[Dis-res] RDDR 11/15/04

[Diane E Gould]

Recent Developments in Dispute Resolution
Willamette University College of Law
Center for Dispute Resolution
October November 1-5, 2004
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THIS ISSUE - November 15, 2004:

1.  Arbitration:  An arbitration award in favor of an insured party
against their insurer is unenforceable to the extent that it exceeds the
insurance policy limit.  (Mass. App. Ct., Nov. 3, 2004)

2.  Arbitration:  If an arbitration clause mandates a buyer has to
arbitrate all of her claims but does not limit the seller in the same
manner, the clause is substantively unconscionable and unenforceable.
(Fla. App., Nov. 3, 2004)

3.  Compromise and Settlement:  An attorney’s agreement to a settlement on
behalf of a client is unenforceable by a court, over the client’s
objection, unless that client/party made explicit representations to the
other party that her attorney had full settlement authority. (D.C. App.,
Nov. 4, 2004)

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CASE SUMMARIES:

Arbitration:  An arbitration award in favor of an insured party against
their insurer is unenforceable to the extent that it exceeds the insurance
policy limit.

Scott v. Commerce Insurance Co., 2004 WL 2439524 (Mass. App. Ct., Nov. 3,
2004)

Commerce Insurance Co. (Co.) insured Scott.  The parties disagreed on how
Scott sustained his injuries so they agreed to submit the issue of
liability to arbitration.   The arbitrator found that an unidentified
third party caused Scott’s injury, and that Scott could have recovered
$112,000 from that third party.  However, the Co.’s policy limit on Scott
was for only $38,000, and they tendered that amount to Scott.  Scott
accepted the payment, but then moved to confirm the arbitration award. 
The Superior court confirmed the award and defendant appealed.  On appeal,
the court determined that it was error to confirm the arbitration award
because defendant had already tendered the policy limit and was not
required to pay in excess of that amount; any appeal was therefore moot. 
The court noted that the arbitrator had not exceeded his authority by
making an award that exceeded the policy limit because the policy limit
was of no concern to the arbitrator.  The issue before the arbitrator was
determining liability and the value of the claim.  (FC)

Full opinion available online at:
http://www.malawyersweekly.com/signup/gtwFulltext.cfm?page=ma/opin/coa/1123404.htm

Arbitration:  If an arbitration clause mandates a buyer has to arbitrate
all of her claims but does not limit the seller in the same manner, the
clause is substantively unconscionable and unenforceable.

Palm Beach Motor Cars Ltd., Inc. v. Jeffries 2004 WL 2452486 (Fla. App.,
Nov. 3, 2004)

Jeffries bought a used car from Palm Beach Motor Cars.  The single-sheet,
double-sided “buyer’s order form” contained a mandatory arbitration clause
on its back side.  The front side included a clause stating that the
signer of the form accepted the terms on both of its sides.  The print was
the smallest on the form.  After the purchase, the car had severe
mechanical defects and Jeffries sued for fraud, deceptive and unfair trade
practices, and civil theft.  Motors Cars petitioned for enforcement of the
arbitration clause.  The trial court found the clause unconscionable and
denied the motion.  To hold a clause unconscionable, the court had to find
it both procedurally and substantively unconscionable.  Because the print
on the front was the smallest on the form and the clause was on the back,
the court found procedural unconscionability.  The court found the clause
substantively unconscionable in that the clause removed Motor Cars’
liability for punitive damages and damages under state consumer liability
laws.  The court also found the clause to be unfairly unilateral as it
forced all claims by the buyer to go arbitration, but did not limit the
seller in the same manner.  Motor Cars appealed only the substantive
unconscionability.  The appellate court held that because the provision
only imposed arbitration on the buyer and not the seller, the clause was
substantively unconscionable and affirmed the lower court’s decision.
(GWM)

Complete Opinion available online at: Westlaw

Makins v. District of Columbia, 2004 WL 2471504 (D.C. App., Nov. 4, 2004)

Compromise and Settlement:  An attorney’s agreement to a settlement on
behalf of a client is unenforceable by a court, over the client’s
objection, unless that client/party made explicit representations to the
other party that her attorney had full settlement authority.

Makins filed suit against her employer, the Department of Corrections for
the District of Columbia, for sex discrimination and retaliation related
to her termination.  The district court judge referred the case to a
magistrate for settlement discussions and ordered the District to have an
individual with full settlement authority at the settlement meetings.   No
such admonition was made to Makins.  A settlement conference was held at
which Makins was not present, but was available by phone as ordered by the
judge.  Makins’ attorney, Harrison, and the attorneys for the District
reached a settlement and reduced it to writing.  Makins later refused to
sign the copy presented to her.  The District filed a Motion to Enforce
Settlement.  The court granted the District’s motion on the grounds that
Harrison had apparent authority to bind Makins and that the District
reasonably believed Harrison had full authority to settle the case.  The
appeals court reversed, holding that an agent/attorney’s apparent
authority depends upon the principal/client’s manifestations to the third
party and that Makins had made no such manifestation, instead the
District’s beliefs were based upon representations made only by Harrison. 
The court concluded that to support a reasonable belief by the District
that Harrison had full settlement authority, Makins would have had to make
representations as to Harrison’s apparent authority beyond merely sending
him to the conference and permitting him to negotiate on her behalf. (CT)

Opinion available online at: Westlaw

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Writers:  Forrest Collins, Alycia Huskins, Geoffrey McCann, Daniel
Rayfield, Kathryn Kellogg Runkle, and Cheryl Taylor
Editor:  Diane Gould
Faculty Advisors:  Richard Birke and A. Lee Jordan

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