SOURCE: Network Capital Funding

Network Capital Funding

November 05, 2014 03:46 ET

Network Capital Wins Groundbreaking Appellate Court Case

IRVINE, CA--(Marketwired - Nov 5, 2014) - Conflicts of interest that could have cost California employers millions of dollars in wages and legal fees were put to a sudden halt when the Fourth District of the California Court of Appeal recently ruled in favor of Network Capital Funding. The California Court of Appeal upheld a lower court ruling in Network Capital's suit against former employee Erik Papke. At stake was who should rule in disputes about what issues are covered by arbitration agreements. Papke asked arbitrators to turn his original arbitration case against Network Capital into a class action case, which would have reaped much higher fees for the arbitrators themselves. The appellate court recognized this conflict of interest and ruled that questions not specifically addressed in arbitration agreements must be settled by the courts -- not by arbitrators.

The case has a wide-ranging impact on agreements between groups that sign on to take disputes before arbitrators. In the case of Network Capital Funding and Papke, both parties had signed an arbitration agreement when Papke was hired. After his employment at the company ended, he filed in arbitration to settle some issues involving compensation. He then asked the arbitrators to take the issues beyond himself and turn them into a class action. Had this tactic been successful, employers throughout the state could have found themselves fighting many more class actions cases, when in truth, only a single employee was involved.

Recognizing what was at stake, Network Capital Funding held that the original language of the arbitration agreement should be enforced and Papke not allowed to expand his case into a class action. Network Capital and its legal team at Fisher & Phillips LLP saw that the arbitrators stood to make a huge financial gain by letting Papke have his way in the case. They decided to put the question before the Orange County Superior Court, which ruled in Network Capital's favor. Papke then appealed the Superior Court decision to the Fourth District of the California Court of Appeal hoping the appellate court would overturn the lower court's decision. However, Network Capital won again and Papke was ordered to pay Network Capital's legal fees for the appeal.

At the heart of the Appeal Court decision was the principle that cases can only be heard before arbitrators when the disputes are over issues that are specifically written into the arbitration agreements that both sides have signed. When disputes fall outside of the areas spelled out in an arbitration agreement, it is up to the courts -- not arbitrators -- to make the call deciding the venue where the dispute should be settled.

Network Capital Funding, based in Irvine, has been one of the top direct mortgage lenders in California since being founded in 2002 by Tri Nguyen, Founder and CEO. It has made Inc. Magazine's list of the fastest growing companies in the United States for four years running. The company offers an assortment of loan products, including FHA, VA, jumbo, fixed-rate, and adjustable mortgages.

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