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COA extends judicial immunity to arbitrators

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The Indiana Court of Appeals affirmed the dismissal of a real estate broker’s action to vacate an arbitration award to another broker. In doing so, the appellate court extended judicial and quasi-judicial immunity to arbitrators and their sponsors.

Real estate broker Ron Droscha challenged the arbitration award of nearly $19,000 in favor of Scott Shepherd. The money was half of the brokers’ commission from a sale of commercial property in which Shepherd represented the seller and Droscha’s firm represented the buyer.

Originally the $37,000 in brokers’ commission was divided equally between the two companies, but Shepherd challenged the split, claiming he was entitled to the whole commission. The first arbitration panel awarded Shepherd nearly $10,000; that order was vacated, and an arbitration panel established by the Fort Wayne Association of Realtors awarded Shepherd the entire amount he wanted.

In Ron Droscha v. Scott Shepherd and Fort Wayne Area Association of Realtors, No. 52A02-1001-PL-26, Droscha filed suit against Shepherd and the association, arguing the proceedings didn’t follow the trial court instructions given when it vacated the original award granted by a different panel. The trial court granted the defendants’ motions to dismiss for failure to state a claim upon which relief could be granted.

The appellate court agreed with the association that the trial court properly dismissed Droscha’s action against it because it has arbitral immunity. Relying on Olson v. Nat. Ass’n of Sec. Dealers, 85 F.3d 381 (8th Cir. 1996), the judges decided to extend judicial and/or quasi-judicial immunity to arbitrators and their sponsors.

Droscha’s claim relates to the association’s appointment of a panel and the panel’s performance of its official decision-making function in addressing the fee dispute. That challenge is to the overall arbitration process and therefore is akin to judicial or quasi-judicial functions subject to immunity, wrote Judge Cale Bradford.  

The Court of Appeals also upheld the dismissal of claims against Shepherd, in which Droscha argued, among other things, that the panel didn’t constitute a representative peer panel. There’s no suggestion in the statutes cited by Droscha that noncompliance permits a court to vacate the arbitration award. The panel wasn’t a party to the action at the time of the trial court’s judgment, and Droscha failed to allege that the orders were introduced as an exhibit or otherwise used to inform the arbitration panel. The judges also didn’t find the panel committed misconduct that prejudiced Droscha’s rights to warrant judicial relief.
 

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  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

  4. I made the same argument before a commission of the Indiana Supreme Court and then to the fedeal district and federal appellate courts. Fell flat. So very glad to read that some judges still beleive that evidentiary foundations matter.

  5. KUDOS to the Indiana Supreme Court for realizing that some bureacracies need to go to the stake. Recall what RWR said: "No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!" NOW ... what next to this rare and inspiring chopping block? Well, the Commission on Gender and Race (but not religion!?!) is way overdue. And some other Board's could be cut with a positive for State and the reputation of the Indiana judiciary.

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