct. App. July 18, 2007)
7/18/2007
Medical records indicating a history of medical decisions being made by one spouse on the other's behalf can establish an implied agency relationship, thus enabling one spouse to bind the other to a medical admission document containing an arbitration agreement, according to the Arizona Court of Appeals.
In Ruesga v. Kindred Nursing Centers, L.L.C., No. 2 CA-CV 2006-0114, 2007 WL 2045458 (Ariz. Ct. App. July 18, 2007), Robert Ruesga was admitted to Kindred's rehabilitation facility after suffering severe health complications. Upon admission to the facility, Mr. Ruesga's wife, Florentine Ruesga, executed documents which included an arbitration agreement applicable to all claims related to Mr. Ruesga's stay in the facility. Mrs. Ruesga signed the agreement on a line labeled "legal representative," and indicated she was his wife on a line labeled "authority and title"... Full Story
Courtroom Not a Convenient Vestibule to the Arbitration Hall
Amador v. San Diego Country Club, No. D049438, 2007 WL 1991193 (Cal. Ct. App. July 11, 2007)
7/11/2007
In affirming denial of a motion to compel arbitration of an employee discrimination suit, a California appellate court held that an employer had waived its right to arbitrate by extensively participating in litigation.
In Amador v. San Diego Country Club, No. D049438, 2007 WL 1991193 (Cal. Ct. App. July 11, 2007), Amador sued San Diego Country Club for employment discrimination. San Diego Country Club filed its answer and asserted as an affirmative defense that both parties were bound by an arbitration agreement. However, rather than filing a motion to compel arbitration, San Diego Country Club answered interrogatories, participated in depositions, and produced documents. Further, San Diego Country Club, in its case management report, checked the box indicating they were willing to participate in mediation, but did not check the box referring to private binding arbitration... Full Story
Failure to Elect Arbitration Within a Time Period Clearly Expressed in an Arbitration Provision Constitutes a Waiver of the Right to Compel
Abel Homes at Naranja Villas, LLC v. Hernandez, No. 3D07-728, 2007 WL 2043547 (Fla. Dist. Ct. App. July 18, 2007)
7/18/2007
A party's right to compel arbitration of claims arising under an agreement is waived by failing to elect arbitration within a time period clearly and unambiguously expressed by the provisions of the agreement, according to the Florida District Court of Appeals.
In Abel Homes at Naranja Villas, LLC v. Hernandez, No. 3D07-728, 2007 WL 2043547 (Fla. Dist. Ct. App. July 18, 2007), Abel and Hernandez entered into a real estate purchase agreement for the construction of a condominium unit. The purchase agreement contained an arbitration provision allowing Abel to elect arbitration upon a claim within 20 days of notice of a claim arising out of the agreement. After a delay in the project, Hernandez notified Abel that he intended to pursue litigation to force Abel to return an escrow deposit. After 20 days had expired with no response from Abel, Hernandez filed a complaint against Abel. Abel then sought to compel arbitration of the claims, which the trial court denied. Abel appealed the denial of the motion to compel arbitration... Full Story
Discrepancy in the Amount of an Arbitration Award, Without Evidence That the Arbitrator Ignored the Proper Calculation, Does Not Warrant Vacatur
ABCO Builders, Inc. v. Progressive Plumbing, Inc., No. S07G0257, 2007 WL 2013602 (Ga. July 13, 2007)
7/13/2007
A court cannot vacate an arbitration award for manifest disregard of the law based on an inference solely drawn from a discrepancy in the amount of the award when there is no evidence in the record that the arbitrator both knew the proper law and intentionally chose to disregard it, according to the Georgia Supreme Court.
In ABCO Builders, Inc. v. Progressive Plumbing, Inc., No. S07G0257, 2007 WL 2013602 (Ga. July 13, 2007), Progressive and ABCO participated in an arbitration hearing, resulting in an award for construction damages being entered. Progressive objected to the amount of the award, alleging that the arbitrator had calculated the amount using a formula different from the formula prescribed by law. The district court vacated the award for "manifest disregard" of the applicable law. The decision was appealed to the court of appeals, which overturned the vacatur, holding there was insufficient evidence of manifest disregard of the law... Full Story
Settlement Reached During Mediation Is Not Enforceable Through a Court Judgment When a Party Withdraws Consent Before Entry of Judgment
Topham v. Patterson, No. 10-06-00101-CV, 2007 WL 2051864 (Tex. App. July 18, 2007)
7/18/2007
Under Texas law, a party to a settlement agreement reached through court-referred mediation can revoke his or her consent to the agreement any time before entry of judgment on the settlement, according to the Texas Court of Appeals.
In Topham v. Patterson, No. 10-06-00101-CV, 2007 WL 2051864 (Tex. App. July 18, 2007), Topham brought suit against Patterson to quiet title to a parcel of land. The trial court referred the parties to mediation, which resulted in a settlement agreement signed by the parties. Patterson then moved for an agreed judgment pursuant to the mediation settlement, to which Topham had already withdrawn his consent. The trial court granted the agreed judgment despite Topham's withdrawal of consent. Topham appealed the judgment, alleging that the judgment was granted in error after his consent was withdrawn, and that Topham's subsequent motion for a new trial on the matter was improperly denied... Full Story
ADR Legislation & Regulation
LEGISLATION
CA A 1264
AUTHOR: Eng [D]
TITLE: Courts: Delay Reduction: Unnamed Defendants
INTRODUCED: 02/23/2007
ENACTED: 07/27/2007
DISPOSITION: Enacted
Commentary:
Amending an existing act regarding the reduction in delay of court proceedings. Amendments include: AB 1264 (1) "Existing law also prohibits delay reduction rules from requiring a period for referral of a case to arbitration that is less than 210 days after the filing of the complaint." "The bill also would prohibit the court from conducting a postmediation status conference if the parties have participated in mediation and the mediator files a notice of agreement or nonagreement at least 5 days before the hearing."
MI H 5048
SPONSOR: Accavitti [D]
TITLE: Video Service Provider
INTRODUCED: 07/24/2007
LOCATION: House Energy and Technology Committee
Commentary:
Provides for mandatory mediation of video service disputes.
NC H 1671
AUTHOR: England [D]
TITLE: Negligent Health Care Actions
INTRODUCED: 04/19/2007
LAST AMEND: 07/17/2007
DISPOSITION: To Governor
Commentary:
Amending an act to provide for arbitration of wrongful death and personal injury claims. The amendments would make any preexisting agreement to arbitrate void, and only allow for post dispute agreements to arbitrate. The bill also attempts to make the Revised Uniform Arbitration Act inapplicable to this article.
TX H 1038
AUTHOR: Ritter [D]
TITLE: Residential Construction Commission
INTRODUCED: 02/01/2007
ENACTED: 06/15/2007
DISPOSITION: Enacted
Commentary:
Relates to the operation of the Texas Residential Construction Commission. If a contract described ... contains a clause that requires the parties to submit a dispute arising under the contract to binding arbitration, the clause must be in 10 point type.
TX H 2278
AUTHOR: Deshotel [D]
TITLE: Business and Commerce Nonsubstantive Revisions
INTRODUCED: 03/01/2007
ENACTED: 06/15/2007
DISPOSITION: Enacted
Commentary:
"Relates to a nonsubstantive revision of statutes relating to business and commerce; includes conforming amendments." Amendments include: "(b) If a contract contains a provision making the contract or any conflict arising under the contract subject to another state's law, litigation in the courts of another state, or arbitration in another state, that provision is voidable by the party obligated by the contract to perform the construction or repair. (Bus. & Com. Code, Sec. 35.52(a); Sec.273.002.NOTICE OF APPLICABLE LAW OR FORUM. If a contract contains a provision making the contract or any conflict arising under the contract subject to another state's laws, litigation in the courts of another state, or arbitration in another state, that provision must be set out conspicuously in print, type, or other form of writing that is boldfaced, capitalized, underlined, or otherwise set out in such a manner that a reasonable person against whom the provision may operate would notice the provision."
TX H 3147
AUTHOR: Solomons [R]
TITLE: Contractors and Condominiums
INTRODUCED: 03/08/2007
ENACTED: 06/15/2007
DISPOSITION: Enacted
Commentary:
Relating to claims against a contractor for construction of common elements under a condominium or cooperative system. Basically allows arbitration of disputes over construction defects in common areas of condominiums, etc.
REGULATION
No new regulations.
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