This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Monday, September 8, 2014
Kentucky Court of Appeals Orders Arbitration; Arbitrator to Determine Timeliness of Demand for Arbitration
Court of Appeals Orders Arbitration;
to Determine Timeliness of Demand for Arbitration
In a recent decision, the Kentucky
Court of Appeals reversed a trial court determination to not refer a dispute to
arbitration.While the trial court had
ordered discovery as to whether the demand for arbitration was timely, the Court
of Appeals directed that determination is to be made by the arbitrator.Roberts
v. Molyneaux, No. 2013-CA-000044, 2014 WL 4177443 (Ky. App. Aug 22, 2014).
Roberts bought a house from Talbott;
Molyneaux was the realtor.Both Talbott
and Molyneaux told Roberts that the property could be easily converted into a
duplex.After closing on the property
Roberts proceeded with the work to convert the property.He received a cease and desist order as to
those efforts, and was denied a conditional use permit.In accordance with the Residential Sales
Contract, Roberts sought mediation and arbitration.The mediation took place, but no agreement
was reached. When Roberts sought arbitration, Talbott and Molyneaux brought a
declaratory judgment action seeking to avoid arbitration on the basis that
Roberts did not seek arbitration within a year of when he should have known of
the zoning restrictions on the property.They then sought discovery as to Robert’s knowledge, which he in part
refused to answer on the basis that it is the arbitrator who should rule on
whether the petition for arbitration was timely.The trial court denied the application for
arbitration, and this appeal followed.
Relying upon Beyt, Rish, Robbins Group v. Appalachian Reg’l Healthcare, Inc.,
854 S.W.22 784 (Ky. App. 1993), the Court of Appeals affirmed that “the
timeliness of tn arbitration demand is to be decided by the arbitrator.”From there, after referencing Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850 (Ky.
2004), the Court wrote:
Because Kentucky courts favor upholding arbitration
agreements, we believe the present dispute is best addressed by an arbitrator,
as the parties intended at the time they signed the agreement. The trial
court’s order denying Roberts’s motion to compel arbitration was in error, and
on remand, the trial court is instructed to compel arbitration.