A comprehensive weekly ADR overview from the National Arbitration Forum
Week of March 19, 2009

IN THIS ISSUE


ADR Legislation & Regulation

 

 

Federal Cases

Third Circuit Holds Utah’s Countenance of Class Action Waiver Terms Contrary to New Jersey Public Policy
Homa v. American Express Co., No. 07-2921, 2009 WL 440912 (3rd Cir. Feb. 24, 2009)
2/24/2009

The Third Circuit Court of Appeals has held that a credit card contract’s choice of law term, which elects Utah law and its presumption in favor of class action waivers, violates New Jersey public policy when applied to claims of individually small amounts.

In Homa v. American Express Co., No. 07-2921, 2009 WL 440912 (3rd Cir. Feb. 24, 2009), Homa obtained a credit card from American Express Company (AEC). When AEC issued the card, it sent Homa a contract outlining the terms of the credit account, including an arbitration agreement and a class action waiver...   Full Story


Iowa Federal Court Finds the Word “Arbitration” Unnecessary for Parties to have Valid Arbitration Agreement
Harker’s Distribution, Inc. v. Reinhart Foodservice, L.L.C., No. C 08-4076-MWB, 2009 WL 141071 (N.D. Iowa Jan. 23, 2009)
1/23/2009

An Iowa federal court has held that an agreement to refer disputes over the valuation of a business to an accounting firm constituted an arbitration agreement despite the parties’ contract not referencing arbitration.

In Harker’s Distribution, Inc. v. Reinhart Foodservice, L.L.C., No. C 08-4076-MWB, 2009 WL 141071 (N.D. Iowa Jan. 23, 2009) Reinhart and Harker’s executed an Asset Purchase Agreement under which Reinhart would acquire Harker’s Distribution’s wholesale food distribution customers in Wisconsin and Iowa. The Asset Purchase Agreement provided a formula for calculating the final purchase price and contained an “accountant remedy” provision that required the parties to submit disputes over the purchase price to an accounting firm acceptable to both parties...   Full Story


 

State Cases

Hawaii Supreme Court Holds Arbitration Agreement Must Unambiguously Reflect Intent to Arbitrate
Swift Securities Limited v. Yau, No. 28759, 2009 WL 383679 (Haw. Feb. 13, 2009)
2/13/2009

In affirming a trial court’s denial of a motion to compel arbitration, the Hawaii Supreme Court held that in order for an arbitration agreement to be enforceable, it must unambiguously reflect the parties’ intent to submit their dispute to arbitration.

In Swift Securities Limited v. Yau, No. 28759, 2009 WL 383679 (Haw. Feb. 13, 2009), Yau and Swift Securities (Swift) entered into a settlement agreement. The settlement agreement provided that the parties could pursue any disputes arising out of the agreement in court, “provided that any dispute arising from this Agreement . . . shall first be submitted to James K. Hoenig for resolution.”...   Full Story


Arbitration Clause Held Enforceable Despite Rescission of Other Contractual Provisions
Gordon v. OM Financial Life Ins. Co., No. 08AP-480, 2009 WL 441977 (Ohio Ct. App. Feb. 24, 2009)
2/24/2009

Where part of an insurance policy is rescinded or void, arbitration language contained in another section of the policy remains in effect, unless the arbitration language is specifically challenged, according to an Ohio appellate court.

In Gordon v. OM Financial Life Ins. Co., No. 08AP-480, 2009 WL 441977 (Ohio Ct. App. Feb. 24, 2009), Gordon filed suit against OM Financial after the company tendered a refund of premiums to rescind the Disability Rider to a life insurance policy upon concluding Gordon was attempting fraud. In its answer, OM Financial affirmatively invoked an arbitration clause contained within the General Provisions section of the policy, and moved for a stay of proceedings pending arbitration, which the trial court granted...   Full Story


Nonsignatory Association Bound to Arbitration Agreement Terms Agreed by its Members
Stanford Development Corporation v. Stanford Condominium Owners Association, Nos. 01-08-00240-CV, 01-08-00386-CV, 2009 WL 214380 (Tex. App. Jan. 29, 2009)
1/29/2009

Where a condominium association asserts claims on behalf of its members who are signatories to an arbitration agreement with the condominium developer, the association proceeds “on behalf of” the individual owners and is bound on estoppel grounds to arbitrate, according to a Texas appellate court.

In Stanford Development Corporation v. Stanford Condominium Owners Association, Nos. 01-08-00240-CV, 01-08-00386-CV, 2009 WL 214380 (Tex. App. Jan. 29, 2009), a condominium owners association filed suit against the condominium developer alleging several causes of action under an earnest money contract between the parties. The developer moved to compel arbitration based on arbitration agreements found within 27 of the 37 homeowners’ earnest money contracts. The trial court denied the motion...   Full Story


Arbitration Panel’s Holding that Spoliation Was Unintentional Left Undisturbed By Wisconsin Appellate Court
Pegues v. Progressive Northern Ins. Co., No. 2008AP1500, 2009 WL 454672 (Wis. Ct. App. Feb. 25, 2009)
2/25/2009

A Wisconsin appellate court has refused to disturb an arbitration panel’s determination that spoliation of evidence in an insurer’s custody was merely negligent, and did not warrant an evidentiary presumption in favor of the insured at arbitration.

In Pegues v. Progressive Northern Ins. Co., No. 2008AP1500, 2009 WL 454672 (Wis. Ct. App. Feb. 25, 2009), Pegues was injured in an automobile accident. Pegues first alleged that he lost control of his vehicle because of ice on the road, but later claimed he was bumped by a semi truck from behind. Progressive denied Pegues’s uninsured motorist claim, based on expert opinion that his vehicle was not contacted in the back. Pegues contested the denial and demanded arbitration in accordance with his policy...   Full Story


ADR Legislation & Regulation

LEGISLATION

AR S 992
AUTHOR: Salmon [D]
TITLE: Credit Card Debt Resolution
INTRODUCED: 03/09/2009
DISPOSITION: Pending
LOCATION: Senate Insurance and Commerce Committee
Commentary:
The bill states in full: “The purpose of the bill is to regulate the arbitration or other resolution of credit card disputes.”

AZ H 2510
AUTHOR: Miranda B [D]
TITLE: Home Equity Purchasers
INTRODUCED: 02/05/2009
DISPOSITION: Pending
LOCATION: House Rules Committee
Commentary:
The bill regulates home equity purchasers. As it relates to arbitration, the bill makes “any provision in a covered contract that attempts or purports to require arbitration of any dispute arising under this article shall be void at the option of the equity seller.”

CT H 6628
INTRODUCER: Joint Judiciary
TITLE: Revised Uniform Arbitration Act
INTRODUCED: 03/04/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
Would enact the Revised Uniform Arbitration Act.

DE H 18
PRIMARY SPONSOR: Plant [D]
TITLE: Model Employment Termination Act
INTRODUCED: 03/10/2009
DISPOSITION: Pending
LOCATION: House Labor Committee
Commentary:
This bill purports to change the law surrounding the relationship of employers and at will employees by requiring employers to have “good cause” to fire at will employees who have worked for the employer for more than one year. As it relates to arbitration, the bill specifically states that both pre and post dispute arbitration agreements between the employer and employee that provide for private arbitration will be enforceable. In addition, either party may demand arbitration with the Department of Labor if no private arbitration agreement exists between the parties. The Department is responsible for adopting rules regarding the qualification, method of selection, and appointment of arbitrators.

FL H 653
IDENTICAL: FL S 2524
AUTHOR: Soto [D]
TITLE: Homestead Property Foreclosure Actions
PREFILED: 01/29/2009
INTRODUCED: 03/03/2009
DISPOSITION: Pending
LOCATION: House Civil Justice & Courts Policy Committee
Commentary:
The bill regulates foreclosures and requires court ordered mediation of all foreclosure proceedings.

HI H 782
AUTHOR: Karamatsu [D]
TITLE: Uniform Mediation Act
INTRODUCED: 01/23/2009
LAST AMEND: 02/13/2009
DISPOSITION: Pending
LOCATION: Senate Judiciary and Government Operations Committee
Commentary:
The bill adopts the Uniform Mediation Act; provides rules for mediations; establishes a privilege that assures confidentiality of mediations in legal proceedings; limits disclosures by the mediator to judges and others who may rule on the case; requires mediators to disclose conflicts of interest, and assures that parties may bring a lawyer or other support.

IA S 364
COMPANION: IA H 695
AUTHOR: Judiciary Cmt
TITLE: Civil Actions
INTRODUCED: 03/09/2009
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
Imposes restrictions on civil actions and judgments relating to foreclosures. Section 6 mandates that the creditor give notice of the availability of mediation to the homeowner prior to commencing an action.

MA H 1649
AUTHOR: Pedone [D]
TITLE: The Massachusetts Foreclosure Mediation Program
INTRODUCED: 01/19/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
Amends G.L.c. 244, Section 35A.
Mandates that the mortgager be “offered the opportunity to participate in a court supervised Foreclosure Mediation Program.” Provides that the mediation program address all the issues relating to the foreclosure including reinstatement of the mortgage and the restructuring of the mortgage debt.

MA S 1805
AUTHOR: Spilka [D]
TITLE: Foreclosure Mediation Program
INTRODUCED: 01/19/2009
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
Would establish a Foreclosure Mediation Program. Requires the attorney general to administer a Foreclosure Mediation Program and establish policies and procedures to implement this section.

MI S 363
SPONSOR: Allen [R]
TITLE: Recreational Vehicle Regulation
INTRODUCED: 03/11/2009
DISPOSITION: Pending
LOCATION: Senate Commerce and Tourism Committee
Commentary:
This proposed bill regulates the dealer manufacturer relationship in the area of recreational vehicles. As it relates to ADR, the bill states that “A manufacturer may not coerce or attempt to coerce a dealer to enter into an agreement with the manufacturer or any other person that requires the dealer to submit its disputes to binding arbitration.” Thus, the bill does not prohibit binding arbitration agreements, but does prevent manufacturers from threatening to terminate relationships, withhold product lines, or delay delivery if the dealer does not agree to binding arbitration.

In contrast, the bill requires a party to demand mediation before bringing a civil suit.

MN H 1692
COMPANION: MN S 891
AUTHOR: Morrow [DFL]
TITLE: Dispute Resolution
INTRODUCED: 03/12/2009
DISPOSITION: Pending
LOCATION: House Civil Justice
Commentary:
A bill to enact the Revised Uniform Arbitration Act. This version of the RUAA is substantially similar to the version published by NCCUSL.

MN S 340
COMPANION: MN H 354
AUTHOR: Scheid [DFL]
TITLE: Real Property
INTRODUCED: 01/29/2009
LAST AMEND: 03/12/2009
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary:
The bill requires notice and mandatory mediation prior to commencement of mortgage foreclosure proceedings and creates a homestead lender mediation account.

MN S 1310
AUTHOR: Scheid [DFL]
TITLE: Commerce
INTRODUCED: 03/09/2009
DISPOSITION: Pending
LOCATION: Senate Commerce and Consumer Protection Committee
Commentary:
This bill deals with no fault auto insurance reform. Subdivision 3 provides for the regulation of arbitration awards in instances of fraud, excessiveness, unreasonableness.

NH H 121
AUTHOR: Hawkins [R]
TITLE: Residential Building and Remodeling Contractors
PREFILED: 01/05/2009
INTRODUCED: 01/07/2009
DISPOSITION: Failed
LOCATION: Died
Commentary:
The bill establishes a board of residential building and remodeling contractors. As it relates to arbitration, the bill allows a contractor and owner to arbitrate disputes via private arbitration services. The bill also establishes a private arbitration services program to consider disputes between owners and registered contractors.

NH H 198
AUTHOR: Nixon [D]
TITLE: Motor Vehicle Accidents
PREFILED: 01/05/2009
INTRODUCED: 01/07/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
The bill permits an insured person seeking damages under his uninsured motorist coverage to use arbitration to resolve the dispute with the insurer. To the extent that an insured person’s damages exceed the limits of the motorist insurance coverage of the person at fault for the accident, the insurer shall be responsible for the remaining damages against the insured person’s own policy up to the limits of the uninsured motorist coverage provided by such policy. The amount of damages to be paid shall be determined by an arbitration panel consisting of one attorney selected by the insurer; one attorney selected by the insured; and one attorney selected by the attorney selected by the insurer and the attorney selected by the insured.

NM S 340
AUTHOR: Morales [D]
TITLE: Financial Institutions
INTRODUCED: 01/28/2009
LAST AMEND: 03/12/2009
DISPOSITION: Pending
LOCATION: Senate Finance Committee
Commentary:
The bill regulating tax refund anticipation loans prohibits mandatory arbitration clauses in those contracts. A 3/12/09 amendment removed any reference to arbitration.

OR H 2903
AUTHOR: Cameron [R]
TITLE: Employment Agreements
INTRODUCED: 03/03/2009
DISPOSITION: Pending
LOCATION: House Business and Labor Committee
Commentary:
Would reduce to 72 hours the minimum time before the first day of employment that an employer is required to notify an employee in a written employment offer that an arbitration agreement or noncompetition agreement is required as condition of employment.

OR H 3217
AUTHOR: Esquivel [R]
TITLE: Motor Vehicle Liability Insurance Policy Arbitration Pr
INTRODUCED: 03/11/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
Would amend Oregon automobile insurance law to state, “A motor vehicle liability insurance policy issued for delivery in this state may not contain a provision requiring arbitration of any dispute.”

OR S 203
AUTHOR: Courtney [D]
TITLE: Construction Contractors
INTRODUCED: 01/15/2009
LAST AMEND: 03/10/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
This bill regulates written construction contracts and construction contractors. As it relates to ADR, the bill requires construction contractors to use certain standard terms in their contracts, one of which is an explanation of the property owner’s rights under the contract, including the ability to “file a claim with the board and the existence of any mediation or arbitration provision in the contract, set forth in a conspicuous manner.”

RI H 5196
AUTHOR: Schadone [D]
TITLE: Insurance
INTRODUCED: 01/28/2009
DISPOSITION: Pending
LOCATION: House Corporations Committee
Commentary:
Would provide a cause of action for third party claimants in automobile accidents for unfair claims practices. In addition, this act would provide guidelines for arbitration of motor vehicle accident claimants. This act would take effect upon passage.

TX H 2095
AUTHOR: Farrar [D]
TITLE: Residential Home Builders Regulation
INTRODUCED: 03/02/2009
DISPOSITION: Pending
LOCATION: House Business and Industry Committee
Commentary:
Would amend the Texas Property Code to modify the rules of the existing Texas Residential Construction Commission. As it relates to ADR, the bill would prohibit homeowners from paying arbitration fees in connection with arbitrating a dispute under this title. Additionally, “the buyer must receive from the builder and seller full disclosure in understandable terms of any mandatory alternative dispute resolution provisions, including mandatory binding arbitration, and the associated costs of the various processes.”

TX H 2896
AUTHOR: Leibowitz [D]
TITLE: Builder Construction Sales Forms and Contracts
INTRODUCED: 03/09/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
Mandates new forms to be used by builders in contracting for the construction of a new home. Provides that a contract form may not be adopted that includes a provision requiring the parties to submit to binding arbitration.

TX H 3426
AUTHOR: Hernandez [D]
TITLE: Property Foreclosures
INTRODUCED: 03/11/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
The bill provides that mortgage servicers would be required to notify borrowers in foreclosure that they are entitled to mediate the foreclosure dispute with the lender. Provides rules for the mediation of foreclosure disputes under this bill.

TX H 3482
AUTHOR: Coleman [D]
TITLE: Real Property Foreclosures
INTRODUCED: 03/11/2009
DISPOSITION: Pending
LOCATION: HOUSE
Commentary:
Text of the bill is unavailable, but it appears as if the bill will require mediation before a mortgage servicer can foreclose on a home.

TX S 1475
AUTHOR: Ellis [D]
TITLE: Contract Lien Foreclosure Notices
INTRODUCED: 03/06/2009
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
Establishes notice procedures and imposes corresponding penalties for certain mortgage servicers before foreclosing a contract lien. Provides that the servicer give notice to the debtor via certified mail of the option to mediate any related disputes.

TX S 1650
AUTHOR: Duncan [R]
TITLE: Federal Arbitration Case Appeals
INTRODUCED: 03/10/2009
DISPOSITION: Pending
LOCATION: SENATE
Commentary:
[No text yet available]
Relates to appeals in cases arising under the FAA.

US H 1214
SPONSOR: Gutierrez [D]
TITLE: Additional Payday Loan Requirements
INTRODUCED: 02/26/2009
DISPOSITION: Pending
LOCATION: House Financial Services Committee
Commentary:
This bill would amend the Truth in Lending Act to establish additional regulation on payday loans. As it relates to ADR, the changes include: 1) prohibiting a waiver of the right to a jury trial unless the waiver is included in an arbitration clause allowed by the Act; 2) prohibiting a mandatory arbitration clause that is “oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers;” 3) making it unlawful “file or initiate a legal proceeding of any kind, including a lawsuit or arbitration, against a consumer to collect on a loan that is the subject of an extended repayment plan, or construe the loan to be in default unless the consumer has failed to repay the loan as agreed under the terms of the repayment plan;” 4) making it unlawful to collect any attorney’s fees, court costs, or arbitration costs incurred in connection with the collection of a payday loan.

US S 512
SPONSOR: Martinez [R]
TITLE: Arbitration
INTRODUCED: 03/03/2009
DISPOSITION: Pending
LOCATION: Senate Judiciary Committee
Commentary:
The “Fairness in Nursing Home Arbitration Act of 2009” would prohibit predispute arbitration agreements in nursing home contracts, both before and after admission.

UT H 165
AUTHOR: Newbold [R]
TITLE: Exchange of Healthcare Information
INTRODUCED: 02/07/2009
LAST AMEND: 03/04/2009
ENACTED: 03/11/2009
DISPOSITION: Enacted
LOCATION: Signed by Governor
Commentary:
The bill regulates health care and insurance and states “nothing in this section may be construed as limiting the ability of an insurer to... enter into a mutual agreement with a provider to resolve alleged violations of this section through mediation or binding arbitration.”

VA S 1169
AUTHOR: Watkins [R]
TITLE: Foreclosure Rescues
INTRODUCED: 01/14/2009
LAST AMEND: 02/05/2009
DISPOSITION: To Governor
LOCATION: To Governor
Commentary:
The bill regulates companies that provide foreclosure rescue services. As it relates to arbitration, the bill outlaws provisions requiring a residential property owner to arbitrate disputes with the supplier of foreclosure rescue services.


REGULATION

None


 

 
 

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