September 2015 E-Bulletin
This month's E-Bulletin topics include:
- Prior Payments and the Company Claim Amount
- Proving Damages and Reductions: Explanation and Evidence
- NASP 2015 Annual Conference: Eureka! Subro Education
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Prior Payments and the Company Claim Amount
Have you ever wondered what figure you should enter in the "Damage Amount" field if the adverse party has sent you a payment of a portion of your damages?
The simple answer is the total amount of the respective damage type.
Let's look at possible outcomes based on different entries. First, let's say your damages are $20,000. The adverse party has already sent you $14,000 and is disputing the remaining $6,000. You enter $20,000 as your Total Company Claim Amount. You do not acknowledge the $14,000 payment, but the adverse party proves that the payment was made and offers as evidence a screenshot showing that payment has also "Cleared," been "Deposited," or been "Honored." It doesn't make any difference what word is used; the point is that there is proof that you received and deposited the payment. The arbitrator decides that you proved liability at 100% and disagrees with the damages dispute. The award of $20,000 is entered, and the prior payment is proven, so the arbitrator gives the adverse party credit for $14,000, resulting in a net award of $6,000.
The next possibility is that you enter the balance of $6,000 as your Total Company Claim Amount, and again, do not acknowledge the $14,000 payment. The arbitrator again finds that you proved 100% liability and the adverse party proves that their payment of $14,000 was issued and deposited. The arbitrator recognizes the proof of the prior payment and again gives "Credit for Prior Payment" for the $14,000. This results in a net award of $00.00.
In the Reference Guide to Arbitration Forums' Agreements and Rules, Effective 1/1/2015, Page 50, it states, "The company claim amount... take(s) precedence over the damages amount if there is a conflict between the entries." Therefore, the arbitrator has the right to apply the full prior payment to the Company Claim Amount. Help ensure accurate awards by entering Total Company-Paid Damages as well as the amount of any prior Payments Accepted.
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Proving Damages and Reductions: Explanation and Evidence
Part of our arbitrator training includes the directive that arbitrators are to base their decisions on facts, and facts are established when contentions are supported by evidence.
Since Respondents are the ones to challenge the validity of the Applicant's damages, they would first present arguments explaining why the deductions are taken and why the deductions are not owed by the Respondent. In support of their arguments, Respondents should submit evidence related to the damages in dispute. When both arguments in the Dispute Damages tab and evidence are submitted, the arbitrator decides how the resulting fact will impact his or her decision.
Similarly, when an Applicant becomes aware that damages are being disputed, it should confirm it has addressed the specific issues in both its contentions and evidence. Why were OEM parts used or why was that particular labor rate paid? Was there a specific reason that flex, corrosion protection, or denib and finesse were included and paid? More specifically, why does it feel that the Respondent owes these expenses? Just because the Applicant pays for certain repairs doesn't mean the Respondent automatically owes them.
Proving a damage dispute or supporting damages paid is no different than proving liability. Make the arguments in your contentions or Dispute Damages tab, and back up those arguments by submitting supporting evidence. Facts are what arbitrators will use when rendering decisions, and facts are created by the presence of contentions, or arguments in the Dispute Damages tab, and evidence.
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NASP 2015 Annual Conference: Eureka! Subro Education
November 8—11, 2015
The Peppermill Resort — Reno/Tahoe, NV
Be sure to visit us at Booth #407 or attend one of our sessions, "Arbitration Management Tools: From Special Arbitration to Performance Management Reports" or "E-Subro Hub"!
Visit the NASP Web site to register, select an exhibit booth, make hotel reservations, and download conference brochures.