E-Alert Case Updates

Arbitration Proper for Defendant Condo Association, But Not For Defendant Unit Owner

Jahanbein v. Ndidi Condominium Unit Owners Association, Inc.
Record No. CAB-5755-11 (District of Columbia Court of Appeals, February 27, 2014)
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Plaintiff Kamal Jahanbein, a unit owner and member of the Ndidi Condominium Unit Owners Association, Inc. (the Condo Association), sued the Condo Association for breach of fiduciary duty and sued Jamal Sahri, a fellow unit owner, for negligence, after the water pipes in Mr. Sahri’s unit burst and allegedly damaged Mr. Jahanbein’s unit. Both Defendants moved to compel arbitration pursuant to D.C. CODE § 16-4407(a), alleging that the trial court did not have subject matter jurisdiction because the Condo Association’s Bylaws, adopted under D.C. CODE § 42-1901.01, et seq., constituted an enforceable agreement that required alternative dispute resolution of Plaintiff’s claims. Plaintiff opposed the motions to compel, arguing (1) that his claims against Defendants were tort claims, not contract claims, and so the Bylaws were inapplicable; and (2) that with respect to the claim against the Defendant unit owner, the Bylaws did not create a contract between unit owners and the unit owner Defendant had no right to compel arbitration of the claim against him. The trial court granted the motions to compel arbitration, and Plaintiff appealed. The appellate court affirmed in part, and reversed in part, and remanded the case for further proceedings. The claim against the Condo Association was subject to arbitration, but the claim against the unit owner Defendant was not.

The appellate court agreed that the Bylaws constituted an enforceable agreement to arbitrate as between Plaintiff and the Condo Association. The Plaintiff’s particular claims against the Condo Association were also subject to arbitration under the terms and conditions of the Bylaws. Therefore, the trial court property granted the Condo Association’s motion to compel arbitration. Whether the Bylaws created an enforceable agreement to arbitrate as between the unit owners was less clear, however, according to the District of Columbia Court of Appeals.

The Bylaws were intended for the benefit of the Condo Association, and not a third-party unit owner, and so the unit owner Defendant could not enforce the arbitration provisions against the unit owner Plaintiff as a third party beneficiary to the Bylaws. The unit owners were also not direct parties to each other’s agreements with the Condo Association. While there was a presumption in favor of arbitration, in light of the ambiguities, that presumption only attached after a trial court determined that a valid agreement to arbitrate existed. No such valid agreement existed in this case as between the unit owner parties, according to the appellate court.

While upholding the trial court’s determination that Plaintiff’s claim against the Condo Association was properly dismissed because it was subject to arbitration, the appellate court held that the Condo Association Bylaws did not constitute an enforceable agreement to arbitrate the inter-unit owner dispute. As such, the appellate court reversed and remanded that aspect of the case for further proceedings.