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An appellate Court in California reversed a lower court's entry of default judgment – even though one party was extremely dilatory – stating that the court lacked the power to enter such a judgment once the parties had agreed to arbitrate their dispute.
In Martinez v. Martinez, No. B190114, 2007 WL 1365979 (Cal. Ct. App. May 10, 2007), Pedro Martinez ("Pedro") signed an agreement to buy a house from Jose Martinez ("Jose," no relation). Their written purchase agreement contained an arbitration clause. When the deal fell through, Pedro filed suit seeking specific performance of the contract.
In a pre-trial case management conference, both parties agreed that they were bound to arbitrate their dispute. After nine months passed, and Jose refused to cooperate in the selection of an arbitrator, Pedro filed for default judgment. Another fifteen months later, the court entered a final judgment against Jose for just over $327,000.
In reversing the judgment, the Court noted that once the parties had stipulated to arbitrate their dispute, the trial court had very limited powers to intervene. More specifically, the court could appoint an arbitrator, provide provisional remedy, and stand ready to confirm, correct, or vacate an arbitration award. But absent an agreement to withdraw the controversy from arbitration, "no other judicial act is authorized."
Still, the Court was clearly sympathetic to the Pedro's plight, and it suggested two remedies available to him under California law: application for an order appointing an arbitrator, and (because the agreement contained no such provision date) a motion for an order setting an arbitration completion date.
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