THE WELCH COMPANY
440 Davis Court #1602
San Francisco, CA 94111-2496
415 781 5700


S U M M A R Y


DIARY: May 21, 1998 09:26 AM Thursday; Rod Welch

Received documents in AAA Chaikin v Weinmann, Foti.

1...Summary/Objective
2...Dispute Identified in Documents
3...Discovery delayed 7 days from Scheduled production
4...Foti complains Claimant failed to produced documents on 980407
5...Foti requests additional time to file documents
6...Claimant fails to file detailed statement of claim as Scheduled
7...Claimant offers to extend schedule of discovery for 30 days
8...Foti requests dismissal due to failure to file detailed claim
9...Claimant says statement of claim will be filed on 980601
10...Analysis of detailed statement of claim
.....R10 Exchange of Information directed by Arbitrator
.....AAA sets schedule to disclose specific claims and amounts
.....Claimant failed to provide specific claims against Foti
.....Timely submission of claims is required by the Contract
.....Foti's request for dismissal denied
11...Foti requests delay in paying Arbitration Fees
.....Arbitrator does not have the 980430 statement from AAA
.....Analysis Payment of Arbitration Fees
..........R52 Deposits - AAA sets instructions for payment of fees


..............
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CONTACTS 
0201 - American Arbitration Association     415 981 3901 fax 781 8426
020101 - Ms. Marcela Taylor; Case Administrator =415 984 5433
020102 - Case Administration

SUBJECTS
Discovery

0403 -    ..
0404 - Summary/Objective
0405 -
040501 - Follow up ref SDS 13 0000, ref SDS 8 0000
040502 -
040503 - Received documents from AAA, ref SDS 0 0820, on delay by Claimant in
040504 - production of documents, ref SDS 0 1542, requests by Foti for
040505 - dismissal of the case, ref SDS 0 1806, and to defer payment of
040506 - arbitration fees. ref SDS 0 1020
040507 -
040508 -     [On 980603 issued rulings on issues raised by letters received
040509 -     today. ref SDS 14 0000]
040510 -
040511 -
040512 -
0406 -
0407 -
0408 - Progress
0409 -
040901 -  ..
040902 - Dispute Identified in Documents
040903 -
040904 - Follow up ref SDS 13 1934.
040905 -
040906 - Received ref DRT 7 dated 980519 from AAA addressed to the Arbitrator.
040907 - It transmits a six (6) documents between the parties as previously
040908 - notified by AAA in its letter dated 980507, ref DRP 8 received on
040909 - 980511. ref SDS 13 3170
040910 -
040911 -  1.  Paul J. McDonald's letter dated April 7, 1998
040912 -
040913 -  2.  Anthony J. Keiley's letter dated April 13, 1998
040914 -
040915 -  3.  Paul J. McDonald's letter dated May 4, 1998
040916 -
040917 -         (Please note that no response from the other parties was
040918 -         received)
040919 -
040920 -  4.  Anthony J. Keiley's response to Mr. McDonald's letter of May 4,
040921 -      1998 dated May 6, 1998
040922 -
040923 -  5.  Paul J. McDonald's letter dated May 6, 1998
040924 -
040925 -  6.  Paul J. McDonald's response to Mr. Keiley's letter of May 6, 1998
040926 -      dated May 12, 1998
040927 -
040928 -  7.  Anthony J. Keiley's response to Mr. McDonald's letter of May 12,
040929 -      1998 dated May 14, 1998.
040930 -
040931 -
040932 -
040933 -  ..
040934 - Discovery delayed 7 days from Scheduled production
040935 - Foti complains Claimant failed to produced documents on 980407
040936 -
040937 - Received ref DRT 1 0000 dated 980407 from Paul McDonald, counsel for
040938 - Foti.
040939 -
040940 - Foti notes that Chaikin failed to produce documents by 980406 and
040941 - requests notice of when documents will be produced. ref DRT 1 2784
040942 -
040943 - Received, ref DRP 6 0000, dated 980413 from Anthony Keilley, counsel
040944 - for Claimant.  This document was originally received on 980414. see
040945 - the record at ref SDS 12 0000
040946 -
040947 -     It appears that Claimant produced documents on 980413,
040948 -     approximately one (1) week late. ref SDS 12 1468
040949 -
040950 -
040951 -
0410 -

SUBJECTS
Discovery
Statement of Claims/Amounts

0605 -
060501 -  ..
060502 - Foti requests additional time to file documents
060503 - Claimant fails to file detailed statement of claim as Scheduled
060504 -
060505 - Follow up ref SDS 8 1858.
060506 -
060507 - Received ref DRT 2 dated 980504 from Paul McDonald, counsel for Foti,
060508 - to Anthony Keilley counsel for Claimant.
060509 -
060510 - Foti notes that Claimant failed to produce the detailed statement of
060511 - claim on the date scheduled in the Arbitrator's order dated 980404.
060512 - ref DRT 2 1980,
060513 -
060514 -      At the hearing on 980401 Claimant agreed to submit its detailed
060515 -      statement of claim by 980501. ref SDS 8 1074
060516 -
060517 -      AAA order #4 dated 980406 confirms Claimant was to have filed its
060518 -      detailed statement of claim by 980501. ref DRP 5 1697
060519 -
060520 - Foti requests in his letter at ref DRT 2 2784 an extension on the
060521 - Schedule established at the hearing on 980401, ref SDS 8 0493, that
060522 - sets 980601 as the date for Foti to do the following...
060523 -
060524 -            Produce documents pursuant to Claimant's separate demands.
060525 -            File any counter-claims
060526 -            File additional demands for documents
060527 -
060528 -     This schedule was confirmed in the AAA order #4 dated 980406. ref
060529 -     DRP 5 1976
060530 -
060531 -     [On 980603 issued ruling setting 980715 for respondents to
060532 -     respond. ref SDS 14 8847]
060533 -
060534 -
060535 -  ..
060536 - Claimant offers to extend schedule of discovery for 30 days
060537 -
060538 - Received ref DRT 3 0000 dated 980506 from Anthony Keiley, counsel for
060539 - Claimant, to respondents.
060540 -
060541 - Claimant agrees to extend the schedule for respondents to make filings
060542 - set out in the AAA order #4 dated 980406 until thirty (30) days after
060543 - Claimant files a detailed statement of claim. ref DRT 3 2576
060544 -
060545 - Claimant expects to file detailed statement of claim "soon." ref DRT 3
060546 - 3284
060547 -
060548 -     [On 980603 issued ruling setting 980715 for respondents to
060549 -     respond. ref SDS 14 8846]
060550 -
060551 -
060552 -
060553 -  ..
060554 - Foti requests dismissal due to failure to file detailed claim
060555 -
060556 - Received ref DRT 5 0000 dated 980512 from Paul McDonald, counsel for
060557 - Foti, to AAA arbitrator Welch.
060558 -
060559 - Foti notes, ref DRT 5 5028, that Claimant does not set a date for
060560 - filing a detailed statement of claim in Claimant's 980506 letter. see
060561 - ref DRT 3 3284
060562 -
060563 -  ..
060564 -
060565 - Foti requests the arbitrator set a deadline date by which Claimant
060566 - must file a detailed claim against Foti.
060567 -
060568 -     [On 980603 issued ruling setting 980615 for Claimant to submit
060569 -     detailed statement of claims. ref SDS 14 8846]
060570 -
060571 - Foti requests that the case against Foti be dismissed, ref DRT 5 3639,
060572 -
060573 -     [On 980603 issued ruling denying the request to dismiss the case
060574 -     against Foti. ref SDS 14 8845]
060575 -
060576 - Foti says Claimant was scheduled to file a detailed statement of claim
060577 - on 980601. ref DRT 5 3639  It appears the actual date was 980501, per
060578 - Arbitrator's order dated 980404. ref DRP 5 1697 and hearing record.
060579 - ref SDS 8 1858
060580 -
060581 -
060582 -  ..
060583 - Claimant says statement of claim will be filed on 980601
060584 -
060585 - Received ref DRT 6 0000 dated 980514 from Anthony Keiley, counsel for
060586 - Claimant, to respondents.
060587 -
060588 - Claimant's counsel says it has completed investigating the site with
060589 - its expert witness. ref DRT 6 7815
060590 -
060591 - Claimant expects the expert witness will complete the detailed
060592 - statement of claim OB 980601 and will submit to the parties. ref DRT 6
060593 - 5125
060594 -
060595 - Claimant argues that Respondents are not prejudiced by failure to file
060596 - detailed statement of claim according to the schedule set for the
060597 - hearing by the arbitrator. ref DRT 6 4531
060598 -
060599 -
060600 -
060601 -  ..
060602 - Analysis of detailed statement of claim
060603 -
060604 - It appears that filing a detailed statement of claims is not an
060605 - express requirement for arbitration under the "Regular" track rules
060606 - in effect for this case.
060607 -
060608 - Construction Industry Dispute Resolution Procedures on page 25 shows
060609 - rule R10...
060610 -
060611 -      ..
060612 -     R10  Exchange of Information directed by Arbitrator
060613 -
060614 -     Consistent with the expedited nature of arbitration, the
060615 -     arbitrator may direct (i) the production of documents and other
060616 -     information, and (ii) the identification of any witnesses to be
060617 -     called.  At least two (2) business days prior to the hearing, the
060618 -     parties shall exchange copies of all exhibits they intend to
060619 -     submit at the hearing.  The arbitrator is authorized to resolve
060620 -     any disputes concerning the exchagne of information.
060621 -
060622 -
060623 -      ..
060624 -     AAA sets schedule to disclose specific claims and amounts
060625 -
060626 -     AAA Administration letter dated 970306, ref DRP 3 6130, calls for
060627 -     the parties to provide a brief description of claims with specific
060628 -     dollar amounts to enable Respondent Foto to respond.
060629 -
060630 -     AAA arbitrator's order dated 980303 received on 980304, ref SDS 4
060631 -     1918, required Claimant to file specific claims against Respondent
060632 -     Foti to permit Foti an opportunity to determine the correctness of
060633 -     the claim and to prepare for any response. ref DRP 2 2181
060634 -
060635 -
060636 -      ..
060637 -     Claimant failed to provide specific claims against Foti
060638 -
060639 -     The letter filed by Claimant dated 980317 failed to specify claims
060640 -     against Foti and dollar amounts as distinguished from respondent
060641 -     Weinmann. ref SDS 6 3723
060642 -
060643 -      ..
060644 -     Timely submission of claims is required by the Contract
060645 -
060646 -     Per review on 980221 of Claimant's demand for arbitration against
060647 -     Foti, the parties agreed by contract Article 10.8 to use AAA for
060648 -     arbitration. ref SDS 2 2511
060649 -
060650 -     This contract provision requires the parties to follow the
060651 -     instructions of AAA for the orderly administration of the case.
060652 -     Filing deadlines are endemic to good case management and to
060653 -     justice for the parties.  Delay in meeting scheduled filings may
060654 -     reflect lack of merit in a demand for arbitration and therefore
060655 -     justify dismissing the case and awarding damages for putting
060656 -     parties to unnecessary expense.
060657 -
060658 -
060659 -     Foti's request for dismissal denied
060660 -
060661 -     The complexity of construction contracts make it difficult to
060662 -     assemble evidence for adjudication of disputes. Industry practice
060663 -     for disputes to be determined during the course of the work by the
060664 -     architect ensures that relevant evidence is assembled at a time
060665 -     when the participants are strongly aware of the facts on disputed
060666 -     issues.  This practice expedites subsequent hearings by a neutral.
060667 -     The arbitrator finds that delays by Claimant in submitting the
060668 -     statement of detailed claims to the Repsondents has not been shown
060669 -     to be unreasonable. Therefore, Foti's request for the case to be
060670 -     dismissed is denied.
060671 -
060672 -     Further delay may however warrant reconsideration.
060673 -
060674 -
060675 -
060676 -
060677 -
0607 -

SUBJECTS
Payment Fees by Parties

0704 -
070401 -  ..
070402 - Foti requests delay in paying Arbitration Fees
070403 -
070404 - Follow up ref SDS 7 1752, ref SDS 3 8840.
070405 -
070406 - Received ref DRT 4 dated 980506 from Paul McDonald, counsel for Foti,
070407 - to AAA transmitted by AAA's letter dated 980519. ref SDS 0 0820
070408 -
070409 - Foti notes receipt of AAA statement dated 980430 requesting payment of
070410 - arbitration fees in the amount of $4,700. ref DRT 4 1980
070411 -
070412 - Foti says it is not appropriate to pay the aribtration fees at this
070413 - time because of possibility that the preliminary hearing on 980622
070414 - will result in the hearing being bifurcated and that Foti will be
070415 - found not liable.
070416 -
070417 -     [On 980603 issued ruling denying Foti's request to defer payment
070418 -     of fees. ref SDS 14 2722]
070419 -
070420 -      ..
070421 -     Arbitrator does not have the 980430 statement from AAA
070422 -
070423 -     AAA letter dated 980318 required parties to each deposit $5,400
070424 -     ref DRP 4 6318, per record on 980319. ref SDS 7 1752
070425 -
070426 -     The "statement" dated 980430 cited by Foti has not been submitted
070427 -     to the arbitrator.
070428 -
070429 -
070430 -      ..
070431 -     Analysis Payment of Arbitration Fees
070432 -
070433 -     Per review on 980221 of Claimant's demand for arbitration against
070434 -     Foti, the parties agreed by contract Article 10.8 to use AAA for
070435 -     arbitration. ref SDS 2 2511
070436 -
070437 -     This provision requires the parties to abide by AAA instructions
070438 -     for administration of the case.
070439 -
070440 -           ..
070441 -          R52 Deposits - AAA sets instructions for payment of fees
070442 -
070443 -          The AAA may require the parties to deposit in advance of any
070444 -          hearings such sums of money as it deems necessary to cover
070445 -          the expense of the arbitration, including the arbitrator's
070446 -          fee, if any, and shall render an accounting to the parties
070447 -          and return any unexpended balance at the conclusion of the
070448 -          case.
070449 -
070450 -     On 980319 AAA letter dated 980318, ref DRP 4 1801, notified the
070451 -     parties to deposit arbitration fees, ref SDS 7 1752, in accordance
070452 -     with prior AAA letter dated 980225, ref DRP 1 3858, that required
070453 -     deposit of fees by 980522, ref DRP 1 3687, per the record on
070454 -     980227. ref SDS 3 8840
070455 -
070456 -     Arbitration fees were for anticipated 8 days of hearings.
070457 -
070458 -     At the preliminary hearing on 980313 Foti requested a bifurcated
070459 -     hearing to determine liability.  Foti argued he would be found not
070460 -     liable and so could avoid the expense of the full hearing on
070461 -     damages, ref SDS 5 2502, scheduled for 980622 - 980630, per AAA
070462 -     letter dated 980225. ref DRP 1 4877
070463 -
070464 -        The record of the preliminary hearing on 980206 shows parties
070465 -        expect hearing to take 7 days. ref SDS 1 4311
070466 -
070467 -        As a result hearings were set for 980622 - 980630. ref SDS 1
070468 -        1309
070469 -
070470 -     Arbitrator offered analysis at the hearing on 980313 showing the
070471 -     hearing could take longer than the 7 days currently scheduled. see
070472 -     ref SDS 5 4047
070473 -
070474 -     The time required for administering the case is speculative and is
070475 -     impacted by availability of witnesses and other factors, including
070476 -     the volume of work being performed by everyone involved.
070477 -
070478 -     In this case, Claimant has had considerable difficulty meeting
070479 -     scheduled dates for filings.  The arbitrator finds at this time
070480 -     that the difficulty is excusable as falling within reasonable
070481 -     bounds of performance for the conduct of pre-hearing matters. see
070482 -     ref SDS 0 5504
070483 -
070484 -     Respondent's Foti's contention that it will be found not liable
070485 -     for Claimant's damages is speculative and therefore not sufficient
070486 -     grounds to avoid or defer payment of fees for the arbitration as
070487 -     prescribed by AAA.
070488 -
070489 -     There is no evidence indicating such a ruling is likely.  At the
070490 -     preliminary hearing on 980401, Foti's counsel cited a letter that
070491 -     may show Foti is not liable for any damages claimed by Claimant.
070492 -     Foti's counsel noted that the authenticity and source of the
070493 -     letter had not been established. Counsel refused to submit the
070494 -     letter into the record at that time and it is not submitted as
070495 -     evidence to show that Foti is not liable.  Claimant's list of
070496 -     defects in the work contains potentially significant damages for
070497 -     which Respondent Foti may be found liable.  A preliminary hearing
070498 -     will be held on 980622 to consider whether to bufurcate the
070499 -     hearing and to schedule the hearing in this case.
070500 -
070501 -     The arbitrator has received 43 documents from the parties and the
070502 -     AAA todate, which is about normal for complex, three (3) party
070503 -     construction cases.
070504 -
070505 -     The case record is likely to continue to compound, as discussed at
070506 -     the hearing on 980313. ref SDS 5 4047
070507 -
070508 -     AAA rule R-52 Deposits provides for an accounting to the parties
070509 -     and return of enexpended fees at the conclusion of the case.
070510 -
070511 -     If a responding party, such as Foti, is found not liable for
070512 -     damages then it may recover reasonable expenses occassioned by
070513 -     responding to the arbitration, including otherwise avoidable
070514 -     arbitration fees, in like manner that a Claimant may seek recovery
070515 -     of its abitration fees as damages arising from respondent's
070516 -     failure to pay what is found to have been owed.
070517 -
070518 -     Therefore Foti's request to avoid payment of arbitration fees
070519 -     according to the schedule set by the Case administrator is denied.
070520 -
070521 -
070522 -
070523 -
0706 -
0707 -
Distribution. . . . See "CONTACTS"