Another Expensive and Lengthy Arbitration

In the April 30, 2018 appellate decision of Weiler v. Marcus & Millichap Real Estate Investment Services, Inc., the Court of Appeal reversed the trial court's decision requiring the Plaintiff Weiler to arbitrate over her objection that she could not afford it. The trial court had required the parties to split the fees and expenses of three arbitrators. Their combined hourly rate was $1450.00 per hour. After 3 years of arbitration, the arbitrators' fees had exceeded $15,000.00 per side and were anticipated by AAA to exceed $100,000.00 per side. That's on top of the attorney fees, expert witness fees and other discovery expenses.

Was the lawsuit particularly complex? Plaintiffs has exchanged two properties in Las Vegas for a commercial property in Texas for $4.1 million. Marcus & Millichap brokered and arranged the sales and the purchase. The Texas tenant missed many rent and property tax payments. Eventually, the Plaintiff sold the property for $2.1 million, and sued Marcus & Millichap for the difference.

The number of parties? The buyer and the broker. The opinion does not mention them, but the seller and the tenant might have been witnesses or even additional parties. Documents? The purchase, disclosure and escrow closing documents. The tenant default documents. Evidence of the value of the property when Plaintiff sold at a $2 million loss? Not that many witnesses or documents.

Regardless of the apparent merits and weaknesses of the Plaintiff's case, my point is that the arbitrators were not getting the case to a prompt final arbitration hearing. Most cases in California are decided in a year, certainly less than 2 years, unless the parties push it out. 3 years?

And in lieu or over $200,000.00 in arbitrators' fees, parties to a court trial get a courtroom, a judge and his clerk, a law clerk and a bailiff, for $435.00 per side. $870.00 total.

There are a variety of pros and cons for court trials versus arbitration. Speed and cost are not always factors in favor of arbitration.

If you are trying to decide whether or not to include an arbitration clause in a contract or whether to agree to arbitration of a pending dispute, discuss carefully with your attorney the pros and cons, and especially whether in your case arbitration will really be faster or less expensive, or not, as it was in Weiler v. Marcus & Millichap.Or call me.