FIRST CIRCUIT ADDRESSES ARBITRATION AGREEMENT

by James R. Chastain, Jr.

On March 23, 2007, the Louisiana First Circuit addressed the validity of an arbitration agreement in Lafleur v. Law Offices of Anthony G. Buzbee, 2007 WL 858859 (La. App. 1st Cir. 2007). The opinion has not been released in permanent law reports and is still subject to revision or withdrawal.

The case arises out of a contract between Mr. Lafleur, a Louisiana resident, and his Texas attorneys, Jeffrey M. Stern and the firm of Stern, Miller, and Higdon. Mr. Lafleur retained the Stern defendants to pursue his maritime claim for personal injuries he sustained while traveling on a vessel in navigable waters off the coast of Louisiana. He executed an agreement with the Stern defendants which stated, "Any and all disputes, controversies, claims or demands arising out of or relating to this Agreement or any provisions hereof, the providing of services by the Stern defendants to Mr. Lafleur, or in any way relating to the relationship between the Stern defendants and Mr. Lafleur, whether in contract, tort or otherwise, at law or in equity, for damages or any other relief, made by or on behalf of Mr. Lafleur shall be resolved by binding arbitration pursuant to the Federal Arbitration Act in accordance with the Commercial Arbitration Rules then in effect with the American Arbitration Association." It also provided "the expense of any arbitration shall be a Case Advance pursuing the claims" and that "Mr. Lafleur understands and acknowledges that Mr. Lafleur is waiving all rights to a trial by jury or a judge."

 

Mr. Lafleur subsequently filed a civil action. In response thereto, the defendants filed an exception of prematurity and motion to stay proceedings and compel arbitration. The trial court denied the exception and motions finding the arbitration clause to be unenforceable.

The First Circuit affirmed that Louisiana law applied to the matter since it has the most significant relationship to the parties and subject matter. More importantly, the First Circuit agreed with the trial court’s determination that the arbitration clause was unduly burdensome. Although the Court recognized that under federal and state law the weight of the presumption in favor of arbitration is heavy, there was no error in the trial court’s conclusion that this provision was adhesionary due to the lack of mutuality and unconscionability. The contract attempted to solely bind Mr. Lafleur while allowing the attorneys to avail themselves of procedural and substantive law remedies. It also imposed the expense of any arbitration exclusively on Mr. Lafleur as a case advance repayable and reimbursable to the attorneys under paragraph 7 of the agreement regardless of the outcome of the arbitration proceedings.

The First Circuit concluded that it is unconscionable for an attorney to be allowed to draft a contract with an arbitration provision that unilaterally takes away the client’s right to a trial while allowing the attorney to pursue any and all remedies. The Court stated, "the lack of mutuality in the arbitration requirement, along with the obligation that the client alone is to bear the expense of the arbitration proceedings accentuated the burdensome and unconscionable elements in this arbitration provision that was drafted by the attorneys without any input from the client." The Court affirmed the trial court's judgment denying the Stern defendants' dilatory exception of prematurity and alternative motions to stay the proceedings and compel arbitration.