The United States Court of Appeals for the Fifth Circuit held that an arbitration clause is enforceable notwithstanding that the parties had terminated their services contract.
In Hall-Williams v. Law Office of Paul C. Miniclier, PLC, No. 09-30113 (5th Cir. Jan. 13, 2010), Carolyn Hall-Williams (Hall-Williams) is a former client of the Law Office of Paul C. Miniclier (Miniclier). In September 2006, Hall Williams hired Miniclier to represent her in an insurance dispute with Allstate Insurance Company (Allstate) regarding a claim for damages caused by Hurricane Katrina. The retainer contract provided for 33 1/3 % contingency fee if the case settled before suit was filed and a 40% contingency fee thereafter. The contract also provided for binding arbitration by the Louisiana State Bar Association for disputes arising under their contract.
Miniclier filed a lawsuit against Allstate in August 2007. At that time, David Binegar (Binegar) and Tiffany Christian (Christian) were employed by Miniclier and worked on the Hall-Williams lawsuit against Allstate. However, on March 7, 2008 Binegar and Christian resigned and formed their own law firm. Hall-Williams hired them and terminated Miniclier as her counsel. On March 13, 2008, Allstate and Hall-Williams settled their dispute for an undisclosed amount. Miniclier insists that he was due 40% (plus costs) of the settlement and requested the matter to be submitted to arbitration. The district court denied Miniclier’s motion to compel arbitration and Miniclier now appeals.
The Fifth Circuit highlighted the legal standard to grant a motion to compel arbitration:
- Whether there is a written arbitration agreement. The court noted that the parties do not dispute the existence of an arbitration agreement and addressed Hall-Williams claims that:
- The agreement is unenforceable due to the termination of Miniclier’s services. The court, citing the FAA ( “a written provision in any…contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract…, shall be valid, irrevocable, and enforceable…”) concluded that the arbitration clause is enforceable.
- Miniclier had waived his right to arbitrate. The court stated that “[w]aiver will be found when a party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party.” Hall-Williams claims that Miniclier waived his right to arbitrate by: (a) Filing a motion to intervene, (b) Sending an email declining to attend the settlement conference, and (c) Failing to invoke arbitration in response to a magistrate judge’s order requiring a fee application.
- Whether any of the issues is referable to arbitration. The court concluded that the underlying dispute is referable to arbitration.
However, the court concluded that these events do not demonstrate Miniclier’s waiver.
Accordingly, the court vacated the judgment of the district court and remanded for referral to arbitration.
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