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Bay Realty v. Executive Investments: Rhode Island Supreme Court Upholds Board's Arbitration Award

Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.

In 1982 the Rhode Island Supreme Court reviewed a trial court's decision to vacate a Board arbitration award. A broker from Executive Investments filed a Request for Arbitration with the Washington County Board of REALTORS® (Board). The arbitration was to settle a dispute which had developed with Bay Realty, whose principal was also a member of the Washington County Board, over the commission earned in connection with the sale of a piece of property. Bay Realty responded to the request for arbitration by indicating that they did not believe a dispute existed. Bay Realty also requested that the Board take no further action in the matter.

The Board found that the dispute was arbitrable, and sent a letter to Bay Realty reminding them of their obligation under the Code of Ethics to arbitrate disputes with other members. The letter also reminded Bay Realty of their agreement to this obligation as members, and noted that violation of the Code of Ethics could subject them to sanctions by the Board. Bay Realty then signed the arbitration agreement and participated in the arbitration hearing. The hearing panel found in favor of Executive Realty and awarded them the amount in dispute.

Bay Realty appealed the decision claiming that they had been coerced into agreeing to the arbitration because of the threat of expulsion from the county and state REALTOR® Association. The trial court agreed and vacated the Board arbitration award in favor of Executive Investments on the ground that Bay Realty's consent to arbitration was procured by duress. Executive Investments appealed the trial court's decision.

After careful consideration of the evidence submitted, the Rhode Island Supreme Court found "no merit" in Bay Realty's claim that it consented to arbitration under duress. Rather, the court accepted arguments advanced by the Rhode Island Association that Bay Realty had agreed to arbitrate when they applied for membership several years earlier, and that the "threat" was really only a reminder of their prior agreement to arbitrate disputes with other members. The supreme court concluded that the trial court erred in vacating the arbitration award and reversed the trial court.

Bay Realty v. Executive Investments, Inc., No. 80-265-Appeal (R.I. December 27, 1982). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]