Arbitrator Made Disclosures “In Abundance of Caution.”
One basis for vacating an arbitration award is when the arbitrator’s denial of a postponement results in substantial prejudice. Another basis for vacating an award is when the arbitrator is obligated to disqualify himself and fails to do so. In McElvany, Inc. v. Hassan Ahmadi et al., No. F069809 (5th Dist. 6/9/16) (Hill, Franson, Pena) (unpublished), the defendants/appellants argued that both bases justified vacating the arbitrator’s award in favor of plaintiff/respondent. The Court of Appeal disagreed, affirming the judgment confirming the award.
Here, the arbitrator denied a request for a continuance by an attorney who argued he was newly substituted, and a co-defendant was unavailable after recent surgery. The attorney’s request for a continuance was denied, and neither the defendants nor their attorneys appeared for the arbitration. Though the co-defendant had a right to appear, she did not express a desire to be present, and there was no evidence presented to the arbitrator that her presence was necessary to fairly present the case. As to the failure of the attorneys to appear, there was no evidence that the outcome would have been different if they had presented the case on the merits.
The arbitrator also refused to disqualify himself, after disclosing (a) his firm had hired an associate who had formerly worked for plaintiff’s law firm, but would be isolated from the case; (b) plaintiff’s law firm hired the sister of the arbitrator’s paralegal as a receptionist. The Court of Appeal concluded that the information disclosed by the arbitrator did not require disqualification, because it would not cause a reasonable person to believe the arbitrator was biased, and because it did not create a conflict of interest.
The panel’s view of matters may have been colored by the fact that several postponements of the arbitration had been granted, and the defendant had also used the filing of a bankruptcy petition to stave off the outcome.
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