Monthly Archives: July 2018

May an Appraiser Advocate for the Party that Appointed the Appraiser?

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Lawrence Moon | Property Insurance Coverage Law Blog | July 18, 2018

A Missouri Court of Appeals recently held that an appraiser may advocate for the party that appointed the appraiser as long as the appraiser has no financial interest in the outcome of the appraisal.

In Allstate Indemnity Company v. Gaworski,1 Allstate petitioned the trial court to disqualify the insureds’ selected appraiser, contending that the appraiser was not “disinterested” because the appraiser:

  1. Had an ongoing relationship with the company hired by the insureds to make the subject repairs and to which the insureds had assigned their contractual interest in their claims against Allstate, and
  2. acted unprofessionally and aggressively in his communications directed to Allstate.

In denying Allstate’s petition to disqualify the insureds’ appraiser, the trial court reasoned:

[A]lthough there was evidence of [the appraiser’s] ‘unprofessional conduct, aggressive rhetoric, and ominous emails,’ there was insufficient evidence of a disqualifying financial interest on his part.2

On appeal, the court agreed with the trial court, but expanded upon its reasoning, stating:

Although there is evidence in the record that [the insureds’ assignee] hired [the appraiser] for previous jobs, this does not constitute sufficient evidence of frequent or habitual employment rising to the level of a disqualifying bias.3

The appellate court also found:

An appraiser is not required to be entirely impartial. Instead, they may act as advocates for their respective parties without violating their commitments. Here, while [the appraiser’s] communications are certainly ‘aggressive,’ as noted by the trial court, they do not evidence a disqualifying bias against Allstate. Instead, [the appraiser’s] emails evidence his advocacy on behalf of the [insureds]….

These rulings help clarify the line between acceptable advocacy by an appraiser and improper bias or prejudice.
________________________
1 Allstate Indem. Co. v. Gaworski, No. ED106079, 2018 WL 3028851 (June 19, 2018).
2 Id. at *1.
3 Id. at *2 (citations omitted).

Connecticut Court Holds Unresolved Coverage Issues Makes Appraisal Premature

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Michael S. Levine, Lorelie S. Masters & Geoffrey B. Fehling | Hunton Andrews Kurth | July 2, 2018

A Connecticut court recently denied a motion to compel appraisal of a claim for coverage of a commercial property damage claim, holding that, where the insurance policy at issue provides for appraisal of disputes related to the value or quantum or a loss suffered—not the rights and liabilities of the parties under the policy—appraisal is premature. The decision relied on law that equates insurance appraisal to arbitration and follows a number of decisions holding that parties cannot expand the scope of appraisal clauses to resolve questions of coverage or liability where, as in this case, those issues are not supported by the applicable policy language.

Background

Ice Cube Building (ICB) owned commercial property in Groton, Connecticut, that was covered by a property insurance policy issued by Scottsdale. Following a winter storm, the weight of the accumulated snow and ice caused the roof to leak and water to enter the building. ICB provided notice of the claim to Scottsdale, which acknowledged partial coverage for the loss. Scottsdale paid the undisputed amount of the claim, but ICB asserted that it had incurred additional, unreimbursed loss in excess of $1 million that was covered by the policy.

When Scottsdale refused to pay, ICB sued in state court for breach of contract and a declaratory judgment that the policy covered all of its unreimbursed losses. After Scottsdale removed the case to federal court and filed an answer and counterclaim, ICB moved to compel arbitration under the policy’s appraisal provision and to stay the litigation.

June 18 Decision

The parties did not dispute that the policy required appraisal of certain disputes, including appraisal as to the amount of loss, arising from the policy. They disagreed, however, on whether the policy’s appraisal clause requires arbitration of a dispute over coverage of ICB’s claim and not simply the amount of damage ICB asserts remains unpaid.

In its motion, ICB pointed to the disagreement on the “amount of loss it suffered” and its written demand for appraisal, arguing that Connecticut’s arbitration statute and the terms of the policy require the court to appoint an appraiser to assess its unreimbursed losses. Scottsdale countered by arguing that “an appraisal is premature because there are outstanding coverage issues that the Court must address as a condition predicate to the appraisal process.” The Court agreed with Scottsdale and denied the motion.

In reaching its decision, the Court noted that “the Policy unambiguously provides for arbitration of disagreements relating to the ‘value of the property’ or the ‘amount of loss’ suffered by the policyholder.” However, “[b]ecause the Policy expressly provides for the arbitration of disputes related to the value or quantum of a loss suffered—not the rights and liabilities of the parties under the Policy—and the Court may only compel the parties to arbitrate matters which they have agreed to arbitrate under the provisions of the insurance policy, the Court cannot compel the parties to arbitrate the question of coverage . . . .” The Court agreed with Scottsdale’s position that, where coverage is in dispute, those unresolved coverage issues posed antecedent questions for the court and are not appropriate for appraisal. As a result, the court denied ICB’s motion to compel appraisal as premature.

Takeaways

As this decision makes clear, appraisal should not be used to determine coverage issues impacting the scope of an insurer’s liability for the claim. The court in Ice Cube Building specifically relied on the language of the appraisal provision, pointing out that appraisal, as a type of arbitration, is a creature of contract and its scope cannot exceed what the parties agreed to. This distinction is often made clear in the policy’s appraisal provision, which commonly limit appraisal to the “amount of loss.”

As was the case in Ice Cube Building, courts have followed such unambiguous restrictions on the scope of issues addressed in appraisals and have refused to compel appraisal where disputed issues include questions of coverage and liability. In many cases, insurers attempt to invoke appraisal clauses prematurely, seeking to resolve issues of both the extent of damage and coverage. Interestingly in Ice Cube Building the policyholder attempted to force appraisal, and the insurer correctly noted that, under the terms of the policy, unresolved coverage and liability issues posed antecedent questions for the court to decide that were inappropriate for appraisal. Policyholders should carefully review the proper scope of appraisal provisions in first-party property policies to determine the most efficient and effective way to resolve disputed claims and to ensure that coverage issues are resolved in the appropriate forum or process. The case is Ice Cube Building, LLC v. Scottsdale Insurance Co., No. 3:17-CV-00973 (VAB), 2018 WL 3025037 (D. Conn. June 18, 2018).

The Other Bad Faith

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Paul A. Rose | Brouse McDowell | July 19, 2018

Certain aspects of insurance bad faith are well known, particularly to insurance coverage practitioners. For instance, it is widely understood that an insurer commits bad faith if it fails to pay upon or otherwise honor a claim without reasonable justification for its refusal. It is, conversely, generally understood that an insurer cannot be liable for bad faith failure to pay a claim if it obtains a judgment that the claim is not covered. What is less understood, and sometimes overlooked, is that a policyholder may successfully assert a bad faith claim against its insurer, even in regard to a policy claim that is determined ultimately not to be covered, if the insurer commits bad faith in its handling of the claim. In other words, there are two types of bad faith—bad faith denial and bad faith claim handling, and the latter type is actionable regardless of whether the policy claim is covered.

Underlying this dichotomy are two fundamental principles of insurance law. First, an insurer owes its policyholder a duty of good faith and fair dealing, and this duty arises from the nature of the relationship between the two. The duty exists in regard to every claim the policyholder presents, regardless of whether the claim ultimately is determined to be covered. An insurer is not obligated to honor every claim presented to it, but it is obligated to timely, adequately, and properly investigate every claim and to make and communicate a timely determination on each, regardless of whether the determination ultimately is one of acceptance or denial.

Second, bad faith is a tort. An insurer’s bad faith liability, therefore, can exist independently of any contractual liability it may have under its policy. Although a determination that an insurer has no contractual obligation to pay on a claim may, correspondingly, serve to exonerate that insurer from a claim of bad faith failure to pay, such a determination would be immaterial to a claim against the insurer for bad faith claim handling. An insurer has a duty to handle claims submitted to it in good faith, regardless of whether the claims are covered.

The law on these matters is well developed in many jurisdictions, including Ohio. In Staff Builders, Inc. v. Armstrong, 37 Ohio St. 3d 298, syllabus 1 (Ohio 1988), the Supreme Court of Ohio made clear that bad faith is an independent tort:

An insurer has a duty to act in good faith in the processing and payment of the claims of its insured. A breach of this duty will give rise to a cause of action in tort against the insurer irrespective of any liability arising from breach of contract.

The Court later echoed these concepts in Zoppo v. Homestead Ins. Co., 71 Ohio St. 3d 552, syllabus 1, (Ohio 1994): “An insurer fails to exercise good faith in the processing of a claim of its insured where its refusal to pay the claim is not predicated upon circumstances that furnish reasonable justification therefore.” In finding that the insurer engaged in bad faith, the Court focused on the insurer’s failure to adequately investigate the fire loss claim at issue. Other Ohio courts have followed suit. For instance, in Furr v. State Farm Mut. Auto Ins. Co., 128 Ohio App. 3d 607, 623-626 (Ohio Ct. App. 1998), the Court found bad faith in the handling of an uninsured motorists claim when the insurer conducted a delayed and superficial examination of the claim, and, further, found the claim handling to be sufficiently egregious to support an award of punitive damages. In addition, an insurer’s duty of good faith continues even during the pendency of coverage litigation, and insurers have been found liable for bad faith based upon their conduct in initiating litigation and following the commencement of litigation. (See, e.g., Nationwide Mut. Fire Ins. Co. v. Masseria, 1999 WL 1313637 (Ohio Ct. App. 1999); Zaychek v. Nationwide Mut. Ins. Co., 2007-Ohio-3297 (Ohio Ct. App. 2007)).

As noted above, these concepts are not limited to Ohio. In a recent decision, the Texas Supreme Court echoed many of them. In USAA Texas Lloyds Co. v. Menchaca, 2018 WL 1866041 (Texas 2018), the Court considered bad faith claims made against a homeowner’s insurer. Although it ultimately remanded the case back to the trial court for a new trial based upon irregularities in the initial trial, the Court took the opportunity to articulate various points of insurance bad faith law. It stated that bad faith is a tort that is “distinct” and “independent” from contractual claims under insurance policies. Id. at *5. It noted that bad faith may be predicated upon an insurer misrepresenting a policy’s coverage or engaging in conduct that causes a policyholder to lose policy rights that it otherwise would have had. Id. at *12. It further noted that an insurer’s violation of statutory requirements for insurer conduct, such as exist in many states, under certain circumstances can result in a recovery for the policyholder, even if the policy would not otherwise cover the claim. Id. at *14. Perhaps most generally, it stated, “[I]f an insurer’s statutory violation causes an injury independent of the loss of policy benefits, the insured may recover damages for that injury even if the policy does not grant the insured the right to benefits.” Id. at *5.

These legal principles make clear that insurers should be timely, thorough, and professional in their handling of claims. If they fail to properly fulfill their duties in this regard, they can be liable for bad faith, even in regard to claims that ultimately are not determined to be covered. Policyholders, for their part, should consider whether their insurers have fulfilled both the duty of good faith in regard to claim payment, if the claims are covered, and the duty of good faith in regard to claim handling, regardless of whether the claims are covered. The analysis is incomplete if bad faith in regard to claim payment is analyzed but the “other” type of bad faith is not considered.

New Jersey’s Highest Court Scrutinizes Statutes of Limitation and the Discovery Rule in Construction Defect Cases

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Robert C. Neff, Jr. | Wilson Elser | July 11, 2018

The typical construction defect case presents an up-front analytical challenge: the defense attorney is presented with boxes of project materials, perhaps an extensive case history and prior discovery, and likely an unhappy (but these days, resigned) client. So you start with the basics: a review of the complaint to assess the allegations; a review of the contract documents, particularly the scope of work, for an understanding of the client’s role in the project; and a conference with the client to review the project and the expected course of the litigation.

At the same time, you speak with the carrier involved for an understanding of the terms of the applicable policy, and whether that may affect your strategy. Is there an ability to spread the risk, perhaps through a contractual indemnification provision? Or might your client be on the hook to defend and indemnify another party?

There is so much to do that sometimes a statute of limitations or statute of repose evaluation might take a back seat, unless it’s obvious. After all, particularly if your client was brought into the suit late, aren’t these cases typically subject to the discovery rule? And aren’t there often multiple owners, such that this new owner bringing suit wouldn’t have had prior knowledge of any defects?

Well, yes and yes. But a new case in New Jersey illustrates the importance of reviewing this potential affirmative defense and the related statute of repose defense, and making the review part of every initial analysis. Most importantly, the case gives defendants the ability to defend against the assertion that the statute of limitations was tolled until the most recent owner (and plaintiff) discovered the cause of action.

Background
In Palisades at Fort Lee Condo. Ass’n v. 100 Old Palisade, LLC, 2017 N.J. Lexis 845, 169 A.3d 473 (Supreme Court of New Jersey, September 14, 2017), Palisades at Fort Lee Condominium Association, Inc. (plaintiff) sued the general contractor and three subcontractors, alleging various defects in a commercial/residential high-rise under plaintiff’s control at the time suit was filed. However, the complex had gone through two ownership changes prior to suit being filed, and the building had been completed more than six years earlier.

The relevant timeline was as follows: in December 1999, Palisades A/V Acquisitions Co., LLC (A/V) retained defendant general contractor AJD Construction Co., Inc. (AJD) to build the complex. The project architect certified that the project was “substantially complete” as of May 1, 2002. A/V then rented units in the project for two years, after which, in June 2004, it sold the complex to 100 Old Palisade, LLC (Old Palisade), which converted the units into condominiums. On October 1, 2004, an engineer retained by Old Palisade found the complex to be in good condition.

In July 2006, the unit owners took control of the Condominium Association and retained another engineer to inspect the complex. That engineer issued a June 13, 2007, report detailing construction-related defects, and the Association eventually sued various defendants in 2009 and 2010. The allegations were the typical breach of warranty and negligent workmanship allegations found in most construction defect complaints.

Rulings
In New Jersey, the statute of limitations to file such a suit is six years, as set forth in N.J.S.A. 2A:14-1. Ruling on a motion to dismiss for violation of the statute of limitations, the trial court found that the statute began to run on May 1, 2002, when the complex was “substantially complete.” Because suit had been filed after May 2008, the court granted the motion and dismissed the case.

The Appellate Division disagreed, concluding that the Association’s claims accrued when it assumed control of the complex and became “reasonably aware” of the claims of construction defect based on its June 2007 engineer’s report. The Supreme Court granted certification, but did not completely agree with either the trial or appellate courts, illustrating the difficulties inherent in the application of the statute of limitations and the discovery rule in construction defect litigation.

First, the Supreme Court disagreed that it is simply a matter of determining when a project is “substantially complete” when setting the accrual date. The discovery rule applies, it noted. So if an owner does not reasonably first discover a cause of action until after the project is substantially complete, then the full six-year statute does not begin to run until the date that the cause of action is discovered.

The Supreme Court therefore rejected the trial court’s opinion that, because damages and an at-fault party were discovered within the initial six-year period commencing with the substantial completion of the project, the plaintiff had to file the action within the initial six-year period. “We therefore reject defendants’ argument that, so long as plaintiff discovered the basis for an actionable claim within six years from the date of substantial completion, plaintiff had to file within the time remaining in the limitations period.”

Instead, the Supreme Court determined the statute of limitations does not begin to run until “the date that the plaintiff knows or reasonably should know of an actionable claim against an identifiable defendant” if that date is after the date of substantial completion. While defendants lost that argument, they won another, perhaps less obvious, argument.

The plaintiff in Palisades was the third owner of the project in question, a 41-story high-rise consisting of a 30-story residential tower atop an 11-story parking garage, including mid-rise apartments, townhomes and recreation facilities. A/V owned it in 1999, Old Palisade took ownership in 2004, and the plaintiff, the Condominium Association, owned it in July 2006 when 75 percent of the unit owners took control of the Condominium Association.

Plaintiff attempted to argue that the statute of limitations did not begin to run until the Condominium Association received its expert report in June 2007, notifying it of the defects. In fact, that is how the Appellate Division ruled. It made no difference to the Appellate Division that the prior owners had known of defects in the project. Instead, the Supreme Court held that a current owner stands in the shoes of a prior owner for statute of limitations purposes, and has no right to revive what may have been a lapsed claim simply because of a change in ownership:

“The statute of limitations clock is not reset every time property changes hands… A cause of action, for purposes of N.J.S.A. 2A:14-1, accrues when someone in the chain of ownership first knows or reasonably should know of an actionable claim against an identifiable party.”

Rejecting plaintiff’s argument and that of its amicus curiae supporters, the Supreme Court explicitly held that a condominium association is not exempt from that rule: “Old Palisade took title subject to the rights of A/V Acquisitions, and the plaintiff Condominium Association took title subject to any limitation on the rights of the two predecessor owners.”

As a final point, the Supreme Court noted that its holding does not abrogate the effect of the statute of repose, which in New Jersey is 10 years. Repose statutes are specifically enacted to save architects, planners, designers, builders and contractors from indefinite liability through operation of the discovery rule. Thus, the 10-year period begins to run on the date of substantial completion and cannot be extended.

At the end of the day, the Supreme Court found in Palisades that it could not determine the accrual date of the statute of limitations, and that a hearing would have to be held with respect to when each of the three owners knew or should have known of a cause of action as against each defendant. It remanded the case for that purpose.

Analysis
Back to the beginning: a statute of limitations analysis must be conducted at the start of each case. In Palisades, the motions to dismiss based on the statute of limitations were filed at the conclusion of all discovery. While an initial analysis might yield the conclusion that certain discovery will be needed to ascertain the appropriate accrual date (or dates, in the case of multiple defendants), counsel will then know what discovery to seek during the discovery period.

In addition, as a practical matter − and if the managing judge or counsel are in agreement − discovery limited to the statute of limitations can be conducted in the beginning of the case, early motions can be filed, and an early hearing held, potentially obviating the need for a lengthy full-discovery period.

…And potentially winning the case on an affirmative defense short of trial for one of those resigned, but now pleasantly surprised, clients.

The Potential Pitfalls of Contesting Arbitrability in the Arbitration

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Todd Rosenbaum | Mintz Levin Cohn Ferris Glovsky and Popeo PC | July 16, 2018

When an agreement to arbitrate contains a clear and unmistakable “delegation” provision, gateway questions of arbitrability are for the arbitrator to decide. See, e.g., Kubala v. Supreme Prod. Servs., 830 F.3d 199, 201-02 (5th Cir. 2016), citing First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995); Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010). But a determination of the delegation issue is not always obvious, and it is sometimes presented to an arbitrator, rather than to a court, in the first instance. In that case, a party challenging arbitrability may feel some trepidation about submitting its challenge to the very arbitrator who could ultimately be deciding the merits of the case. And another, possibly surprising, concern should be the risk that making such a challenge too vigorously in the arbitration proceeding will foreclose a fulsome judicial review of the arbitrator’s ruling on the scope of his or her own authority.

Ordinarily, arbitration awards are subject to very limited and deferential review. E.g., Sanders v. Gardner, 7 F. Supp. 2d 151 (S.D.N.Y. 1998), citing Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997). Generally, an arbitrator’s determination can only be vacated on the basis of one of four grounds enumerated in the Federal Arbitration Act (“FAA”): fraud, impartiality, misconduct, and evidence that the arbitrator exceeded its authority. 9 U.S.C. § 10(a); Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 n.4 (2008). And a court’s review of an arbitral award is deferential. Thus, an award will not be vacated “even if the arbitrator’s interpretation of the contract is clearly erroneous, so long as such Award is explained in terms that offer even a barely colorable justification for the outcome reached.” Hygrade Operators, Inc. v. ILA Local 333, 945 F.2d 18, 22 (2d Cir. 1991); accord Fertilizer Corp. of India v. IDI Management, Inc., 517 F. Supp. 948, 960 (S.D. Ohio 1981); Mobile Oil Corp. v. Oil, Chemical & Atomic Workers Int’l Union & Local Union No. 4-522, 777 F. Supp. 1342, 1348-49 (E.D. La. 1991); Portland GE v. United States Bank Trust N.A., 38 F. Supp. 2d 1202, 1208 (D. Ore. 1999).

The same rules apply generally when a court is reviewing an award that includes an arbitrator’s determination of his/her own authority to decide a dispute (i.e., arbitrability) and that issue was clearly and unmistakably delegated by the parties to the arbitrator for decision. See, First Options, 914 U.S. at 944-45. On the other hand, courts should review de novo an arbitrator’s decision regarding his/her own jurisdiction if it does not appear that the party seeking to vacate such an arbitration award “clearly agree[d] to submit the question of arbitrability to arbitration.” See id. at 946, 947.

In that regard, the objecting party must take care to preserve a court’s ability to consider the arbitrability question de novo after an arbitration award has been issued. The U.S. Supreme Court has opined that “arguing the arbitrability issue to an arbitrator does not indicate a clear willingness to arbitrate that issue.” First Options, 514 U.S. at 946. Hence, and based on the usual rule that challenges to jurisdiction are waived if not timely raised, a reasonable practitioner might assume that he or she should vigorously contest the arbitrator’s authority to decide the arbitrability question at the outset of arbitration. See Opals on Ice Lingerie, Designs by Bernadette, Inc. v. Bodylines Inc., 320 F.3d 362, 368 (2d Cir. 2003) (“[I]f a party participates in arbitration proceedings without making a timely objection to the submission of the dispute to arbitration [on grounds that it is not arbitrable], that party may be found to have waived its right to object to the arbitration.”); Jones Dairy Farm v. Local No. P-1236, United Food and Commercial Workers Int’l Union, AFL-CIO, 760 F.2d 173, 175-76 (7th Cir. 1985) (“If a party voluntarily and unreservedly submits an issue to arbitration [without questioning the arbitrator’s jurisdiction], he cannot later argue that the arbitrator had no authority to resolve it.”).

However, since First Options was decided, federal courts in various jurisdictions have opined that it is possible for a party to go too far in contesting an arbitrator’s jurisdiction, and thus to waive its right to a court’s de novo review of the issue. For example, in Writers Guild of America, West, Inc. v. Sweetpea Entertainment Corp., 225 Fed. Appx. 114 (9th Cir. 2007), the Ninth Circuit determined that by “filing a motion on the arbitrability issue, arguing the issue in a hearing before the arbitrator, and then allowing the arbitrator to rule on the issue,” the appellants — who later sought vacatur of the eventual arbitral award — had “gone too far down the slippery slope in submitting its dispute to arbitration.” 225 Fed. Appx. at 115 (internal citation omitted). The Ninth Circuit held that although the appellants had then declined to argue the merits of their case at arbitration, they had “waived their right to seek a de novo judicial determination of the [arbitrability] issue” by “submit[ing] the question of arbitrability to the arbitrator.” Id.; cf. Pioneer Roofing Org. v. Sheet Metal Workers’ Local 104, Case No. 17-15296 (9th Cir. June 4, 2018) (unpublished).

As one court in the Southern District of New York observed, there is a considerable difference between not objecting to the arbitrator’s authority strenuously enough, and objecting too ardently:

“A simple statement of reservation of rights is not enough, however, but rather a ‘forceful objection’ is necessary to indicate an unwillingness to submit to arbitration. Further, it appears under these cases that where a party has not actually participated in the argument regarding arbitrability and has explicitly objected to jurisdiction, they will be deemed to have reserved the right to object at a later court proceeding.”

S & G Flooring Inc. v. N.Y. Dist. Council of Carpenters Pension Fund, 2009 U.S. Dist. LEXIS 1188, *17-18 (S.D.N.Y. Dec. 18, 2009) (internal citations omitted). In S & G Flooring, the court found that the petitioner struck the right balance. At the outset of arbitration, the petitioner moved for a stay on grounds that it was not bound by the arbitration agreement. The arbitrator denied the stay and held proceedings on the arbitrability issue, in which the petitioner refused to participate. The petitioner then sought to vacate the arbitration default award, challenging the arbitrator’s jurisdiction over the underlying proceeding. The S & G court reviewed the arbitrability issue de novo. Id. at *19-20. See, Opals on Ice, 2002 U.S. Dist. LEXIS 10738 (numerous letters indicating objection, refusing to brief the issue for the arbitrator, and moving for a stay before the court were sufficient for preservation of objection to arbitrability).

Indeed, after First Options, there seems to be an emerging judicial consensus regarding how a party should preserve its challenge to an arbitrator’s jurisdiction so as to be entitled to de novo review in court:

  1. The objection to arbitrability should be made early in the proceeding, either on the record or in correspondence with the arbitrator;
  2. The party’s basis for the objection should be articulated clearly as the arbitrator’s lack of authority to arbitrate the dispute at hand; and
  3. If the arbitrator declines to stay proceedings, the party contending that it is not bound to arbitrate the dispute should not submit legal briefs or otherwise participate in a hearing or argument in the arbitration on the issue of arbitrability (or on the merits).

See S & G Flooring, 2009 U.S. Dist. LEXIS 118832 at *16-20 (objection to arbitrability preserved); Opals on Ice, 2002 U.S. Dist. LEXIS 10738 at *16-19 (same); Writers Guild, 255 Fed. Appx. at 115 (de novo review of award re arbitrability waived by briefing and arguing issue before arbitrator); Crossville, LLC, 485 Fed. Appx. at 823-25 (objection to arbitrability preserved).

Finally, notwithstanding the recent seeming consensus concerning such perplexing doctrine, practitioners should always check precedent in the relevant jurisdictions to ensure that they take the steps necessary to preserve their clients’ objection(s) to an arbitrator’s authority.