Tuesday, May 04, 2010, 11:46 AM

COA: Application for Appointment of Arbitrator Is An "Action" for Purposes of Determining Venue

Today the COA held that an Application for Appointment of Arbitrators is an "action" under the NC venue statute, and that consent to a certain venue for arbitration does not constitute consent to that same venue for all proceedings related to the arbitration. The case is Pay Tel Communications v. Caldwell Cty.

Paytel provided telecommunication/phone services to prisoners. It entered into an agreement with Caldwell County (the "County") to provide telecommunication/phone services to its prisoners. An original agreement and an extension of the agreement were each signed by a County Sheriff. The County cancelled the agreement extension, and Plaintiff claimed that the County was in breach. The County denied that the two sheriffs were its agents.

The agreement extension included an arbitration clause providing that disputes be resolved at the Private Adjudication Center, an organization affiliated with Duke Law School. It also provided that "Venue for such arbitration shall be Raleigh, North Carolina unless otherwise agreed by the parties." After the parties signed the agreement extension, the Adjudication Center ceased operating.

Paytel filed an Application for Appointment of Arbitrator (the "Application") in Wake County. The County claimed that Caldwell County was the appropriate venue, and Paytel claimed that Wake County was.

The COA first noted that the application filed by Paytel initiated an action under the NC Uniform Arbitration Act, similar to a civil complaint. Because the NCUAA does not contain a venue provision, the COA looked to N.C. Gen. Stat. § 1-77(2) to determine proper venue. That statute provides that an action against a public officer should be brought in the county in which the action arose. Paytel conceded that defendants were public officers and that the alleged breach of the extension occurred in Caldwell County, but claimed that the Application was not an "action" under the statute. The COA held that a civil action is “an ordinary proceeding in a court of justice, by which a party prosecutes another party for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment or prevention of a public offense," and that the Application fit this definition.

The COA further held that the provision of the extension stating that “Venue for such arbitration shall be Raleigh, North Carolina unless otherwise agreed by the parties" did not result in a waiver of venue by Defendants. The COA reasoned that consent to conduct arbitration in Wake County did not result in consent to venue for any judicial proceeding (such as an application for appointment of an arbitrator or a motion to compel arbitration), and Paytel provided no evidence that Defendants waived their right to venue. In fact, the COA noted, Defendants filed a motion to change venue contemporaneously with their answer to the Application, which preserved their right to contest venue.

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