I Had Heard of the American Arbitration Association

Sharon McCann

I Had Heard of the American Arbitration Association

I had heard of the American Arbitration Association. I had, mistakenly, it turns out, believed it to be an alternative to the legal system which allowed for a more timely, less confrontational resolution to contract disputes. What it really represents is another opportunity to pay some one to provide a service for which you should not have to pay. It harkens to all of the issues in our troubled legal system which allows for justice for those that can afford it.

In our case, part of the way through the construction of our home, the builder abandoned the project and declared that he was planning on declaring bankruptcy. We were screwed. We had no home, a partially built, not weather tight, construction site; and a massive debt which was still ours to pay despite the fact we still had no home to live in. I immediately filed with the AAA to attempt to determine what of the builder’s assets we could claim. I needed help in getting them to give me what information they had about the house so that we could attempt to complete the construction. I needed the construction documents. I got nothing.

Right up front we had to pay $1,800.00 to AAA just to get them to accept the case. I filed every form they requested. I jumped through every hurdle. I was assigned a case manager. She was actually very nice and professional. The problem was, she was powerless to make the system work any better than it did.

The builder refused to respond to anything that was sent to him. He never responded to any notices or requests for information. It appeared that he had no intention of trying to defend the indefensible. Still, the process was getting me nothing. Months slid by, I was stranded on getting the electrical system installed because we were missing key information that it took more than two months to reconstruct. Money poured out the window with each month of delay. AAA had no remedy for this situation, all they could, or would, address was the contract violation.

Finally, four months after we filed, we were assigned an arbitrator. At this point, after a hearing date had already been set, the builder lawyered up. Some one had apparently noticed that he was named personally on the suit. The lawyer tried to hold up the entire process. The arbitrator refused. I cheered, thinking that perhaps this would be OK. How hard could it be when the builder had so clearly violated the contract?

I was wrong. The hearing was held over the phone. The arbitrator essentially seemed to think his role was to referee to only the strictest letter of the law. He was aware that I was not an attorney, yet he refused to answer questions when I questioned the opposing lawyer’s tactics. He refused to respond when asked directly if his tactics were even legal. When I objected, he remained silent. He allowed the lawyer to verbally browbeat and abuse me, despite the fact that no one argued that the contract had not been violated. He allowed the lawyer to be dismissive of my points, and refused to respond when I demanded that he insist that I be allowed to be heard. As far as I could tell, there was little reason for him to be in the conversation at all.

The hearing was not taped. When I objected, later, that a point had been agreed upon during the hearing, he refused to mediate between the other lawyer and me regarding who had been correct. He finally responded that since we could not agree, he would believe that the agreement had not taken place. He agreed to a demand that we produce over a hundred pages of documentation to “prove” our losses when the other attorney stated openly that his client had no intention of making any restitution regardless of how high or low the judgment was. After we finally got our piece of paper stating that the builder owed us over $108,000.00 AAA told us that they could not help us at all with the enforcement, nor would they help us attempt to get any hold on the builder’s assets. We got a piece of paper. Then, we got a bill from AAA asking for an amount for expenses over the original fee.

Essentially, we paid over $2,000.00 more to prove that we had already been shafted for over $100,000.00; to be verbally abused and browbeaten, and to receive a piece of paper that was worthless.

There were certainly mistakes that I made. Had I been able to afford legal counsel, I probably would have done better. But, with losses such as we were facing and no money collectible from the builder no lawyer would take our case without a large retainer. I honestly do not know what would have been gained by using the civil system instead of arbitration. I do know that we were badly screwed by a broken system and left by the side of the road, where for profit vultures, repeated the process.

Posted at 9:36 AM, Jan 10, 2007 in Permalink | Comments (7) | TrackBack (0)

Comments

You might want to check out this site, www.adrworld.com and the following article & case they are talking about, (for any readers who were refused an arbitration request). I agree that arbitration isn't helping consumers and I believe in most cases it's less likely to help than litigation. BOTH are often unaffordable and neither can guarantee you'll collect if you win. The entire system for compensating consumers for the wrong-doing of corporations is sorely lacking in fairness and practicality.

Companies Refusing to Arbitrate Lose Right, Court Rules
Says Case Highlights 'Dark Side' of Arbitration Policies
By Staff Reporters, ADRWorld.com
(12.12.2005) A federal appeals court last week dealt a blow to companies that require employees to arbitrate disputes when it ruled that they cannot initially refuse to participate in the process and expect to compel arbitration later.
Ruling against a major retailer, the U.S. Court of Appeals for the Ninth Circuit said the case "displays a dark side of our nation's policy in favor of arbitration" in highlighting the fact that an arbitration provider cannot enter a default judgment against a party that refuses to participate in arbitration proceedings.
"We have the occasion to make clear that when an employer enters into an agreement requiring its employees to arbitrate, it must participate in the process or lose its right to arbitrate," the Ninth Circuit said in its Dec. 6 ruling in Brown v. Dillard's, Inc. (No. 03-56719).

Was it mandated in the contract you had to use arbitration to resolve the issue? Perhaps court would have been better.

At this point you need to get a lawyer. If yoou are a lawyer you need to get the arbitration a ward converted into a court judgement. This is not difficult if you know what you are doing. If you have never done this before, it would be an excelllent learning experience. Once you have a judgment you can issue an execution upon it to the apprpriate judicial enforcement officer. They levy execution on the assets of the judgement debtor and could ultimately hold a judicial auction of their assets to satisfy your judgement. Another resolution would be to attach their bank accouts iif you knew their banking affiliations. Good luck!

Collection from residential builders is an excersize in futility. Most, both individuals and small companies, are on a hand-to-mouth existance. The AAA only seems to work when there is a significant amount of money at stake and there are numerous issues, all interrelated, which make the case exteremely complex. Often the arbitrators are experts and/or pratitioners in the field so the parties cannot pull any fast ones as the arbitrators know all the tricks.

As for your matter: 1. You should not have had the arbitration hearing over the telephone. 2. If the arbitrator was not controlling the attorney, you should have insisted on another arbitrator. 3. It appears you did not fully understand what the AAA can and cannot do. 4. The builder's attorney did exactly what he was suppose to do, that is: The defendents's counsel's main responsibility is to slow the proceedings down; as opposed to the plaintiff's counsels is to make the matter proceed as quickly as possible [Sad but true.]

While it is hindsight, when dealing with a small builder or small construction company: ALWAYS GET A PERFORMANCE BOND. It is money well spent.

Lastly: If the builder has a license, go to the State Agency that issues the license. 1. They may have a fund that will partially reimburse you for your loss. Many States put licensing fees in these funds to reimburse consumers. 2. File a complaint and ask for the builder's license to be permanently revoked. Make sure you check for both builder's and remodeler's licenses. Insist that there be a hearing and go to it. Before you do: 1. It will take time and effort to prepare [LOTS!], but do so. 2. Leave your emotions at home; deal with just the adverse economic effects on consumers, as well how this builder's actions could deminish the value of a license. The committee hearing this is interested in broad issuses, of which yours is indicia.

Unfortunately, your experience is all too common. When constructing a house, cutting corners always is unwise; hiring an architect would have been one way to have protected yourself, plus you would have gotten a more functional house, plus you would have had the architect's errors and ommissions insurance to help you out of the situation you have found yourself in.

To summarize: With real estate, and building, and remodeling, do not try and do it yourself. Hire a knowledgable attorney, and/or an engineer, and/or an architect, and/or a construction manager. It is money well spent as they work for YOU, not for the builder, and are there to protect YOUR interests.

This is all based on 30-years experience as a real estate appraiser and consultant, the last 10-years of which were spent providing litigation support and expert witness testimony.

While your situation is so sad, and I do empathize with you, it is all too common.

Hi WW,

You make a couple good observations, but paint a rosier than reality picture of the mandatory arbitration process.

One fundamental point that your comment omits is that arbitrators don't have to follow the law and don't have to given written opinions. Moreover, they have a financial incentive to rule for the businesses because if they don't they will switch arbitrators or arbitration companies.

You are also not entitled to normal discovery in arbitration.

Please explain how the lack of discovery, lack of need to follow the law, lack of need to write an opinion, and the lack of impartiality of the tribunal can ever be as fair as a regualr trial?

There are many more points to make here, but they're made in our other posts on this issue available here.

http://www.tortdeform.com/movabletype/mt-search.cgi?IncludeBlogs=1&search=mandatory+arbitration

Thanks for your comments, keep them coming.

Cindy's complaint has nothing to do with arbitration, though. She won her case. Every complaint she makes about the arbitration process--that it's expensive, that it's slow, that they don't help with collection, that unrepresented parties are at a disadvantage, that losing parties can delay the process, that opposing lawyers browbeat you--goes double for the litigation process.

Her complaint is with her failure to obtain a surety bond. Why is no one asking why she got legal advice with the contract, but the legal advice failed to point out this basic flaw in her contract? The lack of the surety bond cost Cindy over $100,000. The arbitration clause probably saved her money and aggravation, because it would've taken much longer to collect in court.

Sharon,

you have no idea how much I feel your pain and outrage.I am so sorry to see anyone join our club of the clause cursed consumer.

Can you believe we thought this would be less confrontational,faster and cheaper? Like the rest of the very duped American people,we believed the spin.

Our deposistions were degrading and conducted in such an uncivilized manner. The lawyers taunted,screamed, belittled, and laughed at us. They would roll their eyes and make noises.

Your term, profit vultures fits these lawyers as well as AAA. I refer to AAA as a demented collection agency. Our case was a deaming three days. We all swore to tell the truth but,it seemed my husband and I were the only ones who took it seriously. The arbitrator did rule they committed fraud. She had too because there were other cases where they sued their own subcontractors and used my house as the example of the most defective... before we ever saw it.

We got 5% of what we ask for and she ruled we had to pay their attorneys' fees for daring to try to go to court for fraud.

I am so sorry, I can truely empathize.