Herbert v. Marcaccio
713 S.E.2d 531
N.C. Ct. App.2011Background
- Ms. Sykes sustained injuries in a car accident involving the Marcaccios and had Farm Bureau UIM coverage.
- Liberty Mutual tendered its policy limits ($250,000) to Ms. Sykes; Farm Bureau advanced $250,000 to protect its subrogation rights.
- Ms. Sykes executed an agreement to pursue recovery from liable parties and to hold recovered funds in trust for Farm Bureau.
- Ms. Sykes filed suit in October 2007; numerous discovery and venue motions occurred; Ms. Sykes died in December 2008 and Herbert was appointed administrator.
- A demand for arbitration by Herbert was filed 30 November 2009 and an arbitration hearing occurred on 1 March 2010, with an order denying arbitration entered 15 March 2010.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accrual/exhaustion prerequisite to arbitration | Herbert argues her right to arbitration accrued after policy exhaustion or settlement. | Farm Bureau contends no right to arbitration until exhaustion occurred. | Waived; right to arbitration not yet necessary to address. |
| Waiver by delay and prejudice | Delay alone cannot support waiver; prejudice not shown. | Delay caused Farm Bureau to incur substantial resources defending the suit; prejudice shown. | Waived; court affirmed prejudice from extended litigation and defense costs. |
| Discovery procedures used in litigation vs arbitration | Delay in discovery did not amount to using procedures unavailable in arbitration. | Alleged discovery delay prejudiced Farm Bureau. | Not a basis for finding waiver; properly did not count as arbitration-unauthorized discovery. |
| Impact on jury trial right if arbitration available | If arbitration were available, jury-trial rights would be protected; waiver should not stand. | Prejudice and delay undermine arbitration rights and do not require considering jury rights. | Rights to jury trial would be protected if arbitration rights had accrued; however, waiver governs here. |
Key Cases Cited
- Servomation Corp. v. Hickory Constr. Co., 316 N.C. 543, 342 S.E.2d 853 (1986) (waiver by inconsistent conduct requires prejudice to the other party)
- Cyclone Roofing Co. v. David M. LaFave Co., 312 N.C. 224, 321 S.E.2d 872 (1984) (delay in seeking arbitration may prejudice the opposing party)
- N.C. Farm Bureau Mut. Ins. Co. v. Sematoski, 195 N.C.App. 304, 672 S.E.2d 90 (2009) (strong public policy favoring arbitration; scrutiny of waiver claim)
- Culberson v. REO Props. Corp., 194 N.C.App. 793, 670 S.E.2d 316 (2009) (expenses and timeliness of arbitration demand affect prejudice finding)
- McCrary v. Byrd, 148 N.C.App. 630, 559 S.E.2d 821 (2002) (need findings on whether legal fees resulted from delay in arbitration)
- Prime South Homes, Inc. v. Byrd, 102 N.C.App. 255, 401 S.E.2d 822 (1991) (prejudice where substantial legal fees incurred due to delay)
- Sullivan v. Bright, 129 N.C.App. 84, 497 S.E.2d 118 (1998) (record must show expenses not incurred if arbitration had been timely demanded)