Federal Cases
Tenth Circuit Joins Other Circuits in Recognizing Doctrine of Arbitral Immunity Applicable to Arbitration Providers and Arbitrators
Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, No. 04-1274, 2007 WL 512511 (10th Cir. Feb. 20, 2007)
2/20/2007
The Tenth Circuit Court of Appeals became the tenth circuit court to formally recognize the doctrine of arbitral immunity. Accordingly, the Court held that the NASD was immune from liability for allegedly mishandling evidence presented at an arbitration hearing.
In Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, No. 04-1274, 2007 WL 512511 (10th Cir. Feb. 20, 2007), Pfannenstiel submitted a claim against Merrill Lynch to a panel of NASD arbitrators. Specifically, Pfannenstiel claimed that Merrill Lynch owed him $217,785.00 for deficiencies in his account... Full Story
Core Bankruptcy Proceeding Disputes Are Arbitrable
In re Cooley, No. 06-40905-JJR-13, 2007 WL 512758 (Bankr. N.D. Ala. Feb. 14, 2007)
2/14/2007
In ordering arbitration of a core bankruptcy proceeding, a bankruptcy court in Alabama held that a bankruptcy court cannot refuse to enforce an otherwise applicable arbitration agreement unless there is an "inherent conflict" with the underlying purposes of the Bankruptcy Code.
In In re Cooley, No. 06-40905-JJR-13, 2007 WL 512758 (Bankr. N.D. Ala. Feb. 14, 2007), Cooley bought a pick-up truck on an installment contract. Immediately following the sale, the dealership assigned the installment contract to Wells Fargo Financial (Wells Fargo)... Full Story
Federal Court in Oregon Upholds Employment Arbitration Agreement in Face of Unconscionability Challenge
Gray v. Rent-A-Center West, Inc., NO. CV 06-1058-HU, 2007 WL 283035 (D. Or. January 24, 2007)
1/24/2007
Under Oregon law, an arbitration agreement in an employment agreement is not invalid as unconscionable simply because it is offered on a take-it-or-leave-it basis and contains equal fee-splitting provisions.
In Gray v. Rent-A-Center West, Inc., NO. CV 06-1058-HU, 2007 WL 283035 (D. Or. January 24, 2007), Gray, a former employee of Rent-A-Center, brought an action alleging discrimination and violation of the Oregon Family Leave Act against Rent-A-Center... Full Story
Tennessee Arbitration Award Survives Manifest Disregard of Law Challenge
Hilliard v. Saul, No. 3:06-0454, 2007 WL 433241 (M.D. Tenn. Feb. 02, 2007)
2/2/2007
A federal court in Tennessee upheld an arbitration award over an objection that the arbitrators misapplied the law.
In Hilliard v. Saul, No. 3:06-0454, 2007 WL 433241 (M.D. Tenn. Feb. 02, 2007), Saul was employed with Hilliard and complained of Hilliard's alleged securities violations. Saul was also accused of ethical violations. Subsequently, Saul was fired and he pursued claims of retaliatory discharge and under the Tennessee Public Protection Act (TPPA) in arbitration. An arbitration award was issued in his favor. Hilliard moved to vacate the award for manifest disregard of law... Full Story
Interlocutory Review of Denial to Stay Litigation Only Available for "Mandatory" Stay
Halliburton Energy Services, Inc. v. NL Industries, Civil Action No. H-05-4160, 2007 WL 268492 (S.D. Tex. Jan. 26, 2007)
1/26/2007
Following a "bright-line" rule recognized by the Tenth Circuit and D.C. Circuit, the United States District Court for the Southern District of Texas held that a party may only seek interlocutory review of a denial to stay litigation pending arbitration when the requested stay was "mandatory" under Section 3 of the Federal Arbitration Act, 9.U.S.C. §3.
In Halliburton Energy Services, Inc. v. NL Industries, Civil Action No. H-05-4160, 2007 WL 268492 (S.D. Tex. Jan. 26, 2007), Halliburton Energy Services, Inc. (Halliburton) sued NL Industries and a series of companies affiliated with Tremont, LLC (collectively, the "Tremont Parties"), asserting cost recovery and contribution claims related to mineral interests. The Tremont Parties requested a stay of litigation pending arbitration under Section 16 of the Federal Arbitration Act, 9 U.S.C. §16, which would apply to claims asserted by non-signatories of an arbitration clause, as well as claims by the signing party, Halliburton. Halliburton objected to the stay of any lawsuit involving claims that were not "referable to arbitration"... Full Story
West Virginia Federal Court Confirms Arbitration Award When Party Indicates That It Will Pay the Award
Mid-State Surety Corp. v. Thrasher Engineering, Inc., No. 2:04-0813, 2007 WL 314170 (S.D. W.Va. Jan. 30, 2007)
1/30/2007
A federal court in West Virginia confirmed an arbitration award because the party that was ordered to pay damages did not bring a motion to vacate, modify or correct the award and indicated that it would pay the award.
In Mid-State Surety Corp. v. Thrasher Engineering, Inc., No. 2:04-0813, 2007 WL 314170 (S.D. W.Va. Jan. 30, 2007), Mid-State brought an action against Thrasher, Diversified Enterprise, and Fidelity Insurance... Full Story
Sixth Circuit: "Costs of Arbitration" Do Not Include Attorney Fees
Essenmacher v. Orkin Exterminating Co., No. 06-1578, 2007 WL 437935 (6th Cir. Feb. 6, 2007)
2/6/2007
A district court order requiring one party to "pay all the costs of the arbitration" does not require arbitrators to order that party to pay the other party's attorney fees, the Sixth Circuit Court of Appeals held.
In Essenmacher v. Orkin Exterminating Co., No. 06-1578, 2007 WL 437935 (6th Cir. Feb. 6, 2007), an arbitration panel issued an award in Essenmacher's favor. Despite prevailing, Essenmacher asked the court to vacate the award, arguing that the arbitrators manifestly disregarded the law by not awarding her attorney fees... Full Story
Seller in Florida Land Deal Loses Case by Failing to Submit Dispute to Pre-Trial Mediation
USA Flea Market, LLC v. EVMC Real Estate Consultants, Inc., No. 8:06-cv-0431-T-24-TBM, 2007 WL 470501 (M.D. Fla. Feb. 13, 2007)
2/13/2007
Because it failed to follow an agreement to seek mediation before commencing litigation, a Florida company lost its breach of contract claim – and a half-million dollars in earnest money – against a would-be buyer.
In USA Flea Market, LLC v. EVMC Real Estate Consultants, Inc., No. 8:06-cv-0431-T-24-TBM, 2007 WL 470501 (M.D. Fla. Feb. 13, 2007), Flea Market agreed to buy real estate from EVMC. The purchase agreement required EVMC to place $500,000 earnest money in escrow. According to Flea Market, EVMC did not place the earnest money in escrow but found a title company willing to certify that it had... Full Story
Kansas Court: Ten Days Notice of Arbitration Sufficient to Satisfy Due Process
U.S. ex rel. Davis Contracting, L.P. v. B.E.N. Const., Inc., No. 05-1219-MLB, 2007 WL 293915 (D. Kan. Jan. 26, 2007)
1/26/2007
A federal court in Kansas has held that, based on the relatively small amount of the claim, ten days notice of an arbitration hearing is sufficient notice to satisfy due process requirements.
In U.S. ex rel. Davis Contracting, L.P. v. B.E.N. Const., Inc., No. 05-1219-MLB, 2007 WL 293915 (D. Kan. Jan. 26, 2007), Davis Contracting brought a breach of contract action against B.E.N. and an action for payment and performance of a surety bond against B.E.N. and its surety, National American Insurance Company (NAICO). NAICO received notice of arbitration ten days prior to it commencement... Full Story
Minus Reasoned Opinion, Court Finds No "Evident Miscalculation" by NASD Arbitrators
In re Wright, Civil Action No. 06-0356, 2007 WL 496865 (E.D. La. Feb. 13, 2007)
2/13/2007
A federal court in Louisiana refused to modify an arbitration award issued by the National Association of Securities Dealers (NASD) because, due to the lack of a reasoned opinion, nothing suggested that the panel had miscalculated damages.
In In re Wright, Civil Action No. 06-0356, 2007 WL 496865 (E.D. La. Feb. 13, 2007), Wright claimed that A.G. Edwards and Sons, Inc (A.G. Edwards) was responsible for his monetary losses. Wright prevailed in NASD arbitration proceedings, but moved to modify the panel's award, which allegedly miscalculated Wright's damages by $380,719.25... Full Story
Mississippi Federal Court Finds No Manifest Disregard of Law, Avoids Need to Interpret FAA Timeliness Language
Adcock v. Halliburton Energy Services, Inc., No. 2:04-cv-284(Br)(Su), 2007 WL 496729 (S.D. Miss. Feb. 13, 2007)
2/13/2007
A federal district court in Mississippi refused to vacate an arbitrator's award favoring an employer in an age discrimination dispute, as the employee presented no credible evidence of the arbitrator's manifest disregard of the law.
In Adcock v. Halliburton Energy Services, Inc., No. 2:04-cv-284(Br)(Su), 2007 WL 496729 (S.D. Miss. Feb. 13, 2007), Adcock was fired from his job at Halliburton, allegedly because of his age. After losing in arbitration, Adcock claimed the arbitrator had disregarded the law by ignoring testimony that provided evidence for his claim... Full Story
Ohio Federal Court: Waiver Issue Is for the Court to Decide
Reidy v. Cyberonics, Inc., No. 1:06-CV-249, 2007 WL 496679 (S.D. Ohio Feb. 8, 2007)
2/8/2007
Citing public policy concerns and the Federal Arbitration Act, a federal court in Ohio held that the court, and not the arbitrator, should decide whether a party has waived the right to arbitrate.
In Reidy v. Cyberonics, Inc., No. 1:06-CV-249, 2007 WL 496679 (S.D. Ohio Feb. 8, 2007), Reidy brought sex discrimination claims against her former employer Cyberonics following her termination. When Cyberonics asked the court to compel arbitration pursuant to an arbitration clause in an agreement signed by the parties, Reidy argued that Cyberonics had waived its right to arbitrate... Full Story
FORUM Code of Procedure Establishes Clear Intent of Parties to Submit Arbitrability Questions to Arbitrator
Nazar v. Wolpoff & Abramson, LLP, No. 07-2025-JWL, 2007 WL 528753 (D. Kan. Feb. 15, 2007)
2/15/2007
In ordering arbitration of a debt collection dispute, a federal court in Kansas found that the parties clearly and unmistakably agreed to submit questions of arbitrability to the arbitrator by incorporating the National Arbitration Forum (FORUM) Code of Procedure into their arbitration agreement.
In Nazar v. Wolpoff & Abramson, LLP, No. 07-2025-JWL, 2007 WL 528753 (D. Kan. Feb. 15, 2007), Nazar and two other bankruptcy trustees sued Wolpoff & Abramson (W&A), a law firm, alleging that W&A engaged in unlawful practices while attempting to collect unpaid balances on the debtors' MBNA credit cards... Full Story
State Cases
Arbitrator's Award Was Sufficiently Detailed to Satisfy the Parties' Agreement That the Arbitrator Must Issue a "Reasoned" Award
Demott v. McDonald, No. 266301, 2007 WL 486750 (Mich. Ct. App. Feb. 15, 2007)
2/15/2007
In upholding an arbitration agreement in favor of a homebuyer, the Michigan Court of Appeals held that the arbitrator's award was sufficiently detailed to satisfy the "reasoned opinion" requirement in the parties' arbitration agreement.
In Demott v. McDonald, No. 266301, 2007 WL 486750 (Mich. Ct. App. Feb. 15, 2007), Demott contracted with McDonald to supervise the construction of a new home. During construction, McDonald spent the winter in Florida, forcing Demott to act as his own contractor... Full Story
Mississippi Law Authorizes Health Care Surrogates to Agree to Arbitration on Patient's Behalf
Covenant Health Rehab of Picayune, L.P. v. Brown, No. 2005-CA-02220-SCT, 2007 WL 529675 (Miss. Feb. 22, 2007)
2/22/2007
In construing a Mississippi statute that allows a surrogate to make health care decisions on behalf of an incapacitated patient, the Mississippi Supreme Court held that a daughter admitting her mother to a nursing home had statutory authority to agree to arbitration on her mother's behalf.
In Covenant Health Rehab of Picayune, L.P. v. Brown, No. 2005-CA-02220-SCT, 2007 WL 529675 (Miss. Feb. 22, 2007), Brown and her two sisters filed a wrongful death action against Covenant Health after their mother died during her residency in a Covenant Health nursing home... Full Story
Court Confirms Second Arbitration Award Despite Previous Confirmation of a First, "Open-Ended" Award
Roehl v. Ritchie, No. G036999, 2007 WL 259700 (Cal. Ct. App. Jan. 31, 2007)
1/31/2007
Reaffirming the principle that arbitrators are not required to resolve all issues of a dispute in a single award, a California appellate court confirmed a second arbitration award in a trust allocation dispute after the parties' first arbitration award specifically left open the possibility of further modifications to the award.
In Roehl v. Ritchie, No. G036999, 2007 WL 259700 (Cal. Ct. App. Jan. 31, 2007), Ritchie and Roehl were beneficiaries of the Roehl Family Trust (Trust). The Trust agreement provided for arbitration of disputes, and the parties entered arbitration to resolves disputes about allocation... Full Story
Delaware State Court: When Two Arbitrators Decide Differently, the First to Decide Wins
Country Life Homes, Inc. v. Shaffer, No. Civ.A. 2288-S, 2007 WL 333075 (Del. Ch. Jan. 31, 2007)
1/31/2007
Finding no reason to vacate an earlier arbitration award that favored the builder in a house warranty dispute, a state court in Delaware vacated a later award from a second arbitrator that favored the homeowner as precluded by the first award.
In Country Life Homes, Inc. v. Shaffer, No. Civ.A. 2288-S, 2007 WL 333075 (Del. Ch. Jan. 31, 2007), Shaffer signed two contracts concerning the warranty of his new home: a Construction Contract with builder Country Life Homes (CLH) and a limited Home Buyer Warranty Program. Though both contracts contained arbitration agreements, each named a different arbitration administrator... Full Story
Unconscionability Challenge Required Ohio Court to Conduct a Hearing on the Enforceability of the Arbitration Agreement
Bencivenni v. Dietz, No. 88269, 2007 WL 475411 (Ohio Ct. App. Feb. 15, 2007)
2/15/2007
The Ohio Court of Appeals held that a trial court erred by granting a motion to compel arbitration without a hearing because the party opposing arbitration raised an unconscionability challenge that put the enforceability and validity of the arbitration agreement at issue.
In Bencivenni v. Dietz, No. 88269, 2007 WL 475411 (Ohio Ct. App. Feb. 15, 2007), American Building Inspections (ABI) inspected a home that Kelly and Michael Bencivenni had agreed to buy from Marilyn Dietz. The inspection agreement contained an arbitration clause... Full Story
Language Referring to Terms on the Back of a Contract Sufficient to Notify Other Party About Arbitration Provisions
Tyler v. Williams, 1051435, 2007 WL 431425 (Ala. Feb. 9, 2007)
2/9/2007
An indication on the front of a contract that "conditions limit[ing] the sender's legal rights" were contained on the back of the agreement satisfied notice requirements for enforcing an arbitration agreement, according to the Alabama Supreme Court.
In Tyler v. Williams, 1051435, 2007 WL 431425 (Ala. Feb. 9, 2007), Williams attempted to make a mortgage payment to Wal-Mart, which was acting as an agent for MoneyGram Payment Systems, Inc. When Wal-Mart allegedly failed to transfer the funds, Williams lost her home through foreclosure proceedings. Williams sued, and Wal-Mart moved to compel arbitration... Full Story
California Court Upholds Agreement to Arbitrate Attorney Fee Disputes Because Client Waived His Statutory Right to Nonbinding Arbitration
Ervin, Cohen & Jessup, L.L.P. v. Kassel, No. B191761, 2007 WL 466282 (Cal. Ct. App. Feb. 14, 2007)
2/14/2007
The California Court of Appeal held that a recent amendment to the Mandatory Fee Arbitration Act (MFAA) does not invalidate pre-dispute arbitration agreements between an attorney and client. Accordingly, pre-dispute arbitration agreements are enforceable against a client who waives his rights under the MFAA.
In Ervin, Cohen & Jessup, L.L.P. v. Kassel, No. B191761, 2007 WL 466282 (Cal. Ct. App. Feb. 14, 2007), Ervin, Cohen & Jessup (ECJ) sued Kassel, a former client, seeking to recover unpaid fees. ECJ moved to compel arbitration pursuant to an arbitration clause in the retainer agreement... Full Story
ADR Legislation & Regulation
LEGISLATION
AR H 1630
AUTHOR: Adcock [D]
TITLE: Dispute Resolution Process
INTRODUCED: 02/20/2007
DISPOSITION: Pending
Commentary:
Ensures that public employees and governments can use dispute resolution processes to settle disputes.
AZ H 2255
AUTHOR: Stump [R]
TITLE: Pharmacies
INTRODUCED: 01/11/2007
LAST AMEND: 02/15/2007
DISPOSITION: Pending
Commentary:
This bill would enact and amend AZ statute 32 1973 relating to pharmacies and quality assurance. As part of its quality assurance program, records may not be subpoenaed for arbitration proceedings.
AZ S 1054
AUTHOR: Huppenthal [R]
TITLE: Claims Arbitration
INTRODUCED: 01/08/2007
LAST AMEND: 02/15/2007
DISPOSITION: Pending
Commentary:
Amendment to Court Annexed ADR bill raising jurisdictional limits and per diem pay for arbitrators.
CA A 523
AUTHOR: De La Torre [D]
TITLE: Contracts: University of California
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Provides for procedures when a contractor files a change order pursuant to an existing contract. The bill provides for specific procedures allowing and in some cases mandating arbitration between the Regents of the University of California and contractors. The bill also provides for specific aspects of the arbitration process, based on the amount of money in dispute.
CA A 567
AUTHOR: Saldana [D]
TITLE: Common Interest Developments: Ombudsperson
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Legislature intends to create an ombudsperson position to provide a neutral, nonjudicial forum for resolution of common interest development disputes.
CA A 1178
AUTHOR: Hernandez [D]
TITLE: Medical Information: Disclosures
INTRODUCED: 02/23/2007
DISPOSITION: Pending
Commentary:
"A provider of health care, a health care service plan, or a contractor shall disclose medical information if the disclosure is compelled by any of the following...By an arbitrator or arbitration panel, when arbitration is lawfully requested by either party, pursuant to a subpoena duces tecum issued under Section 1282.6 of the Code of Civil Procedure, or any other provision authorizing discovery in a proceeding before an arbitrator or arbitration panel."
CA S 389
AUTHOR: Yee [D]
TITLE: Health Care Coverage
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Provides for independent ADR of billing disputes: "On or before March 1, 2008, the department shall implement an independent provider dispute resolution system. The department shall develop the system in consultation with representatives of health care service plans, providers, and consumer representatives. The department shall consider implementation of a system similar to the independent medical review system in Article 5.55 (commencing with Section 1374.30) to permit independent review of disputed provider complaints, claims, and payment levels."
FL H 923
IDENTICAL: FL S 1444
AUTHOR: Ambler [R]
TITLE: Home Court Advantage Pilot Program
DISPOSITION: Pending
Commentary:
Establishes a pilot program in two FL counties to employ ADR methods relating to deed restrictions or covenants in deed restricted communities; cites AAA ethics code.
FL S 1730
SIMILAR: FL H 817
AUTHOR: Lawson [D]
TITLE: Title Insurance Rate Deviations
DISPOSITION: Pending
Commentary:
Adds arbitration provisions related to title insurance rate deviations; allows title insurers and rating organizations to petition the Office of Insurance Regulation for specific rate deviations or special coverage.
FL S 1936
IDENTICAL: FL H 311
AUTHOR: Joyner [D]
TITLE: Probate
DISPOSITION: Pending
Commentary:
Upholds enforceability of will or trust provisions requiring arbitration of disputes.
GA S 201
AUTHOR: Harp [R]
TITLE: Georgia Family Law Arbitration Act
INTRODUCED: 02/22/2007
DISPOSITION: Pending
Commentary:
Relating to domestic relations, this bill provides for family law arbitration, a motion to compel or stay arbitration, and remedies.
IL H 1437
SPONSOR: Miller [D]
TITLE: Payday Loan
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Amends the Payday Loan Reform Act. Changes the definition of "payday loan" to include any loan with a finance charge exceeding an annual percentage rate of 36%; prohibits oppressive mandatory arbitration clauses.
IL H 1478
SPONSOR: Burke [D]
TITLE: Predatory Home Loan Practices Act
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Creates the Predatory Home Loan Practices Act. Prohibits various practices and charges in connection with home loans made to persons with respect to their primary residence. Prohibits the imposition of prepayment penalties, flipping of loans, and lender financing of credit insurance. Imposes limitations on high cost loans. No mandatory arbitration clause. Also provides: "No high cost loan may be subject to a mandatory arbitration clause that limits in any way the right of the borrower to seek relief through the judicial process."
MT D 1228
AUTHOR: Olson A [R]
TITLE: Property Tax Protest
DISPOSITION: Pending
Commentary:
Allows for mediation of property tax disputes.
OH S 59
SPONSOR: Coughlin [R]
TITLE: Pilot Program Mandating Arbitration
INTRODUCED: 02/21/2007
DISPOSITION: Pending
Commentary:
Establishes a pilot program for mandatory arbitration of medical negligence claims; the program would last for 10 years.
TX H 1686
AUTHOR: McClendon [D]
TITLE: Homebuilder and Residential Construction
INTRODUCED: 02/20/2007
DISPOSITION: Pending
Commentary:
"PROHIBITED CONTRACT PROVISIONS. Each of the following provisions is void and unenforceable if included in a contract for the construction of a new home or the improvement of an existing home when the cost of the work exceeds $2,500: ...(6) a mandatory arbitration clause."
REGULATIONS
NH 6487 (2006)
AUTHOR: Insurance Department
TITLE: Credit for Reinsurance
INTRODUCED: 11/16/2006
ADOPTED: 02/22/2007
Commentary:
"The purpose of this rule is to set forth rules and procedural requirements [for reinsurance contracts] that the commissioner deems necessary to carry out the provisions of RSA 405: 45; RSA 405: 46; RSA 405: 47; RSA 405: 48; RSA 405: 49; RSA 405: 50; RSA 405: 51 and RSA 405: 52... The reinsurance agreement may also contain provisions that: ...[p]ermit the award by any arbitration panel or court of competent jurisdiction of: (1)Interest at a rate different from that provided in Ins 601.08 (c)(2)b. above; (2) Court of arbitration costs; (3) Attorney's fees; and (4) Any other reasonable expenses."
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