ADR Case Updates
Pre-dispute Binding Arbitration Agreement May Be Properly Enforced If Client Waives Right To Nonbinding Arbitration, 02/27/07
Attached is the recent Court of Appeal decision in Ervin, Cohen & Jessup v. Kassel, filed February 14, 2007 (2007 DJDAR 2120), involving a retainer agreement between a law firm and client that provided for binding arbitration of any disputes. The firm sent a notice that it intended to file suit to recover unpaid fees. Although the notice advised Kassel of his right to resolve the dispute through nonbinding arbitration before the local Bar Association under the Mandatory Fee Arbitration Act (MFAA), he never requested it. The firm then filed suit and sought to compel arbitration. The trial court held that pre-dispute binding arbitration agreements were unenforceable under the MFAA, and denied the motion.
Reversed. A pre-dispute binding arbitration agreement may be enforced if the client waives the right given to him or her under the agreement to pursue nonbinding arbitration. This case is consistent with Schatz v. Allen Matkins Leck Gamble & Mallory (2007) 146 Cal. App. 4th 674, where the court said that if the client did not choose MFAA arbitration, or did not properly invoke it, there is no reason to invalidate a binding arbitration agreement. Unlike Mr. Kassel, Schatz had invoked MFAA arbitration.
Also attached are the California Supreme Court decision in Reigelsperger v. Siller, filed February 8, 2007, 2007 DJDAR 1815 (arbitration agreement applied to a medical malpractice claim arising from treatment for a different condition several years later); and Appellate Court decision in Roehl v. Ritchie, Filed January 31, 2007 DJDAR 1480 (judgment confirming a second arbitration award where the arbitrator did not re-evaluate previously determined issues was proper).
All three cases underscore the judicial tendency to compel arbitration providing minimal due process and statutory requirements are met.
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