anthony capobianco (sbn 162551) capobianco l o · 2019-02-08 · individual; katie mcmains, an...

NOTICE OF MOTIONS AND MOTIONS

CASE NO. 3:17-cv-2263-BAS-MDD

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ANTHONY CAPOBIANCO (SBN 162551) DEREK WALLEN (SBN 214477) CAPOBIANCO LAW OFFICES, P.C. 41990 Cook Street, Bldg. F, Suite 2006 Palm Desert, California 92211 Telephone: (760) 568-6500 Facsimile: (760) 568-0100 [email protected] [email protected] Attorneys for Defendant Concierge Auctions, LLC

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

HOWARD APPEL, an individual, and DAVID COHEN, an individual, Plaintiffs,

v. CONCIERGE AUCTIONS, LLC, a Delaware Limited Liability Company; CHAD ROFFERS, an individual; ALEXANDER GRAY, an individual; EMILY PRYOR, an individual; KATIE MCMAINS, an individual; SERENA IRWIN, an individual; and OLIVIA ASAVEI, an individual, Defendants.

Case No. 3:17-cv-2263-BAS-MDD [Assigned to Hon. Cynthia Bashant] CONCIERGE AUCTIONS, LLC’S NOTICE OF MOTIONS AND MOTIONS FOR ORDER COMPELLING ARBITRATION AND TO STAY OR DISMISS PROCEEDINGS OR, IN THE ALTERNATIVE, TO TRANSFER VENUE Hearing Date: February 5, 2018 Place: Courtroom 4B NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT

Case 3:17-cv-02263-BAS-MDD Document 10 Filed 12/15/17 PageID.50 of 3

mailto:[email protected]



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TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE that on Monday, February 5, 2018, or as soon

thereafter as counsel may be heard, in Courtroom 4B of the United States District

Courthouse for the Southern District of California, located at 221 West Broadway,

Suite 4145, San Diego, California 92101, the Hon. Cynthia Bashant presiding,

defendant Concierge Auctions, LLC (“Concierge”) will and hereby does move this

Court for (1) an order compelling plaintiffs Howard Appel and David Cohen

(collectively, “Plaintiffs”) to submit this dispute to binding arbitration in New

York, New York and to dismiss the action or stay proceedings pending the

outcome of the arbitration or, in the alternative, (2) an order transferring this action

to the federal district court for the Southern District of New York.

These motions are made following the conference of counsel that took place

on December 8, 2017 and pursuant to this court’s order granting the joint motion of

the parties entered on November 29, 2017 (ECF No. 6).

These motions are based on this notice of motions, the concurrently filed

memorandum of points and authorities and the declarations of Katie McMains and

Anthony Capobianco, and the papers, records and pleadings on file in this case and

any oral argument made.

Date: December 15, 2017 CAPOBIANCO LAW OFFICES, P.C.

By: /s/ Anthony Capobianco Anthony Capobianco

Attorneys for Defendant Concierge Auctions, LLC E-mail: [email protected]


CERTIFICATION OF SERVICE


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I hereby certify that on December 15, 2017, I electronically filed the

foregoing with the Clerk of the Court using the CM/ECF system which will send

notification of such filing to the registered participants, as denoted on the attached

Electronic Mail Notice List, and I hereby certify that I have mailed the foregoing

document or paper via the United States Postal Service to the non-CM/ECF

participants indicated on the attached Manual Notice List.

/s/ Anthony Capobianco Anthony Capobianco


MEMORANDUM OF POINTS AND AUTHORITIES


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SOUTHERN DISTRICT OF CALIFORNIA HOWARD APPEL, an individual, and DAVID COHEN, an individual, Plaintiffs,

v. CONCIERGE AUCTIONS, LLC, a Delaware Limited Liability Company; CHAD ROFFERS, an individual; ALEXANDER GRAY, an individual; EMILY PRYOR, an individual; KATIE MCMAINS, an individual; SERENA IRWIN, an individual; and OLIVIA ASAVEI, an individual, Defendants.

Case No. 3:17-cv-2263-BAS-MDD [Assigned to Hon. Cynthia Bashant] MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF CONCIERGE AUCTIONS, LLC’S MOTIONS TO COMPEL ARBITRATION AND TO STAY OR DISMISS PROCEEDINGS OR, IN THE ALTERNATIVE, TO TRANSFER VENUE Hearing Date: February 5, 2018 Place: Courtroom 4B NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT

Case 3:17-cv-02263-BAS-MDD Document 10-1 Filed 12/15/17 PageID.53 Page 1 of 23




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TABLE OF CONTENTS I. Introduction. .................................................................................................. 1

II. Statement of facts and procedural history. .................................................... 2

III. Federal law requires this Court to enforce the parties’ binding agreement to arbitrate. ......................................................................................................... 5

IV. All issues pertaining to arbitrability must be decided by the arbitrator. ....... 7

V. The arbitration agreement is enforceable. ..................................................... 8

A. The complaint’s generalized allegations of fraud are insufficient to avoid arbitration. ............................................................................. 9

B. The arbitration agreement is not unconscionable. ............................ 11

VI. The Court should stay this case pending the completion of arbitration or, in the alternative, dismiss this case for lack of subject matter jurisdiction. .... 15

VII. Alternatively, if the Court elects not to compel arbitration, it should transfer the action to the Southern District of New York. ........................................ 16

VIII. Conclusion. .................................................................................................. 17


MEMORANDUM OF POINTS AND AUTHORITIES CASE NO. 3:17-cv-2263-BAS-MDD

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TABLE OF AUTHORITIES

Cases

Allan v. Snow Summit (1996) 51 Cal.App.4th 1358 .............................................. 13

AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 ....................................... 5

Atlantic Marin Const. Co. Inc. v. United States Dist. Ct. for Western Dist. of Texas, (2013) 134 S.Ct 568 ........................................ 16

Balen v. Holland Am. Line Inc. (9th Cir. 2009) 583 F.3d 647 ................................. 6

Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237 ............................................ 14

Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d 1125 ............................................ 8

Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440 .......................... 10

Bushley v. Credit Suisse First Boston (9th Cir.2004) 360 F.3d 1149 .............................................................................................. 11

Chiron Corp. v. Ortho Diagnostic Sys., Inc. (9th Cir. 2000) 207 F.3d 1126 ................................................................................................ 6

Circuit City Stores, Inc. v. Adams (9th Cir. 2002) 279 F.3d 889 ............................. 6

Coto Settlement v. Eisenberg (9th Cir. 2010) 593 F.3d 1031 ................................. 3

Dabriel, Inc. v. First Paradise Theaters Corp. 99 A.D.3d 517, 520 (1st Dept. 2012) .......................................................... 12

Dallas Aerospace, Inc. v. CIS Air Corp. (2d Cir. 2003) 352 F.3d 775 ................................................................................................ 12

Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213 ........................................ 7

Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312 .......................................................... 10

Erie Railroad Co. v. Tompkins (1938) 304 U.S. 64................................................. 8

Grand Prospect Partners, L.P. v. Ross Dress for Less (2015) 232 Cal.App.4th 1332 ................................................................................. 14

Green Tree Fin. Corp.-Alabama v. Randolph (2000) 531 U.S. 79 .......................... 6

Hakopian v. Mukasey (9th Cir. 2008) 551 F.3d 843 ............................................... 3

Harper v. Ultimo (2003) 113 Cal.App.4th 1402 ................................................... 14

Higgins v. Sup.Ct. (2006) 140 Cal.App.4th 1238 ............................................. 14,16




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In re Barker (9th Cir. 2016) 839 F.3d 1189 ............................................................ 3

In re Davis (E.D.N.Y. 1994) 169 B.R. 285 ..................................................... 12, 13

In re Mercurio (1st Cir. 2005) 402 F.3d 62 ........................................................... 17

Intershop Communications AG v. Superior Court (2002) 104 Cal.App.4th 191 ................................................................................... 13

Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309 ................................ 13

Kinney v. United HealthCare Servs., Inc. (1999) 70 Cal.App.4th 1322. .................................................................................. 14

Klaxon Co. v. Stentor Elec. Mfg. Co. (1941) 313 U.S. 487 .................................... 9

Life Receivables Trust v. Goshawk Syndicate (2009) 66 A.D.3d 495 .............................................................................................. 8

Madden v. Kaiser Foundation Hosp. (1976) 17 Cal.3d 699 ................................. 13

Manetti-Farrow, Inc. v. Gucci Am., Inc. (9th Cir. 1988) 858 F.2d 509 ............................................................................................... 17

Marmet Health Care Ctr., Inc. v. Brown (2012) 565 U.S. 530 ............................. 5,6

Momot v. Mastro (9th Cir. 2011) 652 F.3d 982 ...................................................... 7

Moses H. Cone Mem. Hosp. v. Mercury Const. Corp. (1983) 460 U.S. 1 .............. 6

Nagrampa v. MailCoups, Inc. (9th Cir. 2006) 469 F.3d 1257 .............................. 11

Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267 ................................................................................. 15

Parr v. Superior Court (1983) 139 Cal.App.3d 440 ............................................. 13

Patton v. Cox (9th Cir. 2002) 276 F.3d 493 ............................................................ 9

Perry v. Thomas (1987) 482 U.S. 483 ..................................................................... 9

Poublon v. C.H. Robinson Co. (9th Cir. 2017) 846 F.3d 1251 ............................. 11

Powell v. Central Calif. Fed. Savings & Loan Assn. (1976) 59 Cal.App.3d 540....................................................................................... 14

Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395 .................................................................................... 10

Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63 .................................. 7, 9

Reznor v. J. Artist Mgmt., Inc. (S.D.N.Y. 2005) 365 F.Supp.2d 565 .................... 12

Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899 ............................. 15




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Sink v. Aden Enter. Inc. (9th Cir. 2003) 352 F.3d 1197 ........................................... 5

Spinello v. Amblin Entertainment (1994) 29 Cal.App.4th 1390 ........................... 13

State of New York v. Wolowitz, 96 A.D.2d 47, 68 (2d Dept. 1983) ...................... 13

Tompkins v. 23andMe, Inc. (9th Cir. 2016) 840 F.3d 1016, 1027 ........................ 17

Tracer Research Corp. v. Nat’l Envtl. Servs. Co. (9th Cir. 1994) 42 F.3d 1292 ......................................................................... 6

Weinrott v. Carp, 32 N.Y.2d 190, 199 (N.Y. 1973) ................................................ 10

Westinghouse Elec. Corp. v. N.Y.C. Transit Auth. 82 N.Y.2d 47, 55 (1993) ............................................................................. 12

Statutes

9 U.S.C.

§ 2 .................................................................................................................. 5

§ 3 ............................................................................................................ 6, 16

§ 4 .............................................................................................................. 6, 7

28 U.S.C. § 1404(a) ............................................................................................... 16

Fed. R. Civ. Proc.

12(b)(1) ........................................................................................................ 16

12(b)(3) .......................................................................................................... 2

12(h)(1) .......................................................................................................... 2


1 MEMORANDUM OF POINTS AND AUTHORITIES


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Defendant Concierge Auctions, LLC (“Concierge”) submits the following

memorandum of points and authorities in support of its motions to compel

arbitration and to dismiss this case or stay the proceedings pending arbitration or,

in the alternative, to transfer venue to the federal district court for the Southern

District of New York. I. Introduction.

Concierge is one of the world’s largest auctioneers of luxury residential real

property. This case arises out of its June 2017 auction (the “Auction”) of property

in Fiji known as “Navado Bay, Vanua Levu” (the “Property”). Plaintiffs Howard

Appel and David Cohen (“Plaintiffs”) registered to bid at the Auction and signed

Concierge’s auction bidder registration terms and conditions (the “Bidder

Terms”). (McMains Decl. ¶ 5, Ex. 1.) At the Auction, Plaintiffs submitted the high

bid of $2,375,000, and Concierge declared them the winner of the Auction.

(McMains Decl. ¶ 4(d).) Thereafter, a dispute arose among the seller of the

Property (the “Seller”), Plaintiffs and Concierge.

The Bidder Terms “constitute Concierge’s and each Seller’s entire

agreement with the Bidders relative to the Property(s) presented in this Auction.”

(Id. p.1.) Section 27 of the Bidder Terms requires Plaintiffs and Concierge to

submit any dispute “arising out of or relating to” the Bidder Terms, “including but

not limited to [their] enforcement, scope and/or interpretation,” exclusively to

arbitration in New York, New York. (Id. ¶ 27.) Accordingly, this Court must issue

an order (a) compelling Plaintiffs to arbitrate this dispute in accordance with the

Bidder Terms and (b) dismissing this action or staying it pending completion of

the arbitration. The Federal Arbitration Act mandates this result. Federal law in the

Ninth Circuit mandates this result. And California and New York state law

mandate this result.




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The only way Plaintiffs can avoid arbitration is by demonstrating that the

arbitration clause itself was invalid and unenforceable. While Plaintiffs’ complaint

vaguely alludes to the possibility of fraud in the inducement with respect to the

Bidder Terms, whether fraud invalidated the Bidder Terms is itself a question that

must be submitted to arbitration. And as discussed below, any argument that the

arbitration clause of the Bidder Terms is void or unenforceable is entirely

frivolous.

The Bidder Terms include a forum selection clause under which Plaintiffs

consented to the jurisdiction of federal and state courts in New York, New York

and waived any objection to venue with respect to such courts. (Id. ¶ 27.)

Challenges to venue are waived if not raised in the early stages of the proceedings.

Fed. R. Civ. Proc. 12(b)(3), 12(h)(1). Accordingly, out of an abundance of caution

to avoid waiving any rights and in the event that this Court elects not to order

arbitration, Concierge moves to transfer venue to the federal district court for the

Southern District of New York. II. Statement of facts and procedural history.

Plaintiffs are sophisticated real estate investors. (Compl. ¶¶ 3-4.) Since

May 2017, they have participated in seven Concierge real property auctions. In

four of those auctions, including the auction at issue in this lawsuit, they were the

winning bidders. (McMains Decl. ¶ 4.) The aggregate purchase price for the four

properties they purchased in those auctions is nearly $14 million. (Id.)

Plaintiffs are very familiar with Concierge’s Bidder Terms. They agreed to

the Bidder Terms in connection with all seven of the Concierge auctions in which

they have participated since May 2017. (McMains Decl. ¶ 5.) They signed the

Bidder Terms relating to the Auction giving rise to this lawsuit on June 20, 2017.




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(McMains Decl. ¶ 5, Ex. 1; Compl. ¶ 24.)1 Plaintiffs did not attempt to negotiate

the Bidder Terms even though Concierge gave them the opportunity to do so. In

fact, in connection with the auction of Casa Bellamar in Cabo San Lucas, Mexico

(another auction property purchased by Plaintiffs), Plaintiffs did negotiate certain

changes to those Bidder Terms. (McMains Decl. ¶ 6, Ex. 2.)

The Bidder Terms, which the complaint mentions but conveniently fails to

attach,2 contain an exclusive arbitration and venue clause:

The parties agree to submit all controversies, disputes, claims and matters of difference arising out of or relating to these Terms & Conditions, including but not limited to its enforcement, scope and/or interpretation, exclusively to arbitration in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association from time to time in effect . . . . By bidding at an auction . . . the Bidder shall be deemed to consent to the jurisdiction of the state and federal courts located in the County of New York, State of New York (and of the appropriate appellate courts therefrom) in any such action or proceeding (including an action to compel arbitration) and waives any objection to venue. . . . THE PARTIES UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, AND THE RIGHT TO A JURY

1 Although only plaintiff Howard Appel’s signature appears on the Bidder Terms, Plaintiffs in their complaint admit that he executed the Bidder Terms on behalf of himself and his co-plaintiff David Cohen. (Compl. ¶ 24.) Allegations in a complaint are judicial admissions. Hakopian v. Mukasey (9th Cir. 2008) 551 F.3d 843, 846. Judicial admissions are “conclusively binding on the party who made them.” In re Barker (9th Cir. 2016) 839 F.3d 1189, 1195 (internal quotations and citations omitted).

2 Where a complaint references a key document that is not attached, a defendant may submit that document for the Court’s consideration. Coto Settlement v. Eisenberg (9th Cir. 2010) 593 F.3d 1031, 1038. Paragraph 24 of Plaintiffs’ complaint specifically acknowledges the Bidder Terms, and Paragraph 51 refers to the mandatory arbitration covenant within the Bidder Terms.




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TRIAL, BUT THEY GIVE UP THOSE RIGHTS VOLUNTARILY AND AGREE TO RESOLVE ANY AND ALL GRIEVANCES BY ARBITRATION.

(McMains Decl. ¶ 5, Ex. 1, § 27.) Section 18 of the Bidder Terms provides that

“[t]he respective rights and obligations of the parties with respect to these Auction

Terms & Conditions and the conduct of the Auction shall be governed, enforced

and interpreted by the laws of the state of New York, without regard for conflicts

of law principles.” (Id. § 18.)

The Bidder Terms require prospective bidders to acknowledge and agree,

immediately above their signature, that “[b]y signing [the Bidder Terms], I have

read, understood and agree to the above Auction Terms & Conditions and

understand that the Auction Terms & Conditions shall be made part of the

Purchase and Sale Contract for the purchase of this Property(s) [and that] I will not

claim any exceptions to the procedures outlined in this document unless made in

writing & signed by Seller.” (Id. at signature page.)

Concierge conducted the Auction on June 29, 2017 and declared Plaintiffs

the winners of the Auction after they submitted the high bid of bid of $2,375,000.

(McMains Decl. ¶ 4(d).) Shortly thereafter, however, a dispute arose among

Plaintiffs, the Seller and Concierge, as a result of which the parties have not

consummated the purchase and sale of the Property.

On July 28, 2017, Concierge initiated an arbitration proceeding against the

Seller of the Property in New York, in part at Plaintiffs’ request. (McMains

Decl. ¶ 8, Ex. 4.) Plaintiffs acknowledge this arbitration proceeding in their

complaint. (Compl. ¶ 48.) In fact, on October 6, 2017, Plaintiffs themselves made

a written demand for arbitration of this dispute in New York, thus admitting their

obligation to arbitrate their claims. (McMains Decl. ¶ 7, Ex. 3.) In their arbitration

demand Plaintiffs conceded that New York law governed this dispute and

specifically requested an arbitrator “familiar with New York law governing real




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property auctions…” (Id.) They later withdrew the demand without explanation.

(McMains Decl. ¶ 7.)

Plaintiffs filed their complaint in this action on November 6, 2017.

Importantly, the Complaint does not allege that Concierge made any

misrepresentation concerning the arbitration provision set forth in the Bidder

Terms. (See Compl., ¶¶ 56-62.)

In an effort to avoid unnecessary motion practice, Concierge demanded that

Plaintiffs dismiss this action in favor of arbitration, but Plaintiffs refused to do so.

(Capobianco Decl., ¶¶ 2-3, Ex. 5.) On November 29, 2017, the Court granted the

parties’ joint motion to extend time for Concierge to respond to the complaint.

(Dkt. No. 8.) Pursuant to the Court’s order, Concierge’s deadline to respond to the

complaint is 21 days after the Court rules on these motions. (Id.)

III. Federal law requires this Court to enforce the parties’ binding agreement to arbitrate. The Federal Arbitration Act (“FAA”) provides that a “written provision in

any . . . contract evidencing a transaction involving commerce to settle by

arbitration a controversy thereafter arising … shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the revocation

of any contract.” 9 U.S.C. § 2. The Supreme Court has characterized this statute

“as reflecting both a liberal federal policy favoring arbitration and the fundamental

principle that arbitration is a matter of contract. AT&T Mobility LLC v. Concepcion

(2011) 563 U.S. 333, 339 (internal quotations and citations omitted). Through the

FAA, Congress intended “to move the parties to an arbitrable dispute out of court

and into arbitration as quickly and easily as possible.” Sink v. Aden Enter. Inc.

(9th Cir. 2003) 352 F.3d 1197, 1200. Simply put, the FAA “requires courts to

enforce the bargain of the parties to arbitrate.” Marmet Health Care Ctr., Inc. v.

Brown (2012) 565 U.S. 530, 532-33 (per curiam) (emphasis added).




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Although, as is the case here, a contract may provide that state law governs

the contract’s construction, nonetheless “the scope of the arbitration clause is

governed by federal law.” Tracer Research Corp. v. Nat’l Envtl. Servs. Co. (9th Cir.

1994) 42 F.3d 1292, 1294; see also Circuit City Stores, Inc. v. Adams (9th Cir.

2002) 279 F.3d 889, 892 (FAA established “a federal common law of arbitrability

which preempts state law”); Chiron Corp. v. Ortho Diagnostic Sys., Inc. (9th Cir.

2000) 207 F.3d 1126, 1131 (“general choice-of-law clauses do not incorporate state

rules that govern the allocation of authority between courts and arbitrators”).

Importantly, the FAA includes no exceptions for any category of claim. Arbitration

provisions in any contract affecting commerce must be enforced without regard to

the nature of the claim or dispute. Marmet, 565 U.S. at 532.

Any doubt must be resolved against the party asserting a defense to

arbitration, “whether the problem at hand is the construction of the contract

language itself or an allegation of waiver, delay, or a like defense to arbitrability.”

Moses H. Cone Mem. Hosp. v. Mercury Const. Corp. (1983) 460 U.S. 1, 24-25; see

also Balen v. Holland Am. Line Inc. (9th Cir. 2009) 583 F.3d 647, 652 (“any doubts

concerning the scope of arbitrable issues should be resolved in favor of

arbitration”).

The FAA provides two methods for enforcing arbitration: (1) an order

compelling arbitration of a dispute; and (2) a stay of pending litigation raising a

dispute subject to arbitration. 9 U.S.C. §§ 3, 4. The party resisting arbitration

“bears the burden of proving that the claims at issue are unsuitable for arbitration.”

Green Tree Fin. Corp.-Alabama v. Randolph (2000) 531 U.S. 79, 91. Plaintiffs

cannot meet that burden here.

This dispute plainly falls within the scope of the Bidder Terms, which state

that the Bidder Terms “constitute Concierge’s and each Seller’s entire agreement

with the Bidders relative to the Property(s) presented in this Auction.” (McMains




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Decl. ¶ 4(d), Ex. 1, p. 1. [emphasis added]). The Bidder Terms require the parties

to submit “all controversies, disputes, claims and matters of difference arising out

of or relating to these Terms & Conditions, including but not limited to its

enforcement, scope and/or interpretation, exclusively to arbitration in New York,

New York in accordance with the Commercial Arbitration Rules of the American

Arbitration Association . . . .” (Id. ¶ 27.) (emphasis added). Plaintiffs’ complaint

relates entirely to Concierge’s preparations for and conduct of the Auction.

Accordingly, their claims fall squarely within the arbitration agreement.

The FAA requires that arbitration proceed “in accordance with the terms of

the agreement.” 9 U.S.C. § 4. The statute “leaves no place for the exercise of

discretion by a district court, but instead mandates that district courts shall direct

the parties to proceed to arbitration on issues as to which an arbitration agreement

has been signed.” Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 218.

This is as straightforward a case of mandatory arbitrability as one could imagine.

The Court must order Plaintiffs to arbitrate their claims in accordance with the

Bidder Terms.

IV. All issues pertaining to arbitrability must be decided by the arbitrator. Threshold arbitrability issues (such enforceability and scope of an

arbitration agreement) must be decided by the arbitrator if the parties’ agreement

“clearly and unmistakably” delegates them to the arbitrator to decide. Rent-A-

Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 78-80; see also Momot v. Mastro

(9th Cir. 2011) 652 F.3d 982, 987-988 (agreement giving arbitrators authority to

decide “validity of application of any of the provisions of” arbitration clause

showed intent to arbitrate threshold issues concerning agreement). Here, the

Bidder Terms require that any issue pertaining to “enforcement, scope and/or

interpretation” be submitted to arbitration. (McMains Decl. ¶ 4(d), Ex. 1 § 27).




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Moreover, the Bidder Terms explicitly incorporate the Commercial

Arbitration Rules of the American Arbitration Association. (Id.) Under those rules,

“[t]he arbitrator shall have the power to rule on . . . any objections with respect to

the existence, scope, or validity of the arbitration agreement or to the arbitrability

of any claim or counterclaim.” AAA Commercial Arbitration Rules and Mediation

Procedures, Rule 7(a); Capobianco Decl., Ex. 6 at p. 13. The “incorporation of the

AAA rules constitutes clear and unmistakable evidence that contracting parties

agreed to arbitrate arbitrability.” Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d

1125, 1130 (internal citations omitted).

Therefore, all threshold issues related to “enforcement, scope and/or

interpretation,” and any objection to arbitrability that Plaintiffs might raise, must

be decided by the arbitrator.3

V. The arbitration agreement is enforceable. Even if the Court were to determine that it, instead of the arbitrator, should

decide the threshold issue of arbitrability, it is beyond any plausible dispute that

Plaintiffs and Concierge entered into a valid arbitration agreement that covers the

matters alleged in the complaint. The Court must therefore order this case to

arbitration. Defendants anticipate that Plaintiffs may argue that the Bidder Terms

are unenforceable based on fraud or unconscionability. Any such defense to

enforceability must be determined by the arbitrator, but in any event is meritless.

In diversity actions, state law applies to substantive issues. Erie Railroad Co. v.

Tompkins (1938) 304 U.S. 64, 78. Defenses to contracts, even those involving

3 New York also has a broad public policy in favor of arbitration. Life Receivables Trust v. Goshawk Syndicate (2009) 66 A.D.3d 495, 496 (“The policy of this State, like the federal policy . . . favors arbitration. . . . New York courts interfere as little as possible with the freedom of consenting parties to submit disputes to arbitration.”) (internal citations omitted).




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interstate commerce, are governed by applicable state law. “[S]tate law, whether of

legislative or judicial origin, is applicable if that law arose to govern issues

concerning the validity, revocability, and enforceability of contracts generally.”

Perry v. Thomas (1987) 482 U.S. 483, 492 at n.9 (emphasis in original). A District

Court typically applies the law of the state in which it sits. Here, however, the

Bidder Terms state that New York law applies.4 In any case, there is no material

difference between California and New York law on issues of fraud and

unconscionability.

A. The complaint’s generalized allegations of fraud are insufficient to avoid arbitration.

“[A]n arbitration provision is severable from the remainder of the contract.”

Rent-A-Ctr., W., Inc. v. Jackson (2010) 561 U.S. 63, 71 (internal citations and

quotations omitted). “Thus, a party’s challenge to another provision of the

contract, or to the contract as a whole, does not prevent a court from enforcing a

specific agreement to arbitrate.” Id.

In paragraph 51 of their complaint, Plaintiffs obliquely allege that the

Bidder Terms were part of a “scheme” by Concierge to defraud them. To the

extent those allegations can generously be read as a challenge to enforceability, the

challenge is not to the arbitration clause specifically, but rather to the Bidder

Terms or the auction process as a whole. As discussed above, those threshold

issues must be decided by the arbitrator.

The Supreme Court has repeatedly held that “a challenge to the validity of

the contract as a whole, and not specifically to the arbitration clause, must go to

the arbitrator.” See Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S.

4 Choice of law rules are deemed substantive for Erie purposes. Klaxon Co. v. Stentor Elec. Mfg. Co. (1941) 313 U.S. 487; Patton v. Cox (9th Cir. 2002) 276 F.3d 493, 495.




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440, 449. It is well settled that claims that the underlying contract was procured by

fraud must be arbitrated and courts are prohibited from considering “claims of

fraud in the inducement of the contract generally.” Prima Paint Corp. v. Flood &

Conklin Mfg. Co. (1967) 388 U.S. 395, 404 (the FAA’s “statutory language does

not permit the federal court to consider claims of fraud in the inducement of the

contract generally”); see also Ericksen, Arbuthnot, McCarthy, Kearney & Walsh,

Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 318 (in the absence of contrary intent,

general claims of fraud in the inducement of a contract generally will be deemed

subject to arbitration).5

The Plaintiff’s complaint – although falling woefully short of the pleading

requirements of Federal Rule of Civil Procedure 9(b) – includes nebulous

suggestions of fraud in reference to Concierge’s “attempts to enforce” the Bidder

Terms. (See Compl. ¶ 51.) Nowhere in the complaint, however, do the Plaintiffs

allege that they were fraudulently induced to agree to arbitrate disputes arising out

of or relating to the Bidder Terms. Nowhere does the complaint allege that

Concierge made fraudulent representations with the intent of inducing Plaintiffs’

agreement to an arbitration clause. Nor does the complaint allege that Concierge

made any misrepresentation of fact concerning the arbitration clause.

5 New York law is the same. In accordance with the Supreme Court’s holding in Prima Paint, New York courts hold that “[a]s a general rule, … under a broad arbitration provision the claim of fraud in the inducement should be determined by arbitrators.” See Weinrott v. Carp, 32 N.Y.2d 190, 199 (N.Y. 1973); see also Utica Mut. Ins. Co. v. Gulf Ins. Co., 306 A.D.2d 877, 879 (App. Div. 4th Dep’t 2003) (“As with federal law, a broad arbitration clause in New York is separable from the substantive provisions of an agreement and, even if there is fraud in the inducement of the substantive provisions, all issues, including the claim of fraud, are to be determined by the arbitrators.”). Therefore, under either a federal, New York or California law analysis, the Court must refer this case to arbitration.




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Plaintiffs’ claims of fraudulent conduct, which broadly concern the conduct

of the Auction, are plainly insufficient to avoid arbitration.

B. The arbitration agreement is not unconscionable. Similarly, this Court may not decide whether the contract is unenforceable

as an unconscionable adhesion contract because such issues also must be decided

by the arbitrator. In Nagrampa v. MailCoups, Inc. (9th Cir. 2006) 469 F.3d 1257,

1270 (en banc), the Ninth Circuit held that an arbitrator must decide whether an

agreement that contains an arbitration clause is a contract of adhesion because that

issue pertains to the making of the agreement as a whole and not to the arbitration

clause specifically. This principle “not only comports with the holding of Prima

Paint but also gives effect to Congress’s intent to move the parties to an arbitrable

dispute out of court and into arbitration as quickly and easily as possible.” Bushley

v. Credit Suisse First Boston (9th Cir.2004) 360 F.3d 1149, 1153 (internal

quotations omitted).

In any event, the Bidder Terms were not a contract of adhesion. “The term

contract of adhesion signifies a standardized contract, which, imposed and drafted

by the party of superior bargaining strength, relegates to the subscribing party only

the opportunity to adhere to the contract or reject it.” Poublon v. C.H. Robinson

Co. (9th Cir. 2017) 846 F.3d 1251, 1260-61. Plaintiffs are sophisticated real estate

investors who regularly participate in high-value real property auctions.

(Compl. ¶¶ 3-4; McMains Decl. ¶ 4.) With respect to any Concierge auction, they

may choose to negotiate the Bidder Terms, sign them as presented, or not

participate in the Auction at all. In this case, they had the opportunity to negotiate

the Bidder Terms but chose not to do so and indeed, they had negotiated Bidder

Terms in connection with at least one other auction. (McMains Decl. ¶ 6, Ex. 2.)

As discussed above, New York law applies to any defense of

unconscionability. Under New York law, “[a] determination of unconscionability




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requires a showing that the contract was both procedurally and substantively

unconscionable when made – i.e., some showing of an absence of meaningful

choice on the part of one of the parties together with contract terms which are

unreasonably favorable to the other party.” Dabriel, Inc. v. First Paradise Theaters

Corp., 99 A.D.3d 517, 520 (1st Dept. 2012) (citing Gillman v. Chase Manhattan

Bank, N.A., 73 N.Y.2d 1 (1988)). In a transaction between two sophisticated

parties, courts have little desire to overturn a contract clause unconscionable in its

“real-world application or effects.” Dallas Aerospace, Inc. v. CIS Air Corp.

(2d Cir. 2003) 352 F.3d 775, 788.

The general rule is that “[a]bsent some violation of law or transgression of a

strong public policy, the parties to a contract are basically free to make whatever

agreement they wish, no matter how unwise it might appear to a third party.” Id.

(citations omitted); see Reznor v. J. Artist Mgmt., Inc. (S.D.N.Y. 2005) 365

F.Supp.2d 565, 577 (“[New York] courts have rarely found a clause to be

unconscionable in contracts involving two commercial entities, a situation in

which negotiation is presumed possible”); see also Westinghouse Elec. Corp. v.

N.Y.C. Transit Auth., 82 N.Y.2d 47, 55 (1993) (“[t]he bedrock of the doctrine of

unconscionability is the prevention of oppression and unfair surprise and not of

disturbance of allocation of risk”).

Generally, procedural unconscionability arises in cases involving contracts

of adhesion or inexperienced parties subjected to high pressure situations. See In re

Davis (E.D.N.Y. 1994) 169 B.R. 285, 304 (finding a lease agreement

unconscionable where “procedurally, the [party asserting unconscionability] did

not comprehend the transaction and closing documents, were the victims of

misrepresentations[, ]were under considerable pressure to sign the closing

documents under the impression that they would be getting their house back,” and

were people of little means who lacked real estate experience).




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The substantive element looks to the actual content of the contract to

determine if it unreasonably favors the party against whom unconscionability is

asserted. Id. There can be “exceptional cases where a provision of a contract is so

outrageous as to warrant holding it unenforceable on the ground of substantive

unconscionability alone.” Id; see State of New York v. Wolowitz, 96 A.D.2d 47, 68

(2d Dept. 1983). Generally, a party asserting unconscionability must show both a

lack of meaningful choice and the presence of unreasonable contract terms.

Wolowitz, 96 A.D.2d at 68.

The analysis under California law is essentially identical. Under California

law, “[a] finding of adhesion merely begins another inquiry–whether a particular

provision within the contract should be denied enforcement on grounds that it

defeats the expectations of the weaker party or it is unduly oppressive or

unconscionable.” Intershop Communications AG v. Superior Court (2002) 104

Cal.App.4th 191, 201; Allan v. Snow Summit (1996) 51 Cal.App.4th 1358, 1375

(to determine enforceability courts consider whether the contract falls within the

reasonable expectations of the weaker party and, even if it does, whether the

contract, considered in its entire context, is unduly unconscionable).

California courts have held in many cases that arbitration clauses in

adhesion contracts are valid, particularly in commercial transactions involving

sophisticated parties. See e.g. Madden v. Kaiser Foundation Hosp. (1976) 17

Cal.3d 699, 711 (failure to read or understand the arbitration clause is generally no

defense); Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309, 1317-18

(purchase agreement containing arbitration clause, though standardized in form,

was not adhesive and not unconscionable); Spinello v. Amblin Entertainment

(1994) 29 Cal.App.4th 1390, 1397 (standard agreement for submission of movie

script, which included arbitration clause, was not contract of adhesion); Parr v.

Superior Court (1983) 139 Cal.App.3d 440, 446-47 (Merrill Lynch’s arbitration




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provision upheld where the business of the parties took place over five months,

with numerous transactions and large sums of money involved; plaintiff was an

experienced businessman; and his claim that he did not read the arbitration clause

was untenable).

In California, as under New York law, the adhesion doctrine generally does

not apply in the context of sophisticated commercial transactions. See e.g. Powell

v. Central Calif. Fed. Savings & Loan Assn. (1976) 59 Cal.App.3d 540, 551

(plaintiffs, “sophisticated borrowers in the field of real estate development,” could

not assert against defendant lender that loan contract was one of adhesion); Grand

Prospect Partners, L.P. v. Ross Dress for Less (2015) 232 Cal.App.4th 1332,

1350-51 (cotenancy provision in commercial lease was not contract of adhesion).

In California, “procedural unconscionability” concerns the manner in which

the contract was negotiated and the parties’ circumstances at that time. It focuses

on the factors of “oppression or surprise due to unequal bargaining power . . . .”

Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243. If procedural

unconscionability exists, a California court next examines the substantive terms of

the agreement to make certain they are not one-sided or manifestly unfair. Id. at

1244. Oppression arises from “an inequality of bargaining power of the parties to

the contract and an absence of real negotiation or a meaningful choice on the part

of the weaker party.” Kinney v. United HealthCare Servs., Inc. (1999) 70

Cal.App.4th 1322, 1329.

Surprise is “a function of the disappointed reasonable expectations of the

weaker party.” Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406. For

example, the surprise element was satisfied when unsophisticated parties signed a

lengthy agreement with an arbitration clause buried at the end in a “miscellaneous”

paragraph. Higgins v. Sup.Ct. (2006) 140 Cal.App.4th 1238, 1252-1253.




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As noted, Plaintiffs are sophisticated real estate investors who had the

opportunity to negotiate the Bidder Terms, but chose not to do so in this case.

Indeed, Plaintiffs participated in many other Concierge auctions and agreed to

those same Bidder Terms on each occasion. (McMains Decl., ¶¶ 4-5.) Moreover, if

Plaintiffs disagreed with those Bidder Terms, they had the option simply not to

participate in the Auction. The arbitration clause was one of the longest provisions

in the contract and contained various capitalized terms, so it certainly cannot be

described as “hidden.” There is no procedural unconscionability here.

Substantive unconscionability under California law focuses on the terms of

the agreement and whether those terms are “overly harsh or one-sided.” See

Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-911

(“[U]nconscionability requires a substantial degree of unfairness beyond a simple

old-fashioned bad bargain.”). In assessing substantive unconscionability, the

“paramount consideration” is mutuality of the obligation to arbitrate. Nyulassy v.

Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287. Here, the subject

arbitration provision was mutual – it required any and all disputes to be arbitrated

– whether brought by a bidder or by Concierge. Therefore, there was no

substantive unconscionability.

Whether this issue is analyzed under New York or California law, the

subject arbitration agreement was not adhesive and clearly not unconscionable.

VI. The Court should stay this case pending the completion of arbitration or, in the alternative, dismiss this case for lack of subject matter jurisdiction. Section 3 of the FAA states that the Court, “upon being satisfied that the

issue involved in such suit or proceeding is referable to arbitration under such an

agreement, shall on application of one of the parties stay the trial of the action

until such arbitration has been had in accordance with the terms of the




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agreement. . . .” See 9 U.S.C. § 3 (emphasis added). Therefore, if the Court finds

that the issue of arbitrability should be referred to arbitration or the arbitration

clause encompasses the dispute at issue, it “shall . . . stay . . . the action” pending

the completion of arbitration proceedings. Id.

In the alternative, but upon the same finding that this matter is referable to

arbitration, the Court should dismiss this case for lack of subject matter

jurisdiction under Federal Rule of Civil Procedure 12(b)(1).

VII. Alternatively, if the Court elects not to compel arbitration, it should transfer the action to the Southern District of New York. If the Court elects not to issue an order compelling Plaintiffs to arbitrate,

Concierge requests that the Court transfer the case to the federal district court for

the Southern District of New York under 28 U.S.C. § 1404(a) due to the forum

selection clause contained in the Bidder Terms.

A defendant may enforce a forum selection clause designating venue in a

forum other than that selected by the plaintiff via a motion to transfer venue to the

contractually-agreed upon forum. 28 U.S.C. § 1404(a); Atlantic Marin Const. Co.

Inc. v. United States Dist. Ct. for Western Dist. of Texas (2013) 134 S.Ct 568, 579.

If such motion is brought, the District Court “should transfer the case unless

extraordinary circumstances unrelated to the convenience of the parties clearly

disfavor a transfer.” Id. at 575.

The forum selection clause should be given “controlling weight in all but the

most exceptional cases.” Id. at 581. The plaintiff bears “the burden of showing

why the court should not transfer the case to the forum to which the parties

agreed.” Id. at 582. Forum selection clauses are prima facie valid, and are

enforceable absent a strong showing by the party opposing the clause “that

enforcement would be unreasonable or unjust, or that the clause [is] invalid for




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such reasons as fraud or overreaching.” Manetti-Farrow, Inc. v. Gucci Am., Inc.

(9th Cir. 1988) 858 F.2d 509, 514.

A forum-selection clause is unreasonable only if the designated forum

“would be unavailable or unable to accomplish substantial justice.” Tompkins v.

23andMe, Inc. (9th Cir. 2016) 840 F.3d 1016, 1027 (internal quotes omitted). That

clearly is not the case here. “Mere inconvenience” is an insufficient basis for a

court to set aside a forum-selection clause in an arbitration agreement. See In re

Mercurio (1st Cir. 2005) 402 F.3d 62, 66.

This action should never have been brought in the first instance, given the

parties’ agreement to arbitrate, and it certainly should not have been filed in this

Court. The parties’ contract plainly contemplates that all proceedings would occur

in a New York arbitration. If the Court does not order Plaintiffs to arbitrate their

claims, to effectuate the parties’ intent this Court must transfer venue to the

Southern District of New York.

VIII. Conclusion. Defendants respectfully request orders: (1) compelling Plaintiffs to arbitrate

this dispute in New York, New York in accordance with the Bidder Terms; (2)

staying this action pending completion of the arbitration proceedings or dismissing

the action for lack of subject matter jurisdiction under Federal Rule of Civil

Procedure 12(b)(1); or, in the alternative, (3) transferring venue to the federal

district court for the Southern District of New York.

Date: December 15, 2017 CAPOBIANCO LAW OFFICES, P.C. By: /s/ Anthony Capobianco Anthony Capobianco

Attorneys for Defendant Concierge Auctions, LLC E-mail: [email protected]




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DECLARATION OF KATIE MCMAINS


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v. CONCIERGE AUCTIONS, LLC, a Delaware Limited Liability Company; CHAD ROFFERS, an individual; ALEXANDER GRAY, an individual; EMILY PRYOR, an individual; KATIE MCMAINS, an individual; SERENA IRWIN, an individual; OLIVIA ASAVEI, an individual, Defendants.

Case No. 3:17-cv-2263-BAS-MDD [Assigned to Hon. Cynthia Bashant] DECLARATION OF KATIE MCMAINS IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND MOTION TO TRANSFER Hearing Date: February 5, 2018 Place: Courtroom 4B



– 1 – DECLARATION OF KATIE MCMAINS


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DECLARATION OF KATIE MCMAINS

I, Katie McMains, declare as follows:

1. I am the Director of Client Services for Concierge Auctions, LLC

(“Concierge”). I have personal knowledge of the facts stated in this declaration

and they are true to the best of my knowledge. I am competent to testify to the

facts stated in this declaration.

2. I am the duly authorized custodian of business records for Concierge,

and in that capacity I have compiled the information and documents attached to

this declaration. All such records were prepared, at my direction, on behalf of

Concierge in the ordinary course of business at or near the time of the acts,

conditions or events described therein and they accurately describe those acts,

conditions or events.

3. I am informed and believe that Plaintiffs Howard Appel and David

Cohen (“Plaintiffs”) are business partners and sophisticated real estate investors.

4. Plaintiffs have participated in Concierge auctions for seven properties

since May 2017 and have purchased four separate properties through auctions

conducted by Concierge during that period: (a) 45431 Greenling Circle in

Mendocino, California for $2,750,000; (b) 62-3916 Lanikeha Place in Kamuela,

Hawaii for $5,900,000; (c) Casa Bellamar in Cabo San Lucas, Mexico for

$2,725,000; and (d) the subject property, Navodo Bay, Vanua Levu, Cakaudrove,

Fiji for $2,375,000 (the “Property”). Thus, to date, these Plaintiffs have purchased

$13,750,000 in properties from Concierge in the last six months.

5. Each time that Plaintiffs participated in a Concierge auction they

signed and agreed to Concierge’s standard Auction Bidder Registration Terms and

Conditions (the “Bidder Terms”). A true and correct copy of the Bidder Terms to

which Plaintiffs agreed in connection with the subject Fiji Property auction are

attached to this Declaration as Exhibit 1.


Exhibit 1


Submitviaemailtoregister@conciergeauctions.comorfaxto888-317-9503priorto5:00p.m.onJune26,2017.Forfurtherinformationcall212-202-2940(CA2017-0-05-V5)

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BidderInitials

BIDDERREGISTRATIONAUCTIONTERMS&CONDITIONS

SUMMERPORTFOLIOSALEAuctiontobeheldJune28-June29,2017viaConciergeAuctionsMobileBiddingApplication

Seewww.conciergeauctions.com/collection/conciergeportfoliosaleforalistofpropertiesincludedintheAuction(each,a“Property”)

[email protected],faxto888-317-9503ortoaConciergeAuctionsrepresentativePRIORTO5:00P.M.ONJUNE26,2017

BidderName: (“Bidder”)

CellPhone: WorkPhone:

EmailAddress: FaxNumber:

MailingAddress:

AUCTIONTERMS&CONDITIONSSummaryofKeyAuctionTerms(asdescribedinmoredetailbelowandoneachPropertywebpage):

Bidder’sDeposit-$100,000

IfyouaretheHighBidder,your12%EarnestMoneyDepositisduenolaterthanMonday,July3,2017IfyouaretheHighBidder,theexecutedPurchaseContractisduenolaterthanFriday,June30,2017

PleaserefertoeachPropertywebpageforthefollowingdetails: AuctionMethod

Buyer’sPremium OpeningBidIncentive CooperatingBrokerCommission Furnished/Unfurnished Duediligence,HOAandotherPropertyOwnershiprestrictions ConciergeAuctions, LLC (or if anyProperty is located in the StateofConnecticut then,ConciergeAuctionsCT, LLC), its affiliates,agents,auctioneersandrepresentatives(“Concierge”)willpresentthePropertiesforsalebyauction(the“Auction”)onbehalfofthesellerofeachProperty(each,a“Seller”).ProspectivepurchaserswhoregisterinaccordancewiththeseTerms&Conditionswillbedeemed“Bidders”attheAuction.TheseAuctionTerms&ConditionsconstituteConcierge’sandeachSeller'sentireagreementwiththeBiddersrelativetotheProperty(s)presentedinthisAuction.TheAuctionTerms&Conditionsandallotherpublicizedelementsof the Auction are subject to amendment by the posting of notices or by oral announcements made before or during theAuction.Byparticipating intheAuction,youacknowledgeandagreethatyouareboundbytheseAuctionTerms&ConditionsaswellasanyadditionaltermsthatmaybeimposedbytheSellerorannouncedpriortoorattheAuctionbyConcierge.1. Bidding. All bidding is open to the public without regard to race, color, sex, religion, familial status, handicap or national

origin.Conciergereservestherighttorejectanybid in itssolediscretion.TheBidderwhosubmitstheHighBidacceptedbyConciergewill be the buyer of the subject Property (“Buyer”). The “High Bid” shallmean the highest bid acknowledged byConcierge.ByparticipatingintheAuction,eachBidderrepresents,warrantsandcovenantsthatanybiditmakesconstitutesanirrevocableoffertopurchasetheProperty(s)forthefullamountofthebidandthatonceaHighBidisaccepted,theBidderis

DocuSign Envelope ID: 76E5C2C8-3B4A-4A70-A8FD-FB1BDD9BF6EC

Howard Appel

6197421082 6197421082

6197421082

1305 via alta, del mar California 92014

[email protected]

DocuSign Envelope ID: 9EC2CD08-FDCB-4907-8805-D8228B5F8BF7Case 3:17-cv-02263-BAS-MDD Document 10-2 Filed 12/15/17 PageID.80 Page 5 of 28


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obligatedtopurchasesuchProperty for theamountof theHighBid. In theeventofanydisputebetweenBidders,or in theeventofdoubtonthepartofConciergeastothevalidityofanybid,ConciergewillhavethefinaldiscretiontodeterminethesuccessfulBuyer,canceltheAuction,ortore-offerthesubjectProperty(s)forauction.IfanydisputearisesaftertheAuction,theAuctionrecordofConciergeshallbeconclusivetodetermineallbiddingissues,includingbutnotlimitedtotheHighBidandtheBuyer.Conciergemayallowtelephonic,absenteeorproxybidsasaconveniencetoBidderswhoarenotpresentattheAuctionand/orelectronicor Internetbids forbidderswhoeitherareorarenotpresentat theAuction.Concierge isnot responsible foranyerrors or omissions in connectionwith such bids, including,without limitation, poor connections and/or reception, droppedcalls,recordingfailures,busysignalsandmissedcalls.Furthermore,Conciergedoesnotrepresentorwarrantthatthefunctions,features or content contained in any telephonic bidding, electronic bidding, internet bidding website or any third-partysoftware, products, or other materials used in connection with internet or electronic bidding, will be timely, secure,uninterruptedorerror-free,andConciergedoesnotrepresentorwarrantthatdefectswillbecorrected. YOUMAYWISHTOCONSULTWITHALICENSEDREALESTATEBROKER,ADVISER,ATTORNEYORCONTRACTORPRIORTOMAKINGANYBID.

2. Bidder'sPaddle. Toobtainabidder’spaddle,Biddermust (1) registerby signingand submitting toConcierge theseAuctionTerms& Conditions and any required escrow instructions and (2)wire $100,000.00 (the “Bidder’s Deposit” into the EscrowAgent’saccountper thewiring instructionsbelow for receiptprior to5:00p.m.ESTon June26,2017.Conciergemay, in itsdiscretion,extendthisdeadline.IfBidderistheBuyer,theBidder’sDepositshallbehandledinaccordancewiththeseAuctionTerms&ConditionsandthePurchaseandSaleContract.IfBidderisnottheBuyer,thentheBidder’sDepositshallberefundedby5:00p.m.ESTonthesecondbusinessdayfollowingtheAuctiondate.

Make a Charitable Donation to the Concierge “Key for Key”™ Program:

Join Concierge Auctions and Giveback Homes in our life-changing efforts toward building homes for deserving families around the globe.

Yes!Iwouldliketomakeadonation:

oEntireHouse($5,000) o$2,500o$1,000o$500oOther:$________________oIdonotwishtodonate

Ifyouchosetomakeadonation,youacknowledgeandagreethatBostonNationalTitlewilldisburseyourdonationtoGivebackHomesoutofyourBidderDepositwithoutanyfurtheractiononyourpartuponclosingofthesaleoftheProperty.Intheeventthe auction is cancelled or postponed, your bidder deposit will be returned in full. Please check with your tax adviser todeterminethedeductibilityofyourGivebackHomescontribution.

3. Buyer’sPremium.ForeachPropertypurchased,BuyershallpaytoConciergea“Buyer’sPremium”calculatedontheHighBid.Todetermine theamountof theBuyer’sPremiumforaparticularproperty,pleasevisit theapplicablepropertywebpageatwww.ConciergeAuctions.com.

BuyeracknowledgesandagreesthattheBuyer’sPremiumisdeemedearneduponconclusionoftheAuctionandshallbeheldbyBostonNationalanddisbursedtoConciergebyBostonNationaluponclosing.IfthesaleofthePropertyisnotconsummatedforanyreasonotherthandefaultbytheSeller,theBuyer’sPremiumshallneverthelessbedueandpayabletoConcierge.TheBuyer’sPremiumisnotarealestatecommission;itisthefeethatConciergechargestobiddersforbringingtheProperty(s)toauction.Anyapplicablerealestatecommissionswillbedeterminedbythepartiesinaseparateagreementinescrow.Conciergeisnotinvolvedinanywayinconnectionwiththeclosingofanyrealpropertytransactionandallsuchfunctionswillbehandledexclusivelybythirdpartyrealestatebrokerageorlegalprofessionals.

4. SAVEONPURCHASEPRICE:OpeningBidBuyerIncentive.Ifyouagreetomakeapre-auctionopeningbidforaPropertyassetforthbelow,andyouare thehighbidderat theAuction,youmayqualify foran Incentive fromSeller in the formofacreditagainst thePurchasePrice thatwouldhaveotherwisepaid for thePropertyon theamount, in anamountup to12%of the


X

DocuSign Envelope ID: 9EC2CD08-FDCB-4907-8805-D8228B5F8BF7Case 3:17-cv-02263-BAS-MDD Document 10-2 Filed 12/15/17 PageID.81 Page 6 of 28


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OpeningBidAmount.TheOpeningBidBuyerIncentivewillbedeductedfromthetotalamountpaidbytheBidderatclosingifthe Buyer is the successful purchaser of the Property. To determinewhether there is anOpening Bid Buyer Incentive for aparticularproperty,pleasevisittheapplicablepropertywebpageatwww.ConciergeAuctions.com.

a. InordertoqualifyfortheOpeningBidBuyerIncentive,thisform,inclusiveoftheamountoftheBidder’sOpeningBidset

forth in the table below (the “Opening Bid Amount”), must be submitted via email to Concierge [email protected],faxat888-317-9503,ordirectlytoaConciergerepresentative,forreceiptpriorto5:00p.m.ESTonJune26,2017.AllOpeningBidAmountsmustbeinwriting.Conciergemay,initsdiscretion,acceptopening,pre-auctionbidsafterthedeadlinedescribedabove.Conciergemayalso,initsdiscretion,offeradditionalincentivestopre-auctionbidders.

b. BidderunderstandsthatOpeningBidAmountsarelegallybindingandirrevocable.c. Bidder furtherunderstandsthataBidderwhosubmitsanOpeningBid thatqualifies for theOpeningBidBuyer Incentive

mayberequiredtocompleteandsigntheresidentialpurchaseandsalecontractformandanyaddendumforthesaleofthe Property provided on the applicable property web page at www.ConciergeAuctions.com (the “Purchase and SaleContract”)inthePurchasePriceamountofsuchOpeningBidpriortoAuctionDay,whichPurchaseandSaleContractmaybepresented to theSellerasapre-Auctionoffer topurchase theProperty.Buyerherebyacknowledges thathe/shehasreviewed thePurchaseandSaleContract, agrees toexecute thePurchaseandSaleContractupon request, tomakeanyadditional earnest money deposits required under the Purchase and Sale Contract, and further understands that thePurchaseandSaleContractwillbelegallybinding.

d. TheOpeningBidBuyerIncentiveshallnotapplytoanyPurchaseandSaleContractexecutedotherthantothePurchaseandSaleContractbetweenBuyer andSeller executedonor about thedateof theAuction, includingpre-auctionoffersor aback-upbuyercontract.

5. OpeningBid.AnOpeningBidshallbeconsideredtheBidder’sinitialbidattheAuction. IfthesameOpeningBidAmounthas

been submittedbymore thanoneOpeningBidder, the firstqualifying form receivedbyConciergewillbegivenprecedence.PleaseusethefollowingformtosubmitanOpeningBid.

PropertyAddress OpeningBidAmount

822NorthStreet,Greenwich,CT06831

1851TurbevilleRoad,HickoryCreek,TX75065

10WestStreet,PH2C,NewYork,NY10004

7EaglePointeLane,CastleRock,CO80108

VillaAnnabella,TryallClub,Jamaica

CasaBellamar,LosCabos,Mexico

300WyeNarrowsDrive,Queenstown,MD21658

DocuSign Envelope ID: 76E5C2C8-3B4A-4A70-A8FD-FB1BDD9BF6ECDocuSign Envelope ID: 9EC2CD08-FDCB-4907-8805-D8228B5F8BF7

$1,500,000



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BidderInitials

142HooverDrive,Cresskill,NJ07626

2420,720-13thAvenue,Beltline,Calgary,ABT2R1M5Canada

20PeppersTrail,Montague,MI49437

7941SummitCove,FortWorth,TX76179

63AvondaleLane,#R3,BeaverCreek,CO81620

2150SHighwayA1A,VeroBeach,FL32963

1880SHighwayA1A,VeroBeach,FL32963

209Bear’sClubDrive,Jupiter,FL33477

640ClearwaterLane,Thayne,WY83127

MatanaPlantation,KoroIsland,Fiji

NavodoBay,VanuaLevu,Fiji

6. Furnishings.TodeterminewhetheraProperty(s)isbeingsoldfurnishedorunfurnished,pleaseconsultthePurchaseandSale

ContractforacompletelistingofallpersonalpropertyincludedinthepurchaseoftheProperty(s).

7. BidAcceptance;Completion;AuctionMethods.Oncebidding is completeand theBuyer isdeclared,Buyerwill be requiredimmediatelytoexecutethePurchaseandSaleContract,EscrowInstructionsandotherdocumentsreasonablyrequiredbytheEscrowAgent.ABuyerofPropertylocatedintheUnitedStates(oritsterritories)shallinitiateawiretransfertoEscrowAgent(as definedbelow) to increase theBidder’sDeposit, if required, up to twelvepercent (12.00%)of thePurchasePrice; and aBuyerofPropertylocatedoutsidetheUnitedStates(oritsterritories)shallinitiateawiretransfertotheapplicableclosingagentlisted inthePurchaseandSaleContract inanamountequaltotwelvepercent (12.00%)ofthetotalPurchasePrice(ineithercase,the“Deposit”).RegardlessofPropertylocation,theexecutedPurchaseandSaleContract,EscrowInstructionsandotherdocumentsreasonablyrequiredbytheEscrowAgentmustbereceivedno laterthan5:00p.m.ESTonJune30,2017andtheDeposit required by the Escrow Agentmust be received no later than 5:00 p.m. EST on July 3, 2017, Conciergemay, in itsdiscretion,extendthisdeadline.BidderacknowledgesthatitsfailuretoexecutethePurchaseandSaleContractortopaytheDepositwillresultinforfeitureoftheBidder’sDeposit.

CertainPropertiesaresellingwithoutreserveandwillbesoldtotheBidderwiththeHighBidandtheSellershallimmediatelyexecutethePurchaseandSaleContract.OtherPropertiesaresellingwithreserveorminimumpricesthatareeitherdisclosedor confidential (each, a “Reserve”). In a Reserve auction, if the High Bid is equal to or greater than the Reserve, then thePropertywill be sold to suchBidder and Seller shall immediatelyexecute thePurchaseandSaleContract. If theHighBid isbelowtheReserve,thentheSellermayaccept,counter,orrejectthePurchaseandSaleContractonorbefore5:00p.m.onJuly3,2017. IntheeventSellerchoosestorejectthePurchaseandSaleContractpriortomutualacceptance,Buyerwillreceivearefundofmoniesdeposited.InordertodeterminetheapplicableauctionmethodforeachProperty,pleasevisittheapplicableProperty’swebpageatwww.conciergeauctions.com.

DocuSign Envelope ID: 76E5C2C8-3B4A-4A70-A8FD-FB1BDD9BF6ECDocuSign Envelope ID: 9EC2CD08-FDCB-4907-8805-D8228B5F8BF7Case 3:17-cv-02263-BAS-MDD Document 10-2 Filed 12/15/17 PageID.83 Page 8 of 28


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Inaddition,thesaleofcertainPropertiesmayrequirecourtapproval.TodeterminewhetherthesaleofthePropertyonwhichyouarebiddingrequirescourtapproval,pleasevisittheapplicableProperty’swebpageatwww.conciergeauctions.com.IfyouarethehighbidderonanysuchProperty,yourbidremainsirrevocablewhiletheSellerseekscourtapprovalofyourwinningbid.

AsbetweenBuyerandSeller,thePurchaseandSaleContractsupersedesanyandallotherdocumentsorinformation(includingwithout limitationtheseAuctionTerms&Conditions)andservesasthedefinitivedocumentforthepurchaseandsaleoftheProperty(s). Concierge isnotaparty to thePurchaseandSaleContract. Conciergedoesnotguarantee thatany saleof thePropertywillbeconsummated.Theterm“PurchasePrice”shallmeantheHighBid,excludingotheramountspayablebytheBuyerinconnectionwithclosing,such as customary closing costs, escrow/closing fees, property taxes, insurance, transfer fees/taxes in accordance with thePurchase and Sale Contract, and the Buyer’s Premiumpayable to Concierge. Therefore, Buyer’s total obligation toward thepurchaseofthePropertyisequaltothePurchasePrice,theBuyer’sPremiumandthosecustomaryclosingcosts.Tothatend,allBiddersarestronglyencouragedtoreviewthePurchaseandSaleContractpriortobidding.

8.ClosingandEscrowAgent.ClosingwilltakeplaceinaccordancewiththetermsandconditionsofthePurchaseandSaleContractandanyrelateddocuments.EscrowservicesshallbeprovidedexclusivelybyBostonNationalTitle(“EscrowAgent”),locatedat129W.TradeStreet,9thFloor,Charlotte,NC28202.ClosingservicesarenotprovidedbyConcierge.

9. ClosingDate.ThedateofclosingthepurchaseofthePropertybetweenBuyerandSellershallbethe“ClosingDate”setforthintheapplicablePurchaseandSaleContract.Incertaincases,SellermayextendtheClosingDatepursuanttothePurchaseandSaleContractorasotherwisenegotiatedbetweenSellerandBuyer,inSeller’ssolediscretion.

10. Default.FailuretocomplywiththeseAuctionTerms&ConditionsbytheBuyerwillresultinadefaultbeingdeclaredandtheDeposit andBuyer’s Premiummaybe retainedby Seller and/orConcierge in addition toother equitable and legal remediesunderapplicablelawallofwhicharereserved.

11. AuctionProcedures.Concierge’sverbalannouncementsmadeattheAuctionwilltakeprecedenceoverallprintedmaterialor

otherpreviouslymadestatements.Conciergereservestheright towaiveormodifyanypreviouslyannouncedrequirements.Sellerreservestherightathis/hersolediscretiontoacceptorrejectanyoffersmadebeforetheAuctionbegins.Method,orderof Auction, and bidding increments shall be determined by Concierge in its sole discretion, including, without limitation,Concierge’srighttopauseandresumebiddingduringtheAuction.Conciergereservestherighttorejectanybidthatisonlyaminimalincreaseovertheprecedingbid,orthatConciergebelieveswasmadeillegallyorinbadfaith.AlldecisionsofConciergeare final as tomethods of bidding, cancellation or any othermatters thatmay arise before, during or after the Auction. IfConciergeperceivesattemptedcollusion,ConciergewillcanceltheAuctionorrefusetoacceptabid.Collusionbetweenbiddersisprohibitedbyvariousapplicable laws.Conciergereserves theright todenyanypersonadmittanceto theAuctionorexpelanyonewho Concierge believesmay disrupt, cause any nuisance or interferewith the Auction in anyway or for any otherreasoninConcierge’sdiscretion.TheAuctiondoesnotbeginuntilConciergeacceptsthefirstbidonthedayoftheAuction.CONCIERGEANDSELLERRESERVETHERIGHTTOMODIFYORAMENDANYTERMSOFTHEAUCTION,THEAUCTIONMETHODORPARTICULAR CONDITIONS OF THE AUCTION UPON ANNOUNCEMENT PRIOR TO OR DURING THE COURSE OF THE AUCTION.SELLERRESERVESTHERIGHTTOOFFERTHEPROPERTY(S)FORSALEINANYMANNERORMETHOD.Prospectivebiddersshouldregularlyconsulttheapplicablepropertypageatwww.ConciergeAuctions.compriortothedateoftheAuctionforthemostup-to-dateinformationregardingtheProperty(s)offeredinthisAuction,andtheAuctionmethodandtermsandconditions.

12. Property Inspection/DueDiligence/Disclaimer. It is theBidder’ssoleresponsibility toperformany inspectionsBidderdeemspertinenttothepurchaseof theProperty(s)andtobesatisfiedastotheconditionof theProperty(s)prior tobiddingandtoreview all due diligence materials provided with respect to the Property. EACH BIDDER ASSUMES ANY AND ALL RISKSASSOCIATEDWITHANYSUCHINSPECTION.TheProperty(s),bothrealandpersonal(ifany),arebeingsoldintheirexisting"ASIS, WHERE IS, WITH ALL FAULTS" condition, with no expressed or implied guarantees or warranties whatsoever, unlessrequired by law. Personal on-site inspection of the property(s) is strongly recommended and bidders are advised to



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BidderInitials

independently verify all information they deem important. Bidder acknowledges that he/she has reviewed the diligencematerialsanddisclosuresprovidedontheapplicablepropertywebpageatwww.ConciergeAuctions.com;however,Concierge,and the Seller assume no liability for errors or omissions in these disclosures or any other property listings or advertising,promotional or publicity statements and materials. Each Property is scheduled to have one or more open houses, and/orshowings upon request, pursuant to the schedule posted on the applicable property web page atwww.ConciergeAuctions.com. Open house events are hosted solely by third party brokers acting on behalf of Seller andConciergehasnoresponsibilityforsuchopenhouses,includingbutnotlimitedtocancellationsorchangesintimes,allofwhicharethesoleresponsibilityofthethirdpartybrokers.Althoughinformationhasbeenobtainedfromresourcesdeemedreliable,neitherConciergenorSellermakesanyguaranteeastotheaccuracyofanysuchinformation.

Inconnectionwithanyduediligence, inspection,visitand/or investigationof theProperty(s)byProspectiveBidders,Biddersand or any person/entity/representative acting on their behalf (the “Inspectors”), the Prospective Bidders, Bidders, andInspectorsshall (a)ensurethattheProperty(s) iskeptfreeandclearof liens,(b)ensurethatanyandalldamagearisingfromsuchinspectionisrepaired,and(c)indemnify,defendandholdSellerandConciergeharmlessfromallliability,claims,demands,damagesand/orcostsdirectlyor indirectlyarisingthere from. Inspectorsshallcarry,or requireanyoneactingon Inspector’sbehalftocarry,policiesofliabilityinsurance,workers’compensationandotherapplicableinsurance,defendingandprotectingSellerandConciergefromliabilityforanyinjuriestopersonsorpropertyoccurringduringanyinspectionoftheProperty(s).

ByregisteringasaBidderandbiddingattheAuction,eachBiddershallbedeemedtorepresent,warrantandagreewithrespectto each Property(s) it bids upon that: (a)such Bidder has reviewed all due diligencematerials related to the Property, hasinspectedthePropertyandisfamiliarandsatisfiedwiththephysicalconditionthereofandhasconductedsuchinvestigationofthe Property as the Bidder has determined appropriate, (b) neither Concierge nor Seller, nor any affiliate, agent, officer,employeeorrepresentativeofeitherofthem,hasmadeanyverbalorwrittenrepresentation,warranty,promiseorguaranteewhatsoever to the Bidder, expressed or implied, and in particular, that no such representations, warranties, guarantees, orpromiseshavebeenmadewithrespecttothephysicalcondition,operation,oranyothermatterorthingaffectingorrelatedtothePropertyand/ortheofferingorsaleoftheProperty,(c)Bidderhasnotrelieduponanyrepresentation,warranty,guaranteeorpromiseoruponanystatementmadeoranyinformationprovidedconcerningtheProperty(s), includingbutnot limitedtoinformationmadeavailableon-lineattheAuctionwebsite,inAuctionAdvertising,intheAuctionbrochure,orprovidedormadeavailablebyConciergeorbySeller,ortheirrespectiveaffiliates,agents,officers,employeesorrepresentatives,(d)Bidderhasmadeitsbidafterhavingreliedsolelyonitsownindependentinvestigation,inspection,analysis,appraisalandevaluationofthePropertyandthefactsandcircumstancesrelatedthereto,(e)Bidderhasactualauthoritytoenterabidandtoenter intothePurchaseandSaleContract,(f)BidderhasthecapacitytoclosethetransactionpursuanttothePurchaseandSaleContract,(g)any information provided or to be provided by or on behalf of the Seller with respect to the Properties including, withoutlimitation, all information contained on-line at the Auction website, in Auction advertising, or any other printed or onlinematerials being made available to Bidder by Seller and Concierge, was obtained from Seller and/or Seller’s agents, andConciergehasnotmadeanyindependentinvestigationorverificationofsuchinformation,andmakesnorepresentationsastotheaccuracyorcompletenessofsuch information, (h)without limitingthegeneralityof theforegoing,neitherConciergenorSellershallbeunderanyobligationtodisclosetoanyBidder,andshallhavenoliabilityforitsfailuretodisclosetoanyBidder,anyinformationknowntothemrelatingtoanyPropertyexceptasmayberequiredbylaw,and(j)SellerandConciergearenotliableorboundinanymannerbyanyoralorwrittenstatements,representationsorinformationpertainingtotheProperty(s),ortheoperationthereof,madeorfurnishedbyanyrealestatebroker,agent,employee,orotherperson.

WITHOUT LIMITING ANY OTHER PROVISION OF THESE AUCTION TERMS & CONDITIONS OR THE PURCHASE AND SALECONTRACT, ALL BIDDERS ACKNOWLEDGE AND AGREE THAT THEY ARE BIDDING FOR AND, WHEN THE HIGH BIDDER ISCONFIRMED BY THE CONCIERGE, WILL ACQUIRE THE PROPERTY, INCLUDING THE IMPROVEMENTS CONSTRUCTED ON THEPROPERTY AND ALL APPLIANCES AND BUILDING SYSTEMS, IN ITS STATE AND CONDITION AS OF AUCTION DAY, WITH ALLDEFECTS,BOTHPATENTANDLATENT,ANDWITHALLFAULTS,WHETHERKNOWNORUNKNOWN,PRESENTLYEXISTINGORTHATMAYHEREAFTERARISE(TOTHEFULLESTEXTENTALLOWEDBYAPPLICABLELAW).ALLPROSPECTIVEBIDDERSACKNOWLEDGEAND AGREE THAT CONCIERGE HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANYREPRESENTATION, WARRANTY, PROMISE, COVENANT, AGREEMENT OR GUARANTY OF ANY KIND OR CHARACTERWHATSOEVER,WHETHEREXPRESSORIMPLIED,ORALORWRITTEN,PAST,PRESENTORFUTURE,OF,ASTO,CONCERNINGORWITHRESPECTTOTHEPROPERTY, INCLUDINGWITHOUT LIMITATION: (A) THEVALUE,NATURE,QUALITYORCONDITIONOF



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BidderInitials

THEPROPERTY, INCLUDING,WITHOUTLIMITATION,THEWATER,SOILANDGEOLOGY;(B)THEINCOMETOBEDERIVEDFROMTHE PROPERTY, IF ANY; (C) THE SUITABILITYOF THE PROPERTY FORANYANDALL PURPOSES, ACTIVITIES ANDUSESWHICHBIDDERMAYCONDUCTTHEREON;(D)THECOMPLIANCEOFORBYTHEPROPERTYORITSOPERATIONWITHANYLAWS,RULES,ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY,MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (F)THEMANNERORQUALITYOFTHECONSTRUCTIONORMATERIALS,IFANY,INCORPORATEDINTOTHEPROPERTY;(G)THEMANNER,QUALITY,STATEOFREPAIRORLACKOFREPAIROFTHEPROPERTY;(H)THEEXISTENCEOFANYVIEWFROMTHEPROPERTYORTHAT ANY EXISTING VIEW WILL NOT BE OBSTRUCTED IN THE FUTURE; (I) ANY OTHER MATTER WITH RESPECT TO THEPROPERTY, (J) THE STRUCTURAL INTEGRITY OF ANY IMPROVEMENTS ON THE PROPERTY, (K) THE CONFORMITY OF THEIMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY THAT MAY BE PROVIDED TO BIDDER, (L) THECONFORMITY OF THE PROPERTY TO APPLICABLE ZONINGOR BUILDING CODE REQUIREMENTS, (M) THE EXISTENCE OF SOILINSTABILITY, PAST SOIL REPAIRS, SUSCEPTIBILITY TO LANDSLIDES, SUFFICIENCY OF UNDER-SHORING, SUFFICIENCY OFDRAINAGE, OR ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE LAND OR ANY BUILDINGS ORIMPROVEMENTSSITUATEDTHEREON,(N)WHETHERTHEPROPERTYISLOCATEDINASPECIALSTUDIESZONEUNDERTHEPUBLICRESOURCESCODEORASEISMICHAZARDSZONEORASTATEFIRERESPONSIBILITYAREA,ORASPECIALFLOODHAZARDZONEOR(O)THEPRESENCEOFTERMITESOROTHERPESTSANDANYDAMAGETOTHEPROPERTYAND/ORITSIMPROVEMENTSTHATMAYHAVEOCCURREDASARESULT.BIDDERACKNOWLEDGESTHATTHEPROPERTYANDITSIMPROVEMENTSMAYNOTBEINCOMPLIANCEWITHAPPLICABLEZONING,BUILDING,HEALTHOROTHER LAWSORCODES,ANDNEITHERSELLER,CONCIERGENORANYOFTHEIRRESPECTIVEREPRESENTATIVESORAGENTSHAVEOCCUPIEDTHEPROPERTYANDTHEPROPERTYMAYNOTBEINHABITABLECONDITION.ALLPROSPECTIVEBIDDERSFURTHERACKNOWLEDGEANDAGREETHAT,WITHOUTLIMITATION,SELLERANDCONCIERGEHAVENOTMADE,DONOTMAKE,ANDSPECIFICALLYDISCLAIMANYREPRESENTATIONSREGARDINGCOMPLIANCEWITH THE AMERICANSWITH DISABILITIES ACT ORWITH ANY ENVIRONMENTAL PROTECTION, POLLUTION ORLANDUSELAWS,RULES,REGULATIONS,ORDERSORREQUIREMENTS,ASDEFINEDBYTHEU.S.ENVIRONMENTALPROTECTIONAGENCY REGULATIONS OR THE DISPOSAL OR EXISTENCE, IN OR ON THE PROPERTIES, OF ANY HAZARDOUS SUBSTANCE, ASDEFINEDBYTHECOMPREHENSIVEENVIRONMENTALRESPONSECOMPENSATIONANDLIABILITYACTOF1980,ASAMENDED,AND REGULATIONS PROMULGATED THEREUNDER. EACH PROSPECTIVE BIDDER AND ANYONE CLAIMING BY, THROUGH ORUNDER THE SAME HEREBY FULLY AND IRREVOCABLY RELEASE SELLER AND CONCIERGE, AND THEIR RESPECTIVE AFFILIATES,EMPLOYEES,OFFICERS,DIRECTORS,REPRESENTATIVES,ATTORNEYSANDAGENTS,FROMANYANDALLCLAIMSTHATHE/SHE/ITOR THEY MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST SELLERS AND/OR CONCIERGE, AND/OR THEIR RESPECTIVEAFFILIATES,EMPLOYEES,OFFICERS,DIRECTORS,REPRESENTATIVES,ATTORNEYSANDAGENTS,FORANYCOST,LOSS,LIABILITY,DAMAGE,EXPENSE,DEMAND,ACTIONORCAUSEOFACTIONARISINGFROMORRELATINGTOTHECONDUCTOFTHEAUCTIONAND/OR THE CONDITION OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO ANY CONSTRUCTION DEFECTS, ERRORS,OMISSIONSOROTHERCONDITIONS,INCLUDINGBUTNOTLIMITEDTOENVIRONMENTALMATTERS,AFFECTINGTHEPROPERTY,ORANY PORTION THEREOF. THIS RELEASE INCLUDES CLAIMSOFWHICH PROSPECTIVE BIDDER IS PRESENTLYUNAWAREORDOES NOT PRESENTLY SUSPECT TO EXIST IN HIS/HER/ITS FAVOR WHICH, IF KNOWN BY PROSPECTIVE BIDDER, WOULDMATERIALLY AFFECT PROSPECTIVE BIDDER’S RELEASE OF SELLERS AND CONCIERGE. EACH PROSPECTIVE BIDDER SHOULDCONSIDERTHESEMATTERSWHENREGISTERINGASABIDDERANDBEFOREPLACINGBIDS.

BIDDER ACKNOWLEDGES THAT THIS RELEASE AND DISCLAIMER IS INTENDED TO BE VERY BROAD AND BIDDER EXPRESSLYWAIVESANDRELINQUISHESANYRIGHTSORBENEFITSITMAYHAVEUNDERANYSTATEORFEDERALLAWORLEGALPRINCIPLEDESIGNED TO INVALIDATE RELEASES OF UNKNOWN OR UNSUSPECTED CLAIMS TO THE FULLEST EXTENT ALLOWED BYAPPLICABLELAW.

13. SalesAssociate/BrokerCommission. In somecases,acommission/referral feewillbepaidbySeller toaproperly registered

and licensed realestateSalesAssociateorBroker in the jurisdiction inwhich theProperty is locatedandwhoseclient is thesuccessful Buyer at the Auction and whose client completes the purchase of the Property(s). For more details regardingapplicablecommissions/referralfees,pleasevisittheapplicableProperty’swebpageatwww.conciergeauctions.com. TitletotheProperty(s)mustbetransferredandtheclientmustpaythePurchasePricefortheProperty(s)forsuchcommission/referralfeetobepaid.

Inordertobeentitledtoanycommission/referralfee,theRealEstateBrokermust:a. RegisterhisorherclientbycompletingandexecutingtheseTerms&Conditionsinfull.



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BidderInitials

b. SubmitthisexecutedformviaemailtoConciergeatregister@conciergeauctions.comviafaxat888-317-9503,ordirectlytoaConciergerepresentative,forreceiptpriorto5:00p.m.ESTonJune26,2017.Conciergemay,initsdiscretion,extendthisdeadline.

c. AbidebytheseAuctionTerms&Conditions.d. TheRealEstateBroker’sclientmustclosethepurchaseofthePropertyinaccordancewiththePurchaseandSaleContract.e. Complywithallapplicablelawsandregulationsrelatingtobrokerdutiesandcommissions.

ConciergeisnotactinginanycapacityasanagentorbrokerforanyBidder.ConciergeisnotactinginanycapacityasabrokerfortheSeller. Pleasenotetheamountorrateofrealestatecommissionsisnotfixedbylaw. Theyaresetbyeachbrokerindividuallyandmaybenegotiablebetweentheclientandbroker.

14. Title.Titlewillbefreeandclearofallliensandencumbrances,exceptassetforthinthePurchaseandSaleContract,andSellerwillconveygoodandmarketable,feesimpletitleinaccordancewiththePurchaseandSaleContract.

15. NoContingencies.BUYER’SPURCHASEOFTHEPROPERTYISACASHTRANSACTIONWITHNOCONTINGENCIESORCONDITIONS,

including,withoutlimitation,acontingencyforfinancingorinspections.

16. DisputeandWithdrawal.Conciergemay,intheeventofanydisputebetweenbidders,determinethesuccessfulbidderorre-offerthesubjectProperty(s)forauction.ShouldtherebeanydisputeaftertheAuction,Concierge'srecordoftheHighBid,andthePurchasePriceshallbeconclusivetoresolvethedispute.ConciergereservestherighttowithdrawtheProperty(s)beforeorattheAuctioninitssolediscretionandshallhavenoliabilitywhatsoeverforsuchwithdrawal.

17. Cancellation/Postponement. CONCIERGE AND SELLER RESERVE THE RIGHT TO CANCEL, POSTPONE OR WITHDRAW THE

PROPERTY(S)UPTOTHESTARTOFTHEAUCTION.SELLERRESERVESTHERIGHTTOSELLTHEPROPERTY(S)INANYMANNERITSODESIRESBEFOREORUPTOTHESTARTOFTHEAUCTION.

Asstatedabove,ConciergehastherighttopostponetheAuctionattheirdiscretion.ShouldConciergechoosetopostponetheAuction,anyOpeningBidshallremainactiveandirrevocableforaperiodoftimenottoexceed45daysfromJune29,2017.IftheAuctionispostponed,andtherescheduleddatemorethan45daysfromDecember20,2016,BiddermaybepermittedtomakeanewOpeningBidpursuanttotheAuctionTermsandConditionsfortherescheduledauction.PleaserefertotheAuctionTerms&Conditionsbelowforfurtherclarificationandinstruction.

18. ApplicableLaws.TherespectiverightsandobligationsofthepartieswithrespecttotheseAuctionTerms&Conditionsandthe

conductoftheAuctionshallbegoverned,enforcedand interpretedbythe lawsofthestateofNewYork,withoutregardforconflictsoflawprinciples.

19. PRESS RELEASES/PROMOTION. Each attendee of the Auction shall be deemed to have consented to the issuance of press

releasesandotherpubliccommunicationsbySeller,Conciergeand/or theiragentsregardingtheAuctionandtheProperty(s)offeredor soldat theAuction.Byexecuting theseAuctionTerms&Conditionseachattendeeof theAuctionauthorizes andconsentstotherecordingofsuchattendee'sparticipationandappearanceonvideotape,audiotape,film,photographoranyothermediumandtheexhibitionordistributionofsuchrecordingwithoutrestrictionsorlimitationforanypromotionalpurposewhichConciergeandthoseactingpursuanttoitsauthority,deemappropriate.BidderherebyreleasesanddischargesConcierge,itsofficers,employeesandagents, fromanyandallclaimsanddemandsarisingoutofor inconnectionwiththeuseofsuchphotographs,filmortape,includingbutnotlimitedtoanyclaimsfordefamationorinvasionofprivacyorrightstopublicity.

20. INDEMNIFICATION.Biddershallindemnify,defend(bycounselsatisfactorytoConcierge)andholdharmlessConciergeandits

officers,employees,agentsandrepresentatives (collectively, the“Indemnitees”),againstanyclaim,demand,causeofaction,loss,liability,deficiency,fine,penalty,damageorexpense(includingreasonableattorney’sfeesandcostsandincludinginterestandpenalties)(a"Loss")whichanyIndemniteemaysuffer,incur,sustainorbecomesubjectto,asaresultoforinconnectionwith:(i)anybreachbyBidderofanyrepresentation,warranty,obligationorcovenantsetforthintheseTerms&Conditionsand(ii)anybreachbyBidderofanyPurchaseandSaleContractenteredintowithSeller.



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BidderInitials

21. LIMITATION OF LIABILITY. Neither Concierge nor Seller shall be liable for any damages of any type or nature (whether incontract, tortorotherwise)sustainedorclaimedbyanyBidderoranyotherpersonorentity inconnectionwith theAuctionand/orthesaleofanyProperty(s)and/orthefailureofanypartytocompletethesaleofanyProperty(s).Withoutlimitingtheforegoing,innoeventshallConcierge’sliabilitytoanyBidderforanyactoromissionoccurringinconnectionwiththeAuctionexceed the amount that such Bidder has actually paid to Concierge as a deposit or as payment for a particularProperty(s).OffersmadeattheAuctionarevoidwhereprohibitedbylaw.INNOEVENTWILLCONCIERGEBELIABLEFORANYDAMAGES INCLUDING, WITHOUT LIMITATION, ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY ORCONSEQUENTIALDAMAGES,LOSSESRELATEDTOBUSINESSINTERRUPTION,LOSSOFBUSINESSINFORMATIONORLOSTPROFITSARISING OUT OF OR IN CONNECTION WITH THE SALE OF THE PROPERTY OR THE AUCTION, OR OUT OF ANY BREACH OFWARRANTY,EVENIFCONCIERGEHASBEENADVISEDOFTHEPOSSIBILITYOFSUCHDAMAGES.

22. NOTANOFFERTOSELL;SOLICITATIONONLY.Anyinformationonanywebsite,inanybrochure,e-mailorpostcardandanyand

allinformationavailableregardingthePropertiesshallnotconstituteanoffertosellorasolicitationofanyoffertobuyanyofthePropertiesreferencedherein.Inaddition,andwithoutlimitingtheforegoing,anywebsite,advertisementorbrochureshallnotconstituteanoffertosellorasolicitationofanyoffertobuynorshalltherebeanyAuctionsofanyofthePropertiesinanystateinwhichsuchoffer,solicitation,orAuctionwouldbeunlawful.OffersmadeattheAuctionarevoidwhereprohibitedbylaw.

23. LICENSING.ForinformationaboutConcierge’slicensingandbonding,pleasecontactConcierge.

24. THIRD PARTIES. Concierge and/or Sellermay provide and/or designate certain third parties to provide ancillary services in

connectionwithaProperty(s)Auctionand/orlinkstothewebsitesorproductsorservicesofothers.AnysuchdesignationsdonotconstituteanendorsementbyConciergeorSellerofsuchthird-partyserviceproviders,ortheproducts,orservicesofsuchthird parties. These third parties operate independently of Concierge and Seller and have established their own terms andconditions and policies. Bidder acknowledges and agrees that Concierge and Seller are not responsible for any damages orlossescausedorallegedtohavebeencausedbytheuseofanyThird-PartyServices.

25. SEVERABILITY.IfanyprovisionoftheseAuctionTerms&Conditionsisheldbyacourtofcompetentjurisdictiontobeinvalidor

unenforceable,thensuchprovisionshallbeenforcedtothemaximumextentpermissibletoaffecttheintentoftheseTerms&Conditions,andtheremainderoftheseAuctionTerms&Conditionsshallcontinueinfullforceandeffect.

26. ENTIRE AGREEMENT. These Auction Terms & Conditions, together with any additional terms and conditions specific to a

particularauction(whichareincorporatedhereinbyreferenceandcanbefoundthroughoneormorelinksonthedetailpagefor theauction inquestion),constitutetheentireagreementbetweenConciergeandBidderregarding itssubjectmatterandsupersedeandreplaceanyandallpriororcontemporaneousagreementsbetweenthepartiesregardingsuchsubjectmatter.

27. ARBITRATION; VENUE; PREVAILING PARTY. The parties agree to submit all controversies, disputes, claims andmatters of

differencearisingoutofor relating to theseTerms&Conditions, includingbutnot limited to its enforcement, scopeand/orinterpretation, exclusively to arbitration inNewYork,NewYork in accordancewith the Commercial ArbitrationRules of theAmericanArbitrationAssociationfromtimetotimeineffect(the“ArbitrationRules”).Thepartiesmayagreeonaretiredjudgeassolearbitrator.Intheabsenceofsuchagreement,therewillbethreearbitrators,selectedinaccordancewiththeArbitrationRules. If there are three arbitrators, a decision reached by at least two of the three arbitratorswill be the decision of thearbitrationpanel.Thepartiesagreetoabidebyalldecisionsreachedandawardsrenderedinsucharbitrationproceedings,andallsuchdecisionsandawardswillbefinalandbindingonbothparties.Judgmentupontheawardmaybeenteredinanycourtof competent jurisdiction or applicationmay bemade to such court for a judicial acceptance of the award and an order ofenforcement. By bidding at an auction, whether present in person, or by agent, by proxy, by written bid, telephone bid,internetbid,orothermeans,theBiddershallbedeemedtoconsenttothejurisdictionofthestateandfederalcourtslocatedintheCountyofNewYork,StateofNewYork(andoftheappropriateappellatecourtstherefrom)inanysuchactionorproceeding(including an action to compel arbitration) andwaives anyobjection to venue. Process in any actionor proceedingmaybeservedpersonally or by registeredmail anywhere in theworld. In theeventof any such arbitrationor anypermitted courtaction,theprevailingpartyshallbeentitledtoreimbursementfromthenon-prevailingpartyofallreasonableattorney’sfeesand costs/expenses of the prevailing party and any award of the arbitrator(s) or court will include costs and reasonable



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BidderInitials

attorneys’feestotheprevailingparty.IfanyPartyfilesacourtactionarisingoutoforrelatingtothisAgreementorthebreach,termination, enforcement, interpretationor validity thereof, including thedeterminationof the scopeor applicability of thisagreementtoarbitrate,tocompelorstayarbitration,ortoconfirm,vacateormodifyanarbitrationaward(exceptforanon-contestedapplicationtoconfirm),ortoseekpaymentofanyattorneys'feesand/orcostsawardedbythearbitrator(s)butnotpaidby thenon-prevailingparty in thearbitration,or in theeventanyParty seeksenforcementofanyarbitrationawardorjudgmentarisingoutofanarbitrationaward,reasonableattorney’sfeesandothercostsincurredbytheprevailingPartyinsuchcourtactionor inconnectionwithsuch judgmentenforcementshallbereimbursedby thenon-prevailingParty. THEPARTIESUNDERSTANDTHAT,ABSENTTHISAGREEMENT,THEYWOULDHAVETHERIGHTTOSUEEACHOTHERINCOURT,ANDTHERIGHTTO A JURY TRIAL, BUT THEY GIVE UP THOSE RIGHTS VOLUNTARILY AND AGREE TO RESOLVE ANY AND ALL GRIEVANCES BYARBITRATION.



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BidderInitials

Bysigningbelow,Ihaveread,understoodandagreetotheaboveAuctionTerms&ConditionsandunderstandthattheAuctionTerms&ConditionsshallbemadepartofthePurchaseandSaleContractforthepurchaseofthisProperty(s).

Iwillnotclaimanyexceptionstotheproceduresoutlinedinthisdocumentunlessmadeinwriting&signedbySeller.________________________________________________________________ ____________________________BidderSignature DateIfyouhavenotsubmittedanOpeningBidabove,pleaseindicatetheProperty(s)onwhichyouintendtobid:____________________________________________________________________________________________________________IFBIDDERISREPRESENTEDBYASALESASSOCIATEORBROKER:

SalesAssociate/Broker:

EmailAddress: LicenseNumber:

CellularPhone: WorkPhone:

FirmorCompany: BrokerNumber:

CompanyAddress:

CompanyPhone: TaxIDNumber:

________________________________________________________________ ____________________________SalesAssociate/BrokerSignature DateESCROWAGENTWIREINSTRUCTIONS RETURNWIREINSTRUCTIONS$100,000mustbereceivedpriorto5:00pmESTonJune26,2016BostonNationalTitle BankName: ________________________________________129W.TradeStreet,9thFloorCharlotte,NC28202 Phone/Contact: ________________________________________PAYVIAFEDWIRE BankAddress: ________________________________________ToWellsFargoBank,N.A. 420Montgomery ________________________________________SanFrancisco,CA94104ABANumber: ________________________________________FORFURTHERCREDITOF ABANumber: ________________________________________BostonNationalEscrowAccount AccountNo.: AccountName: ________________________________________Regarding:June29thPortfolioSale Attn:IrenelleRedfearn Account#: ________________________________________


first republic bank

1110 camino del mar

del mar ca 92014

reside kauai / russell tucker / paul pacuilla PB RB-1862

ke'e partners

ritz NY, vanua levu, los cabos, beaver creek

6/20/2017

girlie 858-755-5600

DocuSign Envelope ID: 9EC2CD08-FDCB-4907-8805-D8228B5F8BF7

808 645-0698

5-5190 Kuhio Hwy B6/ P.O. Box Hanalei HI 96714

Reside Kauai LLC

[email protected],

808 645-0698

RS-61902

Office RB-21224

6/27/2017

808 639-9207


Exhibit 2


First Addendum to Bidder Registration Terms and Conditions

THIS FIRST ADDENDUM TO BIDDER REGISTRATION TERMS AND CONDITIONS (“Addendum”) is made as of this 28th day of August 2017, by and among CONCIERGE AUCTIONS, LLC, with offices at 405 Lexington Avenue, 26th Floor, New York, NY 10174, 888-966-4759 (“Concierge”) and Howard Appel (“Bidder”). Capitalized terms used but and not otherwise defined in this Addendum shall have the meanings ascribed to them in the Terms (as defined below).

A. Bidder registered to participate as a bidder in Concierge’s June 28, 2017 Auction of real property described as Casa Bellamar, located at Lot 10, Casa Quaccia, La Costa Entre Y Otra C.P. 23400, San Jose Del Cabo, Los Cabos, Baja California Sur, Mexico 23570 (the “House”), and a vacant lot located at Lot 9, La Costa Entre Y Otra C.P. 23400, San Jose Del Cabo, Los Cabos, Baja California Sur, Mexico (the “Lot”) (collectively, the “Property”) and Bidder has executed and returned Concierge’s standard Auction Bidder Registration Terms and Conditions (the “Terms”).

B. Bidder was the high bidder at the Auction to purchase the Property in the amount of

$2,725,000. Pursuant to the Terms, Bidder is obligated to pay to Concierge a Buyer’s Premium equal to $327,000.

C. The parties now desire to amend the Terms as set forth in this Addendum.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreement of the parties hereto to the terms and conditions set forth below, the parties agree to amend the Terms as follows:

1. Buyer’s Premium. Notwithstanding anything to the contrary contained in Section 3 of the Terms, upon closing of Bidder’s purchase of the Property at the Auction, Bidder shall pay to Concierge a reduced Buyer’s Premium in the amount of $309,000.

2. Counterparts and Facsimile Copies. This Addendum may be executed in any number

of counterparts and facsimile copies, each of which, when executed, will be deemed to be an original and all of which, when taken together, will be deemed to be but one and the same instrument.

3. Effect of Addendum. All of the terms and conditions of the Terms shall continue in full force and effect except as modified by this Addendum. In the event of any conflict between the terms of this Addendum and the Terms, this Addendum shall prevail and control.

4. Governing Law. This Addendum shall be governed by and construed in accordance

with the laws of the State of New York, without regard for conflict of laws principles. CONCIERGE AUCTIONS, LLC By: Name: Title: Authorized Representative

BIDDER By: Name: Howard Appel

DocuSign Envelope ID: E07AC565-4258-4679-B00F-14AE362EE79DCase 3:17-cv-02263-BAS-MDD Document 10-2 Filed 12/15/17 PageID.92 Page 17 of 28

Exhibit 3


Exhibit 4


COMMERCIAL ARBITRATION RULES DEMAND FOR ARBITRATION

You are hereby notified that a copy of our arbitration agreement and this demand are being filed with the American Arbitration Association with a request that it commence administration of the arbitration. The AAA will provide notice of your opportunity to file an answering statement.

Name of Respondent: Name of Representative (if known):

Address: Name of Firm (if applicable):

Representative’s Address:

City: State: Zip Code: City: State: Zip Code:

Phone No.: Fax No.: Phone No.: Fax No.:

Email Address: Email Address:

The named claimant, a party to an arbitration agreement which provides for arbitration under the Commercial Arbitration Rules of the American Arbitration Association, hereby demands arbitration.

Brief Description of the Dispute:

Dollar Amount of Claim: $ Other Relief Sought:

Attorneys Fees Interest Arbitration Costs

Punitive/ Exemplary Other

Amount enclosed: $ In accordance with Fee Schedule: Flexible Fee Schedule Standard Fee Schedule

Please describe the qualifications you seek for arbitrator(s) to be appointed to hear this dispute:

Hearing locale: (check one) Requested by Claimant Locale provision included in the contract

Estimated time needed for hearings overall:

hours or daysType of Business: Claimant:

Respondent:

Are any parties to this arbitration, or their controlling shareholder or parent company, from different countries than each other?

Signature (may be signed by a representative): Date:

Name of Claimant: Name of Representative:

Address (to be used in connection with this case): Name of Firm (if applicable):

Representative’s Address:

City: State: Zip Code: City: State: Zip Code:

Phone No.: Fax No.: Phone No.: Fax No.:

Email Address: Email Address:

To begin proceedings, please send a copy of this Demand and the Arbitration Agreement, along with the filing fee as provided for in the Rules, to: American Arbitration Association, Case Filing Services, 1101 Laurel Oak Road, Suite 100 Voorhees, NJ 08043. At the same time, send the original Demand to the Respondent.

Please visit our website at www.adr.org if you would like to file this case online. AAA Case Filing Services can be reached at 877-495-4185.

For Consumer or Employment cases, please visit www.adr.org for appropriate forms.

Robert D. Trette and Deborah L. Trette, Company Directors of Whispering Tides LTD Unknown

205 Avenida Fabricanten/a

n/a

San Clemente CA 92672 n/a n/a n/a

n/a n/a

[email protected] n/a

Breach of Auction Marketing Agreement

285,000.00

2,650.00

Retired judge as sole arbitrator; alternatively, three arbitrators with experience in high-value residential real estate transactions, preferably auctions.

New York, NY

1-2Real Estate Auctioneer

Seller of Real Estate

No.

July 28, 2017

Concierge Auctions, LLC Robert S. Wolf, Esq.

405 Lexington Ave., 26th FloorMoses & Singer LLP

405 Lexington Ave., 12th Floor

New York NY 10174 New York NY 10174

c/o Counsel c/o Counsel (212) 554-7800 (212) 554-7700

c/o Counsel [email protected]


www.adr.org



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DECLARATION OF ANTHONY CAPOBIANCO


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v. CONCIERGE AUCTIONS, LLC, a Delaware Limited Liability Company; CHAD ROFFERS, an individual; ALEXANDER GRAY, an individual; EMILY PRYOR, an individual; KATIE MCMAINS, an individual; SERENA IRWIN, an individual; OLIVIA ASAVEI, an individual, Defendants.

Case No. 3:17-cv-2263-BAS-MDD [Assigned to Hon. Cynthia Bashant] DECLARATION OF ANTHONY CAPOBIANCO IN SUPPORT OF MOTION TO COMPEL ARBITRATION AND MOTION TO TRANSFER Hearing Date: February 5, 2018 Place: Courtroom 4B



– 1 –DECLARATION OF ANTHONY CAPOBIANCO


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DECLARATION OF ANTHONY CAPOBIANCO

I, Anthony Capobianco, declare as follows:

1. I am a principal in the firm of Capobianco Law Offices, P.C.

(“CLO”), attorneys of record representing defendant Concierge Auctions, LLC

(“Concierge”) in this action. I am licensed to practice law in the State of California

and before this court. I have personal knowledge of the facts stated in this

declaration and they are true to the best of my knowledge. I am competent to

testify to the facts stated in this declaration.

2. On November 16, 2017, I wrote a letter to Joseph Preis, counsel for

Plaintiffs Howard Appel and David Cohen (“Plaintiffs”), explaining that the

parties had entered into a binding arbitration agreement and demanding that

Plaintiffs dismiss this action in favor of arbitration before the American

Arbitration Association in New York, among other things. A true and correct copy

of my November 16, 2017 letter is attached to this Declaration as Exhibit 5.

3. During the December 8, 2017 conference of counsel, Plaintiffs’

counsel informed my colleague, Derek Wallen, that Plaintiffs refuse to arbitrate

this matter.

4. Attached as Exhibit 6 to this Declaration is a true and correct copy of

the American Arbitration Association’s currently effective Commercial Arbitration

Rules and Mediation Procedures. I obtained these rules from the American

Arbitration Association’s website at https://www.adr.org/Rules on December 5,

2017.

I declare under penalty of perjury under the laws of the United States of

America that the foregoing is true and correct.

Executed this 14th day of December 2017 at Palm Desert, California.

Anthony Capobianco


Exhibit 5


41990 Cook Street, Bldg. F, Suite 2006 [email protected] Telephone (760) 568-6500 Palm Desert, CA 92211 www.capobiancolaw.com Facsimile (760) 568-0100

November 16, 2017

VIA EMAIL [email protected] Joseph M. Preis GODES & PREIS, LLP 300 Spectrum Center Drive, Suite 1420 Irvine, CA 92618

Re: Petition to Compel Arbitration Appel, et al. v. Concierge Auctions, LLC, et al.

Dear Mr. Preis:

We recently received the above lawsuit that you filed on behalf of your clients Howard Appel and David Cohen against defendants Concierge Auctions, LLC, Chad Roffers, Katie McMains, Sarena Irwin, Alexander Gray, Olivia Asavei and Emily Pryor (collectively, “Concierge”). For the reasons set forth below, unless you voluntarily agree to dismiss this action and transfer it to arbitration in New York, Concierge will file a petition to compel arbitration of this dispute in New York. I have tried to contact you to discuss various issues related to your clients’ complaint, but you have not returned my phone calls. While we hope that we can resolve these procedural issues informally and avoid burdening the court with unnecessary motion practice, we are prepared to file that petition in the next two weeks if your clients will not agree voluntarily to comply with their contractual obligations.

As you know, federal courts exercising diversity jurisdiction must apply the substantive

law of the state in which they are located. Procedural issues, however, are governed by federal law. Erie Railroad Co. v. Tompkins (1938) 304 U.S. 64, 78; Hyan v. Hummer (9th Cir. 2016) 825 F.3d 1043, 1046.

Your clients are sophisticated real estate investors who have participated in various

Concierge auctions in the past and have even purchased three separate properties through auctions conducted by Concierge. In each case, your clients agreed to be bound by Concierge’s Auction Bidder Registration Terms and Conditions (the “Bidder Terms”). The Bidder Terms, which you conveniently fail to attach to your clients’ complaint or even mention, contain various important provisions, including:

“The parties agree to submit all controversies, disputes, claims and matters of difference arising out of or relating to these Terms & Conditions, including but not limited to its enforcement, scope and/or interpretation, exclusively to


Mr. Preis November 16, 2017 Page 2

arbitration in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association from time to time in effect … By bidding at an auction, whether present in person, or by agent, by proxy, by written bid, telephone bid, internet bid, or other means, the Bidder shall be deemed to consent to the jurisdiction of the state and federal courts located in the County of New York, State of New York (and of the appropriate appellate courts therefrom) in any such action or proceeding (including an action to compel arbitration) and waives any objection to venue. Process in any action or proceeding may be served personally or by registered mail anywhere in the world. In the event of any such arbitration or any permitted court action, the prevailing party shall be entitled to reimbursement from the non-prevailing party of all reasonable attorney’s fees and costs/expenses of the prevailing party and any award of the arbitrator(s) or court will include costs and reasonable attorneys’ fees to the prevailing party. If any Party files a court action arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, to compel or stay arbitration, or to confirm, vacate or modify an arbitration award (except for a non-contested application to confirm), or to seek payment of any attorneys' fees and/or costs awarded by the arbitrator(s) but not paid by the non-prevailing party in the arbitration, or in the event any Party seeks enforcement of any arbitration award or judgment arising out of an arbitration award, reasonable attorney’s fees and other costs incurred by the prevailing Party in such court action or in connection with such judgment enforcement shall be reimbursed by the non-prevailing Party. THE PARTIES UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, AND THE RIGHT TO A JURY TRIAL, BUT THEY GIVE UP THOSE RIGHTS VOLUNTARILY AND AGREE TO RESOLVE ANY AND ALL GRIEVANCES BY ARBITRATION.” [Emphasis added.] Your complaint deliberately fails to attach this key agreement. However, where the

complaint references key documents that are not attached to the complaint, defendant may submit those documents for the court’s consideration. Knievel v. ESPN (9th Cir. 2005) 393 F.3d 1068, 1076-77. This doctrine prevents “a plaintiff with a legally deficient claim [from surviving] a motion to dismiss simply by failing to attach a dispositive document.” Pension Benefit Guar. Corp. v. White Consolidated Indus., Inc. (3d Cir. 1993) 998 F.2d 1192, 1196. Indeed, your clients clearly recognized their obligation to arbitrate their claims in New York, because they previously demanded arbitration in New York on or about October 6, 2017, but then later withdrew that arbitration demand without explanation. In addition, your clients instructed Concierge to initiate another pending arbitration in New York against the seller of the Property involved in this dispute. Thus, the instant California civil action is clearly frivolous and should be dismissed in favor of arbitration. The Federal Arbitration Act (FAA) provides that a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising … shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2 (emphasis


Mr. Preis November 16, 2017 Page 3 added); AT & T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339. The FAA establishes federal policy favoring arbitration of commercial disputes and federal courts are required to rigorously enforce the parties' agreement to arbitrate. AT&T Mobility LLC v. Concepcion, 563 U.S. at 345-347. Importantly, the FAA includes no exceptions for any particular type of claim. Arbitration provisions in any contract affecting commerce must be enforced without regard to the nature of the claim or dispute. Marmet Health Care Ctr., Inc. v. Brown (2012) 132 S. Ct. 1201, 1203 (per curiam). For example, California case law precluding arbitration of “public injunctive relief” under the state's unfair competition and consumer remedy laws is displaced by the FAA. Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 935. The FAA provides two methods for enforcing arbitration: (1) an order compelling arbitration of a dispute; and (2) a stay of pending litigation raising a dispute subject to arbitration. 9 U.S.C. §§ 3, 4. In deciding the petition the District Court may only inquire as to whether: (1) there is an agreement to arbitrate; (2) there are arbitrable claims; and (3) there has been a waiver of the right to arbitrate by the moving party or other defense to arbitration. Daisy Mfg. Co., Inc. v. NCR Corp. (8th Cir. 1994) 29 F.3d 389, 392; see Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130. Parties who agree to arbitrate in a particular jurisdiction are held to consent both to personal jurisdiction and venue of the courts within that jurisdiction. Doctor's Assocs., Inc. v. Stuart (2nd Cir. 1996) 85 F.3d 975, 983. If the court orders arbitration, the FAA provides that arbitration must proceed “in accordance with the terms of the agreement” and take place “within the district in which the petition for an order directing such arbitration is filed.” 9 U.S.C. § 4; see Sterling Fin'l Inv. Group, Inc. v. Hammer (11th Cir. 2004) 393 F.3d 1223, 1225.

Here, the parties clearly entered into an arbitration agreement and the subject action falls

within the scope of that very broad arbitration provision. Concierge has not waived its rights to arbitrate. Thus, defendants’ petition will be granted, and they will be entitled to reimbursement of their attorney’s fees and costs as the prevailing party.

Accordingly, please confirm immediately that your clients will agree to dismiss their

California federal action in favor of New York arbitration. If they will not agree, we will proceed to file a petition to compel arbitration and seek attorney’s fees and costs in connection with that successful petition. If we do not hear from you before the close of business on Monday, November 20, 2017, we will assume that your clients will not comply.


Mr. Preis November 16, 2017 Page 4

If you wish to discuss these matters, please feel free to contact me at your earliest opportunity.

Sincerely,

CAPOBIANCO LAW OFFICES, P.C.

By: Anthony Capobianco

AC/df cc: Robert S. Wolf, Esq. Chad Roffers


Exhibit 6


COMMERCIAL RULESRules Amended and Effective October 1, 2013. Fee Schedule Amended and Effective October 1, 2017. 1

CommercialIncluding Procedures for Large, Complex Commercial Disputes

Arbitration Rules and Mediation Procedures

Rules Amended and Effective October 1, 2013Fee Schedule Amended and Effective October 1, 2017

Available online at adr.org/commercial


RULES AND MEDIATION PROCEDURES American Arbitration Association2

States: Delaware, District of Columbia,Maryland, New Jersey, Pennsylvania, VirginiaP. Jean Baker, Esq.Vice PresidentPhone: 202.223.7093Email: [email protected]

States: Oklahoma, TexasAndrew BartonVice PresidentPhone: 210.998.5750Email: [email protected]

States: Alabama, Georgia John M. BishopVice PresidentPhone: 404.320.5150Email: [email protected]

States: City of Houston, Louisiana, MississippiIngeuneal C. Gray, Esq.Vice PresidentPhone: 832.308.7893Email: [email protected]

States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VermontKaren JalkutVice PresidentPhone: 617.695.6062Email: [email protected]

States: Alaska, California, Hawaii, Oregon,WashingtonSerena K. Lee, Esq.Vice PresidentPhone: 415.671.4053Email: [email protected]

States: Indiana, Kentucky, North Carolina, Ohio, South Carolina, Tennessee, West VirginiaMichelle M. SkipperVice PresidentPhone: 704.643.8605Email: [email protected]

States: Florida Rebecca Storrow, Ph.D.Vice PresidentPhone: 954.372.4341Email: [email protected]

States: Arizona, Colorado, Kansas, Idaho, Montana, Nebraska, Nevada, New Mexico, Utah, WyomingLance K. TanakaVice PresidentPhone: 303.831.0824Email: [email protected]

States: Arkansas, Illinois, Iowa, Michigan,Minnesota, Missouri, North Dakota,South Dakota, Wisconsin A. Kelly Turner, Esq.Vice PresidentPhone: 312.361.1116Email: [email protected]

States: New YorkJeffrey T. Zaino, Esq.Vice PresidentPhone: 212.484.3224Email: [email protected]

Regional Vice Presidents

Jeffrey GarciaVice PresidentPhone: 559.490.1860Email: [email protected] cases in: AK, AZ, AR, CA, CO, HI, ID, IL, IA, KS, LA, MN, MS, MO, MT, NE, NV, NM, ND, OK, OR, SD, TX, UT, WA, WI, WY

John M. BishopVice PresidentPhone: 404.320.5150Email: [email protected] cases in: AL, DC, FL, GA, IN, KY, MD, NC, OH, SC, TN, VA

Yvonne BagliniAssistant Vice PresidentPhone: 866.293.4053Email: [email protected] cases in: CT, DE, MA, ME, MI, NH, NJ, NY, PA, RI, VT, WV

Case Management Vice Presidents and Assistant Vice Presidents







Table of ContentsImportant Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Standard Arbitration Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Large, Complex Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Commercial Arbitration Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

R-1. Agreement of Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

R-2. AAA and Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

R-3. National Roster of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

R-4. Filing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

R-5. Answers and Counterclaims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

R-6. Changes of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

R-7. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

R-8. Interpretation and Application of Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

R-9. Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

R-10. Administrative Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

R-11. Fixing of Locale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

R-12. Appointment from National Roster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

R-13. Direct Appointment by a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

R-14. Appointment of Chairperson by Party-Appointed Arbitrators or Parties . . . . . . . .16

R-15. Nationality of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

R-16. Number of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

R-17. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

R-18. Disqualification of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

R-19. Communication with Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

R-20. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

R-21. Preliminary Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

R-22. Pre-Hearing Exchange and Production of Information . . . . . . . . . . . . . . . . . . . . . .19

R-23. Enforcement Powers of the Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

R-24. Date, Time, and Place of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

R-25. Attendance at Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

R-26. Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

R-27. Oaths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21



R-28. Stenographic Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

R-29. Interpreters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

R-30. Postponements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

R-31. Arbitration in the Absence of a Party or Representative . . . . . . . . . . . . . . . . . . . . .22

R-32. Conduct of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

R-33. Dispositive Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

R-34. Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

R-35. Evidence by Written Statements and Post-Hearing Filing of Documents or Other Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

R-36. Inspection or Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

R-37. Interim Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

R-38. Emergency Measures of Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

R-39. Closing of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

R-40. Reopening of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

R-41. Waiver of Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

R-42. Extensions of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

R-43. Serving of Notice and Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

R-44. Majority Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

R-45. Time of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

R-46. Form of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

R-47. Scope of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

R-48. Award Upon Settlement—Consent Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

R-49. Delivery of Award to Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

R-50. Modification of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

R-51. Release of Documents for Judicial Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . .29

R-52. Applications to Court and Exclusion of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

R-53. Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

R-54. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

R-55. Neutral Arbitrator’s Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

R-56. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

R-57. Remedies for Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30

R-58. Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31



Preliminary Hearing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

P-1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

P-2. Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

Expedited Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

E-1. Limitation on Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

E-2. Changes of Claim or Counterclaim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

E-3. Serving of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

E-4. Appointment and Qualifications of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

E-5. Exchange of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

E-6. Proceedings on Documents and Procedures for the Resolution of Disputes Through Document Submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

E-7. Date, Time, and Place of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

E-8. The Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

E-9. Time of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

E-10. Arbitrator’s Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

Procedures for Large, Complex Commercial Disputes . . . . . . . . . . . . . . . . . . . . . . . .37

L-1. Administrative Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

L-2. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

L-3. Management of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

Administrative Fee Schedules (Standard and Flexible Fees) . . . . . . . . . . . . . . . . . . .38

Commercial Mediation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

M-1. Agreement of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

M-2. Initiation of Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

M-3. Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

M-4. Appointment of the Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

M-5. Mediator’s Impartiality and Duty to Disclose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

M-6. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

M-7. Duties and Responsibilities of the Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

M-8. Responsibilities of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

M-9. Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

M-10. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

M-11. No Stenographic Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43



M-12. Termination of Mediation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

M-13. Exclusion of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

M-14. Interpretation and Application of Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

M-15. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

M-16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

M-17. Cost of the Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44



Important Notice

These rules and any amendment of them shall apply in the form in effect at the time the administrative filing requirements are met for a demand for arbitration or submission agreement received by the AAA®. To ensure that you have the most current information, see our web site at www.adr.org.

Introduction

Each year, many millions of business transactions take place. Occasionally, disagreements develop over these business transactions. Many of these disputes are resolved by arbitration, the voluntary submission of a dispute to an impartial person or persons for final and binding determination. Arbitration has proven to be an effective way to resolve these disputes privately, promptly, and economically.

The American Arbitration Association® (AAA), a not-for-profit, public service organization, offers a broad range of dispute resolution services to business executives, attorneys, individuals, trade associations, unions, management, consumers, families, communities, and all levels of government. Services are available through AAA headquarters in New York and through offices located in major cities throughout the United States. Hearings may be held at locations convenient for the parties and are not limited to cities with AAA offices. In addition, the AAA serves as a center for education and training, issues specialized publications, and conducts research on various forms of alternative dispute resolution.

Commercial Arbitration Rulesand Mediation Procedures(Including Procedures for Large, Complex Commercial Disputes)



Standard Arbitration Clause

The parties can provide for arbitration of future disputes by inserting the following clause into their contracts:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

Arbitration of existing disputes may be accomplished by use of the following:

We, the undersigned parties, hereby agree to submit to arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules the following Controversy: (describe briefly). We further agree that the above controversy be submitted to (one) (three) arbitrator(s). We further agree that we will faithfully observe this agreement and the rules, that we will abide by and perform any award rendered by the arbitrator(s), and that a judgment of any court having jurisdiction may be entered on the award.

The services of the AAA are generally concluded with the transmittal of the award. Although there is voluntary compliance with the majority of awards, judgment on the award can be entered in a court having appropriate jurisdiction if necessary.

Administrative Fees

The AAA charges a filing fee based on the amount of the claim or counterclaim. This fee information, which is included with these rules, allows the parties to exercise control over their administrative fees. The fees cover AAA administrative services; they do not cover arbitrator compensation or expenses, if any, reporting services, or any post-award charges incurred by the parties in enforcing the award.

Mediation

Subject to the right of any party to opt out, in cases where a claim or counterclaim exceeds $75,000, the rules provide that the parties shall mediate their dispute upon the administration of the arbitration or at any time when the arbitration is pending. In mediation, the neutral mediator assists the parties in



reaching a settlement but does not have the authority to make a binding decision or award. Mediation is administered by the AAA in accordance with its Commercial Mediation Procedures. There is no additional filing fee where parties to a pending arbitration attempt to mediate their dispute under the AAA’s auspices.

Although these rules include a mediation procedure that will apply to many cases, parties may still want to incorporate mediation into their contractual dispute settlement process. Parties can do so by inserting the following mediation clause into their contract in conjunction with a standard arbitration provision:

If a dispute arises out of or relates to this contract, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure.

If the parties want to use a mediator to resolve an existing dispute, they can en-ter into the following submission agreement:

The parties hereby submit the following dispute to mediation administered by the American Arbitration Association under its Commercial Mediation Procedures. (The clause may also provide for the qualifications of the mediator(s), method of payment, locale of meetings, and any other item of concern to the parties.)

Large, Complex Cases

Unless the parties agree otherwise, the procedures for Large, Complex Commercial Disputes, which appear in this pamphlet, will be applied to all cases administered by the AAA under the Commercial Arbitration Rules in which the disclosed claim or counterclaim of any party is at least $500,000 exclusive of claimed interest, arbitration fees and costs. The key features of these procedures include:

> A highly qualified, trained Roster of Neutrals;

> A mandatory preliminary hearing with the arbitrators, which may be conducted by teleconference;

> Broad arbitrator authority to order and control the exchange of information, including depositions;

> A presumption that hearings will proceed on a consecutive or block basis.



Commercial Arbitration Rules

R-1. Agreement of Parties*

(a) The parties shall be deemed to have made these rules a part of their arbitration agreement whenever they have provided for arbitration by the American Arbitration Association (hereinafter AAA) under its Commercial Arbitration Rules or for arbitration by the AAA of a domestic commercial dispute without specifying particular rules. These rules and any amendment of them shall apply in the form in effect at the time the administrative requirements are met for a Demand for Arbitration or Submission Agreement received by the AAA. Any disputes regarding which AAA rules shall apply shall be decided by the AAA. The parties, by written agreement, may vary the procedures set forth in these rules. After appointment of the arbitrator, such modifications may be made only with the consent of the arbitrator.

(b) Unless the parties or the AAA determines otherwise, the Expedited Procedures shall apply in any case in which no disclosed claim or counterclaim exceeds $75,000, exclusive of interest, attorneys’ fees, and arbitration fees and costs. Parties may also agree to use these procedures in larger cases. Unless the parties agree otherwise, these procedures will not apply in cases involving more than two parties. The Expedited Procedures shall be applied as described in Sections E-1 through E-10 of these rules, in addition to any other portion of these rules that is not in conflict with the Expedited Procedures.

(c) Unless the parties agree otherwise, the Procedures for Large, Complex Commercial Disputes shall apply to all cases in which the disclosed claim or counterclaim of any party is at least $500,000 or more, exclusive of claimed interest, attorneys’ fees, arbitration fees and costs. Parties may also agree to use the procedures in cases involving claims or counterclaims under $500,000, or in nonmonetary cases. The Procedures for Large, Complex Commercial Disputes shall be applied as described in Sections L-1 through L-3 of these rules, in addition to any other portion of these rules that is not in conflict with the Procedures for Large, Complex Commercial Disputes.

(d) Parties may, by agreement, apply the Expedited Procedures, the Procedures for Large, Complex Commercial Disputes, or the Procedures for the Resolution of Disputes through Document Submission (Rule E-6) to any dispute.

(e) All other cases shall be administered in accordance with Sections R-1 through R-58 of these rules.

* Beginning October 1, 2017, AAA will apply the Employment Fee Schedule to any dispute between an individual employee or an independent contractor (working or performing as an individual and not incorporated) and a business or organization and the dispute involves work or work-related claims, including any statutory claims and including work-related claims under independent contractor agreements. A dispute arising out of an employment plan will be administered under the AAA’s Employment Arbitration Rules and Mediation Procedures. A dispute arising out of a consumer arbitration agreement will be administered under the AAA’s Consumer Arbitration Rules.



R-2. AAA and Delegation of Duties

When parties agree to arbitrate under these rules, or when they provide for arbitration by the AAA and an arbitration is initiated under these rules, they thereby authorize the AAA to administer the arbitration. The authority and duties of the AAA are prescribed in the agreement of the parties and in these rules, and may be carried out through such of the AAA’s representatives as it may direct. The AAA may, in its discretion, assign the administration of an arbitration to any of its offices. Arbitrations administered under these rules shall only be administered by the AAA or by an individual or organization authorized by the AAA to do so.

R-3. National Roster of Arbitrators

The AAA shall establish and maintain a National Roster of Arbitrators (“National Roster”) and shall appoint arbitrators as provided in these rules. The term “arbitrator” in these rules refers to the arbitration panel, constituted for a particular case, whether composed of one or more arbitrators, or to an individual arbitrator, as the context requires.

R-4. Filing Requirements

(a) Arbitration under an arbitration provision in a contract shall be initiated by the initiating party (“claimant”) filing with the AAA a Demand for Arbitration, the administrative filing fee, and a copy of the applicable arbitration agreement from the parties’ contract which provides for arbitration.

(b) Arbitration pursuant to a court order shall be initiated by the initiating party filing with the AAA a Demand for Arbitration, the administrative filing fee, and a copy of any applicable arbitration agreement from the parties’ contract which provides for arbitration.

i. The filing party shall include a copy of the court order.

ii. The filing fee must be paid before a matter is considered properly filed. If the court order directs that a specific party is responsible for the filing fee, it is the responsibility of the filing party to either make such payment to the AAA and seek reimbursement as directed in the court order or to make other such arrangements so that the filing fee is submitted to the AAA with the Demand.

iii. The party filing the Demand with the AAA is the claimant and the opposing party is the respondent regardless of which party initiated the court action. Parties may request that the arbitrator alter the order of proceedings if necessary pursuant to R-32.

(c) It is the responsibility of the filing party to ensure that any conditions precedent to the filing of a case are met prior to filing for an arbitration, as well as any time requirements associated with the filing. Any dispute regarding whether a condition precedent has been met may be raised to the arbitrator for determination.



(d) Parties to any existing dispute who have not previously agreed to use these rules may commence an arbitration under these rules by filing a written submission agreement and the administrative filing fee. To the extent that the parties’ submission agreement contains any variances from these rules, such variances should be clearly stated in the Submission Agreement.

(e) Information to be included with any arbitration filing includes:

i. the name of each party;

ii. the address for each party, including telephone and fax numbers and e-mail addresses;

iii. if applicable, the names, addresses, telephone and fax numbers, and e-mail addresses of any known representative for each party;

iv. a statement setting forth the nature of the claim including the relief sought and the amount involved; and

v. the locale requested if the arbitration agreement does not specify one.

(f) The initiating party may file or submit a dispute to the AAA in the following manner:

i. through AAA WebFile, located at www.adr.org; or

ii. by filing the complete Demand or Submission with any AAA office, regardless of the intended locale of hearing.

(g) The filing party shall simultaneously provide a copy of the Demand and any supporting documents to the opposing party.

(h) The AAA shall provide notice to the parties (or their representatives if so named) of the receipt of a Demand or Submission when the administrative filing requirements have been satisfied. The date on which the filing requirements are satisfied shall establish the date of filing the dispute for administration. However, all disputes in connection with the AAA’s determination of the date of filing may be decided by the arbitrator.

(i) If the filing does not satisfy the filing requirements set forth above, the AAA shall acknowledge to all named parties receipt of the incomplete filing and inform the parties of the filing deficiencies. If the deficiencies are not cured by the date specified by the AAA, the filing may be returned to the initiating party.

R-5. Answers and Counterclaims

(a) A respondent may file an answering statement with the AAA within 14 calendar days after notice of the filing of the Demand is sent by the AAA. The respondent shall, at the time of any such filing, send a copy of any answering statement to the claimant and to all other parties to the arbitration. If no answering statement is filed within the stated time, the respondent will be deemed to deny the claim. Failure to file an answering statement shall not operate to delay the arbitration.



(b) A respondent may file a counterclaim at any time after notice of the filing of the Demand is sent by the AAA, subject to the limitations set forth in Rule R-6. The respondent shall send a copy of the counterclaim to the claimant and all other parties to the arbitration. If a counterclaim is asserted, it shall include a statement setting forth the nature of the counterclaim including the relief sought and the amount involved. The filing fee as specified in the applicable AAA Fee Schedule must be paid at the time of the filing of any counterclaim.

(c) If the respondent alleges that a different arbitration provision is controlling, the matter will be administered in accordance with the arbitration provision submitted by the initiating party subject to a final determination by the arbitrator.

(d) If the counterclaim does not meet the requirements for filing a claim and the deficiency is not cured by the date specified by the AAA, it may be returned to the filing party.

R-6. Changes of Claim

(a) A party may at any time prior to the close of the hearing or by the date established by the arbitrator increase or decrease the amount of its claim or counterclaim. Written notice of the change of claim amount must be provided to the AAA and all parties. If the change of claim amount results in an increase in administrative fee, the balance of the fee is due before the change of claim amount may be accepted by the arbitrator.

(b) Any new or different claim or counterclaim, as opposed to an increase or decrease in the amount of a pending claim or counterclaim, shall be made in writing and filed with the AAA, and a copy shall be provided to the other party, who shall have a period of 14 calendar days from the date of such transmittal within which to file an answer to the proposed change of claim or counterclaim with the AAA. After the arbitrator is appointed, however, no new or different claim may be submitted except with the arbitrator’s consent.

R-7. Jurisdiction

(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.

(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.

(c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.



R-8. Interpretation and Application of Rules

The arbitrator shall interpret and apply these rules insofar as they relate to the arbitrator’s powers and duties. When there is more than one arbitrator and a difference arises among them concerning the meaning or application of these rules, it shall be decided by a majority vote. If that is not possible, either an arbitrator or a party may refer the question to the AAA for final decision. All other rules shall be interpreted and applied by the AAA.

R-9. Mediation

In all cases where a claim or counterclaim exceeds $75,000, upon the AAA’s administration of the arbitration or at any time while the arbitration is pending, the parties shall mediate their dispute pursuant to the applicable provisions of the AAA’s Commercial Mediation Procedures, or as otherwise agreed by the parties. Absent an agreement of the parties to the contrary, the mediation shall take place concurrently with the arbitration and shall not serve to delay the arbitration proceedings. However, any party to an arbitration may unilaterally opt out of this rule upon notification to the AAA and the other parties to the arbitration. The parties shall confirm the completion of any mediation or any decision to opt out of this rule to the AAA. Unless agreed to by all parties and the mediator, the mediator shall not be appointed as an arbitrator to the case.

R-10. Administrative Conference

At the request of any party or upon the AAA’s own initiative, the AAA may conduct an administrative conference, in person or by telephone, with the parties and/or their representatives. The conference may address such issues as arbitrator selection, mediation of the dispute, potential exchange of information, a timetable for hearings, and any other administrative matters.

R-11. Fixing of Locale

The parties may mutually agree on the locale where the arbitration is to be held. Any disputes regarding the locale that are to be decided by the AAA must be submitted to the AAA and all other parties within 14 calendar days from the date of the AAA’s initiation of the case or the date established by the AAA. Disputes regarding locale shall be determined in the following manner:

(a) When the parties’ arbitration agreement is silent with respect to locale, and if the parties disagree as to the locale, the AAA may initially determine the place of



arbitration, subject to the power of the arbitrator after appointment, to make a final determination on the locale.

(b) When the parties’ arbitration agreement requires a specific locale, absent the parties’ agreement to change it, or a determination by the arbitrator upon appointment that applicable law requires a different locale, the locale shall be that specified in the arbitration agreement.

(c) If the reference to a locale in the arbitration agreement is ambiguous, and the parties are unable to agree to a specific locale, the AAA shall determine the locale, subject to the power of the arbitrator to finally determine the locale.

The arbitrator, at the arbitrator’s sole discretion, shall have the authority to conduct special hearings for document production purposes or otherwise at other locations if reasonably necessary and beneficial to the process.

R-12. Appointment from National Roster

If the parties have not appointed an arbitrator and have not provided any other method of appointment, the arbitrator shall be appointed in the following manner:

(a) The AAA shall send simultaneously to each party to the dispute an identical list of 10 (unless the AAA decides that a different number is appropriate) names of persons chosen from the National Roster. The parties are encouraged to agree to an arbitrator from the submitted list and to advise the AAA of their agreement.

(b) If the parties are unable to agree upon an arbitrator, each party to the dispute shall have 14 calendar days from the transmittal date in which to strike names objected to, number the remaining names in order of preference, and return the list to the AAA. The parties are not required to exchange selection lists. If a party does not return the list within the time specified, all persons named therein shall be deemed acceptable to that party. From among the persons who have been approved on both lists, and in accordance with the designated order of mutual preference, the AAA shall invite the acceptance of an arbitrator to serve. If the parties fail to agree on any of the persons named, or if acceptable arbitrators are unable to act, or if for any other reason the appointment cannot be made from the submitted lists, the AAA shall have the power to make the appointment from among other members of the National Roster without the submission of additional lists.

(c) Unless the parties agree otherwise, when there are two or more claimants or two or more respondents, the AAA may appoint all the arbitrators.



R-13. Direct Appointment by a Party

(a) If the agreement of the parties names an arbitrator or specifies a method of appointing an arbitrator, that designation or method shall be followed. The notice of appointment, with the name and address of the arbitrator, shall be filed with the AAA by the appointing party. Upon the request of any appointing party, the AAA shall submit a list of members of the National Roster from which the party may, if it so desires, make the appointment.

(b) Where the parties have agreed that each party is to name one arbitrator, the arbitrators so named must meet the standards of Section R-18 with respect to impartiality and independence unless the parties have specifically agreed pursuant to Section R-18(b) that the party-appointed arbitrators are to be non-neutral and need not meet those standards.

(c) If the agreement specifies a period of time within which an arbitrator shall be appointed and any party fails to make the appointment within that period, the AAA shall make the appointment.

(d) If no period of time is specified in the agreement, the AAA shall notify the party to make the appointment. If within 14 calendar days after such notice has been sent, an arbitrator has not been appointed by a party, the AAA shall make the appointment.

R-14. Appointment of Chairperson by Party-Appointed Arbitrators or Parties

(a) If, pursuant to Section R-13, either the parties have directly appointed arbitrators, or the arbitrators have been appointed by the AAA, and the parties have authorized them to appoint a chairperson within a specified time and no appointment is made within that time or any agreed extension, the AAA may appoint the chairperson.

(b) If no period of time is specified for appointment of the chairperson, and the party-appointed arbitrators or the parties do not make the appointment within 14 calendar days from the date of the appointment of the last party-appointed arbitrator, the AAA may appoint the chairperson.

(c) If the parties have agreed that their party-appointed arbitrators shall appoint the chairperson from the National Roster, the AAA shall furnish to the party-appointed arbitrators, in the manner provided in Section R-12, a list selected from the National Roster, and the appointment of the chairperson shall be made as provided in that Section.



R-15. Nationality of Arbitrator

Where the parties are nationals of different countries, the AAA, at the request of any party or on its own initiative, may appoint as arbitrator a national of a country other than that of any of the parties. The request must be made before the time set for the appointment of the arbitrator as agreed by the parties or set by these rules.

R-16. Number of Arbitrators

(a) If the arbitration agreement does not specify the number of arbitrators, the dispute shall be heard and determined by one arbitrator, unless the AAA, in its discretion, directs that three arbitrators be appointed. A party may request three arbitrators in the Demand or Answer, which request the AAA will consider in exercising its discretion regarding the number of arbitrators appointed to the dispute.

(b) Any request for a change in the number of arbitrators as a result of an increase or decrease in the amount of a claim or a new or different claim must be made to the AAA and other parties to the arbitration no later than seven calendar days after receipt of the R-6 required notice of change of claim amount. If the parties are unable to agree with respect to the request for a change in the number of arbitrators, the AAA shall make that determination.

R-17. Disclosure

(a) Any person appointed or to be appointed as an arbitrator, as well as the parties and their representatives, shall disclose to the AAA any circumstance likely to give rise to justifiable doubt as to the arbitrator’s impartiality or independence, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their representatives. Such obligation shall remain in effect throughout the arbitration. Failure on the part of a party or a representative to comply with the requirements of this rule may result in the waiver of the right to object to an arbitrator in accordance with Rule R-41.

(b) Upon receipt of such information from the arbitrator or another source, the AAA shall communicate the information to the parties and, if it deems it appropriate to do so, to the arbitrator and others.

(c) Disclosure of information pursuant to this Section R-17 is not an indication that the arbitrator considers that the disclosed circumstance is likely to affect impartiality or independence.



R-18. Disqualification of Arbitrator

(a) Any arbitrator shall be impartial and independent and shall perform his or her duties with diligence and in good faith, and shall be subject to disqualification for:

i. partiality or lack of independence,

ii. inability or refusal to perform his or her duties with diligence and in good faith, and

iii. any grounds for disqualification provided by applicable law.

(b) The parties may agree in writing, however, that arbitrators directly appointed by a party pursuant to Section R-13 shall be non-neutral, in which case such arbitrators need not be impartial or independent and shall not be subject to disqualification for partiality or lack of independence.

(c) Upon objection of a party to the continued service of an arbitrator, or on its own initiative, the AAA shall determine whether the arbitrator should be disqualified under the grounds set out above, and shall inform the parties of its decision, which decision shall be conclusive.

R-19. Communication with Arbitrator

(a) No party and no one acting on behalf of any party shall communicate ex parte with an arbitrator or a candidate for arbitrator concerning the arbitration, except that a party, or someone acting on behalf of a party, may communicate ex parte with a candidate for direct appointment pursuant to R-13 in order to advise the candidate of the general nature of the controversy and of the anticipated proceedings and to discuss the candidate’s qualifications, availability, or independence in relation to the parties or to discuss the suitability of candidates for selection as a third arbitrator where the parties or party-designated arbitrators are to participate in that selection.

(b) Section R-19(a) does not apply to arbitrators directly appointed by the parties who, pursuant to Section R-18(b), the parties have agreed in writing are non-neutral. Where the parties have so agreed under Section R-18(b), the AAA shall as an administrative practice suggest to the parties that they agree further that Section R-19(a) should nonetheless apply prospectively.

(c) In the course of administering an arbitration, the AAA may initiate communications with each party or anyone acting on behalf of the parties either jointly or individually.

(d) As set forth in R-43, unless otherwise instructed by the AAA or by the arbitrator, any documents submitted by any party or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.



R-20. Vacancies

(a) If for any reason an arbitrator is unable or unwilling to perform the duties of the office, the AAA may, on proof satisfactory to it, declare the office vacant. Vacancies shall be filled in accordance with the applicable provisions of these rules.

(b) In the event of a vacancy in a panel of neutral arbitrators after the hearings have commenced, the remaining arbitrator or arbitrators may continue with the hearing and determination of the controversy, unless the parties agree otherwise.

(c) In the event of the appointment of a substitute arbitrator, the panel of arbitrators shall determine in its sole discretion whether it is necessary to repeat all or part of any prior hearings.

R-21. Preliminary Hearing

(a) At the discretion of the arbitrator, and depending on the size and complexity of the arbitration, a preliminary hearing should be scheduled as soon as practicable after the arbitrator has been appointed. The parties should be invited to attend the preliminary hearing along with their representatives. The preliminary hearing may be conducted in person or by telephone.

(b) At the preliminary hearing, the parties and the arbitrator should be prepared to discuss and establish a procedure for the conduct of the arbitration that is appropriate to achieve a fair, efficient, and economical resolution of the dispute. Sections P-1 and P-2 of these rules address the issues to be considered at the preliminary hearing.

R-22. Pre-Hearing Exchange and Production of Information

(a) Authority of arbitrator. The arbitrator shall manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute, while at the same time promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.

(b) Documents. The arbitrator may, on application of a party or on the arbitrator’s own initiative:

i. require the parties to exchange documents in their possession or custody on which they intend to rely;

ii. require the parties to update their exchanges of the documents on which they intend to rely as such documents become known to them;

iii. require the parties, in response to reasonable document requests, to make available to the other party documents, in the responding party’s possession or custody, not otherwise readily available to the party seeking the documents, reasonably believed by the party seeking the documents to exist and to be relevant and material to the outcome of disputed issues; and



iv. require the parties, when documents to be exchanged or produced are maintained in electronic form, to make such documents available in the form most convenient and economical for the party in possession of such documents, unless the arbitrator determines that there is good cause for requiring the documents to be produced in a different form. The parties should attempt to agree in advance upon, and the arbitrator may determine, reasonable search parameters to balance the need for production of electronically stored documents relevant and material to the outcome of disputed issues against the cost of locating and producing them.

R-23. Enforcement Powers of the Arbitrator

The arbitrator shall have the authority to issue any orders necessary to enforce the provisions of rules R-21 and R-22 and to otherwise achieve a fair, efficient and economical resolution of the case, including, without limitation:

(a) conditioning any exchange or production of confidential documents and information, and the admission of confidential evidence at the hearing, on appropriate orders to preserve such confidentiality;

(b) imposing reasonable search parameters for electronic and other documents if the parties are unable to agree;

(c) allocating costs of producing documentation, including electronically stored documentation;

(d) in the case of willful non-compliance with any order issued by the arbitrator, drawing adverse inferences, excluding evidence and other submissions, and/or making special allocations of costs or an interim award of costs arising from such non-compliance; and

(e) issuing any other enforcement orders which the arbitrator is empowered to issue under applicable law.

R-24. Date, Time, and Place of Hearing

The arbitrator shall set the date, time, and place for each hearing. The parties shall respond to requests for hearing dates in a timely manner, be cooperative in scheduling the earliest practicable date, and adhere to the established hearing schedule. The AAA shall send a notice of hearing to the parties at least 10 calendar days in advance of the hearing date, unless otherwise agreed by the parties.



R-25. Attendance at Hearings

The arbitrator and the AAA shall maintain the privacy of the hearings unless the law provides to the contrary. Any person having a direct interest in the arbitration is entitled to attend hearings. The arbitrator shall otherwise have the power to require the exclusion of any witness, other than a party or other essential person, during the testimony of any other witness. It shall be discretionary with the arbitrator to determine the propriety of the attendance of any other person.

R-26. Representation

Any party may participate without representation (pro se), or by counsel or any other representative of the party’s choosing, unless such choice is prohibited by applicable law. A party intending to be so represented shall notify the other party and the AAA of the name, telephone number and address, and email address if available, of the representative at least seven calendar days prior to the date set for the hearing at which that person is first to appear. When such a representative initiates an arbitration or responds for a party, notice is deemed to have been given.

R-27. Oaths

Before proceeding with the first hearing, each arbitrator may take an oath of office and, if required by law, shall do so. The arbitrator may require witnesses to testify under oath administered by any duly qualified person and, if it is required by law or requested by any party, shall do so.

R-28. Stenographic Record

(a) Any party desiring a stenographic record shall make arrangements directly with a stenographer and shall notify the other parties of these arrangements at least three calendar days in advance of the hearing. The requesting party or parties shall pay the cost of the record.

(b) No other means of recording the proceedings will be permitted absent the agreement of the parties or per the direction of the arbitrator.

(c) If the transcript or any other recording is agreed by the parties or determined by the arbitrator to be the official record of the proceeding, it must be provided to the arbitrator and made available to the other parties for inspection, at a date, time, and place determined by the arbitrator.

(d) The arbitrator may resolve any disputes with regard to apportionment of the costs of the stenographic record or other recording.



R-29. Interpreters

Any party wishing an interpreter shall make all arrangements directly with the interpreter and shall assume the costs of the service.

R-30. Postponements

The arbitrator may postpone any hearing upon agreement of the parties, upon request of a party for good cause shown, or upon the arbitrator’s own initiative.

R-31. Arbitration in the Absence of a Party or Representative

Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or representative who, after due notice, fails to be present or fails to obtain a postponement. An award shall not be made solely on the default of a party. The arbitrator shall require the party who is present to submit such evidence as the arbitrator may require for the making of an award.

R-32. Conduct of Proceedings

(a) The claimant shall present evidence to support its claim. The respondent shall then present evidence to support its defense. Witnesses for each party shall also submit to questions from the arbitrator and the adverse party. The arbitrator has the discretion to vary this procedure, provided that the parties are treated with equality and that each party has the right to be heard and is given a fair opportunity to present its case.

(b) The arbitrator, exercising his or her discretion, shall conduct the proceedings with a view to expediting the resolution of the dispute and may direct the order of proof, bifurcate proceedings and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case.

(c) When deemed appropriate, the arbitrator may also allow for the presentation of evidence by alternative means including video conferencing, internet communication, telephonic conferences and means other than an in-person presentation. Such alternative means must afford a full opportunity for all parties to present any evidence that the arbitrator deems material and relevant to the resolution of the dispute and, when involving witnesses, provide an opportunity for cross-examination.

(d) The parties may agree to waive oral hearings in any case and may also agree to utilize the Procedures for Resolution of Disputes Through Document Submission, found in Rule E-6.



R-33. Dispositive Motions

The arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.

R-34. Evidence

(a) The parties may offer such evidence as is relevant and material to the dispute and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute. Conformity to legal rules of evidence shall not be necessary. All evidence shall be taken in the presence of all of the arbitrators and all of the parties, except where any of the parties is absent, in default, or has waived the right to be present.

(b) The arbitrator shall determine the admissibility, relevance, and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant.

(c) The arbitrator shall take into account applicable principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and client.

(d) An arbitrator or other person authorized by law to subpoena witnesses or documents may do so upon the request of any party or independently.

R-35. Evidence by Written Statements and Post-Hearing Filing of Documents or Other Evidence

(a) At a date agreed upon by the parties or ordered by the arbitrator, the parties shall give written notice for any witness or expert witness who has provided a written witness statement to appear in person at the arbitration hearing for examination. If such notice is given, and the witness fails to appear, the arbitrator may disregard the written witness statement and/or expert report of the witness or make such other order as the arbitrator may consider to be just and reasonable.

(b) If a witness whose testimony is represented by a party to be essential is unable or unwilling to testify at the hearing, either in person or through electronic or other means, either party may request that the arbitrator order the witness to appear in person for examination before the arbitrator at a time and location where the witness is willing and able to appear voluntarily or can legally be compelled to do so. Any such order may be conditioned upon payment by the requesting party of all reasonable costs associated with such examination.

(c) If the parties agree or the arbitrator directs that documents or other evidence be submitted to the arbitrator after the hearing, the documents or other evidence shall be filed with the AAA for transmission to the arbitrator. All parties shall be afforded an opportunity to examine and respond to such documents or other evidence.



R-36. Inspection or Investigation

An arbitrator finding it necessary to make an inspection or investigation in connection with the arbitration shall direct the AAA to so advise the parties. The arbitrator shall set the date and time and the AAA shall notify the parties. Any party who so desires may be present at such an inspection or investigation. In the event that one or all parties are not present at the inspection or investigation, the arbitrator shall make an oral or written report to the parties and afford them an opportunity to comment.

R-37. Interim Measures

(a) The arbitrator may take whatever interim measures he or she deems necessary, including injunctive relief and measures for the protection or conservation of property and disposition of perishable goods.

(b) Such interim measures may take the form of an interim award, and the arbitrator may require security for the costs of such measures.

(c) A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate.

R-38. Emergency Measures of Protection

(a) Unless the parties agree otherwise, the provisions of this rule shall apply to arbitrations conducted under arbitration clauses or agreements entered on or after October 1, 2013.

(b) A party in need of emergency relief prior to the constitution of the panel shall notify the AAA and all other parties in writing of the nature of the relief sought and the reasons why such relief is required on an emergency basis. The application shall also set forth the reasons why the party is entitled to such relief. Such notice may be given by facsimile or e-mail or other reliable means, but must include a statement certifying that all other parties have been notified or an explanation of the steps taken in good faith to notify other parties.

(c) Within one business day of receipt of notice as provided in section (b), the AAA shall appoint a single emergency arbitrator designated to rule on emergency applications. The emergency arbitrator shall immediately disclose any circumstance likely, on the basis of the facts disclosed on the application, to affect such arbitrator’s impartiality or independence. Any challenge to the appointment of the emergency arbitrator must be made within one business day of the communication by the AAA to the parties of the appointment of the emergency arbitrator and the circumstances disclosed.



(d) The emergency arbitrator shall as soon as possible, but in any event within two business days of appointment, establish a schedule for consideration of the application for emergency relief. Such a schedule shall provide a reasonable opportunity to all parties to be heard, but may provide for proceeding by telephone or video conference or on written submissions as alternatives to a formal hearing. The emergency arbitrator shall have the authority vested in the tribunal under Rule 7, including the authority to rule on her/his own jurisdiction, and shall resolve any disputes over the applicability of this Rule 38.

(e) If after consideration the emergency arbitrator is satisfied that the party seeking the emergency relief has shown that immediate and irreparable loss or damage shall result in the absence of emergency relief, and that such party is entitled to such relief, the emergency arbitrator may enter an interim order or award granting the relief and stating the reason therefore.

(f) Any application to modify an interim award of emergency relief must be based on changed circumstances and may be made to the emergency arbitrator until the panel is constituted; thereafter such a request shall be addressed to the panel. The emergency arbitrator shall have no further power to act after the panel is constituted unless the parties agree that the emergency arbitrator is named as a member of the panel.

(g) Any interim award of emergency relief may be conditioned on provision by the party seeking such relief for appropriate security.

(h) A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with this rule, the agreement to arbitrate or a waiver of the right to arbitrate. If the AAA is directed by a judicial authority to nominate a special master to consider and report on an application for emergency relief, the AAA shall proceed as provided in this rule and the references to the emergency arbitrator shall be read to mean the special master, except that the special master shall issue a report rather than an interim award.

(i) The costs associated with applications for emergency relief shall initially be apportioned by the emergency arbitrator or special master, subject to the power of the tribunal to determine finally the apportionment of such costs.

R-39. Closing of Hearing

(a) The arbitrator shall specifically inquire of all parties whether they have any further proofs to offer or witnesses to be heard. Upon receiving negative replies or if satisfied that the record is complete, the arbitrator shall declare the hearing closed.

(b) If documents or responses are to be filed as provided in Rule R-35, or if briefs are to be filed, the hearing shall be declared closed as of the final date set by the arbitrator for the receipt of briefs. If no documents, responses, or briefs are to be filed, the arbitrator shall declare the hearings closed as of the date of the last hearing (including telephonic hearings). If the case was heard without any oral hearings, the arbitrator shall close the hearings upon the due date established for receipt of the final submission.



(c) The time limit within which the arbitrator is required to make the award shall commence, in the absence of other agreements by the parties, upon the closing of the hearing. The AAA may extend the time limit for rendering of the award only in unusual and extreme circumstances.

R-40. Reopening of Hearing

The hearing may be reopened on the arbitrator’s initiative, or by the direction of the arbitrator upon application of a party, at any time before the award is made. If reopening the hearing would prevent the making of the award within the specific time agreed to by the parties in the arbitration agreement, the matter may not be reopened unless the parties agree to an extension of time. When no specific date is fixed by agreement of the parties , the arbitrator shall have 30 calendar days from the closing of the reopened hearing within which to make an award (14 calendar days if the case is governed by the Expedited Procedures).

R-41. Waiver of Rules

Any party who proceeds with the arbitration after knowledge that any provision or requirement of these rules has not been complied with and who fails to state an objection in writing shall be deemed to have waived the right to object.

R-42. Extensions of Time

The parties may modify any period of time by mutual agreement. The AAA or the arbitrator may for good cause extend any period of time established by these rules, except the time for making the award. The AAA shall notify the parties of any extension.

R-43. Serving of Notice and Communications

(a) Any papers, notices, or process necessary or proper for the initiation or continuation of an arbitration under these rules, for any court action in connection therewith, or for the entry of judgment on any award made under these rules may be served on a party by mail addressed to the party or its representative at the last known address or by personal service, in or outside the state where the arbitration is to be held, provided that reasonable opportunity to be heard with regard to the dispute is or has been granted to the party.

(b) The AAA, the arbitrator and the parties may also use overnight delivery or electronic facsimile transmission (fax), or electronic (e-mail) to give the notices required by these rules. Where all parties and the arbitrator agree, notices may be transmitted by e-mail or other methods of communication.



(c) Unless otherwise instructed by the AAA or by the arbitrator, any documents submitted by any party to the AAA or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.

(d) Unless otherwise instructed by the AAA or by the arbitrator, all written communications made by any party to the AAA or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.

(e) Failure to provide the other party with copies of communications made to the AAA or to the arbitrator may prevent the AAA or the arbitrator from acting on any requests or objections contained therein.

(f) The AAA may direct that any oral or written communications that are sent by a party or their representative shall be sent in a particular manner. The failure of a party or their representative to do so may result in the AAA’s refusal to consider the issue raised in the communication.

R-44. Majority Decision

(a) When the panel consists of more than one arbitrator, unless required by law or by the arbitration agreement or section (b) of this rule, a majority of the arbitrators must make all decisions.

(b) Where there is a panel of three arbitrators, absent an objection of a party or another member of the panel, the chairperson of the panel is authorized to resolve any disputes related to the exchange of information or procedural matters without the need to consult the full panel.

R-45. Time of Award

The award shall be made promptly by the arbitrator and, unless otherwise agreed by the parties or specified by law, no later than 30 calendar days from the date of closing the hearing, or, if oral hearings have been waived, from the due date set for receipt of the parties’ final statements and proofs.

R-46. Form of Award

(a) Any award shall be in writing and signed by a majority of the arbitrators. It shall be executed in the form and manner required by law.

(b) The arbitrator need not render a reasoned award unless the parties request such an award in writing prior to appointment of the arbitrator or unless the arbitrator determines that a reasoned award is appropriate.



R-47. Scope of Award

(a) The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract.

(b) In addition to a final award, the arbitrator may make other decisions, including interim, interlocutory, or partial rulings, orders, and awards. In any interim, interlocutory, or partial award, the arbitrator may assess and apportion the fees, expenses, and compensation related to such award as the arbitrator determines is appropriate.

(c) In the final award, the arbitrator shall assess the fees, expenses, and compensation provided in Sections R-53, R-54, and R-55. The arbitrator may apportion such fees, expenses, and compensation among the parties in such amounts as the arbitrator determines is appropriate.

(d) The award of the arbitrator(s) may include:

i. interest at such rate and from such date as the arbitrator(s) may deem appropriate; and

ii. an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.

R-48. Award Upon Settlement—Consent Award

(a) If the parties settle their dispute during the course of the arbitration and if the parties so request, the arbitrator may set forth the terms of the settlement in a “consent award.” A consent award must include an allocation of arbitration costs, including administrative fees and expenses as well as arbitrator fees and expenses.

(b) The consent award shall not be released to the parties until all administrative fees and all arbitrator compensation have been paid in full.

R-49. Delivery of Award to Parties

Parties shall accept as notice and delivery of the award the placing of the award or a true copy thereof in the mail addressed to the parties or their representatives at their last known addresses, personal or electronic service of the award, or the filing of the award in any other manner that is permitted by law.

R-50. Modification of Award

Within 20 calendar days after the transmittal of an award, any party, upon notice to the other parties, may request the arbitrator, through the AAA, to correct any clerical, typographical, or computational errors in the award. The arbitrator is not empowered to redetermine the merits of any claim already decided. The other



parties shall be given 10 calendar days to respond to the request. The arbitrator shall dispose of the request within 20 calendar days after transmittal by the AAA to the arbitrator of the request and any response thereto.

R-51. Release of Documents for Judicial Proceedings

The AAA shall, upon the written request of a party to the arbitration, furnish to the party, at its expense, copies or certified copies of any papers in the AAA’s possession that are not determined by the AAA to be privileged or confidential.

R-52. Applications to Court and Exclusion of Liability

(a) No judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the party’s right to arbitrate.

(b) Neither the AAA nor any arbitrator in a proceeding under these rules is a necessary or proper party in judicial proceedings relating to the arbitration.

(c) Parties to an arbitration under these rules shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.

(d) Parties to an arbitration under these rules shall be deemed to have consented that neither the AAA nor any arbitrator shall be liable to any party in any action for damages or injunctive relief for any act or omission in connection with any arbitration under these rules.

(e) Parties to an arbitration under these rules may not call the arbitrator, the AAA, or AAA employees as a witness in litigation or any other proceeding relating to the arbitration. The arbitrator, the AAA and AAA employees are not competent to testify as witnesses in any such proceeding.

R-53. Administrative Fees

As a not-for-profit organization, the AAA shall prescribe administrative fees to compensate it for the cost of providing administrative services. The fees in effect when the fee or charge is incurred shall be applicable. The filing fee shall be advanced by the party or parties making a claim or counterclaim, subject to final apportionment by the arbitrator in the award. The AAA may, in the event of extreme hardship on the part of any party, defer or reduce the administrative fees.

R-54. Expenses

The expenses of witnesses for either side shall be paid by the party producing such witnesses. All other expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives, and any witness and



the cost of any proof produced at the direct request of the arbitrator, shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties.

R-55. Neutral Arbitrator’s Compensation

(a) Arbitrators shall be compensated at a rate consistent with the arbitrator’s stated rate of compensation.

(b) If there is disagreement concerning the terms of compensation, an appropriate rate shall be established with the arbitrator by the AAA and confirmed to the parties.

(c) Any arrangement for the compensation of a neutral arbitrator shall be made through the AAA and not directly between the parties and the arbitrator.

R-56. Deposits

(a) The AAA may require the parties to deposit in advance of any hearings such sums of money as it deems necessary to cover the expense of the arbitration, including the arbitrator’s fee, if any, and shall render an accounting to the parties and return any unexpended balance at the conclusion of the case.

(b) Other than in cases where the arbitrator serves for a flat fee, deposit amounts requested will be based on estimates provided by the arbitrator. The arbitrator will determine the estimated amount of deposits using the information provided by the parties with respect to the complexity of each case.

(c) Upon the request of any party, the AAA shall request from the arbitrator an itemization or explanation for the arbitrator’s request for deposits.

R-57. Remedies for Nonpayment

If arbitrator compensation or administrative charges have not been paid in full, the AAA may so inform the parties in order that one of them may advance the required payment.

(a) Upon receipt of information from the AAA that payment for administrative charges or deposits for arbitrator compensation have not been paid in full, to the extent the law allows, a party may request that the arbitrator take specific measures relating to a party’s non-payment.

(b) Such measures may include, but are not limited to, limiting a party’s ability to assert or pursue their claim. In no event, however, shall a party be precluded from defending a claim or counterclaim.



(c) The arbitrator must provide the party opposing a request for such measures with the opportunity to respond prior to making any ruling regarding the same.

(d) In the event that the arbitrator grants any request for relief which limits any party’s participation in the arbitration, the arbitrator shall require the party who is making a claim and who has made appropriate payments to submit such evidence as the arbitrator may require for the making of an award.

(e) Upon receipt of information from the AAA that full payments have not been received, the arbitrator, on the arbitrator’s own initiative or at the request of the AAA or a party, may order the suspension of the arbitration. If no arbitrator has yet been appointed, the AAA may suspend the proceedings.

(f) If the arbitration has been suspended by either the AAA or the arbitrator and the parties have failed to make the full deposits requested within the time provided after the suspension, the arbitrator, or the AAA if an arbitrator has not been appointed, may terminate the proceedings.

R-58. Sanctions

(a) The arbitrator may, upon a party’s request, order appropriate sanctions where a party fails to comply with its obligations under these rules or with an order of the arbitrator. In the event that the arbitrator enters a sanction that limits any party’s participation in the arbitration or results in an adverse determination of an issue or issues, the arbitrator shall explain that order in writing and shall require the submission of evidence and legal argument prior to making of an award. The arbitrator may not enter a default award as a sanction.

(b) The arbitrator must provide a party that is subject to a sanction request with the opportunity to respond prior to making any determination regarding the sanctions application.



Preliminary Hearing Procedures

P-1. General

(a) In all but the simplest cases, holding a preliminary hearing as early in the process as possible will help the parties and the arbitrator organize the proceeding in a manner that will maximize efficiency and economy, and will provide each party a fair opportunity to present its case.

(b) Care must be taken to avoid importing procedures from court systems, as such procedures may not be appropriate to the conduct of arbitrations as an alternative form of dispute resolution that is designed to be simpler, less expensive and more expeditious.

P-2. Checklist

(a) The following checklist suggests subjects that the parties and the arbitrator should address at the preliminary hearing, in addition to any others that the parties or the arbitrator believe to be appropriate to the particular case. The items to be addressed in a particular case will depend on the size, subject matter, and complexity of the dispute, and are subject to the discretion of the arbitrator:

(i) the possibility of other non-adjudicative methods of dispute resolution, including mediation pursuant to R-9;

(ii) whether all necessary or appropriate parties are included in the arbitration;

(iii) whether a party will seek a more detailed statement of claims, counterclaims or defenses;

(iv) whether there are any anticipated amendments to the parties’ claims, counterclaims, or defenses;

(v) which

(a) arbitration rules;

(b) procedural law; and

(c) substantive law govern the arbitration;

(vi) whether there are any threshold or dispositive issues that can efficiently be decided without considering the entire case, including without limitation,

(a) any preconditions that must be satisfied before proceeding with the arbitration;

(b) whether any claim or counterclaim falls outside the arbitrator’s jurisdiction or is otherwise not arbitrable;

(c) consolidation of the claims or counterclaims with another arbitration; or

(d) bifurcation of the proceeding.



(vii) whether the parties will exchange documents, including electronically stored documents, on which they intend to rely in the arbitration, and/or make written requests for production of documents within defined parameters;

(viii) whether to establish any additional procedures to obtain information that is relevant and material to the outcome of disputed issues;

(ix) how costs of any searches for requested information or documents that would result in substantial costs should be borne;

(x) whether any measures are required to protect confidential information;

(xi) whether the parties intend to present evidence from expert witnesses, and if so, whether to establish a schedule for the parties to identify their experts and exchange expert reports;

(xii) whether, according to a schedule set by the arbitrator, the parties will

(a) identify all witnesses, the subject matter of their anticipated testimonies, exchange written witness statements, and determine whether written witness statements will replace direct testimony at the hearing;

(b) exchange and pre-mark documents that each party intends to submit; and

(c) exchange pre-hearing submissions, including exhibits;

(xiii) the date, time and place of the arbitration hearing;

(xiv) whether, at the arbitration hearing,

(a) testimony may be presented in person, in writing, by videoconference, via the internet, telephonically, or by other reasonable means;

(b) there will be a stenographic transcript or other record of the proceeding and, if so, who will make arrangements to provide it;

(xv) whether any procedure needs to be established for the issuance of subpoenas;

(xvi) the identification of any ongoing, related litigation or arbitration;

(xvii) whether post-hearing submissions will be filed;

(xviii) the form of the arbitration award; and

(xix) any other matter the arbitrator considers appropriate or a party wishes to raise.

(b) The arbitrator shall issue a written order memorializing decisions made and agreements reached during or following the preliminary hearing.



Expedited Procedures

E-1. Limitation on Extensions

Except in extraordinary circumstances, the AAA or the arbitrator may grant a party no more than one seven-day extension of time to respond to the Demand for Arbitration or counterclaim as provided in Section R-5.

E-2. Changes of Claim or Counterclaim

A claim or counterclaim may be increased in amount, or a new or different claim or counterclaim added, upon the agreement of the other party, or the consent of the arbitrator. After the arbitrator is appointed, however, no new or different claim or counterclaim may be submitted except with the arbitrator’s consent. If an increased claim or counterclaim exceeds $75,000, the case will be administered under the regular procedures unless all parties and the arbitrator agree that the case may continue to be processed under the Expedited Procedures.

E-3. Serving of Notices

In addition to notice provided by Section R-43, the parties shall also accept notice by telephone. Telephonic notices by the AAA shall subsequently be confirmed in writing to the parties. Should there be a failure to confirm in writing any such oral notice, the proceeding shall nevertheless be valid if notice has, in fact, been given by telephone.

E-4. Appointment and Qualifications of Arbitrator

(a) The AAA shall simultaneously submit to each party an identical list of five proposed arbitrators drawn from its National Roster from which one arbitrator shall be appointed.

(b) The parties are encouraged to agree to an arbitrator from this list and to advise the AAA of their agreement. If the parties are unable to agree upon an arbitrator, each party may strike two names from the list and return it to the AAA within seven days from the date of the AAA’s mailing to the parties. If for any reason the appointment of an arbitrator cannot be made from the list, the AAA may make the appointment from other members of the panel without the submission of additional lists.

(c) The parties will be given notice by the AAA of the appointment of the arbitrator, who shall be subject to disqualification for the reasons specified in Section R-18. The parties shall notify the AAA within seven calendar days of any objection to the arbitrator appointed. Any such objection shall be for cause and shall be confirmed in writing to the AAA with a copy to the other party or parties.



E-5. Exchange of Exhibits

At least two business days prior to the hearing, the parties shall exchange copies of all exhibits they intend to submit at the hearing. The arbitrator shall resolve disputes concerning the exchange of exhibits.

E-6. Proceedings on Documents and Procedures for the Resolution of Disputes Through Document Submission

Where no party’s claim exceeds $25,000, exclusive of interest, attorneys’ fees and arbitration costs, and other cases in which the parties agree, the dispute shall be resolved by submission of documents, unless any party requests an oral hearing, or the arbitrator determines that an oral hearing is necessary. Where cases are resolved by submission of documents, the following procedures may be utilized at the agreement of the parties or the discretion of the arbitrator:

(a) Within 14 calendar days of confirmation of the arbitrator’s appointment, the arbitrator may convene a preliminary management hearing, via conference call, video conference, or internet, to establish a fair and equitable procedure for the submission of documents, and, if the arbitrator deems appropriate, a schedule for one or more telephonic or electronic conferences.

(b) The arbitrator has the discretion to remove the case from the documents-only process if the arbitrator determines that an in-person hearing is necessary.

(c) If the parties agree to in-person hearings after a previous agreement to proceed under this rule, the arbitrator shall conduct such hearings. If a party seeks to have in-person hearings after agreeing to this rule, but there is not agreement among the parties to proceed with in-person hearings, the arbitrator shall resolve the issue after the parties have been given the opportunity to provide their respective positions on the issue.

(d) The arbitrator shall establish the date for either written submissions or a final telephonic or electronic conference. Such date shall operate to close the hearing and the time for the rendering of the award shall commence.

(e) Unless the parties have agreed to a form of award other than that set forth in rule R-46, when the parties have agreed to resolve their dispute by this rule, the arbitrator shall render the award within 14 calendar days from the date the hearing is closed.

(f) If the parties agree to a form of award other than that described in rule R-46, the arbitrator shall have 30 calendar days from the date the hearing is declared closed in which to render the award.

(g) The award is subject to all other provisions of the Regular Track of these rules which pertain to awards.



E-7. Date, Time, and Place of Hearing

In cases in which a hearing is to be held, the arbitrator shall set the date, time, and place of the hearing, to be scheduled to take place within 30 calendar days of confirmation of the arbitrator’s appointment. The AAA will notify the parties in advance of the hearing date.

E-8. The Hearing

(a) Generally, the hearing shall not exceed one day. Each party shall have equal opportunity to submit its proofs and complete its case. The arbitrator shall determine the order of the hearing, and may require further submission of documents within two business days after the hearing. For good cause shown, the arbitrator may schedule additional hearings within seven business days after the initial day of hearings.

(b) Generally, there will be no stenographic record. Any party desiring a stenographic record may arrange for one pursuant to the provisions of Section R-28.

E-9. Time of Award

Unless otherwise agreed by the parties, the award shall be rendered not later than 14 calendar days from the date of the closing of the hearing or, if oral hearings have been waived, from the due date established for the receipt of the parties’ final statements and proofs.

E-10. Arbitrator’s Compensation

Arbitrators will receive compensation at a rate to be suggested by the AAA regional office.



Procedures for Large, Complex Commercial Disputes

L-1. Administrative Conference

Prior to the dissemination of a list of potential arbitrators, the AAA shall, unless the parties agree otherwise, conduct an administrative conference with the parties and/or their attorneys or other representatives by conference call. The conference will take place within 14 calendar days after the commencement of the arbitration. In the event the parties are unable to agree on a mutually acceptable time for the conference, the AAA may contact the parties individually to discuss the issues contemplated herein. Such administrative conference shall be conducted for the following purposes and for such additional purposes as the parties or the AAA may deem appropriate:

(a) to obtain additional information about the nature and magnitude of the dispute and the anticipated length of hearing and scheduling;

(b) to discuss the views of the parties about the technical and other qualifications of the arbitrators;

(c) to obtain conflicts statements from the parties; and

(d) to consider, with the parties, whether mediation or other non-adjudicative methods of dispute resolution might be appropriate.

L-2. Arbitrators

(a) Large, complex commercial cases shall be heard and determined by either one or three arbitrators, as may be agreed upon by the parties. With the exception in paragraph (b) below, if the parties are unable to agree upon the number of arbitrators and a claim or counterclaim involves at least $1,000,000, then three arbitrator(s) shall hear and determine the case. If the parties are unable to agree on the number of arbitrators and each claim and counterclaim is less than $1,000,000, then one arbitrator shall hear and determine the case.

(b) In cases involving the financial hardship of a party or other circumstance, the AAA at its discretion may require that only one arbitrator hear and determine the case, irrespective of the size of the claim involved in the dispute.

(c) The AAA shall appoint arbitrator(s) as agreed by the parties. If they are unable to agree on a method of appointment, the AAA shall appoint arbitrators from the Large, Complex Commercial Case Panel, in the manner provided in the regular Commercial Arbitration Rules. Absent agreement of the parties, the arbitrator(s) shall not have served as the mediator in the mediation phase of the instant proceeding.



L-3. Management of Proceedings

(a) The arbitrator shall take such steps as deemed necessary or desirable to avoid delay and to achieve a fair, speedy and cost-effective resolution of a Large, Complex Commercial Dispute.

(b) As promptly as practicable after the selection of the arbitrator(s), a preliminary hearing shall be scheduled in accordance with sections P-1 and P-2 of these rules.

(c) The parties shall exchange copies of all exhibits they intend to submit at the hearing at least 10 calendar days prior to the hearing unless the arbitrator(s) determines otherwise.

(d) The parties and the arbitrator(s) shall address issues pertaining to the pre-hearing exchange and production of information in accordance with rule R-22 of the AAA Commercial Rules, and the arbitrator’s determinations on such issues shall be included within the Scheduling and Procedure Order.

(e) The arbitrator, or any single member of the arbitration tribunal, shall be authorized to resolve any disputes concerning the pre-hearing exchange and production of documents and information by any reasonable means within his discretion, including, without limitation, the issuance of orders set forth in rules R-22 and R-23 of the AAA Commercial Rules.

(f) In exceptional cases, at the discretion of the arbitrator, upon good cause shown and consistent with the expedited nature of arbitration, the arbitrator may order depositions to obtain the testimony of a person who may possess information determined by the arbitrator to be relevant and material to the outcome of the case. The arbitrator may allocate the cost of taking such a deposition.

(g) Generally, hearings will be scheduled on consecutive days or in blocks of consecutive days in order to maximize efficiency and minimize costs.

Administrative Fee Schedules (Standard and Flexible Fees)

FOR THE CURRENT ADMINISTRATIVE FEE SCHEDULE, PLEASE VISIT www.adr.org/feeschedule.



Commercial Mediation Procedures

M-1. Agreement of Parties

Whenever, by stipulation or in their contract, the parties have provided for mediation or conciliation of existing or future disputes under the auspices of the American Arbitration Association or under these procedures, the parties and their representatives, unless agreed otherwise in writing, shall be deemed to have made these procedural guidelines, as amended and in effect as of the date of filing of a request for mediation, a part of their agreement and designate the AAA as the administrator of their mediation.

The parties by mutual agreement may vary any part of these procedures including, but not limited to, agreeing to conduct the mediation via telephone or other electronic or technical means.

M-2. Initiation of Mediation

Any party or parties to a dispute may initiate mediation under the AAA’s auspices by making a request for mediation to any of the AAA’s regional offices or case management centers via telephone, email, regular mail or fax. Requests for mediation may also be filed online via WebFile at www.adr.org.

The party initiating the mediation shall simultaneously notify the other party or parties of the request. The initiating party shall provide the following information to the AAA and the other party or parties as applicable:

(i) A copy of the mediation provision of the parties’ contract or the parties’ stipulation to mediate.

(ii) The names, regular mail addresses, email addresses, and telephone numbers of all parties to the dispute and representatives, if any, in the mediation.

(iii) A brief statement of the nature of the dispute and the relief requested.

(iv) Any specific qualifications the mediator should possess.

M-3. Representation

Subject to any applicable law, any party may be represented by persons of the party’s choice. The names and addresses of such persons shall be communicated in writing to all parties and to the AAA.



M-4. Appointment of the Mediator

If the parties have not agreed to the appointment of a mediator and have not provided any other method of appointment, the mediator shall be appointed in the following manner:

(i) Upon receipt of a request for mediation, the AAA will send to each party a list of mediators from the AAA’s Panel of Mediators. The parties are encouraged to agree to a mediator from the submitted list and to advise the AAA of their agreement.

(ii) If the parties are unable to agree upon a mediator, each party shall strike unacceptable names from the list, number the remaining names in order of preference, and return the list to the AAA. If a party does not return the list within the time specified, all mediators on the list shall be deemed acceptable. From among the mediators who have been mutually approved by the parties, and in accordance with the designated order of mutual preference, the AAA shall invite a mediator to serve.

(iii) If the parties fail to agree on any of the mediators listed, or if acceptable mediators are unable to serve, or if for any other reason the appointment cannot be made from the submitted list, the AAA shall have the authority to make the appointment from among other members of the Panel of Mediators without the submission of additional lists.

M-5. Mediator’s Impartiality and Duty to Disclose

AAA mediators are required to abide by the Model Standards of Conduct for Mediators in effect at the time a mediator is appointed to a case. Where there is a conflict between the Model Standards and any provision of these Mediation Procedures, these Mediation Procedures shall govern. The Standards require mediators to (i) decline a mediation if the mediator cannot conduct it in an impartial manner, and (ii) disclose, as soon as practicable, all actual and potential conflicts of interest that are reasonably known to the mediator and could reasonably be seen as raising a question about the mediator’s impartiality.

Prior to accepting an appointment, AAA mediators are required to make a reasonable inquiry to determine whether there are any facts that a reasonable individual would consider likely to create a potential or actual conflict of interest for the mediator. AAA mediators are required to disclose any circumstance likely to create a presumption of bias or prevent a resolution of the parties’ dispute within the time-frame desired by the parties. Upon receipt of such disclosures, the AAA shall immediately communicate the disclosures to the parties for their comments.



The parties may, upon receiving disclosure of actual or potential conflicts of interest of the mediator, waive such conflicts and proceed with the mediation. In the event that a party disagrees as to whether the mediator shall serve, or in the event that the mediator’s conflict of interest might reasonably be viewed as undermining the integrity of the mediation, the mediator shall be replaced.

M-6. Vacancies

If any mediator shall become unwilling or unable to serve, the AAA will appoint another mediator, unless the parties agree otherwise, in accordance with section M-4.

M-7. Duties and Responsibilities of the Mediator

(i) The mediator shall conduct the mediation based on the principle of party self-determination. Self-determination is the act of coming to a voluntary, uncoerced decision in which each party makes free and informed choices as to process and outcome.

(ii) The mediator is authorized to conduct separate or ex parte meetings and other communications with the parties and/or their representatives, before, during, and after any scheduled mediation conference. Such communications may be conducted via telephone, in writing, via email, online, in person or otherwise.

(iii) The parties are encouraged to exchange all documents pertinent to the relief requested. The mediator may request the exchange of memoranda on issues, including the underlying interests and the history of the parties’ negotiations. Information that a party wishes to keep confidential may be sent to the mediator, as necessary, in a separate communication with the mediator.

(iv) The mediator does not have the authority to impose a settlement on the parties but will attempt to help them reach a satisfactory resolution of their dispute. Subject to the discretion of the mediator, the mediator may make oral or written recommendations for settlement to a party privately or, if the parties agree, to all parties jointly.

(v) In the event a complete settlement of all or some issues in dispute is not achieved within the scheduled mediation session(s), the mediator may continue to communicate with the parties, for a period of time, in an ongoing effort to facilitate a complete settlement.

(vi) The mediator is not a legal representative of any party and has no fiduciary duty to any party.



M-8. Responsibilities of the Parties

The parties shall ensure that appropriate representatives of each party, having authority to consummate a settlement, attend the mediation conference.

Prior to and during the scheduled mediation conference session(s) the parties and their representatives shall, as appropriate to each party’s circumstances, exercise their best efforts to prepare for and engage in a meaningful and productive mediation.

M-9. Privacy

Mediation sessions and related mediation communications are private proceedings. The parties and their representatives may attend mediation sessions. Other persons may attend only with the permission of the parties and with the consent of the mediator.

M-10. Confidentiality

Subject to applicable law or the parties’ agreement, confidential information disclosed to a mediator by the parties or by other participants (witnesses) in the course of the mediation shall not be divulged by the mediator. The mediator shall maintain the confidentiality of all information obtained in the mediation, and all records, reports, or other documents received by a mediator while serving in that capacity shall be confidential.

The mediator shall not be compelled to divulge such records or to testify in regard to the mediation in any adversary proceeding or judicial forum.

The parties shall maintain the confidentiality of the mediation and shall not rely on, or introduce as evidence in any arbitral, judicial, or other proceeding the following, unless agreed to by the parties or required by applicable law:

(i) Views expressed or suggestions made by a party or other participant with respect to a possible settlement of the dispute;

(ii) Admissions made by a party or other participant in the course of the mediation proceedings;

(iii) Proposals made or views expressed by the mediator; or

(iv) The fact that a party had or had not indicated willingness to accept a proposal for settlement made by the mediator.



M-11. No Stenographic Record

There shall be no stenographic record of the mediation process.

M-12. Termination of Mediation

The mediation shall be terminated:

(i) By the execution of a settlement agreement by the parties; or

(ii) By a written or verbal declaration of the mediator to the effect that further efforts at mediation would not contribute to a resolution of the parties’ dispute; or

(iii) By a written or verbal declaration of all parties to the effect that the mediation proceedings are terminated; or

(iv) When there has been no communication between the mediator and any party or party’s representative for 21 days following the conclusion of the mediation conference.

M-13. Exclusion of Liability

Neither the AAA nor any mediator is a necessary party in judicial proceedings relating to the mediation. Neither the AAA nor any mediator shall be liable to any party for any error, act or omission in connection with any mediation conducted under these procedures.

M-14. Interpretation and Application of Procedures

The mediator shall interpret and apply these procedures insofar as they relate to the mediator’s duties and responsibilities. All other procedures shall be interpreted and applied by the AAA.

M-15. Deposits

Unless otherwise directed by the mediator, the AAA will require the parties to deposit in advance of the mediation conference such sums of money as it, in consultation with the mediator, deems necessary to cover the costs and expenses of the mediation and shall render an accounting to the parties and return any unexpended balance at the conclusion of the mediation.



M-16. Expenses

All expenses of the mediation, including required traveling and other expenses or charges of the mediator, shall be borne equally by the parties unless they agree otherwise. The expenses of participants for either side shall be paid by the party requesting the attendance of such participants.

M-17. Cost of the Mediation

FOR THE CURRENT ADMINISTRATIVE FEE SCHEDULE, PLEASE VISIT www.adr.org/feeschedule.


© 2016 American Arbitration Association, Inc. All rights reserved. These rules are the copyrighted property of the

American Arbitration Association (AAA) and are intended to be used in conjunction with the AAA’s administrative services.

Any unauthorized use or modification of these rules may violate copyright laws and other applicable laws.

Please contact 800.778.7879 or [email protected] for additional information.


800.778.7879 | [email protected] | adr.org

States: Delaware, District of Columbia,Maryland, New Jersey, Pennsylvania, VirginiaP. Jean Baker, Esq.Vice PresidentPhone: 202.223.7093Email: [email protected]

States: Oklahoma, TexasAndrew BartonVice PresidentPhone: 210.998.5750Email: [email protected]

States: Alabama, Georgia John M. BishopVice PresidentPhone: 404.320.5150Email: [email protected]

States: City of Houston, Louisiana, MississippiIngeuneal C. Gray, Esq.Vice PresidentPhone: 832.308.7893Email: [email protected]

States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VermontKaren JalkutVice PresidentPhone: 617.695.6062Email: [email protected]

States: Alaska, California, Hawaii, Oregon,WashingtonSerena K. Lee, Esq.Vice PresidentPhone: 415.671.4053Email: [email protected]

States: Indiana, Kentucky, North Carolina, Ohio, South Carolina, Tennessee, West VirginiaMichelle M. SkipperVice PresidentPhone: 704.643.8605Email: [email protected]

States: Florida Rebecca Storrow, Ph.D.Vice PresidentPhone: 954.372.4341Email: [email protected]

States: Arizona, Colorado, Kansas, Idaho, Montana, Nebraska, Nevada, New Mexico, Utah, WyomingLance K. TanakaVice PresidentPhone: 303.831.0824Email: [email protected]

States: Arkansas, Illinois, Iowa, Michigan,Minnesota, Missouri, North Dakota,South Dakota, Wisconsin A. Kelly Turner, Esq.Vice PresidentPhone: 312.361.1116Email: [email protected]

States: New YorkJeffrey T. Zaino, Esq.Vice PresidentPhone: 212.484.3224Email: [email protected]

Regional Vice Presidents

Jeffrey GarciaVice PresidentPhone: 559.490.1860Email: [email protected] cases in: AK, AZ, AR, CA, CO, HI, ID, IL, IA, KS, LA, MN, MS, MO, MT, NE, NV, NM, ND, OK, OR, SD, TX, UT, WA, WI, WY

John M. BishopVice PresidentPhone: 404.320.5150Email: [email protected] cases in: AL, DC, FL, GA, IN, KY, MD, NC, OH, SC, TN, VA

Yvonne BagliniAssistant Vice PresidentPhone: 866.293.4053Email: [email protected] cases in: CT, DE, MA, ME, MI, NH, NJ, NY, PA, RI, VT, WV

Case Management Vice Presidents and Assistant Vice Presidents



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