[Dis-Res] April 30 newsletter

[Brook B Reinhard]

Dear subscriber:

Please find enclosed the latest case summaries from Recent Developments in
Dispute Resolution.

HEADLINES:

** ARBITRATION: Award for attorney fees, based on bad faith by one party,
overrides fee-splitting provision in arbitration agreement (2nd Cir.
(N.Y.))

** MEDIATION: Mediator not authorized to excuse parties' attendance from
court ordered mediation.  (N.C. App.)

CASES

**Arbitration: Award for attorney fees, based on bad faith by one party,
overrides fee-splitting provision in arbitration agreement (2nd Cir.
(N.Y.))

//ReliaStar Life Ins. Co. of N.Y. v. EMC Nat. Life Co.//, 2009 WL 941173,
(2nd Cir. (N.Y.), April 9, 2009).

ReliaStar Life Insurance Company and National Travelers Life Company
contracted together for reinsurance services. The contracts contained an
arbitration clause which provided that arbitrator's fees would be split
and each party would pay their own attorneys' fees. Several years later,
there was a dispute and National invoked the arbitration clause. The
arbitrators found for ReliaStar and entered an award for $21 million. The
arbitrators found that National had engaged in bad faith during the
arbitration and awarded ReliaStar an additional $4 million in costs and
attorney fees. When ReliaStar petitioned the district court to enforce the
award, however, the court vacated the attorney fees award based on the
contract's fee provisions. ReliaStar appealed to the United States Court
of Appeals for the Second Circuit. The Court reversed and remanded. It
held that the arbitration agreement gave the arbitrators sufficient
authority to sanction National's bad faith conduct through the fee award.
The Court noted that under the "American rule" parties are usually
expected to bear their own attorney costs in litigation and arbitration.
But the Court held that bad faith by a party was an exception to that
rule. The Court ruled the attorney fee provisions in the arbitration
clause were based on good faith participation; if the parties had wanted
to preclude fee shifting based on bad faith, they would have had to do so
explicitly. (BR)

Case available on Westlaw or as a PDF on the Second Circuit's web site at
http://www.ca2.uscourts.gov/decisions/isysquery/740b5b37-ba94-46e2-8c3f-bcb888fb0f13/1/doc/07-0828-cv_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/740b5b37-ba94-46e2-8c3f-bcb888fb0f13/1/hilite/


** Mediation: Mediator not authorized to excuse parties' attendance from
court ordered mediation.  (N.C. App.)

//Perry v. GRP Financial//, 2009 WL 909847, 2009 WL 782897 (N.C. App.,
Apr. 7, 2009).

Irene Perry, along with friends and family members, sued GRP Financial
Services and JWB Properties, alleging that JWB had converted certain
property owned by the plaintiffs after foreclosing upon Perry's home. 
Perry and JWB were ordered by the trial court to attend mediation.  North
Carolina rules require that all parties with settlement authority
physically attend the mediation, unless all the parties and the mediator
agree that someone need not be present, or the court issues an order
excusing someone's presence.  Perry attended the mediation but three of
his co-plaintiffs failed to attend based on financial concerns and travel
complications. Plaintiffs requested that JWB authorize the three
co-plaintiffs to attend telephonically. The mediator allowed the request
over the objection of JWB. The mediation took place, with Perry present
and the three co-plaintiffs available by phone, and no settlement was
reached.  JWB then moved to sanctions against Perry and the three
co-plaintiffs for their failure to attend. The trial court granted the
motion. Perry and the co-plaintiffs appealed to the North Carolina Court
of Appeals.  The Court affirmed. It held the mediator lacked authority to
grant the parties to attend telephonically.  The Court held that the
parties' absence was not excused for good cause; Perry and her
co-plaintiffs were aware that not everyone would be able to attend the
mediation and should have asked the court for authorization in advance.

Opinion available from Westlaw or online from the North Carolina Courts
website at:
http://www.aoc.state.nc.us/www/public/coa/opinions/2009/080080-1.htm.


Brook Reinhard
Student Editor

Contributors:
Daniel B Peters
Brook Reinhard

Center for Dispute Resolution
Willamette University, College of Law
The Oregon Civic Justice Center
790 State Street SE
Salem, Oregon 97301
Telephone: 503-375-5369
Fax:  503-370-6998