Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-06096/USCOURTS-ca10-90-06096-0/pdf.json

Parties Involved:
Atlantic Richfield Company
Appellee
Claxton R. Cook
Appellant
Mable E. Cook
Appellant

Document Text:

.. 

UNITED STATES COURT OF APPEALS 

JUL .. 9 1991 

----------&OBERT L. HOECKER 

Clerk 

TENTH CIRCUIT 

CLAXTON R. COOK and ) 

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MABLE E. COOK, 

Plaintiffs-Appellants, 

vs. 

ATLANTIC RICHFIELD COMPANY, 

Defendant-Appellee. 

No. 90-6096 

(D.C. No. Civ-83-1717-R) 

( W. D • Okla. ) 

ORDER AND JUDGMENT* 

Before LOGAN, BALDOCK and BRIGHT,** Circuit Judges. 

Plaintiffs-appellants Claxton and Mable Cook owned surface 

acreage and mineral rights in Payne County, Oklahoma. In 1979, an 

agent of defendant-appellee Atlantic Richfield Company approached 

plaintiffs, offering to lease their mineral acreage for oil and 

gas exploration. Negotiations between the agent and plaintiffs 

culminated in an oil and gas lease together with a letter 

governing defendant's use of plaintiffs' surface acreage. Soon 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** The Honorable Myron H. Bright, Senior United States Circuit 

Judge, Eighth Circuit, sitting by designation. 

Appellate Case: 90-6096 Document: 010110128849 Date Filed: 07/09/1991 Page: 1 
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thereafter, defendant began exploration, but ignored the covenants 

in the letter. Plaintiffs filed this diversity action, alleging 

breach of contract and seeking damages. Defendant moved for 

dismissal, or in the alternative, arbitration pursuant to the 

Oklahoma Arbitration Act, Okla. Stat. Ann. tit. 15 §§ 801-818 

(West 1991). In sum, defendant contended that the letter was not 

a contract, but that if it were a contract, it would contain an 

enforceable arbitration clause. The court denied the motion to 

dismiss and also declined to order arbitration due to defendant's 

refusal to admit the contractual nature of the letter. Later, 

approximately one month before the scheduled trial date, the court 

ordered arbitration after defendant admitted the contractual 

nature of the letter and renewed its request for arbitration. 

Plaintiffs contend that (1) defendant waived its right to 

arbitration by waiting until the "eve of trial" to admit the 

contractual nature of the letter, and (2) the district court erred 

in failing to vacate the resulting arbitration award on account of 

the arbitration panel's refusal to consider claims for punitive 

damages. We affirm. 

Plaintiffs conceded at oral argument that they did not argue 

waiver of arbitration to the district court. They claim instead 

that the issue is properly before us for the first time on appeal 

because they did not have the opportunity to raise it below. Yet 

they fail to explain why they did not raise it in their motion to 

vacate the arbitration award. Because plaintiffs did not pursue 

this issue, which would necessitate a fact-intensive inquiry 

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below, we deem it "'inappropriate for consideration on appeal.'" 

Adams-Arapahoe School D. 28-J v. Continental Ins. Co., 891 F.2d 

772 (10th Cir. 1989) (quoting Stephens Ind., Inc. v. Haskins & 

Sells, 438 F.2d 357, 361 (10th Cir. 1971)). 

Regarding plaintiffs' second issue, we review de novo the 

district court's legal determination not to vacate the arbitration 

award. The Federal Arbitration Act, 9 u.s.c. §§ 1-16, applies to 

any arbitration provision which involves interstate commerce, and 

interstate commerce is interpreted very broadly. See Foster v. 

Turley, 808 F.2d 38, 40 (10th Cir. 1986). Federal law, therefore, 

preempts in most situations. In this case, however, the district 

court applied the Oklahoma Arbitration Act because it lacked 

sufficient information to determine whether the contract involved 

interstate commerce. Regardless of the propriety of this 

determination, the point is moot because the Oklahoma Act tracks 

the federal legislation in all aspects relevant to this case. We 

therefore will apply federal law in reviewing the district court's 

determination. See Foster, 808 F.2d at 41 (applying federal law). 

In reviewing the record of the proceedings below we find no 

error. Before this dispute was referred for arbitration, the 

parties agreed to a partial settlement. See IR. doc. 43. As 

part of the settlement, the issue of whether punitive damages were 

included in the settlement agreement was to be determined by the 

arbitration panel. Id. at 2. The panel, in turn, determined that 

the partial settlement included punitive damages and therefore 

precluded an award of such damages in arbitration. Plaintiffs 

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contend that this was a refusal to hear evidence material to the 

controversy, and therefore warrants vacation of the arbitration 

award. See 9 u.s.c. § 10 (vacation appropriate if arbitrators 

"refus[ed] to hear evidence pertinent and material to the 

controversy"). We do not agree. The panel's legal determination 

that punitive damages were precluded by the partial settlement 

agreement made all evidence of such damages immaterial, and 

because this legal determination was within the panel's authority 

by virtue of the parties' stipulation, the district court properly 

denied to vacate the award. See id.§ 10 (a)(5) (award subject to 

vacation if arbitrators "exceed[] their powers"). This is not to 

say that the panel's legal interpretations are not reviewable. If 

the interpretation ignores the plain language of the agreement, 

the resulting award may be vacated on account of lack of 

authority. See Jenkins v. Prudential-Bache Securities, Inc., 847 

F.2d 631, 635 (10th Cir. 1988). But this narrow review does not 

encompass mere misapplications of law. "Even if the panel misread 

the contract, we may not reverse for that reason alone." Id. at 

635. Upon review of the record, we cannot say that the panel 

ignored the language of the settlement agreement. Therefore, we 

must affirm the district court's refusal to vacate the award. 

AFFIRMED. 

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Entered for the Court 

Bobby R. Baldock 

Circuit Judge 

Appellate Case: 90-6096 Document: 010110128849 Date Filed: 07/09/1991 Page: 4