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Arbitrator Entering Default Judgment Cannot Award Unliquidated Damages Without a Hearing

Thursday, May, 24, 2012




“Although an arbitrator need not follow all the niceties observed in court proceedings, the arbitrator must grant the parties a fundamentally fair hearing.”  So said the Fourth District Court of Appeal in Talel Corp. v. Shimonovitch, 4D10-3886, 2012 WL 1108437 (Fla. 4th DCA 2012).  In Talel, the arbitrator entered a default against defendants who had violated multiple arbitration orders, and awarded $677 thousand on the plaintiff’s claim for unliquidated damages.  The trial court denied the defendants’ motion to vacate the arbitration award, and the defendants appealed.  The appellate court affirmed the trial court’s ruling that the arbitrator had the discretion to enter a default.  By refusing to hold a hearing on unliquidated damages, however, the arbitrator had “refused to hear evidence material to the controversy” and thereby “prejudiced substantially” the rights of the defendants.  The court remanded the case for the trial court to vacate the award and direct the arbitrator to hold a hearing on unliquidated damages.