[Home insulation] Jae and Lydia ran a home insulation company for several years. They, however, encountered a dispute regarding the allocation of profit and agreed to discontinue their business. They could not agree on a number of issues involving not only profits, but also winding up the business, disposing of equipment, and other matters. They agreed to hire an arbitrator to settle their disputes. Jae suggested that they use a local lawyer named Alan to arbitrate the matter, and Lydia agreed. Lydia had some medical problems and requested that the arbitration be postponed for a short time. Jae objected to her request. Alan would not agree to Lydia's request for a postponement, stating that any arbitration proceeding must be heard within 30 days and that the time period was nearly over. Alan conducted the arbitration hearing. He refused to hear any evidence from any witnesses, explaining that he only had the authority to hear testimony from Jae and Lydia. Therefore, Lydia was not able to present testimony of a property appraiser she had hired. Alan proceeded to rule in favor of Jae on all counts. Lydia was very discouraged and discussed the situation with her friend Mia. Mia said "My goodness! Didn't you know that Alan and Jae play golf together every week, that Jae is married to Alan's cousin, and that Jae has loaned money to Alan in the past?" Lydia immediately called Alan and asked him about his connection with Jae. Alan acknowledged those connections. He told Mia, however, that he was perfectly fair and that there was nothing she could do. The Federal Arbitration Act applies.
-Regarding Alan's refusal of a continuance based upon Lydia's medical problem, which of the following is true?
A) Alan's statement that a hearing must be held within 30 days was correct.
B) Alan was prohibited by law from granting a continuance over Jae's objection.
C) Alan was incorrect regarding the time in which a hearing must be held because under the Federal Arbitration Act, the applicable time period is 60 days.
D) Under the Federal Arbitration Act, an arbitration proceeding may not be postponed based upon illness.
E) Alan was probably wrong in refusing the continuance, and that could present a basis upon which to set aside his award.

Question

Quizplus · Accepted Answer

Alan's refusal to grant a continuance for Lydia's medical issues could be seen as unfair or prejudicial, which under the Federal Arbitration Act (or similar laws governing arbitration) could be grounds for challenging the validity of the arbitration award. Arbitrators generally have broad discretion in managing the proceedings, including granting continuances for reasonable causes such as illness.

[Home Insulation] Jae and Lydia Ran a Home Insulation Company