Archives: July 2006
Tue Jul 11, 2006
Arbitration Submission Agreemeents
Submission Agreements in Arbitration
In negotiating commercial contracts, adding an arbitration clause to resolve disputes between the parties imparts a different tone when the signatories have already agreed to terms culminating in a draft. In consummating an agreement presumably auguring mutual success, the parties do not expect disputes. Experience and history suggest otherwise. If arbitration is selected in lieu of litigation, drafting the arbitration clause requires careful consideration if for no other reason than to avoid litigation disputing the arbitrable terms as distinct from execution or performance of the contract.
One increasingly common practice in drafting contracts includes inserting a mediation clause as a condition precedent to arbitration. The word “mediation”, superficially a boilerplate clause, does not connote universal understanding. Saeta v. Sup.Ct., 117 Cal.App.4th 261 (2004). The clause should define the term consistent with the CCP and the Ev. Code, although each is applicable to court ordered mediation. The language of these statutes is identical and requires all parties to mandatorily participate in a “process in which a neutral person(s). . .facilitates communication between the disputants to assist them in reaching a mutually acceptable agreement.” CCP 1775.1 (a); Ev. Code 1115 (a).
The arbitration clause should include a penalty for non-compliance, including attorney fees and the cost of mediation conducted by the neutral third party. Nyulassy v. Lockheed Martin Corp., 120 Cal.App.4th 1031 (2004); Leamon v. Krajiewcz, 107 Cal.App.4th 424 (2003). In the event the mediation is unsuccessful, the parties should contractually agree to submit the dispute to arbitration (or litigation) within a specified time thereafter. In contractual language, a mediation clause is a condition precedent.
In the event the parties select arbitration as an alternative to litigation, counsel can draft a clause forthrightly reciting agreement of the parties to waive jury, avoid litigation and mutually select arbitration as the process of resolution. An arbitration clause in a contract should identify the issues for resolution, their scope, and the legal capacity of the parties and their standing. If the parties select an arbitration service, counsel should incorporate by reference the Rules of the provider. Provide the method of notice demanding arbitration and service on the parties.
In initiating arbitration with another party, absent court intervention, the importance of identifying the claim(s) in the submission agreement cannot be overemphasized. When a party submits a demand for arbitration and includes a statement of claims, the opposition cannot afford to ignore this language. The contractual arbitration clause and the submission agreement are separate documents and interpreted independently; Schoenduve Corp. v Lucent Technologies, Inc., 442 F.3d 727 (9th Cir. 2006).
Schoenduve illustrates the importance of this process. During the arbitration, the parties disagreed on the scope of the submission agreement terms applicable to the merits of the dispute. Apparently the arbitrator did not previously construe the scope of the submission agreement per se and the arbitration proceeded to conclusion and rendition of an award. In a motion to vacate the award, the non-prevailing party argued that the arbitrator “exceeded his powers” in contractual arbitration by misinterpreting the arbitration clause; 9 U.S.C. 10 (a) (3).
The Ninth Circuit repeated the familiar rules restricting the limited grounds for appeal of an award and cited judicial deference to an arbitrator’s decision in general. Kyocera Corp. v. Prudential-Bache Trade Services, 341 F.3d 987 (9th Cir. 2003). An arbitrator who mistakes application of an arbitration clause and submission agreement is not a ground for reversal in the absence of manifest disregard of the law or violation of public policy. Kyocera. Although the court denied the motion, additional costs to the parties were substantial .
Tue Jul 04, 2006
Attorney Rules for Temporary Judges
The California Constitution permits appointment of Temporary Judges; Art. VI, Sec 21. The Judicial Council has adopted new rules to the California Rules of Court (CRC) applicable to attorneys who serve as Temporary Judges; CRC 243.11-243.21 (court-appointed) and 243.30-243.34 (party appointed). Effective July 1, 2006 the Code of Judicial Ethics now govern Temporary Judges in these two categories. The Rules are operative January 1, 2007.
In addition, CRC 243.21 imposes "limitations on service" of court-appointed Temporary Judges who may not serve in that capacity under certain conditions:
1. In any type of case, if appearing on the same day in the same courthouse as an attorney or a party; CRC 243.20 (b) (1)
2. In the same type of case, if the attorney is presently a party to an action or proceeding in the court; CRC 243.20 (b) (2);
3. In a family law or unlawful detainer case, one party self represented and the other party represented by counsel or is an attorney; CRC 243.20(b) (3).
For good cause, the parties may waive disqualification of these “limitations” under certain conditions; CRC 243.20 (c). The Rules require:
A written and knowing waiver, reciting the basis of disqualification or limitation, signed by all parties and counsel and filed; CRC 243.20 (c) (1).
Waivers are disallowed for disqualification (but not "limitations") if the temporary judge has a personal bias or prejudice against party; or has served as counsel in the matter in controversy; or has been a material witness in the controversy; CRC 243.20 (c) 2.
Late discovery: If the grounds of disqualification or “limitation” are discovered after one or more rulings by the Temporary Judge, but before completion of the action, the prior rulings are not reversible absent good cause; CRC 243.20 (d). Parties may also waive this provision.
Notice: The Temporary Judge must notify the presiding judge, or designated judge, of the withdrawal and discontinue proceedings unless the parties waive; CRC 243.20 (e).
Request for disqualification: A party may request the Temporary Judge to withdraw and apply to the court for a stipulation to withdraw. The presiding judge determines whether “good cause” exists; CRC 243.31 (d).
Motion to Withdraw Stipulation: CRC 243.31: Minor amendment to conform to re lettering of CRC 243.20 (also applicable to court appointed Temporary Judge).
Note: CRC 243.31 (d) (2) has been deleted (applicable to party appointed Temporary Judge).
To read the new Rules in detail, see: California Official Reports (Advance Sheets), No. 16 (June 8. 2006).