Problem.Dispute.Noise abatement

     Eduardo Hernandez ("Hernandez"), an architect, and Sheila Jones ("Jones"), a licensed marriage, family, child counselor, occupy adjacent commercial premises in the City of Hamlet, California. Hernandez retained a contractor to renovate his commercial premises. Noise from the renovation disturbed the therapy practice of Jones, and several of her patients have told Jones that they might not continue treatment unless the noise abated.

     Jones hired an expert who measured maximum noise from the renovation at 85 decibels. Jones located the Hamlet noise ordinance at the local law library. The ordinance, like many housing codes, provides a civil rather than a criminal penalty for violation, enforceable in a civil action brought by the City Attorney of Hamlet.

     Jones concluded that the noise from renovation exceeded the maximum permitted by the noise ordinance. Her conclusion was erroneous because she overlooked a provision in the ordinance creating a relevant exception for construction noise.

     In a telephone conversation with her son, a New York tax lawyer, Jones learned that she might possibly have a tort claim for nuisance, even in the absence of a violation of a noise ordinance. Her son cautioned that he wasn't an expert in tort law, and he wondered aloud whether a court would consider temporary construction noise to be a nuisance.

     Jones confronted Hernandez with her conclusion that the noise violated the Hamlet noise ordinance. When Hernandez appeared unwilling to work toward a solution, Jones threatened to file a complaint with the City Attorney for violation of the noise ordinance. In the heat of the moment, she also told Hernandez that she had been assured by the City Attorney that Hernandez would be fined if there were a violation of the noise ordinance. In fact, she had never talked to the City Attorney. She also threatened to sue Hernandez for nuisance and said that she would seek damages for lost patients and an immediate injunction against the construction.

     As an architect, Hernandez was, in general, familiar with noise ordinances and he thought there might be an exception for construction. However, he was worried about being sued for nuisance because financial constraints made it imperative for him to complete the construction promptly, without the threat of injunction. He also learned from his contractor that it would be relatively easy to shift work schedules to alleviate the noise problem.  Accordingly, without checking the Hamlet noise ordinance, he signed a written agreement, prepared for Jones by her son the tax lawyer. Jones also signed the agreement. The agreement included the following terms:

2.1 Hernandez shall cause his contractor each weekday between the hours of 9:30 a.m. and 2:30 p.m. to limit on site construction activity involving sawing or hammering to no more than 10 minutes each hour.

2.2 Jones releases any claim that she may have or have had against Hernandez for violation of the City's noise ordinance or for nuisance by virtue of construction on his commercial premises.

3.0 In the event of breach by Hernandez of his promise under paragraph 2.1, Hernandez shall pay Jones at the rate of $100.00/hour for therapy treatment hours lost by Jones as a result of clients terminating therapy because of construction noise from the Hernandez renovation.

3.1 Ronald Goldblum shall arbitrate any dispute about whether or not a breach of the promise under paragraph 2.1 results in the loss of clients by Jones and any dispute about the number of remaining hours each client would likely have been treated by Jones.

     The agreement contained no other promises by either party.
 
     Ronald Goldblum, like Jones, is a licensed marriage, family and child counselor. He practices in an adjoining county. Goldblum and Jones were classmates in the masters program leading to their counseling degrees. Jones frequently refers clients to Goldblum.

     Hernandez breached the promise in paragraph 2.1 several times. Jones now claims to have lost several clients, each of whom require long term therapy, as a result of the breach and claims that she has therefore lost between $10,000 and $15,000 in future fees. Jones has demanded that Hernandez meet with her, or submit to an arbitration by Ronald Goldblum, to determine the amount that Hernandez should pay for breaching the agreement.

     Hernandez has asked that you advise him. What is your analysis of the enforceability of the agreement, the enforceability of the arbitration clause, and, in the event that Hernandez has breached an enforceable agreement, his liability for damages? Do not consider his potential liability for violation of the noise ordinance or for the tort of nuisance.