What You'll Want to Know
If you have a civil case in North Carolina, especially if you are about to file or defend against a new one, you will want to know about some critical changes to the non-binding arbitration statutes.
The changes have left the law of court-ordered arbitration in North Carolina somewhat murky. To try to help clarify things, we have outlined the key changes below and also provided a free download of a Word version of one new arbitration waiver form.
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Previous North Carolina Arbitration Statute
Previously, N.C. Gen. Stat. § 7A-37.1, the main North Carolina arbitration statute, permitted, but did not require, local judicial districts, counties or individual courts to implement their own mandatory non-binding arbitration local rules. The same statute also gave the North Carolina Supreme Court the authority to promulgate arbitration rules.
North Carolina Supreme Court's Arbitration Rules
Rule 2 of the the Supreme Court's Rules for Court-Ordered Arbitration requires arbitration in all civil court actions. The rule, however, contains a series of exceptions. In conjunction with the main arbitration statute, the rule and its exceptions essentially allowed local courts to require mandatory, non-binding arbitration for most civil court actions filed in District Court seeking only money damages.
As a result, many judicial districts had local rules, similar to this current one from the 10th District Local Rules for District Court in Wake County:
“10.1 All eligible civil actions pending in the 10th Judicial District shall be ordered to arbitration unless there is a written order by a judge waiving such arbitration requirements.”
Changes to the Arbitration-Related Statutes
This past summer, the North Carolina General Assembly passed Session Law 2013-159 (Senate Bill 452). That bill amended N.C. Gen. Stat. § 7A-243, increasing the amount-in-controversy limit for District Court from $10,000 to $25,000, which, of course, will increase considerably the overall number of District Court cases.
Senate Bill 452 also amended former N.C. Gen. Stat. § 7A-37.1, the main arbitration statute. As amended, that that statute now appears to require mandatory, non-binding arbitration for all District Court cases across North Carolina. It reads in part as follows:
“(c) Except as otherwise provided in rules promulgated by the Supreme Court of North Carolina pursuant to subsection (b) of this section, this procedure shall be employed in all civil actions where claims do not exceed twenty-five thousand dollars ($25,000)…“
Still some Confusion
The entire statute, however, is now somewhat confusing, because the General Assembly did not change another part of the statute that appears not to require state-wide arbitration. That part, subsection (d), still reads,
“(d) This procedure may be implemented in a judicial district, in selected counties within a district, or in any court within a district,….”
In addition, I am told that many North Carolina Judicial Districts are not yet ordering cases to arbitration because the General Assembly has not funded the requirement of State-wide mandatory arbitration apparently required by subsection (c).
But Parties May Now Agree to Waive Arbitration
Previously, to avoid arbitration when it was ordered required a motion and a court order pursuant to Rule 2(b)(2) of the Rules for Court-Ordered Arbitration. That rule still reads,
(b) Exemption and Withdrawal From Arbitration. The court may exempt or withdraw any action from arbitration on its own motion, or on the motion of a party, made not less than 10 days before the arbitration hearing and a showing that:
(1) the action is excepted from arbitration under Arb. Rule 2(a)(1) or
(2) there is a compelling reason to do so.
Now, however, the parties may simply waive arbitration by agreement. Senate Bill 452 amended N.C. Gen. Stat. § 7A-37.1(c) to apparently require arbitration state-wide, but the bill also added that this was only so,
“unless all parties to the action waive arbitration under this section.“
New Waiver Form
Wake County Chief District Court Judge Robert Rader has appointed District Court Judge Debra Sasser to head the civil division of Wake County District Court. Judge Sasser has promulgated a Waiver of Arbitration Form so that parties can notify the Wake Co. Trial Court Administrator's Office, and Ms. McLeod in particular, that they have agreed to waive arbitration in their case.
You can request a Word version of that form here.
Even if your judicial district has not yet developed its own arbitration waiver form, you might want to grab this one and then modify it for your district.
But No New State-wide Waiver Rule
In a recent interview, Carol McLeod, the Arbitration Coordinator for Wake County, discussed the new changes to the North Carolina amount in controversy and arbitration laws, saying
“We expect an increase in the number of District Court cases, and therefore arbitrations…. We haven't had many new cases ordered to arbitration under the new laws, so we will have to see how things work out as we all move forward.”
Although the parties can now agree to waive arbitration, there is not yet a rule that governs the time by which they must waive. As Ms. McLeod noted,
“The Supreme Court hasn't issued a new rule setting the time by which the parties must waive arbitration…. Hopefully, the parties will give us enough notice that they are waiving arbitration, so that we can continue to administer cases efficiently for the parties and the Court.”
How to Help the Arbitration Coordinator, the Appointed Arbitrator and the Court
Even though it may be possible to turn in a waiver form at the eleventh hour, I'm sure Ms. McLeod, the Wake County TCA, and the lawyer appointed as arbitrator would greatly appreciate notice of waivers as early as possible.
Download a Word Version of Waiver of Arbitration Form
We are frequently associated as local trial counsel, for example, to allow other attorneys to practice pro hac vice in Raleigh and throughout North Carolina. As a service to our existing and potential co-counsel, we have created a Word version of the new Wake County Waiver of Arbitration Form. To request a link to download it now, you should fill out the form below.
While you are here, you should also check the box to subscribe to our free newsletter, North Carolina Local Counsel. It's our way of helping co-counsel keep up with key changes to North Carolina laws, rules, standing orders, and even judge's preferences.
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