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What Happens After An Arbitrator Decides A Civil Dispute?

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Many businesses prefer arbitration to litigation for resolving potential disputes with customers. To that end, many business contracts that customers are asked to sign include binding arbitration clauses. This means that instead of suing the company for breach of contract, the customer must submit to arbitration.

The arbitrator’s final decision–known as an award–is binding on both sides. The prevailing party can ask a judge to confirm the award, giving it the full force of law. The losing party may also, in very limited circumstances, ask a judge to vacate or reverse the award.

Florida Judge Confirms $2.8 Million Award Against Extermination Company

The U.S. 11th Circuit Court of Appeals recently addressed a confusing situation where both things occurred simultaneously–the prevailing customer sought confirmation of the award, while the losing business attempted to vacate the same award.

The facts of this case are fairly straightforward. The plaintiffs are a couple who purchased a coastal home in Alabama. The home’s previous owners had contracted with the defendant to “provide termite prevention services” for the property, according to the 11th Circuit. The contract required the defendant to regularly inspect the house for termites and termite-related damage. This contract was then assigned to the plaintiffs when they became the new owners.

You can probably figure out what happened next. About four years after buying the property, another pest control company came in and discovered termites. Indeed, there was so much termite damage that the house had to be demolished. The plaintiffs subsequently sued the defendant, alleging its negligence and substandard work caused the termite damage to go unchecked for years.

The case went to arbitration. The plaintiffs prevailed. The arbitrator awarded the couple approximately $2.8 million in damages.

Two days after the arbitrator’s decision, the plaintiffs filed suit in federal court to confirm the award. The defendant did not initially respond to this lawsuit. When the defense did reply, it was to argue the plaintiffs’ actions were “premature” and “procedurally improper.” The defendant apparently believed it was not required to offer a more detailed reply as it had three months to file its own lawsuit challenging the award.

Eventually, the defendant did file a separate motion to vacate the award. The judge, however, ruled that motion was untimely. The court also granted the plaintiffs’ motion to confirm the award, which was effectively unopposed by the defense.

On appeal, the 11th Circuit said the trial court acted within its discretion. The Court noted that nothing in federal arbitration law granted the defendant an “automatic three-month stay on confirmation.” To the contrary, a successful party can seek confirmation “immediately following an arbitration award.” While a trial court has the discretion to issue a stay to consider a motion to vacate, it is not required to do so. In simple terms, the trial court was not required to wait to consider the plaintiff’s motion for confirmation..

The 11th Circuit did, however, recommend that in similar future cases, trial courts should “enter a briefing schedule that sets simultaneous deadlines for the losing party to file an opposition to confirm, if any, any to file a motion to vacate, modify, or correct, if any.” This would hopefully prevent any confusion in future arbitration cases.

Contact a Florida Civil Litigation Lawyer Today

Legal disputes are often quite taxing on the parties involved. That is why it is best to work with an experienced Sarasota civil litigation attorney who will look out for your interests throughout the process. Contact the offices of Moran, Sanchy & Associates today if you are involved in a potential civil matter and would like to schedule a consultation with a member of our team.

Source:

media.ca11.uscourts.gov/opinions/pub/files/202012904.pdf