Federal Cases
If Arbitral Forum's Rules are Expressly Incorporated into Contract, Arbitrators' Manifest Disregard of Rules Can Serve as Basis for Vacatur
Kashner Davidson Securities Corp. v. Mscisz, No. 07-1231, 2008 WL 2553337 (1st Cir. June 27, 2008)
6/27/2008 12:00:00 AM
The First Circuit Court of Appeals held that if an NASD arbitration panel disregards the NASD arbitration rules that are expressly incorporated into an arbitration agreement, the panel is disregarding the parties' contract and the subsequent award should be vacated for manifest disregard of the law.
In Kashner Davidson Securities Corp. v. Mscisz, No. 07-1231, 2008 WL 2553337 (1st Cir. June 27, 2008), Mscisz, an investor, and Kashner, a broker-dealer and member of the NASD, entered into a contract that contained an arbitration agreement, and the agreement expressly provided that the arbitration would be governed by NASD's arbitration rules... Full Story
Failure to Comply with Contractual Obligation to Mediate Results in Dismissal of Case
Brosnan v. Dry Cleaning Station Inc., No. C-08-02028 EDL, 2008 WL 2388392 (N.D. Cal. June 6, 2008)
6/6/2008 12:00:00 AM
A California federal court determined that the failure to mediate a dispute pursuant to a contract that made mediation a condition precedent to filing a lawsuit warranted dismissal.
In Brosnan v. Dry Cleaning Station Inc., No. C-08-02028 EDL, 2008 WL 2388392 (N.D. Cal. June 6, 2008), Brosnan entered into a franchise agreement with Dry Cleaning Station. The franchise agreement included a provision, which required both parties to enter into mediation of all disputes prior to initiating any legal action against the other... Full Story
Court Upholds Arbitration Agreement But Severs Employer's Unilateral Right to Terminate or Modify the Agreement.
Ramirez-Baker v. Beazer Homes, Inc., No. CV-F-008-601 LJO DLB, 2008 WL 2523368 (E.D. Cal. June 20, 2008)
6/20/2008 12:00:00 AM
In compelling arbitration of an employment dispute, a federal district court in California largely rejected the employee's unconscionability challenge, but found that the employer's unilateral right to modify or terminate the agreement was unconscionable. However, instead of invalidating the entire arbitration agreement, the Court severed the offending provision.
In Ramirez-Baker v. Beazer Homes, Inc., No. CV-F-008-601 LJO DLB, 2008 WL 2523368 (E.D. Cal. June 20, 2008), Ramirez sued Beazer Homes (Beazer), her former employer, for wrongful discharge and discrimination. Beazer filed a motion to compel arbitration pursuant to an arbitration agreement in Ramirez's employment application... Full Story
Arbitrator Has No Jurisdiction When Contractual Statute of Limitations is Not Met
Bapu Corp. v. Choice Hotels International, Inc., No. 07-CV-5938 (WJM), 2008 WL 2559306 (D.N.J. June 24, 2008)
6/24/2008 12:00:00 AM
A federal court in New Jersey held that where a party fails to timely demand arbitration within the statute of limitations provided by the contract, the arbitrator does not have jurisdiction to hear the case, so any subsequent arbitration award must be vacated.
In Bapu Corp. v. Choice Hotels International, Inc., No. 07-CV-5938 (WJM), 2008 WL 2559306 (D.N.J. June 24, 2008), Bapu and Choice entered into a hotel franchise contract that required Bapu to renovate a building by November 30, 2000. The contract contained an arbitration agreement, and also provided that neither party could file a claim "after 3 years from the date that the claim arose."... Full Story
State Cases
Arbitrator Did Not Exceed Powers by Applying Equitable Principles and Excusing Noncompliance with Notice-and-Cure Provision
Gueyffier v. Ann Summers, Ltd., 184 P.3d 739 (Cal. 2008)
7/28/2008 12:00:00 AM
The California Supreme Court held that an arbitrator did not exceed his powers by excusing noncompliance with a notice-and-cure provision because even though the arbitration agreement expressly foreclosed the arbitrator's authority to modify the notice-and-cure provision, it did not contain any unambiguous limitations on the arbitrator's authority to excuse noncompliance on equitable grounds.
In Gueyffier v. Ann Summers, Ltd., 184 P.3d 739 (Cal. 2008), Gueyffier and Ann Summers entered into a franchise agreement (the Agreement) whereby Gueyffier would open an Ann Summers store in a Beverly Hills shopping center. The store, which sold lingerie and sex toys, opened to controversy and closed shortly after the opening... Full Story
Unilateral Dispute Resolution Amendments to Account Holder Agreements Unenforceable Under California Law
L&B Real Estate v. Wells Fargo Bank, N.A., No. B191120, 2008 WL 2486815 (Cal. Ct. App. June 23, 2008)
6/23/2008 12:00:00 AM
In affirming a judgment against a bank customer in a dispute regarding forged checks written by an employee, a California appellate court revisited California's take on "bill stuffer" amendments made to account holder agreements and affirmed that amendments regarding alternative dispute resolution processes cannot be made unilaterally.
In L&B Real Estate v. Wells Fargo Bank, N.A., No. B191120, 2008 WL 2486815 (Cal. Ct. App. June 23, 2008), L&B filed suit against Wells Fargo to recover approximately $774,000 in forged checks written by an L&B employee for the purpose of embezzling funds over the course of several years and drawn on multiple Wells Fargo bank accounts, the first of which was opened in 1993 and closed in 2001 prior to the opening of a second account in 2001... Full Story
Citing Armendariz, California Court of Appeal Finds Food Server's Arbitration Agreement Unconscionable
Liebrand v. Brinker Restaurant Corp., No. G039017, 2008 WL 2445544 (Cal. Ct. App. June 18, 2008)
6/18/2008 12:00:00 AM
A California Court of Appeal has upheld the denial of an employer's motion to compel arbitration of statutory discrimination claims, finding the terms of the agreement unconscionable, in part, because of its cost-splitting terms and the food service employee's "lower-wage" status.
In Liebrand v. Brinker Restaurant Corp., No. G039017, 2008 WL 2445544 (Cal. Ct. App. June 18, 2008), Liebrand was hired by Brinker to work as a food server at one of Brinker's Chili's Restaurants. As part of the hiring process, Liebrand entered into an arbitration agreement with Brinker encompassing all employment-related claims. Liebrand later alleged that Brinker engaged in pregnancy discrimination and failed to provide her with leave as mandated by California statute. See Cal. Gov't Code § 12940 et seq. (governing employment discrimination and failure to provide pregnancy leave)... Full Story
Court Denies Attorney Fees Based on Contract Term Requiring Mediation as a Precursor to Litigation
Lange v. Schilling, No. C055471, 2008 WL 2192833 (Cal. Ct. App. May 28, 2008)
5/28/2008 12:00:00 AM
A California appellate court enforced a contract term that established a condition precedent whereby a party must attempt to mediate a conflict before proceeding to arbitration or litigation in order to recover attorney fees.
In Lange v. Schilling, No. C055471, 2008 WL 2192833 (Cal. Ct. App. May 28, 2008), Lange bought a lake house from real estate broker Schilling, using a standard California residential property purchase agreement. The agreement provided that the parties would mediate any dispute before resorting to arbitration or court action. Under the agreement, if a party commenced an action without first attempting to mediate, that party would not be entitled to recover any attorney fees which would otherwise be available... Full Story
Denial of Arbitration Upheld Where Multiple Claims Would Result in Multiple Inconsistent Rulings
Patton v. Estate Strategies, Inc., 2d Civil No. B195508, 2008 WL 2454683 (Cal. Ct. App. June 19, 2008)
6/19/2008 12:00:00 AM
A California appellate court refused to compel arbitration of multiple claims related to a charitable remainder trust where multiple inconsistent arbitration and litigation outcomes could result because not all of the parties requested arbitration of the matter and because the improper handling of such a trust is an interest of public policy not necessarily subject to arbitration in spite of an agreement to arbitrate.
In Patton v. Estate Strategies, Inc., 2d Civil No. B195508, 2008 WL 2454683 (Cal. Ct. App. June 19, 2008), Lowell Patton petitioned the court to remove the trustees of his estate and brought suit against Estate Strategies and other parties, alleging various claims including elder financial abuse and fraud. Estate Strategies moved to compel arbitration based on an agreement to arbitrate contained within engagement letters signed by Patton... Full Story
Party Waived Right to Explanatory Award by Not Requesting One Under the Applicable Rules
Anderson v. Golf Mill Ford, Inc., No. 1-07-2349, 2008 WL 2444686 (Ill. App. Ct. June 16, 2008)
6/16/2008 12:00:00 AM
In affirming confirmation of an arbitration award, an appellate court in Illinois held that the aggrieved party waived his right to a written opinion by not requesting one in accordance with the applicable rules of arbitration.
In Anderson v. Golf Mill Ford, Inc., No. 1-07-2349, 2008 WL 2444686 (Ill. App. Ct. June 16, 2008), Anderson sued Golf Mill Ford (Golf Mill), alleging that Golf Mill violated various consumer protection laws by changing the terms of financing on Anderson's purchase of an SUV. After some procedural maneuvering, the parties submitted the dispute to arbitration in accordance with the sales contract... Full Story
Judge's Involvement in Deciding Non-Arbitrable Issues Did Not Render Her Unfit to Hear Challenge to Arbitration Award
Cardano v. Cardano, FM-13-0407-05, 2008 WL 2415270 (N.J. Super. Ct. App. Div. June 17, 2008)
6/17/2008 12:00:00 AM
Since there was no evidence of bias, a judge presiding over divorce proceedings was not unfit to hear the ex-husband's challenge to an arbitration award that addressed some of the issues arising from the divorce, according to a New Jersey appellate court.
In Cardano v. Cardano, FM-13-0407-05, 2008 WL 2415270 (N.J. Super. Ct. App. Div. June 17, 2008), Michael and Catherine Cardano agreed, pursuant to the New Jersey Alternative Procedure for Dispute Resolution Act (APDRA), to arbitrate several issues arising from their divorce... Full Story
Louisiana Law Required Trial Court to Grant Credit Card Issuer's Motion to Confirm an Arbitration Award
Capital One Bank v. White, No. 2007 CW 2174, 2008 WL 2332277 (La. Ct. App. June 6, 2008)
6/6/2008 12:00:00 AM
Under Louisiana law, trial courts do not have discretion to deny confirmation of an arbitration award unless the aggrieved party has challenged the award within the auspices of the arbitration statute. Accordingly, the trial court in this case lacked discretion to deny a credit card issuer's motion to confirm an arbitration award.
In Capital One Bank v. White, No. 2007 CW 2174, 2008 WL 2332277 (La. Ct. App. June 6, 2008), Capital One filed a motion to confirm an arbitration award for the unpaid balance on White's credit card. At the hearing, White claimed that she never agreed to arbitrate. The trial court denied the motion to confirm but did not vacate the award... Full Story
Arbitration Agreement in Mortgage Contract Did Not Apply to Post-Foreclosure Dispute
Runion v. American General Financial Services, Inc., No. H-08-001, 2008 WL 2468573 (Ohio Ct. App. June 20, 2008)
6/20/2008 12:00:00 AM
An Ohio appellate court held that a lender's alleged destruction of property purchased at foreclosure was outside the scope of an arbitration agreement contained within a loan agreement secured by the same property.
In Runion v. American General Financial Services, Inc., No. H-08-001, 2008 WL 2468573 (Ohio Ct. App. June 20, 2008), Dennis Runion took out a home-equity loan from American General secured by a mortgage on real property. After Runion defaulted on his loan, the mortgage was foreclosed, and American General purchased the property... Full Story
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