Despite both sides of a contract agreeing to arbitrate their disputes, many plaintiffs choose to ignore their agreement and will instead file their claims in civil court. This forces the defendant to file a motion seeking to compel arbitration. But what happens when the defendant is successful in compelling arbitration and the plaintiff still refuses to initiate it? After all, it is (and should be) the plaintiff’s burden to commence an arbitration and pay for the filing fees.
When a trial court issues an order compelling a matter to arbitration, the case ends up in jurisdictional limbo. The court’s powers are significantly reduced, and the arbitrator’s authority is not activated until arbitration is initiated and an arbitrator is appointed. This becomes problematic when you have a plaintiff who, for one reason or another, wishes to delay arbitration.
How Can You Move Things Along?
Sometimes a delay poses no problem for defendants. Other times, justice delayed will be justice denied. If your client falls into the latter category, what can you do to advance the ball?
Aside from confirming, modifying, or vacating an arbitration award after completion of arbitration, the trial court’s remaining “vestigial” powers after ordering a matter to arbitration are limited to appointment of an arbitrator, issuing provisional relief if the arbitration would be rendered ineffectual without such relief, and ordering a deadline for completion of an arbitration award.
None of these functions are at all useful when it comes to a plaintiff who simply refuses to initiate arbitration.
For example, while the trial court is permitted to set a deadline for making an arbitration award, this remedy has limited value in terms of pushing plaintiff to commence arbitration. At the outset, a plaintiff may feel compelled to comply with the order to avoid any perceived consequences for violation of the same.
However, an order setting a deadline for completion of an arbitration award has no teeth when it comes to enforcement of that order. The most common consequence of violating such an order is to vacate any award entered after the completion date.
In other circumstances where the completion date is not met due to unreasonable conduct of the arbitrator, the trial court may enter an order appointing a new arbitrator. (See California Code of Civil Procedure §1283.8 and Bosworth v. Whitmore) While these consequences may be compelling in forcing an arbitration already initiated to proceed forward, they likely will not cause a recalcitrant plaintiff to initiate arbitration in the first place.
The trial court also cannot dismiss the action for a plaintiff’s failure to prosecute. As frustrating as this may be for both the defendant and the trial court—the latter of which is forced to keep the matter on its docket until a full and final resolution—the trial court has no power to dismiss a case compelled to arbitration. (See Brock v. Kaiser Foundation Hosps. and Titan/Value Equities Group Inc. v. Superior Court)
Initiating Your Own Arbitration
So what now? Defendants eager for vindication are not hostages without recourse. The simplest solution is to initiate arbitration yourself. Yes, a defendant can do this. While arbitration is set up to be initiated by the plaintiff, there is no rule preventing a defendant from initiating arbitration on plaintiff’s behalf.
The defendant will need to comply with the terms of the arbitration agreement in selecting an ADR service provider and in seeking appointment of the arbitrator, unless a separate agreement has been reached with the plaintiff or an order selecting the arbitrator has been issued by the trial court. If the defendant elects to initiate arbitration, it will also be forced to pay the initial filing fee, the amount of which will depend on how many parties are involved and which arbitral forum is used.
Cost, while certainly important, should not be the deciding factor when determining whether to initiate arbitration on plaintiff’s behalf. If the defendant has a viable early dispositive motion, the defendant can advocate for recoupment of the filing fees, and sometimes reallocation of the arbitrator’s fees, if and when he or she prevails. The rules of most ADR service providers allow for fee shifting at the election or discretion of the arbitrator.
Initiating arbitration as the defendant can also provide relief in cases where the plaintiff has delayed for years. Although the trial court may lack jurisdiction, California courts of appeal have long held that an arbitrator has authority to dismiss using California’s five-year statute as a “measuring rod.” (See Young v. Ross-Loos Medical Group and Burgess v. Kaiser Foundation Hospitals) This statute requires that an action be brought to trial within five years or else it must be dismissed.
While it may cost a defendant more at the outset, and there is no guarantee those costs will be recovered, the opportunity to secure a dismissal and end the frustrating delays caused by a recalcitrant plaintiff may turn out to be money and time well spent. An arbitrator’s order of dismissal is the “functional equivalent” of an award against the plaintiff which can be confirmed in a judgment by the trial court.
Thus, both the arbitration and the trial court action would be resolved by a successful motion to dismiss. If your matter has been in limbo after years of delay, this would no doubt be a welcome and deserved result.
This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Write for Us: Author Guidelines
Author Information
Jennifer E. Newcomb is an associate at Kaufman Dolowich & Voluck LLP. She focuses her practice on civil litigation defense, with an emphasis in professional liability and has represented professionals in a variety of fields including law, real estate, accounting, and insurance.
"now" - Google News
June 21, 2022 at 03:02PM
https://ift.tt/OxnC39P
You Compelled Arbitration and the Plaintiff Refuses: Now What? - Bloomberg Law
"now" - Google News
https://ift.tt/uLSYbo9
Bagikan Berita Ini
0 Response to "You Compelled Arbitration and the Plaintiff Refuses: Now What? - Bloomberg Law"
Post a Comment