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BMD Appellate Win Clarifies Waiver of Contractual Right to Arbitrate

Brennan, Manna & Diamond, LLC attorneys David M. Scott, Lucas K. Palmer, and Krista D. Warren prevailed before the United States Court of Appeals for the Sixth Circuit regarding if/when a party waives a contractual right to arbitrate. Borror Property Management, LLC v. Oro Karric North, LLC, No. 20-3146 (the “Decision”).

BMD clients Oro Karric North, LLC and its affiliates (collectively, “Oro”) entered into a property management agreement with Borror Property Management, LLC (“Borror”), in which Borror agreed to manage several apartment properties owned by Oro. The property management agreement stated that, “[i]f either party shall notify the other that any matter is to be determined by arbitration,” the parties would proceed to arbitration unless the matter could be resolved.

Oro came to believe that Borror breached the management agreement, so Oro sent various correspondence and demand letters to Borror prior to filing suit/arbitration (what Judge Readler, author of the Decision, describes as the “legal equivalent of a shot across the bow”). Oro went so far as to threaten litigation. Borror declined to compromise and instead filed suit against Oro in the United States District Court for the Southern District of Ohio. Oro promptly moved to compel arbitration, but the District Court denied, holding that Oro’s pre-suit threat to litigate constituted a waiver of Oro’s contractual right to require arbitration. Oro appealed.

On appeal, Borror argued that the District Court was correct in deeming Oro’s pre-litigation letters to constitute a waiver of its contractual right to arbitrate. But the Sixth Circuit Court of Appeals notes that strong public policy considerations favor arbitration, and “the exchange of letters between parties as a prelude to more formal dispute resolution is a time-honored tradition.” Further noting that Oro almost immediately moved to compel arbitration after the suit was filed, the Sixth Circuit holds that Borror was not prejudiced and sending a pre-suit “posturing” letter does not constitute a waiver.

Takeaway: This significant precedent has already been cited as authoritative in numerous decisions regarding if/when parties waive the right to arbitrate. Knowing how far one may push in negotiations can make the difference between resolution or impasse and help a party control its own destiny in a conflict scenario.

For any litigation or arbitration questions, please contact Litigation Member David Scott at dmscott@bmdllc.com.

El Contrato Escrito: La Herramienta Predilecta

No existe mejor herramienta a una disputa contractual que un documento firmado por las partes en el cual se expongan las obligaciones y acuerdos entre éstas.

New State Budget Institutes Licensure Requirement for Ohio’s Hospitals

On July 1, 2021, Governor Mike DeWine signed Ohio’s final budget codified at Ohio Revised Code 3722.01 et seq., which includes a new licensing requirement for Ohio’s hospitals. For years, Ohio was the only state in the country that did not license its hospitals. This approach will now be replaced with new, detailed requirements that will require careful review and compliance. Here are some of the highlights concerning these new changes:

Healthcare Provisions in the Ohio FY 22-23 Budget

Governor Mike DeWine signed Ohio’s Fiscal Year 2022-2023 budget bill (HB 110) into law on July 1, 2021. At almost 1,000 pages and 74.1 billion dollars, the budget lays out the State’s spending for the next two years. Below are a few highlighted provisions from the budget that will be important for the healthcare industry in Ohio

Interim Final Rule for Surprise Billing

In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.

President Biden Seeks to Limit Non-Compete Agreements

Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”