182 A.3d 1173
Vt.2018Background
- Barr Law Group demanded arbitration against Adams Construction for unpaid legal fees; Adams Construction answered and counterclaimed.
- Both sides actively participated in arbitrator selection, preliminary conferences, and extensive reciprocal discovery over ~5–6 months.
- Adams Construction requested a three-day hearing; arbitrator scheduled three days.
- One week before hearing, Adams Construction first objected to the enforceability of the pre‑dispute arbitration clause, alleging Barr breached fiduciary/ethical duties and fraudulently induced the agreement.
- Arbitrator denied the objection, conducted the hearing, awarded Barr Law Group fees, dismissed Adams Construction’s counterclaims, and assessed sanctions.
- Adams Construction sought to vacate the award in superior court; the court held Adams Construction waived its objection by its prior participation and denied vacatur. Adams Construction appealed.
Issues
| Issue | Plaintiff's Argument (Adams Construction) | Defendant's Argument (Barr Law Group) | Held |
|---|---|---|---|
| Whether a party waives an objection to the validity of an arbitration agreement by participating in arbitration before the hearing | Objection was timely because it was raised before the arbitration hearing; Vermont statute preserves objections made prior to hearing | Adams Construction’s lengthy, active participation (selection of arbitrator, counterclaims, extensive discovery, motion practice) waived any objection | Waiver upheld — active participation over months may constitute waiver even if objection is raised before hearing |
| Whether the court should reach the merits of Adams Construction’s claim that the arbitration clause was unenforceable due to fiduciary breach/fraud | The clause is unenforceable because Barr failed to obtain informed consent and violated ethical duties | Barr argues procedural posture prevents reaching merits because objection was waived | Court declined to reach merits and affirmed denial of vacatur based on waiver |
Key Cases Cited
- Joder Building Corp. v. Lewis, 153 Vt. 115, 569 A.2d 471 (Vt. 1989) (early objection required; participation can trigger waiver)
- Pilgrim Inv. Corp. v. Reed, 457 N.W.2d 544 (Wis. Ct. App. 1990) (substantial preliminary participation without reservation can estop challenge to arbitration)
- Helmerichs v. Bank of Minneapolis & Trust Co., 349 N.W.2d 326 (Minn. Ct. App. 1984) (timely objection needed so opposing party can choose whether to continue arbitration)
- Opals on Ice Lingerie v. Body Lines Inc., 320 F.3d 362 (2d Cir. 2003) (repeated and timely objections preserve right; participation alone does not always waive objection)