Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_10-cv-00504/USCOURTS-azd-4_10-cv-00504-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

ARIANN J-HANNA, 

Plaintiff, 

vs.

TUCSON DODGE INC., et al.,

Defendants. 

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No. CIV 10-504-TUC-CKJ 

ORDER

Pending before the Court are the Motion to Vacate the AAA Award (Doc. 189) filed

by Ariann J-Hanna ("J-Hanna").

Background and Arbitration Award

On December 9, 2011, this Court granted the Motion to Stay Case and Compel

Arbitration filed by Tucson Dodge Incorporated ("Tucson Dodge") and stayed this matter.

On June 7, 2013, J-Hanna filed a Notice of American Arbitration Association's

Tribunal Award Favoring Tucson Dodge (Doc. 184). Tucson Dodge filed a response to JHanna's Notice (Doc. 187) and a Notice of Filing Arbitration Award and Proposed Judgment

(Doc. 188). The May 30, 2013, Award of Arbitration ("the Award") states that a preliminary

hearing had been held, pre-hearing memoranda were submitted by the parties, documentary

evidence and oral testimony was proffered at an April 23, 2013, arbitration hearing, and posthearing memoranda were submitted by the parties. The Award also states that Tucson Dodge

and J-Hanna both made additional submissions following the submission of the post-hearing

memoranda. The Award states:

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Based on all of the evidence, the Arbitrator finds that Claimant has not sufficiently

established her claim to damages; therefore, the Arbitrator AWARDS no damages to

Claimant.

Doc. 184-1, Ex. A.

On July 9, 2013, J-Hanna filed a Motion to Vacate the AAA Award (Doc. 189). A

response (Doc. 192) and a reply (Doc. 202) have been filed. J-Hanna has also filed a

Response to Tucson Dodge's Closing Brief (Doc. 208).

Additionally, J-Hanna has submitted recordings of phone conversations between

herself, counsel for Tucson Dodge, and the arbitrator. The Court has reviewed the recordings

which consist of two telephonic pre-arbitration hearings. J-Hanna, defense counsel, the

arbitrator, and an AAA representative were on the line for each proceeding. During the

March 20, 2013, hearing, the participants discussed inter alia procedural matters (e.g., form

of order, use of court reporter), scheduling, and issues to be resolved by the arbitrator.

During the April 12, 2013, hearing, the participants discussed inter alia dismissal and expert

testimony issues.

J-Hanna has also filed a Notice to Submit Technical Corrections of the 1st Affidavit

of Sergio Lujan’s and Submit an Addendum Regarding the Disabled (sic) Airbag (Doc. 247).

J-Hanna asserts the submitted affidavit clarifies Lujan’s testimony at the arbitration hearing.

Response to Tucson Dodge’s Closing Brief (Doc. 208)

J-Hanna has filed a Motion to Vacate the AAA Award (Doc. 189), Tucson Dodge has

filed a response (Doc. 192) and J-Hanna has filed a reply (Doc. 202). Tucson Dodge’s

response included its Closing Brief from the arbitration proceedings as an attachment. JHanna does not state any reason why she could not have fully responded to Tucson Dodge’s

response (including the Closing Brief) in her reply. See LRCiv. 7.2 (providing for a motion,

a response, and a reply). The Court will strike the Response to Tucson Dodge’s Closing

Brief.

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Standard to Vacate an Arbitration Award

A court must confirm an arbitration award unless it is vacated, modified, or corrected

as prescribed by the FAA. Schoenduve Corp. v. Lucent Technologies. Inc., 442 F.3d 727,

731 (9th Cir. 2006); see also Kyocera Corp. V. Prudential-Bache Trade Services, Inc., 341

F.3d 987 (9th Cir. 2003), citation omitted ("Under the statute, 'confirmation is required even

in the face of erroneous findings of fact or misinterpretations of the law.'").

The Federal Arbitration Act ("FAA") reflects a strong federal policy favoring

arbitration. A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d 1401, 1404 n. 2 (9th

Cir.1992). Courts will generally defer to an arbitrator’s decisions when the parties have

agreed to resolve their dispute through arbitration. See Todd Shipyards Corp. v. Cunard

Lines, 943 F.2d 1056, 1060 (9th Cir.1991) (“It is generally held that an arbitration award will

not be set aside unless it evidences a ‘manifest disregard for the law.’”); Catz Am. Co. v.

Pearl Grange Fruit Exch., Inc., 292 F.Supp. 549,551 (S .D.N.Y.1968) (“Since one of the

fundamental purposes of resorting to arbitration is to reduce the cost and delay of litigation,

the role of the court must be limited in reviewing an arbitration award.”). The FAA allows

courts to vacate an arbitration award upon a finding of: (1) corruption, fraud or undue

means; 2) evident partiality or corruption of the arbitrators; (3) misconduct which prejudices

one party; or (4) where the arbitrators exceeded their authority, or so imperfectly executed

their powers that a "mutual, final and definite award" on the subject matter was not made.

9 U.S.C. §10(a); Collins v. D.R. Horton, Inc., 505 F.3d 874 (9th Cir. 2007). 

J-Hanna does not specifically delineate under which theories her arguments fall

within. The Court will discuss each theory in the context of J-Hanna’ arguments. 

Corruption, Fraud or Undue Means

The Court accepts J-Hanna's argument that Tucson Dodge conspired with the

arbitrator to present a motion to dismiss as an assertion the Award should be vacated based

on corruption, fraud or undue means. A party seeking vacation of an arbitration award on

that basis must show the corruption, fraud or undue means was (1) not discoverable upon the

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The recordings show that, during the pre-arbitration hearing, the arbitrator advised

the parties the form of the award would state which party(ies) won, the amount of any

damages, and the amount of any attorneys’ fees, but would not provide any detailed

reasoning. Neither party stated an objection to this form of the award.

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exercise of due diligence prior to the arbitration, (2) materially related to an issue in the

arbitration, and (3) established by clear and convincing evidence." A.G. Edwards & Sons,

Inc. v. McCollough, 967 F.2d 1401, 1403-04 (9th Cir. 1992) (stating standard applies to

claims of fraud or undue means; undue means connotes immoral, if not illegal, behavior);

PaineWebber Group, Inc. v. Zinsmeyer Trusts P'ship, 187 F.3d 988, 991 (8th Cir. 1999)

(noting that undue means must be read in conjunction with the words fraud and corruption

preceding it in the statute; further noting that courts have uniformly construed the term undue

means as requiring proof of intentional misconduct).

Some examples of the type of corruption, fraud, or undue means warranting a vacation

of an arbitration award include perjury by a witness or an ex parte communication discussing

what documents should be part of the record for future review. See 141 A.L.R. Fed. 1. For

example, in Pacific & Arctic Ry. & Navigation Co. v United Transp. Union, 952 F2d 1144

(9th Cir. 1991), the arbitrator and a party engaged in ex parte communications and

recommended a party only offer part of a document so that the full document would not be

part of the record. 

Here, J-Hanna asserts Tucson Dodge conspired with the arbitrator to file a motion to

dismiss. The recordings provided to the Court indicate a discussion occurred, with both

parties present, regarding the filing of briefs that could include what each party believed the

evidence would show and any supporting legal points. The arbitrator informed the parties

that, if evidence was presented, he would look to see if claims were proven or if it was

appropriate to take into consideration any defense. The arbitrator's statement in the award

that, based on all of the evidence, he found that J-Hanna had not sufficiently established her

claim to damages, Doc. 184-1, Ex. A., indicates the arbitrator considered the evidence as

opposed to dismissing the claims based on a legal theory.1

 

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Contrary to J-Hanna's argument, the Court does not find any basis to conclude there

was any improper conduct by Tucson Dodge in discussing possible legal theories and how

the arbitrator wished those arguments to be presented to him. All of these conversations took

place with J-Hanna present – no evidence of any ex parte communications has been

presented to the Court. The Court finds there is no evidence of corruption, fraud, or undue

means warranting the vacation of the Award. 

Evident Partiality or Corruption of the Arbitrator

J-Hanna alleges that the arbitrator's ruling prejudiced J-Hanna by being partial to

Tucson Dodge, the arbitrator willfully ignored evidence supporting J-Hanna's claim, the

arbitrator conspired with Tucson Dodge to rule against J-Hanna before the final hearing was

held, the arbitrator was biased because future employment would result from a ruling in favor

of Tucson Dodge, the arbitrator was biased against J-Hanna's gender, and the arbitrator was

biased against J-Hanna's pro se status. The Court accepts these allegations as arguments of

evident partiality or corruption of the arbitrator.

A court may vacate an award on grounds of "evident partiality or corruption" of the

arbitrator. FAA §10(a)(2). In order for a party to succeed on an evident partiality claim, the

party must show that specific facts create a reasonable impression of bias. Lagstein v.

Certain Underwriters at Lloyd's, 607 F.3d 634, 642 (9th Cir. 2010); see also Employers Ins.

of Wausau v. Nat'l Union Fire Ins. Co. of Pittsburgh, 933 F.2d 1481, 1489 (9th Cir. 1991)

(a party “must demonstrate more than a mere appearance of bias to disqualify an arbitrator”).

Examples of “evident partiality” include an arbitrator's financial interest in the outcome of

the arbitration, Sheet Metal Workers Int'l Ass'n Local 420 v. Kinney Air Conditioning Co.,

756 F.2d 742, 746 (9th Cir. 1985), an arbitrator's failure to disclose prior consulting work for

a party, Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 146

(1968), a family relationship that made the arbitrator's impartiality suspect, Morelite Constr.

Corp. v. New York City Dist. Council Carpenters Benefit Funds, 748 F.2d 79, 85 (2nd Cir.

1984), an arbitrator's former employment by one of the parties, Merit Ins. Co. v. Leatherby,

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714 F.2d 673, 680 (7th Cir.), cert. denied, 464 U.S. 1009 (1983) and an arbitrator's

employment by an entity represented by one of the parties' law firms, Ormsbee Dev. Co. v.

Grace, 668 F.2d 1140, 1149 (10th Cir.1982). While not exhaustive, these examples provide

the level of partiality that is required by the statute. The Court finds no evidence of a

reasonable interpretation of bias has been shown.

To demonstrate actual bias, a party challenging the award must establish “specific

facts which indicate improper motives,” and the reviewing court must find actual bias as

opposed to an impression of partiality. Woods v. Saturn Distribution Corp., 78 F.3d 424,

427 (9th Cir. 1996), citations omitted. J-Hanna alleges the arbitrator was partial to Tucson

Dodge, willfully ignored evidence supporting J-Hanna's claim, conspired with Tucson Dodge

to rule against J-Hanna before the final hearing was held, was biased because of future

opportunities that may result from a ruling in favor of Tucson Dodge. 

However, the record before the Court fails to show that the arbitrator conspired with

Tucson Dodge – rather, the information before the Court reflects a conversation how best

procedurally for Tucson Dodge to present issues to the arbitrator; J-Hanna, defense counsel,

and the arbitrator were all present during this discussion. Similarly, the Court does not agree

that the arbitrator willfully ignored evidence supporting J-Hanna's claim – it was the

arbitrator's role to decide what weight to afford evidence presented to him. This does not

establish a bias. Further, it is simply speculation that the arbitrator was motivated by future

opportunities to decide in Tucson Dodge's favor, the gender of J-Hanna, or J-Hanna's pro se

status. The Court finds the record does not show the arbitrator was partial or biased in favor

of Tucson Dodge.

Misconduct Which Prejudices One Party

J-Hanna argues that the Award/arbitrator contradicts a prior ruling by this Court that

J-Hanna had established she had a claim, the arbitrator willfully ignored evidence or legal

theories supporting J-Hanna's claim, and the arbitrator failed to read all of the documents of

both parties. These are arguments of misconduct which prejudices a party.

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Misconduct warranting a vacatur of an arbitration award must deprive a party of a fair

hearing or prejudice the rights of a party. See Ardalan v. Macy's Inc., No. 5:09-cv-04894

JW, 2012 WL 2503972 (N.D.Cal. 2012); In re Wal–mart Wage and Hour Employment

Practices Litigation, Nos. MDL 135, 2:06–CV–00225–PMP–PAL, 2011 WL 4809046

(D.Nev. 2011). Circumstances constituting misconduct include the arbitrary denial of a

continuance or reopening of a hearing or a refusal to hear material evidence. 25 Causes of

Action 473(II)(A)(2) (Dec. 2013).

Here, the Court disagrees with J-Hanna that the arbitrator contradicted a prior ruling

of this Court. Rather, because the Court determined an arbitration agreement existed

between the parties, it did not decide whether any legal arguments (e.g., statute of

limitations) would bar J-Hanna from seeking relief. Further, whether a party has sufficiently

stated a claim to proceed in a lawsuit does not affect whether there is ultimately sufficient

evidence to establish that claim sufficiently to warrant a verdict or arbitration award in that

party's favor. Furthermore, J-Hanna asserts she had to repeat evidence to the arbitrator (e.g.,

regarding the sale of the vehicle "as is"). However, this does not constitute a failure to

consider the evidence; rather, the arbitrator was entitled to determine what weight to afford

such evidence. Additionally, J-Hanna's speculation that the arbitrator did not consider her

claims of fraud are belied by the record – the parties presented evidence and arguments

regarding fraud and there is no showing the arbitrator dismissed the claim of fraud or did not

consider it (including the element of materiality) in issuing the Award. In fact, the arbitrator

specifically stated that he resolved all of the claims submitted to arbitration. Lastly, J-Hanna

asserts the arbitrator could not have read all of the documents of the parties prior to the

arbitration hearing, as stated by the arbitrator, because he should have known by the time of

the hearing if J-Hanna could not establish her claim. The Court disagrees with J-Hanna's

speculation. Rather, it appears the arbitrator was seeking to afford the parties every

opportunity, through documents, testimony, and argument, to present their cases. The Court

finds misconduct which prejudiced a party has not been shown.

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Arbitrator Exceeding Authority or Imperfectly Executed his Powers

Although none of J-Hanna's arguments appear to fall within this theory to vacate an

arbitration award, the Court will discuss why J-Hanna's arguments do not constitute such a

basis for vacating the Award. 

Arbitrators have “exceeded their powers” only when their award is “completely

irrational, or exhibits a manifest disregard for the law.” Schoenduve, 442 F.3d at 731; Bosack

v. Soward, 586 F.3d 1096 (9th Cir. 2009). This basis for vacating an arbitration award is,

however, “severely limited and for the most part, the court defers to the arbitrators'

determination of the award.” See Michigan Mutual Ins. Co. v. Unigard Security Ins. Co., 44

F.3d 826, 832 (9th Cir. 1995).

The Ninth Circuit has stated:

An award is completely irrational “only ‘where the arbitration decision fails to draw

its essence from the agreement.’” [Citation omitted.] An arbitration award “draws its

essence from the agreement if the award is derived from the agreement, viewed in

light of the agreement's language and context, as well as other indications of the

parties' intentions.” [Citation omitted.] 

Lagstein, 607 F.3d at 642. Further, "'the question is whether the award is ‘irrational’ with

respect to the contract, not whether the panel's findings of fact are correct.'” Id., citation

omitted.

The arbitration agreement in this case states:

9. Seller and Purchaser hereby agree that . . . either party may submit the dispute to

binding arbitration by a sole arbitrator from the American Arbitration Association

(“AAA”) in accordance with the AAA’s Commercial Arbitration Rules . . . . Such

arbitration shall be conducted in Maricopa County, Arizona. Except as otherwise

specifically provided for herein, each party shall bear its own costs and attorney’s

fees. The procedures specified herein shall be the sole and exclusive procedures for

the resolution of disputes between the parties arising out of or relating to this

Agreement . . . All applicable statutes of limitation shall be tolled while procedures

specified in the section are pending. The parties will take such action, if any, required

to effectuate such tolling.

Doc. 32-1, modified to remove bold emphasis. There is no basis before the Court that the

Award is irrational with respect to the parties' arbitration agreement. 

To rise to the level of manifest disregard, “the governing law alleged to have been

ignored by the arbitrators must be well defined, explicit, and clearly applicable.” Collins v.

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D.R. Horton. Inc., 505 F.3d 874, 879-880 (9th Cir.2007), citation omitted, emphasis in

original. Additionally, the record must be clear that the “arbitrators recognized the

applicable law and then ignored it.” Michigan Mutual, 44 F.3d at 832; see also Lagstein, 607

F.3 d at 641, citation omitted; see also Bosack, 586 F.3d at 1104 (the record must contain

some evidence, other than the result, that the arbitrator was aware of the law and intentionally

disregarded it). However, a court should confirm an award, “even in the face of erroneous

findings of fact or misinterpretations of the law[,]” unless the party challenging the decision

meets one of the narrow statutory exceptions. Kyocera Corp. v. Prudential-Bache Trade

Svcs., Inc., 341 F.3d 987, 997 (9th Cir.2003). Indeed, “[a]rbitrators are not required to set

forth their reasoning supporting an award.” Bosack, 586 F.3d at 1104, citation omitted. An

arbitrator’s “award may be made without explanation of their reasons and without a complete

record of their proceedings[.]” Id. An award is to be confirmed even in the face of erroneous

misinterpretations of law. G.C. & K .B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1105 (9th

Cir.2003). “It is not even enough that the [arbitrator] may have failed to understand or apply

the law. An arbitrator's decision must be upheld unless it is completely irrational or it

constitutes manifest disregard of the law.” Id.

J-Hanna is not asserting the arbitrator recognized the applicable law and then ignored

it. Rather, J-Hanna is arguing that the evidence she presented warranted a different decision.

The Court finds the arbitrator did not exceed his authority.

Evidence Supporting the Award

J-Hanna argues the arbitrator's statement that she had not sufficiently established her

claim to damages is belied by the repair costs of the vehicle. J-Hanna appears to have

interpreted the arbitrator's statement as meaning J-Hanna did not establish the value of the

damages. Rather, the arbitrator found J-Hanna had not established the claim itself. To any

extent J-Hanna seeks a review by this Court of the sufficiency of the evidence to support the

Award, such a review is beyond the scope of this Court's authority. Bosack v. Soward, 586

F.3d 1096, 1105 (9th Cir. 2009). Indeed, it is not appropriate for this Court to re-weigh the

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evidence. Coutee v. Barington Capital Group, L.P., 336 F.3d 1128, 1134 (9th Cir. 2003).

Agreement to Arbitrate

J-Hanna disputes that she agreed to present her claims to arbitration. The Court

considered whether the arbitration agreement between the parties was enforceable; the Court

found it was appropriate to stay this matter to allow the parties to proceed to arbitration in

its October 5, 2011, Order. See Doc. 66; see also Doc. 79. It is not appropriate to reconsider

that determination at this time and to any extent J-Hanna is seeking reconsideration of that

ruling, such request is denied.

Attorneys' Fees

Tucson Dodge requests an award of attorneys' fees. Tucson Dodge may file a motion

seeking such an award pursuant to Fed.R.Civ.P. 54 and LRCiv. 54.2.

Accordingly, IT IS ORDERED:

1. The Response to Tucson Dodge’s Closing Brief (Doc. 208) is STRICKEN.

2. The Motion to Vacate the AAA Award (Doc. 189) is DENIED.

3. The May 30, 2013, Award of Arbitrator (Docs. 184-1, 188-1, 192-2) is

CONFIRMED.

4. J-Hanna is awarded no damages on any claim against Tucson Dodge.

5. The Clerk of Court shall enter judgment and shall then close its file in this

matter.

DATED this 7th day of February, 2014.

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