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Arbitrating alarm industry disputes
January 24, 2022
Arbitrating alarm industry disputes
          There are plenty of reasons you should be using Kirschenbaum Contracts™ for your alarm, security, fire and automation business.  Among the most important reasons are:
  *  most up to date contract forms in the industry; continuously updated
  *  strongest provisions for defense of claims
  *  strongest provisions for collections
  *  most recognized and accepted contracts by central stations, insurance companies and potential buyers
  *  worth the most when valuing equity and seeking highest multiple
  *  support from Kirschenbaum & Kirschenbaum for legal issues
  *  required for participation in K&K’s Concierge Program
  *  dispute resolution through arbitration
          It’s the last itemized benefit I want to discuss in today’s article, arbitration.
          Arbitration is a contracted for dispute resolution alternative to litigation in court.  The court system in just about every jurisdiction was faltering if not broken before Covid; now it’s probably safe to say that unless you’re in a one horse town, your court system is hopelessly broken.  You simply can’t pursue collection cases and you can’t get lawsuits against you resolved because you can’t get a court date or a judge to decide motions.  So instead of going to court, you agree to go to arbitration.
          Because arbitration is a creature of agreement, parties are free to fashion their own procedures.  There are several well-known companies, such as American Arbitration Association and more recently Jams.  Because the alarm industry contracts offered by K&K include the arbitration program offered by Arbitration Services Inc that company has considerable experience with alarm industry cases.  This program offers inexpensive and relatively quick resolution of matters. 
          You do have to be careful which arbitration program you agree to use because you can find yourself bogged down with an expensive and protracted arbitration proceeding.  For example, one popular program has a minimum filing fee of $1700.  Obviously that isn’t going to be practical when you have a collection case for close to that amount.  Other programs may require three arbitrators instead of one, which means you’re paying for three instead of one; it gets expensive and proceedings are protracted because all three have different schedules.
          Some arbitration programs don’t offer virtual hearings which are much easier to schedule and attend.  We’ve found virtual hearings to be just as effective as in-person hearings. 
          Courts favor arbitration.  A dispute arose between a natural gas supplier and a California consumer over pricing.  The consumer started a class action claiming violation of the consumer contract regarding pricing.  The gas company moved to dismiss the class action and compel arbitration.  The Federal District court gave a comprehensive analysis of the contract in question, which was executed electronically, and rejected all challenges to the arbitration provision.  The Judge cited familiar law:
          “In deciding whether to compel arbitration, a district court typically determines two gateway issues: (1) whether a valid agreement to arbitrate exists; and (2) if it does, whether the agreement encompasses the dispute at issue. “To evaluate the validity of an arbitration agreement, federal courts ‘should apply ordinary state-law principles that govern the formation of contracts.’” If the court is “satisfied that the making of the arbitration agreement or the failure to comply with the agreement is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.”  “[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” If a court “determines that an arbitration clause is enforceable, it has the discretion to either stay the case pending arbitration, or to dismiss the case if all of the alleged claims are subject to arbitration.” (citations omitted).
          “In determining whether to compel arbitration under the FAA, the Court must engage a two-step inquiry. First, the Court must determine whether a valid agreement to arbitrate exists. Second, if it does, the Court then must look to see if the agreement encompasses the dispute at issue. If the answer to both questions is “yes,” then the Court must enforce the arbitration agreement.”  (citations omitted).
          Regarding the often-cited defense to arbitration of fraudulent inducement the Judge found:
          “Plaintiff appears to argue that the oral contract in its entirety is not valid because it was fraudulently induced. However, this question must be decided by an arbitrator. (finding questions of whether fraud in the inducement of the agreement as a whole were questions for the arbitrator); (determining that a fraudulent inducement claim that runs to the entire contract, and not specifically the arbitration provision, must be decided by the arbitrator). Accordingly, this argument is not a basis upon which to deny Defendants’ motion to compel arbitration.” (citations omitted).
          The Judge also made short rift of the Plaintiff’s claim that she didn’t agree to the contract, making this interesting finding:
          “Plaintiff argues that because Vista allegedly mailed the Welcome Letter and T&Cs to Plaintiff two days after enrolling in the Vista Program, they attempted to change the contract after its formation, and thus there was no “meeting of the minds” and a valid contract does not exist. Defendants argue that courts have found such provisions enforceable and Plaintiff assented to arbitration by continuing the service. The Ninth Circuit has found that receiving an agreement and continuing service is sufficient to show assent to the agreement. (The district court’s finding that plaintiffs received the Consumer Agreement and continued to accept DirecTV's services is not clearly erroneous and its conclusion that these actions bound Plaintiffs to the terms of the contract is correct.”). Here, Plaintiff was able to terminate her contract at any time without paying an early termination fee or penalty. Plaintiff, however, continued her service for approximately five months after services commenced. Plaintiff’s failure to cancel her contract demonstrates that Plaintiff assented to the agreement. Accordingly, the Court finds a valid agreement to arbitrate exists.”  (citations omitted)
          You can read this case, YOSHIDA v VISTA ENERGY MARKETING on K&K’s website under Alarm Law Articles / Leading Cases / California

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301