Lancaster v. West: Arkansas Supreme Court Confirms Board's Award in Arbitration Between Association Members

In Lancaster v. West, the Supreme Court of Arkansas addressed whether a Board arbitration award should be confirmed or vacated. Because it found no grounds on which to set aside the award, the court affirmed its confirmation.

West, doing business as Classic Realty, employed Lancaster as a sales associate. Both before and after her employment at Classic, Lancaster was a self-employed broker. While employed at Classic, Lancaster secured an offer and acceptance for the sale of a parcel of land. Several days later, Lancaster resigned her position at Classic. Subsequently, Lancaster successfully cancelled the offer and acceptance contract by having the seller write "void" on the instrument. After the sale of the property was completed, Lancaster refused to pay West her share of the sales commission. As a result, West filed a Request for Arbitration with the Board. All of the parties received notice, and both West and Lancaster attended the arbitration hearing. Although the Arbitration Board found in favor of West, Lancaster refused to pay. West filed a Motion to Enforce the arbitration agreement with the court. The trial court found that West was entitled to the full amount of the Board arbitration award. Lancaster argued that the Board's decision was not binding upon her under Arkansas law because she was an employee of West at the time the dispute arose. However, the court noted that Lancaster waived that objection by agreeing to submit member disputes to arbitration, and by actively participating in this Board arbitration. Lancaster appealed.

On appeal, Lancaster argued four points. First, she claimed that the controversy at issue was an employer-employee dispute and, therefore, not subject to the provisions of the Uniform Arbitration Act (UAA). In connection with this point, she alleged that the trial court erred in finding that she waived her right to object to Board arbitration by appearing at the hearing. With regard to this argument, the Supreme Court of Arkansas considered whether the UAA was applicable to this case. After citing the relevant provision of the UAA, the court also cited Jim Halsey Co. v. Bonar, 284 Ark. 461, 683 S.W.2d 898 (1985), which dealt with whether questions in the law of torts were subject to written agreements to arbitrate. The court noted that the dispute did not ripen until the second offer and acceptance contract had been executed and the REALTOR®'s commission was earned. The court also noted that the issue of waiver was only relevant if the employer-employee relationship existed at the time the sale was consummated. However, such a relationship did not exist at that point.

Lancaster's second argument was that the Board's arbitration requirement did not apply to REALTORS® of the same firm and that the trial court erred in finding that she waived her right to refuse arbitration by appearing at the hearing. The Supreme Court of Arkansas reasoned that Lancaster was no longer associated with Classic at the time the sale was completed. Therefore, the parties were associated with different firms, and the Board's arbitration agreement was applicable.

Thirdly, Lancaster argued that even if she were subject to arbitration, it was not established that she received sufficient notice, and that the trial court erred in finding that she had waived notice by appearing at the hearing. The Supreme Court of Arkansas noted that Lancaster's argument was misdirected because arbitration is "strongly favored" by Arkansas public policy, and it is looked upon with approval by courts as a less expensive and more expeditious means of settling litigation and relieving docket congestion. (See Dean Witter Reynolds, Inc. v. Deislinger, 289 Ark. 248, 711 S.W.2d 771 (1986)). The court noted that the party attempting to overturn an arbitration award bears the burden of proof.

Lancaster's final argument was that she was deprived of a valuable property right without due process, and by undue means, in violation of the written agreement and Arkansas law because the arbitrators were not impartial, the notices given were insufficient and confusing, and she was extended no right to counsel or to call witnesses. With respect to partiality, the court cited Chrobak v. Edward D. Jones & Co., 46 Ark. App. 105, 731 S.W.2d 789 (1987), which states that the party attempting to set aside the award on such a basis bears the burden of proof. After rejecting all of these arguments, the Supreme Court of Arkansas affirmed the trial court's ruling.

Lancaster v. West, 319 Ark. 293, 891 S.W.2d 357 (1995).

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