Welk Resort Operators Can't Force Owners Into Arbitration, Court Rules
The Welk Group, operators of the Welk Resort San Diego, has lost its right to force owners into binding arbitration over mold damage to the property, Courthouse News Service reports. The time share community was originally opened by television personality Lawrence Welk in northern Escondido in 1964
Hermengildo "Jay" Martinez originally filed a class action suit in 2009 on behalf of time share owners at the property, alleging Welk Group and three partners concealed water leaks that led to serious mold and fungus damages at the site. His complaint has since been amended four times, and now that he has an operative lawsuit, the defendants have asked the court to compel owners into arbitration due to an agreement all owners are forced to sign.
Though the agreement is indeed binding, U.S. District Judge Anthony Battaglia ruled that the defendants had waived their right to force the action out of court and into the hands of an arbitrator. “It is indisputable that they knew of their right to seek arbitration,” Battaglia wrote in his decision, noting that the Welk Group waited through several rounds of complaints before attempting to force the arbitration only after receiving an “unwelcome” order from the court.
“The purpose of the [Federal Arbitration Act], and arbitration in general, is to promote quick, informal, and streamlined resolution of issues between parties,” Battaglia continued. “It is not to be used as a back-up plan for litigation strategies.”
Martinez has yet to file to have his class of owners certified, a move Welk Group will likely attempt to block due to an alleged conflict of interest concerning lawyers for the class and Wade Brent, a former engineer the defendants are pursuing with counter claims.
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