Xavier v. Treasure Bay V.I. Corp.
USVI Supreme Court, 3/25/24
Judge Swan
Topics: Arbitration Agreement; Magistrates; Waiver
Quick Take: The plaintiff withdrew his objection to the defendant’s motion to compel arbitration. The arbitrator held for the defendant. Two years later, the plaintiff tried to challenge the magistrate’s ability to send the case to arbitration, but the magistrate did have that authority, and the lapse of two years was long past the 10-day window for challenging a magistrate’s ruling, so the plaintiff waived his challenge.
Full Take: Xavier sued Treasure Bay for negligence. Way back in 2009, he sat on a chair in Treasure Bay’s establishment, and it toppled over. He sustained injuries. Xavier was a member of a reward problem with Treasure Bay, and that program contained a mandatory binding arbitration clause for “disputes between you and us.” A “claim” was defined as anything related to the facilities and/or services. The arbitration was deemed to be binding except for an appeal under the Federal Arbitration Act, 9 U.S.C. § 1.
Suit was filed and answered in late 2009, the parties participated in in discovery, but then in April 2010, Treasure Bay moved to compel arbitration and stay the court proceedings. The case was referred to a magistrate to decide the arbitration issue. Xavier responded 14 months later, arguing that Treasure Bay waived its right to arbitration by not timely raising the issue. About six weeks later, Treasure Bay filed a reply that took the position that it did not find the arbitration agreement until a month before filing the motion.
The magistrate took another 11 months to rule. The magistrate sided with Treasure Bay, noting that they did not file the motion compel arbitration until six months into the case, but Xavier did not appear prejudiced because he did not respond for 14 months and very little discovery had happened in the case.
The parties proceeded to arbitration. It took two more years for that three-day arbitration to occur. (We’re up to October 2014 now, about 5 years post-accident). The arbitrator held for Treasure Bay.
Xavier than filed a motion in the Superior Court challenging the decision to compel arbitration (which had been decided two years earlier). Treasure Bay moved to strike the petition for review of the magistrate’s action, arguing that it was untimely. Xavier then filed a motion to vacate the arbitration award on the basis that it was wrong to send the case to arbitration. Briefs went back and forth, and the Superior Court judge kicked the issue up to the Appellate Division even though no one had appealed. The appellate division dismissed the petition for review and remanded the case back to the trial division. Nothing happened in 2017, 2018, and 2019. In 2020, the trial division entered an order denying the 2014 challenging the magistrate’s 2021 order compelling arbitration. The order then stated that because it was correct to send the case to arbitration and because arbitration resolved the case, the case was now closed. Xavier appealed in February 2020. Now, four years later, we get a decision in that appeal.
The 2020 judgment was a final appealable order. 4 V.I.C. § 123(b)(l) expressly denies magistrate Judges the authority to adjudicate
motion[s] for injunctive relief, for judgment on the pleadings, for summary judgment, for dismissing or quashing an indictment or information made by the defendant, suppression of evidence in a criminal case, dismissal or to permit maintenance of a class action, dismissal for failure to state a claim upon which relief may be granted, and to involuntarily dismiss an action
Xavier argues that staying the case and sending the case to arbitration was essentially a dismissal of the case or summary judgment. The Court disagreed, however, because there was no final exercise of judicial authority by the court until after the arbitration process is completed, at which time the court has the jurisdiction to affirm, modify, or vacate the arbitrator’s awards. When a magistrate judge refers a matter to arbitration that is governed by the FAA, the Superior Court never loses jurisdiction over the action as the decision of the arbitrator is subject to the review of the Superior Court. Sending the case to arbitration was not a ruling on the merits.
Xavier also waived his right to argue in court that Treasure Bay waived its right to arbitration because, while there is a 10-day window to object to a magistrate’s ruling, Xavier waited two years to file a motion challenging the magistrate’s order. A claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act.