On October 27th, 48 new mediators were sworn in to the State of Nevada Foreclosure Mediation Program (FMP). This brings the total number of authorized FMP mediators in Nevada to 293. The FMP was created by Assembly Bill 149 during the 2009 Nevada Legislature session. According to a June 21, 2010 fact sheet: The FMP applies to residential properties located in Nevada that are owner occupied and the primary home of the owners. Additional eligibility requirements include a Notice of Default (NOD) and Election to Sell that was filed with the County Recorder on or after July 1, 2009. Homeowners that received a NOD prior to July 1, 2009 and meet the other requirements listed above may agree with their lender to opt into the FMP upon written agreement to the FMP Administrator. Under the program, an eligible homeowner has 30 days after receiving a NOD to request mediation. A nonrefundable mediation fee of $200 and a “Financial Statement and Housing Affordability Worksheet” are also required from the homeowner. Once a lender receives notice that a homeowner has elected to participate in the FMP, it must participate in good faith in the mediation. After the lender pays an additional $200 mediation fee, Nevada Supreme Court Rules require that a mediation take place within 135 days. Within 10 days after a mediation concludes, the mediator must file a Mediator Statement with the FMP. If not satisfied with the outcome of mediation, either party may petition for judicial review within 15 days of receiving the Mediator Statement. Between July 1, 2009 and June 30, 2010, 79,232 Notices of Default were reported for all properties across Nevada, 8,738 FMP mediations were requested and 4,212 FMP mediations were completed. 46% of mediations completed resulted in the homeowners remaining in their homes and 89% ended with a result other than foreclosure. Prior to being sworn in, the 48 new mediators attended a two and a half day training session which focused “on the foreclosure and modification process, mediation skills and FMP procedures. The mediators consist of Nevada attorneys and professional mediators.” You can read the entire article from the Nevada Judiciary here. Over the last few months, Disputing discussed the mid-year statistics for the Third Circuit Court of Hawaii’s Foreclosure Mediation Pilot Project here, state-mandated foreclosure mediation in Florida here and Connecticut’s Home Foreclosure Mediation Program here. Technorati Tags: ADR, law, mediation

Fulbright & Jaworski has released its 2010 Litigation Trends Survey: Companies Expect More Litigation, Regulation; Continue Emphasis on Managing Legal Cost In Struggling Economy. The 2010 Fulbright & Jaworski Litigation Trends Survey was conducted from May through July by Greenwood Associates, a business research firm in Houston that has produced previous editions of the report. The survey, launched by Fulbright in 2004, is the largest polling of corporate counsel on litigation issues and concerns. Fulbright’s 2010 survey asks companies to consider, among other things, what types of litigation most concerns them, where they’re spending limited budgets and how they are adjusting approaches to litigation management as the economy struggles to emerge from the downturn. This year’s survey also delves into special topics, such as how companies are dealing with the issue of data preservation and what social technology sites are being used to advance business interests. The survey provides valuable insight including: How Should We Resolve This? Litigation versus Arbitration International Arbitration Expected to Rise: Fulbright’s latest survey found an expectation among corporate counsel that international commercial arbitration will rise in the coming year. Nearly one-fifth of all respondents (and nearly a third of U.K. respondents) expect an increase in 2011. Sector-wise, a quarter of respondents from each of the financial services, manufacturing and healthcare industries expect a rise in the use of international arbitration. International Arbitration All the Rage in U.K.: Last year, only 22% of all respondents reported having been party to an international arbitration in the previous 12 months. This year’s survey finds that overall rate more than doubled. However, the rise was due mainly to a spike in international arbitrations at U.K. companies – 52% of whom were party to an international arbitration (versus only 19% of U.S. respondents). Sector-wise, 40% of respondents from the financial services and manufacturing industries reported being party to one or more international arbitrations in the past year, with energy and technology/communications a close second with 36% of each reporting one or more international arbitration. For Domestic Disputes, Litigation Still Preferred: For disputes that are not international in nature, litigation is preferred, both in the U.S. and U.K. and across company-size and sector. But the rationale changes depending on geography: in the U.K. “lower cost” is the predominant reason for choosing litigation. Meanwhile, only 19% of U.S. respondents say lower cost leads them to choose litigation – they also point to “better results” and “reviewability” among the top reasons for choosing litigation. For the minority that prefer arbitration in domestic disputes, lower cost is the main reason. Arbitrating Labor Suits – A Special Case: More than one-quarter of U.S. respondents say they now require arbitration of employment disputes in non-union settings – that’s up from last year’s 19%. Why choose arbitration in these cases? More than 70% each of small-cap, mid-cap and large-cap companies say arbitration is beneficial for employee relations.” The full survey is available here. Disputing would like to thank Charles Rumbaugh for the link. You can find Disputing‘s blog about the 2009 Litigation Trends Survey here. Technorati Tags: law, ADR, arbitration, arbitration trends, litigation trends

The Northern District of Texas has refused to compel arbitration in a bankruptcy proceeding where the equities did not weigh in favor of ordering a non-signatory to arbitration, the party who sought to compel arbitration substantially engaged in adversarial proceedings and issues of bankruptcy law predominated. In Hallwood Group, Inc. v. Balestri (No. 3:10-CV-1198-K) (N.D. Tex. Oct. 21, 2010), the Hallwood Group appealed a bankruptcy court’s order which denied its motion to compel arbitration. The Hallwood Group owns half of the general partner shares and twenty-two percent of the limited partnership interest in Hallwood Energy, L.P., a Texas natural gas exploration and drilling limited partnership. In June 2008, Hallwood Energy entered into an agreement with FEI Shale (Shale Agreement) which provided that FEI Shale “would provide funding for drilling operations in exchange for a share of the proceeds from successful wells.” This agreement contained an arbitration clause as well as a provision which required Hallwood Energy and Hallwood Group to enter into a separate agreement (Hallwood Agreement) in which Hallwood Group agreed to provide $12.5 million in cash to Hallwood Energy. According to the record, FEI Shale was concerned about Hallwood Energy’s ability to meet its obligations and conditioned enforcement of the Shale Agreement on the creation of the Hallwood Agreement. In February 2009, a disagreement arose between Hallwood Energy and Hallwood Group regarding whether Hallwood group was obligated to make a payment under the Hallwood Agreement. Hallwood Group did not make the payment and Hallwood Energy filed for bankruptcy on March 1, 2009. On March 30th, Hallwood Energy initiated an adversarial proceeding against Hallwood Group for breach of the Hallwood Agreement. In June 2009, both FEI Shale and Phoenix/Inwood, Hallwood Energy’s largest secured and unsecured creditor, were allowed to intervene and prosecute claims on behalf of Hallwood Energy against Hallwood Group. Hallwood Group sought to compel arbitration against Phoenix/Inwood but the bankruptcy court denied Hallwood Group’s motion. The Northern District of Texas agreed with the bankruptcy court’s refusal to grant Hallwood Group’s motion to compel arbitration because an arbitration agreement was not included in the Hallwood Agreement and the arbitration clause in the Shale Agreement did not extend to the Hallwood Group. Additionally, the court stated the bankruptcy court did not abuse it’s discretion in holding that Hallwood Group could not invoke the arbitration clause in the Shale Agreement against a non-signatory under a theory of equitable estoppel. The Northern District approved of the bankruptcy court’s holding that, even assuming Hallwood Group possessed an enforceable right to arbitrate, it waived that right by substantially engaging in adversarial proceedings with Hallwood Energy. The court noted that Hallwood Group’s involvement was extensive, including the initiation of three depositions, participation in fourteen more, and the filing of several counterclaims. According to the bankruptcy court, Hallwood Group prejudiced Phoenix/Inwood by its participation in the adversarial proceedings. Moreover, because Hallwood Group first moved for arbitration nearly one year after the adversarial proceedings commenced and only two months before trial was scheduled, to allow arbitration would create an unfair delay to all creditors of the bankruptcy estate. Finally, the Northern District of Texas held that the bankruptcy court “correctly determined that it had discretion to refuse to enforce the arbitration provision under National Gypsum and In re Gandy because issues of bankruptcy law predominated.” Under National Gypsum, 118 F.3d 1056 (5th Cir. 1997), even if Hallwood Group had a right to arbitrate and did not waive it, a bankruptcy court would still have discretion to refuse to enforce an arbitration agreement when: “(1) the underlying proceedings derive exclusively form the Bankruptcy Code; and (2) arbitration would conflict with the goals of the Code.” The court stated In re Gandy, 299 F.3d 489 (5th Cir. 2002), was a factually similar case and noted that “though state law claims were present, the crux of the lawsuit deals with bankruptcy matters.” The court held that because Phoenix/Inwood accused Hallwood Group of forcing Hallwood Energy into a declaration of bankruptcy in order to avoid its obligations under the Hallwood agreement, the bankruptcy court properly determined that arbitration would conflict with the purposes of the Bankruptcy Code. The Northern District of Texas affirmed the bankruptcy court’s denial of Hallwood Group’s motion to compel arbitration. Technorati Tags: law, ADR, arbitration

The United States Supreme Court heard oral arguments Tuesday in AT&T Mobility LLC v. Concepcion, 09-893, a class-wide arbitration case from the 9th Circuit. AT&T concerns the applicability of state law unconscionability defenses to class arbitration exclusion clauses in consumer arbitration agreements. In the case, Vincent and Liza Concepcion sued AT&T in California over a charge of approximately $30 in connection with purchasing a cellular telephone. Because the amount was so small, the Concepcions also sued on behalf of other cellular phone purchasers despite that the service agreement the couple signed stated: YOU AND AT&T AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Although AT&T revised its arbitration provisions after the Concepcions filed suit, the case was allowed to proceed in federal court due to questions regarding whether California unconscionability law applied. AT&T maintains that the Federal Arbitration Act pre-empts state contract law. Oral argument before the Court lasted for approximately one hour. According to the Washington Post, The justices’ questions suggested a more limited ruling on the facts of the specific case rather than the broad decision on class-action suits that the 26 groups submitting friend-of-the-court briefs had addressed. The arguments also raised questions about states’ rights. State and federal courts in California agreed with a state law that said businesses’ attempts to ban arbitration class-action suits unfairly tilt the field against consumers. And some justices indicated that the decision should be up to the states. …[Justice] Roberts and Justice Samuel A. Alito Jr. seemed more sympathetic to AT&T. The company argued that lower courts had wrongly held that the ban on class-action arbitration suits was “unconscionable.” Alito said the “heart” of AT&T’s argument was that the traditional test of whether a contract is unconscionable “focuses on unfairness to the party who is before the tribunal. So here it would be unfairness to the Concepcions, rather than unfairness to other members of the class who are not before the court.” A review of the transcript reveals that the recent ruling in Stolt-Nielsen v. AnimalFeeds International, 130 S. Ct. 1758 (2010), weighed heavily on the minds of the Court. During oral argument, Justice Ginsburg asked AT&T’s attorney to focus on Stolt-Nielsen and explain why it was not dispositive in the case at hand. Justices Alito, Scalia and Roberts, who aligned with Justices Thomas and Kennedy to create the majority in Stolt-Nielsen, seemed likely to rule that the class arbitration exclusion clause in the case cannot be rendered unenforceable by the application of California unconscionability law. Meanwhile, Justices Breyer, Sotomayor and Kagan appeared to favor the application of state unconscionability principles, even in a class-wide arbitration context. It will be interesting to see if the Court in this case splits in a similar fashion to Stolt-Nielsen. Once available, audio from yesterday’s argument will be uploaded here. Disputing has discussed the AT&T Mobility case many times in recent months. Blogs about the case can be read here, here and here. Technorati Tags: law, ADR, arbitration