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Doleac v. Real Estate Professionals9/15/2005
ecedent' language evidenced an intent for non-binding arbitration." Id. In determining that its interpretation was consistent with other courts, the court cited Kelleher v. Cersosimo, 320 N.E.2d 840 (Mass. App. Ct. 1974), in which the Appeals Court of Massachusetts construed an arbitration clause similar to the one in their case. The Massachusetts court, in rejecting the argument that the arbitration award was non-binding, noted that the "condition precedent" language was a historical carryover from a time when arbitration agreements were viewed with disfavor as an attempt to oust courts of jurisdiction. Kelleher, 320 N.E.2d at 841. The Colorado court in Ringwelski held that the agreement provided for binding arbitration and that the trial court was precluded from addressing the merits of plaintiffs' complaint. 919 P.2d at 959.
. Similarly, the Fourth Circuit dealt with the issue of whether the parties agreed to arbitration as a binding process, one that would bar litigation, or whether the agreement to arbitrate was simply a dispute settlement process that was a condition precedent to litigation. Rainwater v. Nat'l Home Ins. Co., 944 F.2d 190 (4th Cir. 1991). It stated that this determination was critical because the Federal Arbitration Act provides that a court has jurisdiction to confirm an award only if the parties have agreed that the award is final. Id. at 192. That court concluded that reference to the American Arbitration Association rules is enough to make arbitration binding. Id. at 193. In coming to this conclusion, the Fourth Circuit cited Commonwealth Edison Co. v. Gulf Oil Corp., 541 F.2d 1263, 1272-73 (7th Cir. 1976) and Varley v. Tarrytown Assocs., Inc., 477 F.2d 208, 210 (2d Cir. 1973), which also held that if the clause makes reference to the American Arbitration Association rules then the arbitration is binding. 944 F.2d at 193. The Fourth Circuit held that the arbitration was final and binding. Id. at 194.
. Likewise, the Fifth Circuit has also dealt with whether such an arbitration clause calls for binding arbitration. In McKee v. Home Buyers Warranty Corp., 45 F.3d 981, 983 (5th Cir. 1995), the Fifth Circuit, citing the above mentioned circuits, also held that arbitration is biding where the rules under which the arbitration is conducted call for binding arbitration. In McKee, the court pointed out that it was undisputed that the agreement provided that the American Arbitration Association rules would govern if the dispute was submitted to arbitration. Id. at 983. The Fifth Circuit agreed with the Fourth Circuit's treatment of this issue in Rainwater. Id. at 984. In citing Rainwater, the Fifth Circuit concluded that such an arbitration clause does "not undermine the binding nature of arbitration, but instead applies to the confirmation process permitted by 9 U.S.C. ยง 9." Id. The Fifth Circuit held that "because the Kilpatricks submitted the dispute to arbitration under AAA rules that required binding arbitration unless the warranty provided for non-binding arbitration, and the warranty did not provide for non-binding arbitration, the district court was correct in determining that the arbitration was binding." Id.
. Here, the arbitration clause specifically makes arbitration a condition precedent to any judicial action. Thus, this Court finds that the clause is valid and that no judicial action can be maintained until arbitration has been pursued. Furthermore, the arbitration clause in question also states that the dispute shall be submitted to arbitration "pursuant to the rules of the American Arbitration Association." Pursuant to the above circuits, including the Fifth Circuit, this Court holds that arbitration is binding and final since the arbitration clause
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