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    Landlord-Tenant Alternative Dispute Resolution

    Reference Outline

    Eric J. Millner

    R. Jason Pierce

    Bourland, Wall & Wenzel,

    A Professional Corporation

    Attorneys and Counselors

    301 Commerce Street, Suite 1500

    Fort Worth, Texas 76102

    (817) 877-1088(877) 429-9529 (toll-free)

    (817) 877-1636 (facsimile)

    [email protected] E-mail:

    Jasons E-mail: [email protected]

    Presented to

    5th Annual Landlord-Tenant Law in Texas

    November 3, 2010

    Information set forth in this outline should not be considered legal advice, because every fact pattern is unique. The information setforth herein is solely for purposes of discussion and to guide practitioners in their thinking regarding the issues addressed herein.

    All written material contained within this outline is protected by copyright law and may not be reproduced without the express written

    consent of Bourland, Wall & Wenzel.

    Bourland, Wall & Wenzel, P.C.

    248408

    mailto:[email protected]:[email protected]
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    ADR

    TABLE OF CONTENTS

    I. INTRODUCTION/SOURCES OF ADR LAW ............................................................................... 3II. MEDIATION ................................................................................................................................... 3

    A. What is mediation? ............................................................................................................. 3B. Confidentiality of the mediation procedure ........................................................................ 3

    III. ARBITRATION .............................................................................................................................. 4A. What is arbitration? ............................................................................................................. 4B. What is the legal basis for arbitration? ............................................................................... 4C. The Arbitration Agreement ................................................................................................. 5D. The Arbitration Process .................................................................................................... 13E. The Arbitration Award ...................................................................................................... 15

    APPENDIX A.................................................19

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    ADR

    I. INTRODUCTION/SOURCES OF ADR LAW

    Alternative Dispute Resolution is a blanket term used to describe a wide variety of forums beyond

    the courthouse available to parties to seek to resolve their disputes. The term can refer to informal

    and formal settlement conferences, moderated settlement conferences, mediation, trial by a special

    judge, mini-trial, arbitration, and the burgeoning collaborative law process (used in family law

    cases). Beyond informal settlement negotiations and settlement conferences, which are not

    governed by specific rules, mediation and arbitration are by far the most common methods

    employed by parties in seeking a resolution of disputes somewhere other than the courthouse.

    Thus, this paper will focus primarily on those procedures.

    Both Texas and federal law have strong public policy preferences in favor of alternative dispute

    resolution. The reason is obvious alternative dispute resolution procedures take the pressure off

    of the courts, which are already overloaded, especially in the larger counties. Texas has specifically

    provided for a number of alternative methods of dispute resolution in Title 7 of the Civil Practice

    and Remedies Code, several provisions of which are discussed in greater detail later in this paper.Congress has also authorized the arbitration process in the Federal Arbitration Act, which is found

    in Title 9 of the U.S. Code.

    II. MEDIATION

    A. What is mediation?

    Texas Civil Practice and Remedies Code Section 154.023(a) defines mediation as a

    forum in which an impartial person, the mediator, facilitates communication between

    parties to promote reconciliation, settlement, or understanding among them.

    Mediation is an opportunity for parties to a dispute to attempt to reach a mutually

    agreeable resolution of their dispute with the assistance of an intermediary who facilitates

    the discussion. The mediators role is not to make a judgment or determination of the

    relative merits of the parties positions. However, good mediators are able to assist the

    parties in evaluating the relative strengths and weaknesses of their cases and exploring

    effective and creative ways to resolve their disputes.

    The mediation process is notable for its flexibility. There are no hard and fast rules for

    the procedures that are involved in mediation. It can be conducted in a single session

    over the course of a few hours or it can be conducted in stages broken out over the course

    of a few days, weeks, or even months. The parties can spend time discussing the disputetogether in the same room or they can stay separated from each other, communicating

    only through the mediator and/or their lawyers. The parties can mediate the entirety of

    the dispute or they can mediate only specific issues in controversy.

    B. Confidentiality of the mediation procedure

    If there is one rule that does apply to mediation, though, it is that ofconfidentiality. See TEX. CIV. PRAC. & REM. CODE 154.073. The

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    communications made in the course of mediation are confidential and privilegedfrom discovery in a judicial or administrative proceeding. See id.

    III. ARBITRATION

    Arbitration is one of the most well developed areas of alternative dispute resolution law.

    A. What is arbitration?

    Arbitration is a procedure whereby parties can present their dispute to a neutral

    third party who may render a specific award. See TEX.CIV.PRAC.&REM.CODE

    154.027. The arbitrators decision may be either non-binding or binding on theparties. See id.

    B. What is the legal basis for arbitration?

    1. Texas Law.

    There are at least three specific provisions for arbitration in Title 7 of the

    Texas Civil Practice and Remedies Code, which are as follows:

    a. Chapter 171 of the Texas Civil Practice & Remedies Code setsforth the general arbitration provisions.

    b. Chapter 172 of the Texas Civil Practice & Remedies Code setsforth arbitration rules applicable to international commercial

    disputes.

    c. Chapter 173 of the Texas Civil Practice & Remedies Code sets

    forth rules applicable to arbitration between members of non-profit

    entities.

    2. Federal Law.

    The Federal Arbitration Act applies to all suits in either state or federal

    court when the disputes concerns a contract evidencing a transactioninvolving interstate commerce. Jack B. Anglin Co. v. Tipps, 842 S.W.2d

    266, 268-70 (Tex. 1992). A contract evidences interstate commerce where

    it affects interstate commerce. Am. Med. Techs., Inc. v. Miller, 149S.W.3d 265, 269 (Tex. App.Houston [14th Dist.] 2004, no pet.). The

    question of whether a contract affects interstate commerce is one of fact.TMI, Inc. v. Brooks, 225 S.W.3d 783, 790 n.6 (Tex. App.Houston [14

    th

    Dist.] 2007, pet. denied) (citingIn re Educ. Mgmt. Corp., 14 S.W.3d 418,

    422 (Tex. App.Houston [14th Dist.] 2000, orig. proceeding)). Where it

    applies, the Federal Arbitration Act preempts any inconsistent provisions

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    in the Texas Arbitration Act unless the parties specifically excluded itsapplication in the contract. Am. Med. Techs., Inc., 149 S.W.3d at 269.

    C. The Arbitration Agreement

    1. General Application of Arbitration Agreements.

    A determination of whether a claim is subject to arbitration turns on two

    questions: whether a valid and enforceable agreement to arbitrate exists

    and, if so, whether the claims fall within the scope of the agreement. SeeJ.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); Dallas

    Cardiology Assoc., P.A. v. Mallick, 978 S.W.2d 209, 212 (Tex. App.Texarkana 1998, pet. denied); see also IKON Office Solutions, Inc. v.Eifert, 2 S.W.3d 688, 693 (Tex. App.Houston [14th Dist.] 1999, no pet.).

    The court has no discretion and must compel arbitration if the answer to

    both of these questions is yes. Dallas Cardiology Assoc., P.A., 978S.W.2d at 212. Whether an agreement exists is a fact question while the

    scope of the agreement is a legal question. See IKON, 2 S.W.3d at 693-94. Because arbitration is highly favored under Texas law, any doubts

    must be resolved in favor of arbitration. See id. at 694.

    2. Existence of a Valid and Enforceable Agreement

    a. Enforceability is Governed by General Contract Principles

    An arbitration agreement is a contract and, as such, is interpreted

    and enforced under traditional contract principles. See J.M.Davidson, Inc., 128 S.W.3d at 227-28. To establish an enforceable

    contract, one must show: (1) an offer, (2) an acceptance, (3) mutualassent, (4) execution and delivery of the contract with the intent

    that it be mutual and binding, and (5) mutuality of obligation

    supporting the contract. See Texas Gas Util. Co. v. Barrett, 460S.W.2d 409, 412 (Tex. 1970); Buxani v. Nessbaum, 940 S.W.2d

    350, 352 (Tex. App.San Antonio, 1997, no writ).

    No particular form is required for an arbitration agreement so longas there is a clear expression of intent demonstrated. See

    Wachovia Securities, LLC v. Emery, 186 S.W.3d 107, 113 (Tex.

    App.Houston [1st Dist.] 2005, no pet.).

    Arbitration agreements can be either stand-alone agreements or canbe part of an underlying contract. See In re AdvancePCS Health,L.P., 172 S.W.3d 603, 607 (Tex. 2005). When the arbitration is

    part of an underlying contract, the mutual promises in that contractcan support the arbitration agreement. Id.; In re FirstMerit Bank,

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    N.A., 52 S.W.3d 749, 757 (Tex. 2001). Where the arbitrationagreement is a stand-alone contract, binding, mutual promises are

    required to support the agreement. AdvancePCS Health, L.P., 172

    S.W.3d at 607.; J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223,228 (Tex. 2003);In re Halliburton Co., 80 S.W.3d 566, 569 (Tex.

    2002). The agreement may be illusory and unenforceable whereone party can unilaterally avoid the agreement to arbitrate. In re

    Champion Technologies, Inc., 222 S.W.3d 127, 130 (Tex. App

    Eastland 2006, pet. denied).

    b. Who is bound by the agreement?

    Since the obligation to arbitrate a dispute is contractual in nature, it

    goes without saying that, in general, only the signatories to the

    arbitration agreement are bound thereby. In re James E. Bashaw

    & Co., 305 S.W.3d 44, 54 (Tex. App.Houston [1st Dist.] July 23,

    2009, no pet.). The Texas Supreme Court has, however,acknowledged six theories for binding non-signatories to anarbitration agreement: (1) incorporation by reference; (2)

    assumption; (3) agency; (4) alter ego; (5) equitable estoppel; and

    (6) third-party beneficiary. See In Re Kellogg Brown & Root, Inc.,

    166 S.W.3d 732, 739 (Tex. 2005). Despite this acknowledgment,even in such situations, courts have significantly limited the

    application of arbitrations to non-signatories, particularly with

    respect to agency and estoppel.

    The Texas Supreme Court has made it clear that [a]rbitration

    clauses do not automatically cover all corporate agents oraffiliates. In re Kaplan Higher Educ. Corp., 235 S.W.3d 206, 210

    (Tex. 2007); also In re Merrill Lynch Trust Co. FSB, 235 S.W.3d

    185, 191 (Tex. 2007). Further, the Fifth Circuit has held that an

    agency relationshipwithout moreis an insufficient basis tocompel arbitration with a non-signatory. See Palmer Ventures, LLC v. Deutsche Bank AG, 254 Fed. Appx. 426, 433 (5th Cir.

    2007)(holding Deutsche Bank, as agent for signatory, could notcompel arbitration).

    Courts have limited estoppel in the context of enforcing anarbitration provision to cases of direct benefits estoppel. See St.

    Clair v. Brook Franchise Corp., No. 2-06-216-CV, 2007 WL

    1095554, at *4 (Tex. App.Fort Worth April 12, 2007, nopet.)(citing InterGen N.V. v. Grina, 344 F.3d 134, 145-46); In re

    Kellogg, 166 S.W.3d at 739. There are two circumstances under

    which the courts have applied direct benefits estoppel. The first iswhere a litigant sues based on a contract containing an arbitration

    provision. See In re First Merit Bank, 52 S.W.3d 749, 755 (Tex.

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    2001). The second is where a non-signatory deliberately seeks orobtains substantial benefits from the contract itself during the

    performance of the contract. See In re Weekley Homes, L.P., 180

    S.W.3d 127, 132-33 (Tex. 2005).

    As respects the first circumstance, the Texas Supreme Court hasstated, [w]hile the boundaries of direct-benefits estoppel are notalways clear, non-parties generally must arbitrate claims if liability

    arises from a contract with an arbitration provision, but not if

    liability arises from general obligations imposed by law. In re

    Vesta Ins. Group, Inc., 192 S.W.3d 759, 761 (Tex. 2006). It is notenough to assert that claims relate to an agreement with an

    arbitration provision. Rather, the claimant must be seeking,

    through its claims, to derive a direct benefit from the contract. See

    In re Kellogg, 166 S.W.3d at 740. To determine whether a party

    seeks through the claim to derive a direct benefit from the contract,

    the court must look to whether liability arises solely from thecontract or whether liability must be determined by a reference to

    the contract. See In re Weekley Homes, 180 S.W.3d at 132. Where

    claims are based upon an independent duty under Texas law and

    not derivatively based on the contract, direct benefits equitableestoppel does not apply.

    In some instances, a claimants claims may be based on an

    independent duty under Texas tort law, but the claimant may alsohave actively sought direct benefits under the contract. See id.

    Such was the case in Weekley Homes. In Weekley Homes, the non-

    signatory in question was an adult child of a purchaser of a homefrom Weekley Homes. See id. The non-signatory had been

    actively involved in the construction process, including directing

    construction of many features, making repeated demands for

    extensive repairs, making requests for financial reimbursement ofexpenses, conducting settlement negotiations with the builder, and

    the like. See id. Based on this extensive involvement in the

    construction, which was governed by a contract including anarbitration clause, the non-signatory was estopped from taking the

    position that her claims that Weekleys negligent repairs caused

    her to develop asthma were not subject to the arbitration provisionin the contract. See id.

    3. Scope of the Agreement

    The scope of the arbitration agreement controls what is to be arbitrated.Arbitration agreements are interpreted under traditional contract

    principles. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.

    2003). Like other contracts, arbitration agreements are to be enforced

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    according to their terms and the intentions of the parties. In re Kaplan

    Higher Educ. Corp., 235 S.W.3d 206, 210 (Tex. 2007).

    When the FAA applies, federal law determines whether a dispute is

    arbitrable and federal common law is used to interpret the scope of the

    arbitration clause. Prudential Secs., Inc. v. Marshall, 909 S.W.2d 896,899 (Tex. 1995); Svc. Corp. Intl v. Lopez, 162 S.W.3d 801, 810 (Tex.

    App.Corpus Christi 2005, orig. proceeding). Because of the strongpolicy presumption in favor of arbitrability, the terms of a valid and

    enforceable arbitration agreement are interpreted broadly. In re NEXTFinancial Group, Inc., 271 S.W.3d 263, 267 (Tex. 2008); In re Choice

    Homes, Inc., 174 S.W.3d 408, 413 (Tex. App.Houston [14th

    Dist.] 2005,no pet.). For the same policy reasons, exceptions to an arbitration

    agreement are to be construed narrowly. NEXT Financial Group, 271

    S.W.3d at 267. Any doubts as to the scope of an arbitration agreement areto be resolved in favor of finding coverage. In re Bank One, N.A., 216

    S.W.3d 825, 826 (Tex. 2007); In re D. Wilson Constr. Co., 196 S.W.3d774, 782-83 (Tex. 2006). The presumption in favor of arbitrability andbroad reading are especially followed when broad language is used in the

    arbitration agreement, such as language that requires arbitration of any

    dispute arising between the parties, any controversy or claim arising out

    of or relating to the contract thereof, or any controversy concerning theinterpretation, performance or application of the contract. McReynolds v.Elston, 222 S.W.3d 731, 740 (Tex. App.Houston [14th Dist.] 2007, no

    pet.). The presumption cannot, however, be used to stretch a contractualclause beyond the scope intended by the parties or to modify the plain and

    unambiguous language of the arbitration agreement. Id.

    In determining the scope of the arbitration agreement, the focus is on thefactual allegations of the claimant, not the legal causes of action. See

    IKON Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 694 (Tex. App.

    Houston [14th Dist.] 1999, no pet.) (citing Prudential Securities, Inc. v.

    Marshall, 909 S.W.2d 896, 900 (Tex. 1995)).

    Courts generally view arbitration clauses embracing all disputes orcontroversies relating to the underlying agreement as extremely broad

    and capable of expansive reach. Kirby Highland Lakes Surgery Center,

    L.L.P. v. Kirby, 183 S.W.3d 891, 898 (Tex. App.Austin 2005, orig.

    proceeding) (citing Pennzoil Exploration & Prod. Co. v. Ramco Energy,

    Ltd., 139 F.3d 1061, 1067-68 (5th Cir. 1998)). In contrast to the use of thephrase arising out of, which is more narrowly construed, the term

    related to extends to all disputes between the parties having a

    significant relationship to the contract regardless of the label attached to

    the dispute or that touch matters covered by the contract containing thearbitration provision. Id.; see also Svc. Corp. Intl v. Lopez, 162 S.W.3d

    801, 810 (Tex. App.Corpus Christi 2005, orig. proceeding) (Generally,

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    if the facts alleged touch matters, have a significant relationship to, areinextricably enmeshed with, or are factually intertwined with the

    contract that is subject to the arbitration agreement, the claim will be

    arbitrable.) (citing Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 271(Tex. 1992); In re Nestle USA-Bev. Div., Inc., 82 S.W.3d 767, 776 (Tex.

    App.Corpus Christi 2002, orig. proceeding); Hou-Scape, Inc. v. Lloyd,945 S.W.2d 202, 205-06 (Tex.App.-Houston [1st Dist.] 1997, orig.proceeding)); Dennis v. College Station Hosp., L.P., 169 S.W.3d 282, 285

    (Tex. App.Waco 2005, pet. denied) (standing for the same proposition).

    While this does not mean that a broadly worded arbitration clause is

    unlimited in scope, there is a split between the intermediate courts ofappeals in Texas as to what the outer bounds would be. See generallyKirby Highland Lakes Surgery Center, L.L.P. v. Kirby, 183 S.W.3d 891,

    899 n.7 (Tex. App.Austin 2005, orig. proceeding) (recognizing anddiscussing the split of opinion between the various courts of appeals).

    Some courts have held that where the facts alleged stand alone, completely

    independent of the contract, and the claim could be maintained withoutreference to the contract, the claim is not subject to arbitration. See Svc.

    Corp. Intl v. Lopez, 162 S.W.3d 801, 810 (Tex. App.Corpus Christi

    2005, orig. proceeding) (citing Fridl v. Cook, 908 S.W.2d 507, 511 (Tex.

    App. El Paso 1995, writ dismd w.o.j.); In re Dillards Dept. Stores,

    Inc., 181 S.W.3d 370, 377 (Tex. App. El Paso 2005, orig. proceeding);Assoc. Glass, Ltd. v. Eye Ten Oaks Investments, Ltd. , 147 S.W.3d 507, 513

    (Tex. App.San Antonio 2004, orig. proceeding). Other courts haveargued that this approach is too narrow and inconsistent with the federal

    common law governing the scope of an arbitration agreement withoutproviding any specific guidance as to the outer boundaries of the reach of

    an arbitration clause. See Kirby Highland Lakes Surgery Center, L.L.P.,

    183 S.W.3d at 899 n.7 (citingDennis, 169 S.W.3d at 285).

    4. Avoidance of the Arbitration Clause?

    Upon establishing the existence of an arbitration agreement, the burden of

    establishing grounds for the revocation of said agreement is on the party

    seeking to avoid arbitration. Henry v. Gonzalez, 18 S.W.3d 684, 689

    (Tex. App.San Antonio 2000, pet. denied) (citing Dallas Cardiology,

    978 S.W.2d at 212). There are a number of bases that have been argued in

    avoidance of an arbitration clause in the past to varying degrees of

    success. The more common potential defenses are as follows:

    a. Fraud, Unconscionability, and Duress

    A party may revoke an arbitration agreement only on a ground that

    exists at law or in equity for the revocation of a contract. TEX.CIV. PRAC. & REM. CODE 121.001(b). In order to avoidarbitration altogether, the defenses of unconscionability, duress,

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    and fraud must specifically relate to the arbitration clause itself.Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56 (Tex. 2008);In reFirst Merit Bank, 52 S.W.3d 749, 756 (Tex. 2001). Where those

    defenses are asserted as to the contract as a whole, on the otherhand, they are subject to the arbitration clause. Forest Oil, 268

    S.W.3d at 56; First Merit Bank, 52 S.W.3d at 756.

    There is nothing per se unsoncsionable about arbitration

    agreements. In re AdvancePCS Health, L.P., 172 S.W.3d 603, 608

    (Tex. 2005). There are two types of unconscionability

    procedural unconscionability and substantive unconscionability.

    Procedural unconscionability focuses on the circumstances

    surrounding the bargaining process leading to the adoption of thearbitration provision. See TMI, Inc., 225 S.W.3d at 792 (citingInre Rangel, 45 S.W.3d 783, 786 (Tex. App.Waco 2001, orig.

    proceeding)). Generally, this will require a showing of fraudulentinducement. See id. at 793 (Absent fraud, a party to a contract

    may not successfully claim he believed the provisions of a contract

    were different from those plainly set out in the contract or he did

    not understand the language.).

    Substantive unconscionability focuses on the fairness of the terms

    of the arbitration provision itself. Id. at 792. The test ofsubstantive unconscionability is whether, given the parties

    general commercial background and the commercial needs of theparticular trade or case, the clause involved is so one-sided that it

    is unconscionable under the circumstances existing when the

    parties made the contract. First Merit Bank, 52 S.W.3d at 577;TMI, Inc. v. Brooks, 225 S.W.3d 783, 792 (Tex. App.Houston

    [14th Dist.] 2007, pet. denied). For instance, substantive

    unconscionability may be argued where, under the facts andcircumstances of the particular case, arbitration is so cost-

    prohibitive as to effectively preclude a litigant from being able to

    exercise his right to redress. First Merit Bank, 52 S.W.3d at 756;TMI, Inc., 225 S.W.3d at 795-96. However, the party opposingarbitration on this basis must present specific evidence of the

    likelihood of incurring substantial costs. First Merit Bank, 52

    S.W.3d at 756 (citing Green Tree Fin. Corp. v. Randolph, 531 U.S.79, 90 (2000)); TMI, Inc., 225 S.W.3d at 795-96.

    b. Waiver

    Even where claims in litigation are subject to a valid and enforceable

    arbitration agreement, arbitration may be avoidable where the party

    seeking to invoke the arbitration clause has waived that right. A party

    waives its right to invoke an arbitration clause or agreement when that

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    substantially invokes the judicial process to the other partys detriment.

    In re Fleetwood Homes of Texas, L.P., 257 S.W.3d 692, 694 (Tex. 2008);

    In re Bank One, N.A., 216 S.W.3d 825, 827 (Tex. 2007); EZ Pawn Corp.

    v Mancias, 934 S.W.2d 87, 89 (Tex. 1996). However, there is a strong

    presumption against waiver and it must be shown to be intentional. In re

    Bank One, N.A., 216 S.W.3d at 827;EZ Pawn Corp., 934 S.W.2d at 89.

    Waiver may be either express or implied. See Tex. Residential Mortg.,L.P. v. Portman, 152 S.W.3d 861, 863(Tex. App.Dallas 2005, no pet.);

    Williams Indus., Inc. v Earth Dev. Sys. Corp., 16 S.W.3d 131, 135, (Tex.

    App.Houston [1st

    Dist.] 2003, no pet.).

    The Texas Supreme Court has explained that detriment in this context

    refers to a partys attempt to have it both ways by switching between

    litigation and arbitration to its own advantage. Perry Homes v. Cull,

    258 S.W.3d 580, 596 (Tex. 2008). One intermediate Court of Appeals

    has further stated that a party is prejudiced when his opponent uses the

    judicial process to gain access to information that would not have been

    available through arbitration or incurs significant costs and fees due to

    the delay in invoking the arbitration process. Williams Indus., Inc. 110S.W.3d at 135.

    Waiver is a legal question to be decided by the court, not the arbitrator.

    In re Fleetwood Homes of Texas, L.P., 257 S.W.3d at 694; Perry Homes,

    258 S.W.3d at 589. It should be determined based on the totality of the

    circumstances. In re Fleetwood Homes of Texas, L.P., 257 S.W.3d at

    694. Factors to be considered by the court include: (1) whether the party

    seeking to invoke arbitration was the plaintiff or defendant in the judicial

    proceeding; (2) the length of delay in invoking the arbitration clause; (3)

    when the party invoking the arbitration clause discovered its existence;

    (4) whether and to what extent the pretrial activity in the judicial

    proceeding was related to the merits, as opposed to questions ofarbitrability or jurisdiction; (5) the amount of time and expense incurred

    in the litigation; (6) whether the party seeking arbitration sought or

    opposed arbitration at any previous time in the litigation; (7) whether the

    party seeking to invoke the arbitration clause has filed affirmative claims

    or dispositive motions; (8) what discovery would be unavailable inarbitration; (9) whether activity in court would be duplicated in

    arbitration; and (10) when the case was to be tried. Perry Homes, 258

    S.W.3d at 591. A different standard also applies in deciding whether

    there has been a waiver when it is the plaintiff in the litigation who seeks

    to invoke the arbitration clause, as opposed to the defendant. Id. at 592.As parties may begin arbitration without a court order, it is certainly

    relevant that a plaintiff chose to file suit instead. Id. However, itshould be noted that this difference does not apply when the plaintiff has

    brought the suit merely to compel arbitration, as is permitted under

    section 171.021 of the Texas Civil Practice & Remedies Code. Id.

    Examples of circumstances in which courts have found that arbitration

    has been waived include the following:

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    (1) Conducting full discovery and filing motions on the merits. In reCitigroup Global Markets, Inc., 258 S.W.3d 623, 625 (Tex.

    2008).

    (2) Taking the case to trial. Cottman Transmission Sys., L.L.C. v.FVLR Enterprises, L.L.C., 295 S.W.3d 372, 380 (Tex. App.

    Dallas 2009, pet. denied).

    (3) Defendant amended answer to include counterclaims, serveddiscovery, received responses, and then, just after the other party

    served its discovery, sought to compel arbitration. Okorafor v.

    Uncle Sam & Assocs., Inc., 295 S.W.3d 27, 40 (Tex. App.

    Houston [1st Dist.] 2009, pet. denied).

    Examples of circumstances in which courts have found that arbitration

    has not been waived include the following:

    (1) Defendant did not pursue its demand for arbitration for eightmonths while the matter was litigated, discussed a trial setting,

    allowed limited discovery, noticed one deposition (which never

    occurred), served one set of written discovery, and filed nodispositive motions. In re Fleetwood Homes, 257 S.W.3d 692,

    694-95 (Tex. 2008).

    (2) Defendant filed a motion for new trial to set aside a defaultjudgment obtained by the opposing party. In re Bank One, N.A.,

    216 S.W.3d 825, 827 (Tex. 2007).

    (3) Minimal participation in discovery conducted by other parties tothe litigation. In re Wells Fargo Bank, N.A., 300 S.W.3d 818,

    830-31 (Tex. App.San Antonio 2009, orig. proceeding).

    (4) Conducting extensive discovery while waiting court decision onmotion to compel arbitration when discovery sought could be

    used in the arbitration. In re ReadyOne Indus., Inc., 294 S.W.3d

    764, 773-74 (Tex. App.El Paso 2009, orig. proceeding).(5) Filing an answer subject to a motion to compel arbitration. PER

    Group, L.P. v. Dava Oncology, L.P., 294 S.W.3d 378, 388-89

    (Tex. App.Dallas 2009, orig. proceeding).

    (6) Defendant filing a motion to dismiss and seeking the onsiteinspection and testing of property involved in dispute. In re

    Hawthorne Townhomes, L.P., 282 S.W.3d 131, 141-42 (Tex.

    App.Dallas 2009, no pet.).

    (7) Merely filing suit. In re D. Wilson Constr. Co., 196 S.W.3d at783; In re Green Tree Servicing, LLC, 275 S.W.3d 592, 601

    (Tex. App.Texarkana 2008, orig. proceeding).(8) Moving to dismiss a claim for lack of standing. In re Vesta Ins.

    Group, Inc., 192 S.W.3d at 764.(9) Opposing a trial setting and seeking to move the litigation to

    federal court. In re Serv. Corp. Int'l, 85 S.W.3d at 174-75.

    (10) Moving to strike an intervention and opposing discovery.Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 898-99

    (Tex.1995).

    (11) Propounding interrogatories and requests for production. In reBruce Terminix Co., 988 S.W.2d at 704.

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    (12) Agreeing to a trial resetting, requesting one round of discovery,and noticing a single deposition that was not taken, where there

    was no showing that the discovery addressed the merits of the

    case as opposed to the arbitrability of the dispute. In re Vesta

    Ins. Group, Inc., 192 S.W.3d at 763.

    5. Potential Exception for Temporary Injunctive Relief

    The Northern District of Texas has held that a court may grant apreliminary injunction in order to preserve the status quo during the

    process of arbitration on the same claims. Ruscitto v. Merrill Lynch,Pierce, Finner & Smith, Inc., 777 F. Supp. 1349, 1353 (N.D. Tex. 1991),

    affd948 F. 2d 1286 (5th

    Cir. 1991). Thus, even in cases clearly subject toa valid and enforceable arbitration clause, temporary injunctive relief may

    be available through the courts.

    D. The Arbitration Process

    The arbitration process itself can take many forms depending upon the agreementof the parties, the particular rules chosen, and the facts and circumstances of the

    case. The following are some common issues that can arise:

    1. Initiating the Arbitration Process

    Generally, there are two methods of initiating the arbitration process. Thefirst is to file a demand for arbitration with an arbitrator or arbitration

    service provider such as the American Arbitration Association (AAA).This is a good approach where the enforceability and applicability of the

    arbitration clause is not likely to be at issue and where the arbitration

    service provider is set out in the arbitration clause. The second is to filean action with a court of competent jurisdiction to compel the opposing

    party to arbitrate the dispute. This may be appropriate in circumstances

    where the opposing party has already filed a judicial proceeding, the

    validity or applicability of the arbitration clause is or is expected to be adisputed issue, or the arbitrators or arbitration service provider has not

    been set out in the arbitration clause.

    2. Selection of Arbitrators

    The parties may agree, either in the arbitration agreement or upon thepresentation of a demand for arbitration, on the arbitrators to be appointed.

    See 9 U.S.C. 5; TEX.CIV.PRAC.&REM.CODE 171.041(a). Where no

    agreement has been or can be reached between the parties as to the

    identity of the arbitrator, one or more parties may seek to have a court ofcompetent jurisdiction appoint the arbitrator or arbitration panel. See 9

    U.S.C. 5; TEX.CIV.PRAC.&REM.CODE 171.041(b).

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    3. Discovery in Arbitration

    Parties in an arbitration proceeding are not entitled, as a matter of right, to

    the pre-trial discovery procedures that are used in litigation. See In reCitigroup Global Markets, Inc., 202 S.W.3d 477, 482 (Tex. App.Dallas2006, Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497

    (5th Cir. 1986)). However, the parties may permit for discovery under

    their arbitration agreement. Some limited amount of discovery may also

    be permitted under the rules selected by the parties to govern thearbitration process, such as the rules of the AAA. According tot he Texas

    Supreme Court, arbitrators possess almost unbridled discretion

    concerning whether and to what extent discovery is permitted. PerryHomes v. Cull, 258 S.W.3d 580, 599 (Tex. 2008). Given the policy and

    purpose behind the arbitration process, many arbitrators are stingy in

    allowing discovery.

    When discovery is permitted by the arbitrator or arbitration panel, thereare procedural mechanisms to assist with conducting and compelling

    discovery. Section 171.050 of the Texas Civil Practice & Remedies Code

    permits arbitrators to authorize depositions to be used in the arbitrationproceeding, which are to be taken in the same manner as depositions for

    use in the civil district courts. Section 171.051 also allows an arbitrator

    to issue subpoenas to compel the attendance of witnesses and theproduction of books, records, documents, or other evidence by persons not

    a party to the arbitration proceeding.

    The FAA also authorizes an arbitrator to issue a summons to compel non-parties to attend the arbitration hearing to testify or produce documents. 9

    U.S.C. 7. A number of courts outside of the Fifth Circuit have taken a

    narrow view of this power, holding that it is limited to compelling

    attendance or production at the final hearing and does not authorize theissuance of a summons to compel discovery or depositions prior to the

    final hearing. See Life Receivables Trust v. Syndicate 102 at Lloyds of

    London, 549 F.2d 210, 216-17 (2d Cir. 2008); Hay Group, Inc. v. E.B.S.

    Acquisition Corp., 360 F.3d 404, 411 (3d Cir. 2004); see also COMSATCorp. v. Natl Sci. Found., 190 F.3d 269, 276 (4th Cir. 1999) (taking the

    same position but carving out an exception in dicta for unusualcircumstances upon a showing of special need or hardship). While the

    Fifth Circuit does not appear to have taken a position on this issue yet,

    Chief Judge Fitzwater of the Northern District of Texas recently issued anunpublished memorandum opinion adopting the rationale of the Second

    and Third Circuits in holding that the FAA does not authorize arbitrators

    to compel production of documents from a non-party, unless they are

    doing so in connection with the non-party's attendance at an arbitration

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    hearing. Empire Fin. Grp., Inc. v. Penson Fin. Svcs., Inc., No. 3:09-CV-2155-D, 2010 WL 742579, at *3 (N.D. Tex. Mar. 3, 2010).

    4. Arbitration Hearing

    Under the Texas Arbitration Act, unless the agree to the contrary in thearbitration agreement, they have a right to have a hearing conducted by thearbitrators. See TEX.CIV.PRAC.&REM.CODE 171.043. At the hearing,

    each party has the right to be heard, to present evidence material to the

    controversy, and to cross-examine any witnesses. TEX. CIV. PRAC. &REM. CODE 171.047. Absent an agreement to the contrary by theparties, the Rules of Civil Procedure and the Rules of Evidence are not

    applicable in an arbitration proceeding. Crossmark, Inc. v. Hazar, 124

    S.W.3d 422, 432-33 n.10 (Tex. App.Dallas 2004, pet. denied). It is upto the arbitrator to decide the rules that govern arbitration. In re Wood,

    140 S.W.3d 367, 369-70 (Tex. 2004).

    Similarly, the Fifth Circuit has held that an arbitrator is not bound to hear

    all of the evidence tendered by the parties; however, he must give each of

    the parties to the dispute an adequate opportunity to present its evidence

    and arguments. Forsythe Intern., S.A. v. Gibbs Oil Co. of Texas, 915F.2d 1017, 1023 (5th Cir. 1990) (quotingHoteles Condado Beach v. Unionde Tronquistas Local 901, 763 F.2d 34, 39 (1st Cir. 1985)).

    E. The Arbitration Award

    1. Form and Substance of the Arbitration Award

    Under the Texas Arbitration Act, the arbitration award must be in writingand signed by each arbitrator joining in the award. TEX. CIV. PRAC. &REM.CODE 171.053(a). It must be delivered to each party in person, by

    registered or certified mail, or as otherwise agreed. TEX. CIV. PRAC. &REM. CODE 171.053(b). The Federal Arbitration Act does not

    specifically contain these types of requirements, but as a practical matter

    the arbitration award will need to be in writing to be enforced.

    Substantively, the arbitrators may not exceed the authority granted to them

    by the arbitration agreement in crafting their remedy. J.J. Gregory

    Gourmet Svcs., Inc. v. Antones Import Co., 927 S.W.2d 31, 35 (Tex.App.Houston [1st Dist.] 1995, no writ) (citing Gulf Oil Corp. v. Guidry,

    327 S.W.2d 406, 408 (Tex. 1959); City of Baytown v. C.L. Winter, Inc.,

    886 S.W.2d 515, 518 (Tex. App.Houston [1st Dist.] 1994, writ denied)).However, where there is no language in the arbitration clearly restricting

    the arbitrators authority, the courts will grant the arbitrators great latitude

    in crafting the appropriate remedy. Id. (citing Lodge No. 12, Dist. 37,Intl Assoc. of Machinists v. Cameron Iron Works, Inc., 292 F.2d 112, 119

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    (5th

    Cir. 1961). Arbitrators are not required to set forth any findings offact or to state the reasons for their award in the arbitration award. Gray v.

    Noteboom, 159 S.W.3d 750, 754 (Tex. App.Fort Worth 2005, pet.

    denied).

    2. Enforcement of the Arbitration Award

    Unless grounds exist to vacate, modify, or correct an arbitration award, a

    court is required to enter a judgment confirming the award. 9 U.S.C. 9;

    TEX.CIV.PRAC.&REM.CODE 171.087. The Texas Arbitration Act does

    not set forth a specific timeline in which the parties must seek aconfirmation. The Federal Arbitration Act, on the other hand, requires the

    parties to seek confirmation within one year after the award is made. 9

    U.S.C. 9. The arbitration award may then be enforced in the samemanner as any other judgment of the court. See TEX.CIV.PRAC.&REM.CODE 171.092(a).

    3. Modification and Correction of the Arbitration Award

    Under the Texas Arbitration Act, the arbitrators may modify or correct an

    award for the following reasons:

    (1) To correct evident mistakes as to the amount of the award or thedescription of the persons, things, or property referred to in theawards. TEX. CIV. PRAC. & REM. CODE 171.054(a)(1) and

    171.091(a)(1).(2) To correct an award made with respect to a matter that has not

    been submitted to them, provided that the award may be corrected

    without affecting the merits of the decision made with respect tothe issues that were before the arbitrators. TEX.CIV.PRAC.&REM.CODE 171.054(a)(1) and 171.091(a)(2).

    (3) To correct an imperfection in the form of the award not affectingits merits. TEX. CIV. PRAC. & REM. CODE 171.054(a)(1) and

    171.091(a)(3).

    (4) To clarify the award. TEX. CIV. PRAC. & REM. CODE 171.054(a)(2).

    The modification or correction must be requested by either a party or a

    court. TEX. CIV. PRAC. & REM. CODE 171.054(b). A party to theproceeding may request the modification or correction from the arbitrators

    no later than the 20th day following the date the award is delivered to the

    applicant. TEX.CIV.PRAC.&REM.CODE 171.054(c). A party may alsomake an application to the court to modify or correct the award, provided

    it is brought not later than the 90th day after the delivery of a copy of the

    award to the applicant. TEX.CIV.PRAC.&REM.CODE 171.091(b).

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    Section 11 of the Federal Arbitration Act permits the modification orcorrection of an arbitration by a court, upon application of the parties for

    the following:

    (1) Where there was an evident material miscalculation of figures oran evident material mistake in the description of any person, thing,or property referred to in the award.

    (2) Where the arbitrators have awarded upon a matter not submitted tothem, unless it is a matter not affecting the merits of the decision

    upon the matter submitted.

    (3) Where the award is imperfect in matter of form not affecting themerits of the controversy.

    4. Grounds for Appeal or Vacation of the Arbitration Award

    There is no true basis for appeal of an arbitration award. Parties may,

    however, under very narrow circumstances, seek to have an arbitrationaward vacated.

    Under the Texas Arbitration Act, a court is required to vacate an award

    upon an application by a party and a showing of one of the following:

    (1) The award was obtained by corruption, fraud, or other unduemeans;

    (2) the rights of a party were prejudiced by:(A) evident partiality by an arbitrator appointed as a neutral

    arbitrator;

    (B) corruption in an arbitrator; or

    (C) misconduct or willful misbehavior of an arbitrator;(3) the arbitrators:

    (A) exceeded their powers;

    (B) refused to postpone the hearing after a showing ofsufficient cause for the postponement;

    (C) refused to hear evidence material to the controversy; or

    (D) conducted the hearing, contrary to Sections 171.043,

    171.044, 171.045, 171.046, or 171.047, in a manner thatsubstantially prejudiced the rights of a party; or

    (4) there was no agreement to arbitrate, the issue was not adverselydetermined in a proceeding under Subchapter B, and the party didnot participate in the arbitration hearing without raising the

    objection.

    TEX.CIV.PRAC.&REM.CODE 171.088(a). A party must seek to have

    the court vacate the award not later than the 90th day after the date of

    delivery of a copy of the award to the applicant, except in the case of anaward obtained by corruption, fraud, or other undue means, which must be

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    APPENDIX A

    Arbitration Provision Examples

    Example 1 Specific Issue

    Any dispute, claim, controversy, or other matter in question between the parties hereto relating tothe tenants pro rata share of operating expenses shall be settled by binding arbitration administered by

    the American Arbitration Association pursuant to the then-existing applicable rules of the American

    Arbitration Association. The locale of the arbitration proceeding shall be Fort Worth, Texas. A demand

    for arbitration may be made by either party. The decision of the arbitrator shall be final and binding on

    both parties and the award of the arbitrator shall be enforceable according to law.

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    Example 2 Specific Issue with Procedures spelled out in Contract

    [From a total takings clause.] If Landlord and Tenant are unable to agree on the respective fair

    market values of their interests in the Premises, then the matter shall be submitted to arbitration as

    provided in Section 15.03. After the determination and distribution of the condemnation award as herein

    provided, this Lease shall terminate.

    15.03 Arbitration.

    (a) This section shall only apply where express provision is made in this Lease for settlement

    of a dispute or determination of a matter by arbitration.

    (b) If either Party wishes to so settle an applicable dispute or determine an applicable matter

    by arbitration, such matter shall be resolved by binding arbitration in accordance with the provisions of

    this Section 15.03, and shall be self-administered in accordance with the American Arbitration

    Association pursuant to its rules of commercial arbitration. Any claimed default based upon such dispute

    shall be deemed suspended until the dispute is resolved, provided that the Party claimed to be in default is

    proceeding diligently with the arbitration; provided, however, nothing contained in this Section 15.03

    shall suspend the obligation of Tenant to pay Rent hereunder.

    (c) Landlord and Tenant may agree on an arbitrator, and in such event, such arbitrators

    decision shall be final and binding on Landlord and Tenant and shall be specifically enforceable in any

    court having jurisdiction. If Landlord and Tenant are unable to agree on an arbitrator, Landlord and

    Tenant shall each appoint an arbitrator, and such two arbitrators shall select, within fifteen (15) days after

    the appointment of such second arbitrator, a third arbitrator. The decision of a majority of the three

    arbitrators shall be final and binding on Landlord and Tenant and shall be specifically enforceable in any

    court having jurisdiction.

    (d) If (i) either Landlord or Tenant fails to appoint an arbitrator within ten (10) days after

    receiving notice from the other Party that such other Party has appointed an arbitrator, or (ii) the first two

    arbitrators fail to appoint a third arbitrator within the aforesaid fifteen (15) day period, or (iii) any Personappointed as an arbitrator by or on behalf of either Landlord or Tenant shall die, fail to act, resign or

    become disqualified and the Party by or on behalf of whom such arbitrator was appointed shall fail to

    appoint a substitute arbitrator within ten (10) days after being requested to do so by the other Party, the

    arbitrator in question will be appointed by the United States District Court for the Southern District of

    Texas, Houston Division, or if it does not have jurisdiction, then the District Courts of Harris County

    Texas subject to the rules of such courts regarding recusal of judges. Each Party shall bear and pay the

    cost of the arbitrator appointed by (or for) it, and the cost of the third arbitrator shall be borne and paid

    equally by Landlord and Tenant. If the presiding judge of the applicable court does not appoint the third

    arbitrator within forty-five (45) days, then such arbitrator shall be appointed within fifteen (15) days

    thereafter in accordance with the rules of the American Arbitration Association, but subject to the

    requirements herein for the appointment of arbitrators.

    (e) All arbitration proceedings shall be held in Houston, Harris County Texas. If a hearing is

    scheduled, Landlord and Tenant shall be given reasonable advance notice of the time and place of any

    arbitration hearing and both shall have the right to be present, heard and represented by counsel. The

    arbitrators shall not have the right to add to or subtract from or otherwise change the terms and provisions

    of this Lease, and their determination shall be consistent and in accordance with the terms and provisions

    of this Lease and the Laws of the State of Texas.

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    Example 3 Broad arbitration agreement

    DISPUTE RESOLUTION AGREEMENT

    DISPUTE RESOLUTION AGREEMENT

    ATTACHED AS EXHIBIT B TO AND MADE A PART OF THECOMMERCIAL LEASE AGREEMENT OF LANDLORD AND TENANT

    ARBITRATION

    (a) If a dispute, controversy or claim arises between the parties, including without limitation any

    dispute, controversy or claim that arises out of or relates to this Agreement or any other

    agreement or instrument between or among any of the shareholders, officers and/or directors of

    this corporation (collectively the parties), or the breach, termination or invalidity of the

    Agreement or any such other agreement or instrument, AND including but not limited to a claim

    based on or arising out of a claim for tortious interference or other tortious or statutory claims

    arising before, during or after termination of the Agreement (all of the foregoing shall becollectively referred to as Dispute), the parties agree to resolve the Dispute by binding

    arbitration administered by the American Arbitration Association (AAA) in accordance with its

    Commercial Arbitration Rules (the Rules), and judgment upon the award rendered by the

    arbitrator(s) may be entered in any court having jurisdiction thereof. Any arbitration hereunder

    shall be conducted pursuant to the Rules, except to the extent modified in this Section.

    (b) The parties expressly agree that any court with jurisdiction may order the consolidation of any

    arbitrable dispute, controversy or claim under this Agreement with any related arbitrable dispute,

    controversy or claim not arising under this Agreement, as the court may deem necessary in the

    interests of justice or efficiency or on such other grounds as the court may deem appropriate.

    (c) The site of the arbitration shall be in Fort Worth, Texas, and shall take place in the offices of theAmerican Arbitration Association or such other place as the parties may agree.

    (d) The parties agree that the federal and state courts located in the State of Texas shall have

    exclusive jurisdiction over an action brought to enforce the rights and obligations created in or

    arising from this agreement to arbitrate, and each of the parties hereto irrevocably submits to the

    jurisdiction of said courts. Notwithstanding the above, application may be made by a party to any

    court of competent jurisdiction wherever situated for enforcement of any judgment and the entryof whatever orders are necessary for such enforcement.

    (e) Process in any action arising out of or relating to this Agreement may be served on any party to

    the Agreement anywhere in the world by delivery in person or by registered or certified mail,

    return receipt requested.

    (f) Neither party nor the arbitrators may disclose the existence, content, or results of any arbitration

    hereunder without the prior written consent of both parties.

    (g) The parties agree that all questions concerning the arbitrators jurisdiction shall be decided by the

    arbitrator.

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    (h) All fees and expenses of the arbitration (exclusive of filing fees for claims and counterclaims)

    shall be borne by the parties equally. Each party shall bear the expense of its own counsel,

    experts, witnesses, and presentation of proofs.

    (i) This agreement to arbitrate is intended to be binding upon the signatories hereto, their principals,

    successors, assigns, subsidiaries or affiliates.

    (j) The arbitrator shall determine the rights and obligations of the parties according to applicable

    federal laws and the substantive laws of the State of Texas (excluding conflicts of laws

    principles).

    (k) The arbitrator is directed to consider any defense that all or part of the claim is not timely by

    reason of laches or statute of limitations as a preliminary issue and to render an award

    determining the merits of such claim before considering the substantive merits of the arbitration

    claim, unless the arbitrator determines that the merits of such claim of laches or statute of

    limitations is so intertwined with the substantive merits of the arbitration claim as to make

    impractical the determination of the claim of laches or limitations as a preliminary matter.

    (l) The arbitrator shall hear and determine any preliminary issue of law asserted by a party to bedispositive of any claim, in whole or part, in the manner of a court hearing a motion to dismiss for

    failure to state a claim or for summary judgment, pursuant to such terms and procedures as the

    arbitrator deems appropriate.

    (m) It is the intent of the parties that, barring extraordinary circumstances, any arbitration shall be

    concluded on or before six months of the date the statement of claim is received by the arbitrator.

    Unless the parties otherwise agree, once commenced, hearings shall be held five days a week,

    four weeks a month, with each hearing day to begin at 9:00 A.M. and to conclude at 5:00 P.M.

    These time limits can be extended or altered by an agreement by the parties or by a determination

    by the arbitrator that such extension or alteration is in the interests of justice. The arbitrator shall

    use his or her best efforts to issue the final award or awards within a period of thirty days after

    closure of the proceedings. Failure to do so shall not be a basis for challenging the award.

    (n) The procedure to be followed in any arbitration hereunder shall be as prescribed herein and in

    such directives that shall be issued by the arbitrator following consultation with the parties.

    Unless otherwise agreed by the parties, the procedures shall provide for the submission of briefs

    by the parties, the introduction of documents and the oral testimony of witnesses, cross-examination of witnesses, oral arguments, the closure of the proceedings and such other matters

    as the arbitrator may deem appropriate. Further, the arbitrator shall regulate all matters relating to

    the conduct of the arbitration not otherwise provided for in this Agreement or in the Rules.

    (o) In the event a party, having been given notice and opportunity, shall fail or shall refuse to appearor participate in an arbitration hereunder or in any stage thereof, the proceedings shall

    nevertheless be conducted to conclusion and final award. Any award rendered under suchcircumstances shall be as valid and enforceable as if both parties had appeared and participated

    fully at all stages.

    (p) The parties agree that discovery shall be limited and shall be handled expeditiously. Discovery

    procedures available in litigation before the courts shall not apply in an arbitration conducted

    pursuant to this agreement. However, each party shall produce relevant and non-privileged

    documents or copies thereof requested by the other parties within the time limits set and to the

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    extent required by order of the arbitrator. All disputes regarding discovery shall be promptly

    resolved by the arbitrator.

    (q) It is the intent of the parties that the testimony of witnesses be subject to cross-examination. It is

    agreed that the direct testimony of a witness may be submitted by sworn affidavit, provided that

    such affiant be subject to cross-examination.

    (r) Strict rules of evidence shall not apply in an arbitration conducted pursuant to this Agreement.

    The parties may offer such evidence as they desire and the arbitrator shall accept such evidence as

    the arbitrator deems relevant to the issues and accord it such weight as the arbitrator deems

    appropriate.

    (s) No witness or party may be required to waive any privilege recognized at law.

    (t) The parties to this Agreement agree that neither party shall be entitled to any damages in the

    nature of punitive, exemplary or statutory damages in excess of compensatory damages or any

    form of damages in excess of compensatory damages, and the parties hereby waive all rights to

    any damages in the nature of punitive, exemplary or statutory damages. Any arbitrator or

    arbitrators deciding any disputes hereunder will not have the authority to award and arespecifically divested of any power to award any damages in the nature of punitive, exemplary or

    statutory damages or any other damages in excess of compensatory damages or any form of

    damages in excess of compensatory damages, and may not, in any event, make any ruling,

    finding or award that does not conform to the terms and conditions of the Agreement.