Monday, September 8, 2014

Kentucky Court of Appeals Orders Arbitration; Arbitrator to Determine Timeliness of Demand for Arbitration

Kentucky Court of Appeals Orders Arbitration;
Arbitrator 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.

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