November 24, 2014

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November 21, 2014

North Carolina Court Of Appeals Reverses Order Denying Motion to Compel Arbitration

Generally speaking, the North Carolina Rules of Civil Procedure do not require trial courts to make findings of fact when disposing of motions.  However, in Cornelius v. Lipscomb, Judge Martha A. Geer, joined by Chief Judge John C. Martin and Judge Donna Stroud, explained that orders addressing motions to compel arbitration present an exception to this rule.

In reviewing an order denying a motion to compel arbitration, Judge Geer explained that "[t]his court has repeatedly held that 'an order denying a motion to compel arbitration must include findings of fact as to whether the parties had a valid agreement to arbitrate and, if so, whether the specific dispute falls within the substantive scope of that agreement.'"  A failure to include those findings will result, as it did in this case, in the Court of Appeals reversing the trial court's order and remanding the case for entry of an appropriate order.

Judge Geer's opinion also reminded trial courts that if they find "that the parties did enter into an arbitration agreement, the court must also address whether the Federal Arbitration Act ("FAA") or the North Carolina Revised Uniform Arbitration Act applies as to the agreement."

While the Court of Appeals' opinion is directed to the trial courts, as most practicing attorneys know, these types of orders are generally drafted by counsel for the parties and submitted to the trial court for the judge's signature. A proposed order on a motion to compel arbitration that does not contain the necessary findings of fact and conclusions of law is a sure way to spend a great deal of your time and your client's money on an appeal that is certain to result in the lower court's opinion being reversed.

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