South Carolina Court of Appeals Reinstates Previously Vacated Arbitration Award Arising from Real Estate Commission Dispute
- Follow the procedures outlined in the Code of Ethics and Arbitration Manual to support the enforceability of arbitration awards.
- Arbitration panels are generally not required to disclose the underlying legal conclusions and findings of fact in support of a panel’s decision.
- Prohibiting a recording or written record of a Procedural Review Hearing is unlikely to be deemed prejudicial to the requesting party.
The South Carolina Court of Appeals recently reinstated a $250,000 arbitration award to the Appellant in a commission dispute by overturning a lower court’s decision that previously vacated the award. Despite the absence of a written representation agreement, the Court of Appeals reinstated the Arbitration Panel’s decision that Appellant was the procuring cause in the sale.
Appellee initially filed this case in South Carolina Circuit Court challenging the arbitration award issued by the South Carolina Association of REALTORS® (SCAR) to Appellant, arguing the award misconstrued South Carolina law, which Appellee argued required a written representation agreement. The case was referred to the Master-in-Equity, and in 2018, the Master-in-Equity vacated the arbitration award to Appellant based on the conclusion that South Carolina law required co-brokerage agreements to be in writing, and with no written agreement the Arbitration Panel’s decision was a “manifest disregard for the law.” Additionally, the Master-in-Equity concluded Waldo was prejudiced by not receiving the Arbitrations Panel’s findings of fact or conclusions of law, and by the denial of a request to transcribe the post-arbitration Procedural Review Hearing.
On appeal, the South Carolina Court of Appeals overturned the Master-in-Equity’s decision and reinstated the arbitration award to Appellant. Referencing previous caselaw awarding real estate commissions without written agreements, the Court of Appeals found the Arbitration Panel’s decision was supported by legally justifiable reasoning and was not made in manifest disregard of the law.
Additionally, the Court of Appeals held that SCAR was not required to provide the Panel’s findings of fact or conclusions or law or to allow a court reporter at the Procedural Review Hearing. In reaching this conclusion, the Court of Appeals found the association’s actions complied with the South Carolina REALTORS® Governing State Professional Standards Procedure. Additionally, the court cited case law supporting the Panel’s reasoning in reaching the Arbitration Award because “the factual inferences and legal conclusions supporting the award are ‘barely colorable.” The Court of Appeals therefore held that vacating the arbitration award was not warranted.
The opinion also highlighted the court’s general reluctance to vacate arbitration awards without evidence of arbitrators abusing their power or misconstruing established legal principles. The opinion highlighted that an arbitration’s purpose is as a substitute for, and not a prelude to, litigation.
Respondents petitioned for writ of certiorari with the Supreme Court of South Carolina. A decision is pending.
Waldo v. Cousins, 2021 WL 4979956 (S.C. App. 2021), reh'g denied (Jan. 11, 2022).