Construction Defect Dispute Resolution
Six of Your Peers or an Experienced Judge: The Implications of Arbitration In Place of a Jury Trial
Michael Lowder
May 2, 2012
At the early stages of a construction defect lawsuit, a major issue is the forum to be used to resolve the dispute. The default option is a jury trial; an alternative is arbitration. Because this decision has advantages and disadvantages, it is best for homeowners, homeowners associations, and their attorneys to be well-informed regarding these options.
What is the standard method to formally resolve a construction defect case? The default method to resolve a legal dispute is a traditional jury trial in court. In construction defect cases in Colorado, these trials typically take place before a local district court judge sitting in the county where the defect-afflicted building is located. A jury of local citizens (in Colorado construction defect cases, six citizens) hears the testimony and evidence, weighs the credibility of witnesses, applies the law to the testimony and evidence, and makes the ultimate decision of liability.
What is an arbitration? An alternative to jury trial is arbitration, a private, binding means of alternative dispute resolution. With arbitration, the parties forgo a traditional jury trial before a jury in favor of resolving their dispute in front of a private “arbiter.” Numerous entities, often composed former and retired judges, provide arbitration services. All parties must voluntarily agree to arbitrate. Unfortunately, many consumers, by contract, unknowingly agree to arbitrate their future disputes, sometimes with a certain arbitration company.
Arbitration can mirror many of the aspects of a traditional jury trial. However, parties may also specify the governing law that the arbiter should apply, the arbiter’s powers to award certain types of damages, and the extent to which the arbiter should apply certain rules, such as the rules of evidence or civil procedure. The arbitration replaces the district court lawsuit and the arbiter serves in place of the jury. He or she weighs the credibility of witnesses, applies the law to the facts presented as evidence, and makes the ultimate decision of liability. Unless otherwise limited by the parties, the arbiter has the same powers as a district court judge. Arbiters’ decisions are typically final and not appealable to any court.
What are the advantages and disadvantages of arbitration? Traditionally, arbitration was viewed as a quicker, easier, cheaper, and less burdensome means to resolve the dispute. Arbitrations could be scheduled more quickly. Arbiters traditionally applied some of the stringent civil procedure and evidence rules more loosely, allowing quicker and cheaper resolution of disputes on those grounds. Arbitrations were originally intended to pair arbiters with the types of cases with which they have significant experience. Therefore, because the arbiter theoretically has experience in the relevant specific type of case, he or she can better understand the legal and factual issues. This experience is particularly helpful in construction defect cases, which often involve highly complex and complicated issues with numerous expert witnesses.
Nonetheless, modern arbitration is not the expedient and inexpensive dispute resolution mechanism that it once was. Rules that were once loosely applied in arbitrations are now frequently more strictly applied, and the disputes have become more contentious. Now, arbitrations can take as long as or longer to schedule and complete than a traditional jury trial. On the other hand, in some instances, arbitrations can still be less costly and quicker. Further, arbitrations can be particularly advantageous to the prevailing party, depending upon the language of the agreement to arbitrate. As mentioned above, parties often agree to arbitrate through their contract and these contractual arbitration provisions often include a “costs and fees clause.” Costs and fees clauses authorize the arbiter to award to the prevailing party their attorney’s fees and costs associated with preparing the lawsuit for arbitration. These costs and fees are typically unavailable in a traditional jury trial.
What are the advantages and disadvantages of a jury trial? As average citizens, many of whom are often homeowners, jurors are often more sympathetic to homeowners and homeowners associations facing serious problems because of deficient construction. As a result, if a plaintiff prevails, juries often award a greater amount than an arbiter would. Also, errors of the judge and jury can be appealed to a higher court if needed.
However, jury trials have a number of specific disadvantages. Jury trials are traditionally more contentious, longer, and more expensive. They often take longer to schedule. Rules of evidence and civil procedure are more stringently applied, and, consequently, longer and costlier disputes arise regarding those issues. Average jurors may not have sufficient experience or knowledge to adequately understand the complicated factual issues in a highly-complex construction defect case. Finally, each party typically must bear their own attorney’s fees and costs.