We regularly compile a few recent rulings that may be of interest to our clients and friends. Feel free to contact any of the firm's litigation attorneys should you have questions about these cases.
[1. Civil Procedure]
ARBITRATOR'S FAILURE
TO DISCLOSE THAT HE WORKED FOR SAME ADR FIRM PROVIDED GROUNDS TO VACATE
ARBITRATION AWARD
While
continuing to represent the respondent in arbitration proceedings before ADR
Services Inc. (ADR), the respondent's attorney also joined ADR as an arbitrator,
a fact the arbitrator failed to disclose. The arbitrator issued an award for the
respondent, which the petitioner then sought vacate based on the
nondisclosure. The Court of Appeal
reversed the trial court's denial of the petition to vacate. The court held that the California
Arbitration Act and the California Ethics Standards for Neutral Arbitrators in
Contractual Arbitrations require an arbitrator to disclose any grounds for
disqualification, which include the status of a party's attorney as a member of
the arbitrator's dispute resolution firm.
The court further held that California Code of Civil Procedure section
1286.2(a)(6) requires a court to vacate an award if the arbitrator fails to
comply with disclosure requirements. According
to the court, disclosure requirements are mandatory and nonwaiveable under the
plain language of the statute and the Ethics Standards. Therefore, it did not matter whether there in
fact existed a significant relationship between the arbitrator and the
respondent's attorney, or whether the petitioner knew or should have known of the
attorney's membership in ADR.
________________________________________________________________
COURT COULD NOT DENY
ARBITRATION FOR EFFICIENCY'S SAKE TO PREVENT PARALLEL LITIGATION/ARBITRATION
PROCEEDINGS, WHERE THERE WAS INSUFFICIENT RISK OF CONFLICTING RULINGS
There
is a strong policy under California law favoring arbitration. Consistent with that policy, a court must
enforce a written arbitration agreement unless it finds one of the limited
number of exceptions set forth in California Code of Civil Procedure Section
1281.2, which include the existence of pending litigation with a third party
that creates the possibility of conflicting rulings on common factual or legal
issues. The trial court found that
exception to apply in a case involving The Colton Real Estate Group (Colton), a
group of related companies that bought and managed commercial real property, which generally used separate funds to solicit
investors and take title to each portfolio of properties it managed. Hundreds of investors sued Colton, alleging a
wide variety of fraudulent conduct in connection with multiple different funds. Some of the funds' governing documents had
arbitration provisions and some did not.
Reasoning that having parallel arbitration and court proceedings would
be inefficient and could lead to conflicting rulings, the trial court denied all
of Colton's motions to compel arbitration.
The Court of Appeal reversed, holding that the primary purpose of
Section 1281.2(c) is to avoid conflicting rulings, not to further judicial
economy, and that the specific facts of the case did not indicate a sufficient
likelihood of conflicting rulings.
________________________________________________________________
LOW LEVEL OF
PROCEDURAL UNCONSCIONABILITY IS INSUFFICIENT FOR COURT TO REFUSE TO ENFORCE
ARBITRATION AGREEMENT
Once
a party seeking to compel arbitration has proved that an arbitration agreement
exists, the opposing party bears the burden of proving one of the defenses to
enforceabilty, which include unconscionability of the agreement. One relying on that defense must prove both
procedural unconscionability (which focuses on oppression and surprise due to
unequal bargaining power) and substantive unconscionability (which focuses on
overly harsh or one-sided results).
Under that standard, where a used car purchaser's principal argument for
unconscionability was that the sales documents were presented to him on a
take-it-or-leave-it basis and he was not given an opportunity to negotiate any
of the terms, the Court of Appeal held that it was error for the trial court to
deny the petition to compel arbitration.
The court reasoned that any procedural unconscionability arising from
the use of a pre-printed contract was minimal where the arbitration clause was
conspicuous and the lengthy form of contract was commonly used by auto dealers
to comply with various statutes.
Likewise, substantive unconscionability, if any, was also minimal. Requiring the consumer to pay his own
arbitration costs did not violate any statute and was not unconscionable absent
evidence that the arbitration would be prohibitively expensive.
________________________________________________________________
ATTORNEYS' FEES
PROVISION IN HOA STATUTE COVERS PRE-LITIGATION ALTERNATIVE
DISPUTE RESOLUTION
A
dispute arose between homeowners and their homeowners' association when the
homeowners built a cabana and fireplace in their backyard without obtaining the
association's prior approval. Before
proceeding to litigate the dispute, the parties unsuccessfully attempted to
settle it through the alternative dispute resolution (ADR) process of
mediation. After the homeowners
prevailed in litigation, they obtained from the trial court a judgment for their
attorneys' fees, including fees incurred in connection with the pre-litigation
mediation. The Court of Appeal affirmed,
relying on provisions of the Davis-Sterling Common Interest Development Act
(the Act) providing for attorneys' fees to the prevailing party in disputes
between an association and a member of a common interest development. The court held the Act's attorneys' fees
provisions are mandatory, as is the requirement under the Act that, before an
association or a member may file an enforcement action, the parties must first
submit the dispute to ADR. Since the
pre-litigation ADR requirement is mandatory, the court reasoned, there is no
basis to exclude mediation fees incurred from the Act's attorneys' fees
provisions.
________________________________________________________________
ACT GOVERNING HOA REQUIRES STRICT COMPLIANCE WITH PRE-LIEN,
PRE-FORECLOSURE NOTICE REQUIREMENTS
After
a townhouse owner failed to pay a special assessment, the homeowners
association recorded an assessment lien on the property and then filed for
judicial foreclosure. The property owner sought summary judgment on the ground that it was undisputed that the
association had failed to strictly comply with the pre-lien and pre-foreclosure
notice requirements set forth in the Davis-Stirling Common Interest Development
Act (the Act) under California Civil Code Sections 1367.1 and 1367.4. Finding that the association had
substantially complied with the notice requirements, the trial court denied the
summary judgment motion. The Court of
Appeal reversed, holding that substantial compliance was insufficient since the
Act's legislative history showed that the Legislature intended the notice
requirements to be strictly construed.
Diamond v. Superior Court (2013) 217 Cal. App.
4th 1172 (Opinion not available)
________________________________________________________________
EMPLOYER LIABLE FOR
RETALIATION FOR TURNING EMPLOYEE'S COWORKERS AGAINST HER BY LEAKING DETAILS OF
PRIOR CONFIDENTIAL DISCRIMINATION SETTLEMENT
As
part of a confidential settlement of an employment discrimination lawsuit, an
employer agreed to provide its employee with training for a position that would
give her a pay increase. However, when
the employee's training began, she was given a
"less desirable" workspace that increased her isolation from the rest
of the staff, was denied certain training materials and was not told about a
class regarding hazardous materials. The
employee then brought a second suit, alleging claims including unlawful
retaliation under the California Fair Employment and Housing Act. Following a jury verdict favoring the
employee, the trial court granted a motion for judgment notwithstanding the
verdict. The Court of Appeal reversed
with respect to the retaliation claim, reasoning that there was sufficient
evidence for a reasonable jury to find that management revealed to the
plaintiff's coworkers the details of the prior confidential settlement with the
intent to turn her coworkers against her, thus making her training period
intolerable.
No comments:
Post a Comment