News & Information: ORRA BrokerWise

COE Case Study: Obligation to submit to arbitration

Thursday, December 6, 2012  
Share |

Article 17, Case 17-1

REALTOR® A and REALTOR® B had been engaged in a cooperative transaction that resulted in a dispute regarding entitlement to compensation. Rather than requesting arbitration before the board of REALTORS®, REALTOR® A filed suit against REALTOR® B for payment of the compensation he felt REALTOR® B owed him. Upon receiving notification of the lawsuit, REALTOR® B filed a request for arbitration with the board, which was reviewed by the grievance committee and found to be a mandatory arbitration situation. REALTOR® A was advised of the grievance committee’s decision, but refused to withdraw from the lawsuit. Thereupon, REALTOR® B filed a complaint with the board charging a violation of Article 17 as supported by Standard of Practice 17-1.

REALTOR® A was directed to be present at a hearing on the complaint before the board of directors. Evidence that REALTOR® B had sought REALTOR® A’s agreement to submit the dispute to arbitration was presented at the hearing. REALTOR® A defended his action in filing the suit and refusing to submit to arbitration by asserting that under laws of the state, the board of REALTORS® had no authority to bar his access to the courts or to require him to arbitrate his dispute with REALTOR® B.

The board of directors concluded that REALTOR® A was correct as to his legal right and as to the board’s lack of any right to prevent him from filing a suit. It was pointed out to REALTOR® A, however, that the board of REALTORS® is a voluntary organization, whose members accept certain specified obligations with respect to their relations with other REALTORS®, and that if he wished to continue as a member of the board he would be obliged to adhere to the board’s requirements as to arbitration.

Because REALTOR® A would not withdraw the litigation, the board of directors concluded that REALTOR® A was in violation of Article 17 for refusing to arbitrate in a mandatory arbitration situation. However, it was noted that if REALTOR® A had filed litigation against REALTOR® B, and had REALTOR® B then requested arbitration with the grievance committee determining that an arbitrable issue of a mandatory nature existed, REALTOR® B might have successfully petitioned the court to remand the matter to the board for arbitration, and there would have been no finding of a violation of Article 17 since the board’s arbitration process would have been ultimately complied with.

ORRA Partners
ORRA would like to thank our Partners for their continuing support.
View the full list of ORRA Partners.