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Penalty Provisions in Nevada’s Court Annexted Arbitration Program

Posted by: on Fri, Jan 30, 2015

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The purpose of penalty provisions in Nevada’s court-annexed
arbitration programs is to dissuade litigants from ignoring or abandoning the
arbitration process and then seeking a trial de novo after the process
has concluded.  Hence, the rule allows the court to strike a request for trial de novo where a party or attorney fails “to either prosecute or defend a case in good faith during the
arbitration proceedings.”  NAR 22(A).  As a matter of law, H’s actions
have not been in good faith.  To allow H’s behavior would undermine the entire arbitration program.  To hold otherwise would destroy all incentive to participate in the court-annexed program.

When there has been no participation at all by a defendant in an arbitration,
striking the de novo request is appropriate.  In the case of New England Merchants Nat.
Bank vs. Hughes
, 556 F.Supp. 712 (E.D. Pa. 1983), the court approved the
denial of the demand for trial de novo by a party who refused to
participate in the arbitration proceedings at all under a similar rule.  The Court explained that “the goals of the arbitration program and the authority of this court would be seriously
undermined if a defendant were permitted to refuse to attend an arbitration
hearing and then demand trial de novo.”  Id. at 715.

The Nevada Supreme Court in Gittings vs. Hartz [citation needed],
held that for purposes of requesting a trial de novo “this court has
equated good faith with meaningful participation in the arbitration
proceedings.”  For example, in Casino Properties vs. Andrews, 112 Nev. 132, 911 P.2d 1181 (Nev. 1996), the Nevada Supreme Court explained that:

“the purposes of Nevada’s Court Annexed Arbitration
Program are to provide a simplified procedure for obtaining a prompt and
equitable resolution of certain civil matters.  NAR 2(a).  In Gilling vs.
Eastern Airlines, Inc
., 680 F.Supp. 169 (DNJ 1988), a federal court dealing
with the issue of good faith participation in arbitration, equated good faith
with meaningful participation and determined that if the parties did not
participate in a meaningful manner, the purposes of mandatory arbitration would
be compromised.  We agree with this
proposition and conclude that appellants did not defend the case in good faith
during the arbitration proceeding because they did not participate in a
meaningful manner.”

The very purpose of penalty provisions in court annexed arbitration programs “is to
dissuade litigants from actually seeking a trial de novo.  Without penalty provisions, litigants would have little incentive to take court-annexed arbitration programs
seriously.”  See, Court Annexed Arbitration Programs, Nevada Law Journal, 11 Nev L.J. 282 (fall 2010).

There is a narrow exception recognized in Nevada for car accident cases where
liability is clear and defense counsel does attend and participate in good
faith in the arbitration hearing – in such narrow circumstances, the courts
occasionally excuse the actual defendant from attending, so long as his
attorney attends and participates in the arbitration hearing.

The Nevada Supreme Court in Gittings v. Hartz, 116 Nev. 386, 996 P.2d 898
(Nev. 2000) upheld a request for trial de novo and ruled that a motion to
strike was improperly granted, even though the plaintiff had not appeared at
the hearing.  However, in doing so, the court identified multiple key factors which distinguish Gittings from this situation, (where H failed to participate in any discovery, in any
briefing, or to appear in person or through counsel at the arbitration hearing
itself).  Specifically in Gittings, the key differences noted are as follows: Gittings was represented by counsel.  Gittings’ attorney did appear at the arbitration hearing.
Gittings had participated in discovery and had served interrogatories
and a request for production of documents on Hartz.  Gittings also took the deposition of
Plaintiff Hartz.  Moreover, Gittings’ attorney did appear at the arbitration hearing and conducted cross-examination and presented arguments during the arbitration hearing.  Gittings conducted depositions and discovery as authorized and in addition prepared and submitted an arbitration brief to the arbitrator.  Additionally, one of the key distinguishing factors between this case and the Gittings case is that in Gittings the court relied upon the statistics compiled by the
office of the District Court Discovery Commissioner outlining the percentage of
cases in which Allstate Insurance Co. had requested a trial de novo.

In Gittings, the Supreme Court allowed the trial de novo to move forward because Gittings
had participated in good faith in all forms of discovery permitted by the
arbitrator, had prepared an arbitration brief, and had appeared through counsel
at the arbitration hearing itself where defendant’s counsel conducted
cross-examination of witnesses.  An additional key difference is that Gittings explained that she did not need to personally attend the arbitration hearing itself because liability was not
an issue
.  She had run through a red light and struck the passenger side of Plaintiff Hartz’s vehicle.  The impact was significant enough to shatter the windows and bend the frame of Hartz’s vehicle.  Both vehicles were deemed total losses.  The Nevada Supreme Court agreed that under these unique circumstances, it was not necessary for the defendant to
personally attend the arbitration hearing, as long as her lawyer did so,
because liability was not an issue, only damages, and since defense counsel was
present to participate in the arbitration, no bad faith existed.  The court held that Gittings’ decision not to contest liability at the hearing or to seek independent medical examination
through experts were insufficient grounds to completely strike the demand for a
trial de novo under these circumstances.

Likewise, in Chamberland vs. Labarbera, 110 Nev. 701, 877 P.2d 523 (Nev. 1994),
the Nevada Supreme Court also held, that in a car accident case with liability
not at issue, and the entire dispute involving solely damages arising from the
car accident, striking the trial de novo was not appropriate in that case where
defense counsel was present at the arbitration hearing and did participate and
conducted cross-examination and disputed the estimated damages.

In other words, there appears to be a minor exception to the general rule that a
party must appear at the arbitration hearing, for car accident cases where
liability is clear and only damages are being contested, and where defense
counsel does appear.  In that rare instance, the court has allowed
a trial de novo to move forward where the defendant’s attorney participated in
the discovery and in the arbitration hearing itself, even though the defendant
was not personally present at the hearing.

Here that narrow exception is not applicable.  This is not a case where
Defendant H participated in the arbitration hearing through his assigned
attorney and presented a defense and cross examined witnesses.  Mr. H
ignored the hearing altogether, ignored the notice to attend an EAC, notice to
attend an Arbitration Hearing, the Arbitration Brief that was served on his
secretary in his Las Vegas law office (which by local rule demonstrated that an
Arbitration Hearing was days away), and ignored the telephone calls and
messages that were left on his office and cell phone that the arbitration
hearing was starting.

III.  CONCLUSION

Based upon all of the foregoing, it is abundantly evident that H knew of the
arbitration proceedings as early as July 2014 (when he received and responded
to discovery requests that were also sent to the arbitrator, Robert Kurth).1  Mr. H never responded or made an appearance from August 8, 2014 until January 20, 2015 when he filed his Request for Trial de Novo.  Mr. H has not participated in the underlying arbitration proceedings in good faith or in any meaningful manner.  Consequently, his Request for
Trial de Novo should be summarily stricken and the court should uphold the
Decision entered by the Arbitrator after a full hearing on the merits with
three witnesses in attendance and testifying for the Plaintiff, Harsch Properties.  The goals of the arbitration program and the authority of this court would be seriously undermined if a defendant were permitted to refuse to attend an arbitration hearing and then simply demand a
trial de novo. This is particularly true here, where an attorney is the
defendant and has a history of ignoring eviction and rent collection
procedures.  To allow an attorney, representing himself in proper person, to ignore the court annexed arbitration process would eviscerate the public policies supporting the court-annexed
arbitration program.

DATED
this _____day of February, 2015.

 

ALBRIGHT, STODDARD, WARNICK & ALBRIGHT

Mark Albright

 

 


11It should be noted that stapled to the back of H’s Responses to Requests for
Admissions was a two sentence document entitled “Notice of Erroneous Service,”
requesting that future pleadings be mailed to a California residence
address.  However, this document was NOT filed with the court and, since it was stapled to H’s discovery responses, was not noticed by Plaintiff’s staff or apparently by the Arbitrator. However, LR 7.26 allows service on a party at his business.

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on litigation and dispute resolution, including representing clients in all forms of alternative dispute resolution and serving as mediators in private dispute resolutions for third parties.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.