1. Arbitration and Mediation--party's failure to attend--no evidence representative
possessed authority to make binding decisions
The trial court did not err by concluding that defendants failed to appear at a court-
ordered arbitration hearing in an automobile collision case in violation of N.C. Arbitration Rule
3(p) where defendants were not at the hearing but counsel purporting to represent defendants was
present along with an adjuster from defendants' liability insurance carrier, because even if Rule
3(p) allows appearance by counsel or a liability insurance carrier representative in lieu of the
actual parties, no evidence in the record indicates that the attorney and adjuster in attendance at
the arbitration hearing indeed possessed authority to make binding decisions on defendants' behalf
in all matters.
2. Arbitration and Mediation--sanctions--authority
The trial court did not abuse its discretion by imposing the sanction of striking defendants'
request for a trial de novo based on defendants' failure to participate in mandatory arbitration in a
good faith and meaningful manner as required by North Carolina Arbitration Rule 3(1), because
the determination that defendants violated N.C. Arb. R. 3(p) accorded the trial court the
discretion to impose sanctions under N.C. Arb. R. 3(1), which in turn references N.C.G.S. § 1A-
1, Rule 37(b)(2)(c) allowing the striking of pleadings, dismissal of an action or a portion thereof,
and rendering judgment by default as permissible sanctions.
Law Offices of Michael A. DeMayo, L.L.P., by Frank F. Voler,
for plaintiff-appellee.
Kenneth M. Gondek and Steven J. Colombo, for defendants-
appellants.
JOHN, Judge.
Defendants Doreena Shapialle Simmons and Gary Simmons appeal
the trial court's 16 April 1999 order (the Order) allowing
plaintiff Layla Mohamad's “Motion to Enforce Arbitration Award
and/or Attorney Fees and Expenses” and denying defendants' “Motion
for Imposition of Sanctions.” We affirm. Pertinent facts and procedural history include the following:
On 10 May 1996, plaintiff and Doreena Simmons were involved in an
automobile collision. Plaintiff subsequently complained of back
pain and was examined by her physician and thereafter treated by a
chiropractor, accumulating total bills in the amount of $1,730.00.
Plaintiff subsequently filed the instant complaint 23 April 1998,
alleging the negligence of Doreena Simmons proximately caused the
collision and damages to plaintiff in an amount not in excess of
$10,000.00.
The case was assigned to mandatory non-binding arbitration
pursuant to the North Carolina Court-Ordered Arbitration Rules 1(a)
and 8(a) (1999) (hereinafter N.C. Arb. R. or the Rules). See
N.C.G.S. § 7A-37.1(b) (1999). On 17 June 1998, defendants filed
answer denying negligence and demanding a jury trial. Defendants
also filed a pre-arbitration submission, a motion to require
prosecution bond, and an Offer of Judgment in the amount of
$1,005.00.
A court ordered arbitration hearing (the hearing) was noticed
for 15 December 1998. The notice recited, inter alia, that
“[f]ailure to appear for the hearing and participate in good faith
may result in an adverse award and/or sanctions.” Defendants did
not attend the hearing; however, counsel purporting to represent
defendants was present along with an adjuster from defendants'
liability insurance carrier. Plaintiff objected to the failure ofthe individual defendants to appear, but proceeded with the hearing
without waiving or withdrawing the objection.
Following the hearing, the arbitrator awarded plaintiff
$1,750.00. Defendants timely filed a request for trial de novo.
See N.C. Arb. R. 5(a) (“party not in default . . . who is
dissatisfied with an arbitrator's award may have a trial de novo as
of right upon filing a written demand” therefor in timely manner).
On 8 March 1999, plaintiff moved to enforce the arbitration award
and defendants thereupon responded with a motion for imposition ofsanctions pursuant to N.C.G.S. § 1A-1, Rule 11 (1999). In the
Order, the trial court granted the former motion and denied the
latter. Defendants appeal.
Initially, we note defendants set forth five assignments of
error, but have failed to address assignments of error three and
four in their appellate brief. These assignments of error are
therefore deemed abandoned. See N.C.R. App. P. 28(b)(5)
(“[a]ssignments of error not set out in the appellant's brief, or
in support of which no reason or argument is stated or authority
cited, will be taken as abandoned”).
[1]Defendants' first two assignments of error challenge the
trial court's “finding of fact” number three, which stated as
follows:
3. That the named Defendants' failure to
appear at the Court-Ordered Arbitration was in
violation of Rule 3(p) of the North Carolina
Rules for Court-Ordered Arbitration.
The foregoing “finding” is rather a conclusion of law, fully
reviewable on appeal. See Bowles Distributing Co. v. Pabst Brewing
Co., 69 N.C. App. 341, 344, 317 S.E.2d 684, 686 (1984) (if “finding
of fact is essentially a conclusion of law, . . . it will be
treated [as such]” and is fully “reviewable on appeal”).
N.C. Arb. R. 3(p) provides that:
Parties must be present at hearings;
Representation. All parties shall be present
at hearings in person or through
representatives authorized to make binding
decisions on their behalf in all matters in
controversy before the arbitrator. All
parties may be represented by counsel. Only
individuals may appear pro se.
It is not disputed that the individual defendants did not
attend the hearing; however, counsel purporting to represent
defendants and an adjuster employed by their liability insurance
carrier were present. Defendants maintain that the phrase “or
through representatives authorized to make binding decisions,” set
out in N.C. Arb. R. 3(p), allows appearance by counsel or a
liability insurance carrier representative in lieu of the actual
parties.
However, assuming arguendo defendants are correct, no evidence
in the instant record indicates that the attorney and adjuster in
attendance at the hearing indeed possessed authority “to make
binding decisions on [defendants'] behalf in all matters.” Id.
Defendants counter that the attorney-client relationship grants
“inherent authority” to counsel to make binding decisions for
clients, and that contracts of liability insurance similarly grant
an insurer authority to make binding decisions on behalf of the
insured.
In the foregoing regard, we note defendants' concession
that the attorney-client relationship rests on
the principles of agency, with the client
being the principle [sic] and the attorney
being the agent.
Notwithstanding, defendants assert that counsel possesses “inherent
authority . . . to make binding decisions with respect to strategic
and tactical matters,” and extrapolate therefrom the conclusion
that “defendants' appearance at the arbitration [was] unnecessary
for a determination on the merits.” We believe defendants'
conclusion is unfounded. First, as noted above, no documents in the record, such as
defendants' contract with counsel, an affidavit setting forth the
nature of the representational relationship and the authority of
counsel, or defendants' policy of insurance, indicate the attorney
purporting to represent defendants or the representative of their
liability insurance carrier who were present at the hearing
possessed in this case authority “to make binding decisions on
[defendants'] behalf in all matters in controversy before the
arbitrator.” N.C. Arb. R. 3(p) (emphasis added). Without
question, our review is based “solely upon the record on appeal,”
N.C.R. App. P. 9(a), and we decline to accept as part of the record
herein assertions of fact in the parties' briefs which are not
sustained by record evidence, see N.C.R. App. P. 28(b)(4)
(underlying facts set out in appellate brief must be supported by
“references to pages in the . . . record on appeal”), and Hudson v.
Game World, Inc. 126 N.C. App. 139, 142, 484 S.E.2d 435, 437-38
(1997) (matters argued in brief but not contained in the record
will not be considered on appeal).
Perhaps more importantly, we observe that the commentary to
N.C. Arb. R. 1 indicates that the purpose of the Rules “is to
create an efficient, economical alternative to traditional
litigation for prompt resolution of disputes involving” relatively
minor money damage claims as in the case sub judice. Parties are
thereby provided an early opportunity to present their contentions
to a disinterested third party and obtain an impartial decision
thereon in a cost-effective manner. In addition, the “alternativeto traditional litigation,” id., serves to relieve the c
onstantly
increasing caseload of our already overburdened trial courts.
Further, N.C. Arb. R. 3(l) provides for imposition of
sanctions upon a “party failing or refusing to participate in an
arbitration proceeding in a good faith and meaningful manner.”
Such a rule only highlights the critical importance of earnest,
conscientious involvement by the parties in the process.
We believe both the express and implied bases for the Rules
would be subverted, if not completely eviscerated, if parties were
allowed to disregard the mandatory attendance requirement without
unequivocal evidence in the record that representatives attending
on behalf of absent parties were indeed “authorized to make binding
decisions on [the absent parties'] behalf in all matters in
controversy before the arbitrator.” N.C. Arb. R. 3(p). To
conclude otherwise would simply countenance the failure to
participate in mandatory arbitration “in a good faith and
meaningful manner.” N.C. Arb. R. 3(l).
In sum, as defendants failed to attend the hearing in person,
and as no evidence in the record reflects that counsel purporting
to appear on defendants' behalf or the representative of
defendants' liability insurance carrier were authorized “to make
binding decisions . . . in all matters” on behalf of defendants, we
affirm the trial court's determination in “finding of fact” number
three of the Order that defendants violated N.C. Arb. R. 3(p).
[2]Defendants next argue the trial court erred by imposing
the “sanction of striking defendants' request for trial de novo.” Defendants concede that the trial court's
determination that the defendants' violated
[N.C. Arb. R.] 3(p) gave [the court] the
discretion to impose sanctions pursuant to
[N.C. Arb. R.] 3(l).
However, defendants maintain the court's enforcement of the
arbitration award implicitly deprived them of the right to a jury
trial provided in N.C. Arb. R. 5(a).
N.C. Arb. R. 3(l) permits sanctions pursuant to, inter alia,
N.C.G.S. § 1A-l, Rule 37(b)(2)(c) (1999) (Rule 37(b)(2)(c)), which
allows the trial court to enter
[a]n order striking out pleadings or parts
thereof, or staying further proceedings until
the order is obeyed, or dismissing the action
or proceeding or any part thereof, or
rendering a judgment by default against the
disobedient party.
Sanctions imposed under Rule 37(b)(2)(c) will not be upset on
appeal in the absence of an abuse of discretion, Hursey v. Homes By
Design, Inc., 121 N.C. App. 175, 177, 464 S.E.2d 504, 505 (1995),
i.e., upon a showing the ruling “was so arbitrary that it could not
have been the result of a reasoned decision,” id.
Suffice it to state we perceive no abuse of discretion in the
case sub judice. Defendants have acknowledged that the trial
court's determination they violated N.C. Arb. R. 3(p) accorded to
the court the discretion to impose sanctions under N.C. Arb. R.
3(l), which in turn references Rule 37(b)(2)(c) allowing the
striking of pleadings, dismissal of an action or a portion thereof,
and rendering judgment by default as permissible sanctions.
Assuming arguendo the trial court's Order enforcing the arbitrationaward thereby implicitly imposed the sanctions of striking
defendants' request for trial de novo or of entering judgment
against defendants, such action appears well within the purview of
Rule 37(b)(2)(c) and in no event constitutes an abuse of the
court's discretion.
In sum, the Order is in all respects affirmed.
Affirmed.
Judges WALKER and TIMMONS-GOODSON concur.
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