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GARLOCK v. 3DS PROPERTIES

Cite as 303 Neb. 521

John A. Garlock and John H. Ga

appellees, v. 3DS Properties, L.L

a Nebraska limited liability

company, et al., appellant

___ N.W.2d ___

Filed July 5, 2019. No. S-18-336.

1. Arbitration and Award: Appeal and Error. In reviewing a decision 

to vacate, modify, or confirm an arbitration award, an appellate court is 

obligated to reach a conclusion independent of the trial court’s ruling as 

to questions of law. However, the trial court’s factual findings will not 

be set aside on appeal unless clearly erroneous.

2. Arbitration and Award: Federal Acts: Contracts. Arbitration in 

Nebraska is governed by the Federal Arbitration Act if it arises from 

a contract involving interstate commerce; otherwise, it is governed by 

Nebraska’s Uniform Arbitration Act. When determining whether an arbitration clause is governed by the Uniform Arbitration Act or the Federal 

Arbitration Act, the initial question is whether the parties’ contract evidences a transaction “involving commerce” as defined by the Federal 

Arbitration Act.

3. Contracts: Real Estate. While more complex transactions may implicate interstate commerce, a simple contract for the sale of residential 

real estate is an inherently intrastate activity.

4. Arbitration and Award: Waiver. As a general rule, voluntary participation in an arbitration proceeding on the merits of a dispute will result in 

a waiver or forfeiture of the right to later challenge arbitrability. In other 

words, a party may not voluntarily submit a dispute to arbitration and, 

after an unfavorable result, petition the courts to find the dispute was 

not arbitrable.

5. Arbitration and Award. If a party clearly and explicitly makes known 

to the arbitrator, prior to a hearing on the merits, that he or she objects 

to the arbitrability of an issue, that party’s participation in the arbitration 

will not preclude a later judicial challenge to arbitrability.

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

09/20/2019 01:06 AM CDT
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6. ____. A party who voluntarily participates in an arbitration proceeding 

without raising objection may not thereafter rely on Neb. Rev. Stat. 

§ 25-2613(a)(5) (Reissue 2016) to support judicial vacatur.

7. ____. When a party seeks to confirm an arbitration award pursuant to 

the Uniform Arbitration Act, a court must confirm that award unless a 

party has sought to vacate, modify, or correct the award and grounds for 

such vacation, modification, or correction exist.

8. ____. Neb. Rev. Stat. § 25-2612 (Reissue 2016) of the Uniform 

Arbitration Act does not allow for the exercise of discretion by the court 

when a request of confirmation is made where there has been no application for vacation or modification.

Appeal from the District Court for Douglas County: James T.

Gleason, Judge. Reversed and remanded with directions

Douglas W. Ruge for appellant Ryan Basye.

William J. Bianco, of Bianco Stroh, L.L.C., for appellants 

3DS Properties, L.L.C., and Keith Donner.

Justin D. Eichmann and Sarah E. Cavanagh, of Houghton, 

Bradford & Whitted, P.C., L.L.O., for appellees.

Heavican, C.J., Miller-Lerman, Cassel, Stacy

Papik, and Freudenberg 

Stacy, 

The purchasers of a home filed suit against the sellers, 

alleging several defects in the home had been concealed. The 

district court stayed the lawsuit to permit either mediation or 

arbitration as provided in the purchase agreement, and the parties proceeded to arbitration. After an arbitration award was 

entered in favor of the sellers, the purchasers moved the district 

court to vacate the award, and the sellers moved to confirm it. 

The district court vacated the award, and the sellers filed this 

appeal. We reverse, and remand with directions to confirm the 

arbitration award.

BACKGROUND

On or about March 26, 2015, John A. Garlock and John 

H. Garlock entered into a purchase agreement with 3DS 
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Properties, L.L.C. (3DS), for the sale of a home in Omaha, 

Nebraska. The sellers’ disclosure statement had been signed by 

3DS member Keith Donner, and the home was listed by Ryan 

Basye, a licensed real estate agent in Nebraska. After closing, 

the Garlocks discovered problems with the home.

Lawsui

On May 13, 2016, the Garlocks filed a complaint in the 

Douglas County District Court against 3DS, Donner, and Basye, 

alleging multiple theories of recovery, including a violation of 

Neb. Rev. Stat. § 76-2,120 (Cum. Supp. 2014), fraudulent concealment, false representation, negligent misrepresentation, and 

breach of contract. The complaint alleged the “Seller Property 

Condition Disclosure,” signed by Donner, misrepresented the 

condition of the home. In particular, the complaint alleged the 

disclosure statement falsely indicated that the roof did not leak, 

there was no damage to the roof, there was no water seepage 

in the basement, and there were no structural problems with 

the property.

Paragraph 35 of the purchase agreement was entitled 

“Arbitration and Mediation” and provided in relevant part:

B. Mediation: In the event of any Dispute, any party 

to the Dispute may seek non-binding mediation in an 

attempt to resolve the dispute by giving fifteen (15) days 

written notice of a request for such mediation to all other 

parties to the Dispute. . . .

C. Arbitration: Any Dispute that is not resolved by 

informal settlement or mediation shall be resolved exclusively by binding arbitration. Such arbitration shall be 

administered by the American Arbitration Association and 

shall be conducted according to the American Arbitration 

Association’s Commercial Rules — Real Estate Industry 

Arbitration Rules (Including a Mediation Alternative). 

The arbiter(s) shall apply Nebraska substantive and procedural law to the arbitration proceeding. Arbitration shall 

be commenced by written demand made by any one 

or more of the parties to the Dispute given to all other 
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parties of the Dispute. . . . The prevailing party shall be 

entitled to costs and fees of the arbitration and, in the 

discretion of the arbitrator who shall take into account 

the relative merits of the opponent’s case, the arbiter may 

award attorney’s fees and arbitration costs to the prevailing party.

(Emphasis omitted.) Above the signature line in the purchase 

agreement appeared a sentence which read: “This contract 

contains an arbitration provision which may be enforced by the 

parties.” (Emphasis omitted.) This sentence appeared in font 

which was bolded and capitalized, but was not underlined.

On July 5, 2016, 3DS and Donner jointly moved to dismiss 

the lawsuit because the purchase agreement required that “any 

dispute not resolved by informal settlement or mediation shall 

be resolved exclusively by binding arbitration.” Shortly thereafter, Basye filed a motion seeking to “[d]ismiss or [s]tay” the 

lawsuit for the same reason.

A hearing was held on the motions, but our record does not 

include a transcription of that proceeding. After the hearing, the 

court entered an order staying the case and deferring ruling on 

the motions to dismiss. The court’s order, entered September 

21, 2016, did not expressly order either mediation or arbitration, but instead stayed the lawsuit “until such time as the parties have either entered into a form of mediation or by agreement . . . submit[ted] to arbitration as set forth in Paragraph 

C of Section 35.” No appeal was taken from this order.1

Thereafter, the Garlocks filed a written demand for expedited 

arbitration, and all parties began the arbitration process.

Approximately 6 months later, on March 22, 2017, the 

Garlocks filed what they styled a “Motion for Rehearing” 

asking the court to reconsider its order of September 21, 

2016, staying the lawsuit. In support, the Garlocks alleged 

for the first time that the arbitration provision in the purchase 

1 See Kremer v. Rural Community Ins. Co., 280 Neb. 591, 788 N.W.2d 

538 (2010) (order compelling arbitration or staying judicial proceedings 

pending arbitration is final order).
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agreement violated Neb. Rev. Stat. § 25-2602.02 (Reissue 

2016) of Nebraska’s Uniform Arbitration Act (UAA)2 because 

certain language was not underlined. In response, 3DS and 

Donner filed another motion to dismiss, again asserting that the 

purchase agreement required the parties’ dispute to be settled 

by binding arbitration.

On May 16, 2017, a hearing was held on all pending motions 

and evidence was adduced. Among the exhibits offered were 

affidavits of the Garlocks in which they averred they had initiated arbitration proceedings, but were dissatisfied with (1) 

how costly and complex the arbitration process was, (2) the 

length of time the arbitration was taking, (3) the fact that they 

would “still need the services of an attorney” during the arbitration, and (4) the discovery limitations they had encountered 

in arbitration. The Garlocks’ affidavits stated that if they had 

known these things in advance, they would not have agreed 

to arbitrate.

After receiving evidence and hearing argument, the court 

took all motions under advisement. At the time of the hearing, 

all parties were aware that an arbitration hearing was set for 

June 12 and 13, 2017, in Omaha. However, no party advised 

the court of this fact, and no party asked to stay or enjoin the 

imminent arbitration hearing.3

Instead, the arbitration took place as scheduled and was 

completed before the district court ruled on either the Garlocks’ 

motion to reconsider or the motion to dismiss filed by 3DS and 

Donner. All parties to the district court action participated in 

the arbitration hearing, and all were represented by counsel.

Arbitrati

After the Garlocks filed a written demand for expedited arbitration, the parties selected an arbitrator and the proceedings 

2 Neb. Rev. Stat. §§ 25-2601 to 25-2622 (Reissue 2016).

3 See § 25-2603(b) (“[o]n application, the court may stay an arbitration 

proceeding commenced or threatened on a showing that there is no 

agreement to arbitrate”).
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were expanded to include discovery and a multiday hearing. 

The parties agreed to have a court reporter present for the 

arbitration hearing, which was held in Omaha at an agreedupon location.

All parties consented to participate in the arbitration and 

agreed to be bound by it. Before the arbitration hearing, 

Basye’s attorney sent an email addressed to the arbitration 

company and the Garlocks’ attorney, stating: “By this email, 

my client consents and agrees to be bound by the arbitration. 

This is contingent on a substantially similar representation by 

the other parties.” At the start of the arbitration hearing on 

June 12, 2017, the Garlocks’ attorney asked the arbitrator to 

confirm, on the record, each party’s consent to arbitrate. The 

arbitrator then individually confirmed the parties’ agreement to 

proceed with the arbitration and to be bound by it. During the 

2-day arbitration hearing that followed, more than 70 exhibits 

were offered and 12 witnesses testified.

An arbitration award was issued July 14, 2017. The award 

began by addressing procedural issues and expressly stated 

that before the arbitration hearing, and again during the hearing, a question was raised whether all parties had agreed 

to be bound by arbitration. The arbitrator found that “all 

Respondents agreed in writing to waive any challenge to 

the binding nature of the arbitration proceedings” and that 

“[t]he Parties also made the same representation on the record 

before the close of [the] Hearing.” Additionally, the arbitrator 

acknowledged he had been advised that the Garlocks had “a 

pending motion before the state court regarding reconsideration of its remand of this matter to arbitration” but that they 

had “agreed to move forward with the arbitration.” The arbitrator further stated: “No motion for continuance was made or 

pending at the time of [the arbitration] Hearing and no court 

order presented.”

The arbitrator’s award then discussed the merits of the 

Garlocks’ claims and found there was “no credible evidence to 

support” any of the Garlocks’ claims against 3DS, Donner, or 

Basye. The arbitrator ordered the Garlocks to pay the costs of 
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the arbitration and ordered each party to pay their own attorney fees.

Competing Motions to 

and Confirm Arbitr

On August 11, 2017, the Garlocks filed, in the district court 

action, an “Application to Vacate” the arbitration award. The 

motion asserted three grounds for vacating the award: (1) The 

arbitrator was partial to the defendants, (2) the award was contrary to Nebraska public policy, and (3) the arbitrator refused to 

postpone the arbitration hearing despite a pending motion for 

rehearing in the district court action.

On September 12, 2017, 3DS and Donner filed another 

motion to dismiss, this time alleging the lawsuit should be 

dismissed because binding arbitration had been completed 

by the parties. Thereafter, on November 14, 3DS and Donner 

filed a motion seeking judicial confirmation of the arbitration award.

On November 17, 2017, a hearing was held before the district court on all pending motions. Evidence was adduced, and 

the matter was taken under advisement.

Order Finding Arbitrati

and Vacating

In an order entered March 8, 2018, the district court noted 

that while the motion for rehearing of its order staying the 

lawsuit was under advisement, “the parties proceeded with 

arbitration.” It recognized that the Garlocks were now seeking 

to vacate the arbitration award, while 3DS and Donner were 

seeking to confirm it.

The court first took up the motion for rehearing and found 

that the arbitration provision in the purchase agreement was 

unenforceable, citing § 25-2602.02 and reasoning:

[T]he language “This contract contains [an] arbitration 

provision which may be enforced by the parties” was not 

underlined as required by Statute. Although the language 

was set forth in bold face type, this does not comply with 
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[§ 25-2602.02] and our Court has required strict compliance with this Statute in order to enforce [an] arbitration 

clause. [Citation omitted.] This failure is fatal to the 

enforcement of the arbitration clause.

The court also stated: “Because this court is of the opinion that 

the motion for rehearing should be granted, the Court must 

determine that the arbitration proceedings which the parties 

involved themselves in while this matter was under advisement, are a nullity.”

The court then sustained the Garlocks’ motion to vacate the 

arbitration award, reasoning that the parties “would not have 

participated in arbitration but for the exigent circumstances 

and for that reason, this Court determines that the arbitration 

itself was void.” The court also ordered that the costs of the 

arbitration be reallocated so that the plaintiffs and defendants 

were each responsible for one-half of the costs. Finally, the 

court denied both the motion to dismiss and the motion to confirm the arbitration award.

Various Motions After

Vacating Arbitratio

In response to the March 8, 2018, order vacating the arbitration award, the defendants filed several motions on March 

12, including a motion to reconsider and a motion to alter 

or amend. The motion to reconsider alleged that because the 

parties had “willingly participated” in arbitration and agreed 

to be bound by the results, it was immaterial that the arbitration clause in the purchase agreement did not comply with 

§ 25-2602.02 of the UAA. The motion also alleged there was 

no evidence to support the court’s finding that arbitration took 

place only due to “exigent circumstances.” The motion to alter 

or amend was filed only by Basye. He generally alleged the 

court had improperly applied the UAA to invalidate the arbitration agreement when the agreement was governed by the 

Federal Arbitration Act (FAA).4

4 9 U.S.C. §§ 1 to 16 (2012).
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In an order entered March 20, 2018, the court overruled the 

motion to reconsider and the motion to alter or amend. 3DS, 

Donner, and Basye filed a joint notice of appeal on March 31, 

appealing from the orders of March 8 and 20.

ASSIGNMENTS OF ERROR

3DS, Donner, and Basye assign, restated and consolidated, 

that the district court erred by (1) implicitly finding that the 

FAA did not apply, (2) finding the arbitration provision in the 

purchase agreement was unenforceable under the UAA, (3) 

vacating the arbitration award, and (4) failing to confirm the 

arbitration award.

STANDARD OF REVIEW

[1] In reviewing a decision to vacate, modify, or confirm 

an arbitration award, an appellate court is obligated to reach 

a conclusion independent of the trial court’s ruling as to questions of law.5

 However, the trial court’s factual findings will 

not be set aside on appeal unless clearly erroneous.6

ANALYSIS

Applicable 

[2] Before addressing the arbitration issues raised by the 

parties on appeal, we consider whether our analysis is governed by the UAA or the FAA. Arbitration in Nebraska is 

governed by the FAA if it arises from a contract involving 

interstate commerce; otherwise, it is governed by the UAA.7

When determining whether an arbitration clause is governed 

by the UAA or the FAA, the initial question is whether the parties’ contract evidences a transaction “involving commerce” as 

defined by the FAA.8

5 Ronald J. Palagi, P.C. v. Prospect Funding Holdings, 302 Neb. 769, 925 

N.W.2d 344 (2019); State v. Henderson, 277 Neb. 240, 762 N.W.2d 1 

(2009).

6 Id.

7 Ronald J. Palagi, P.C., supra note 5.

8 Id.
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The U.S. Supreme Court has interpreted the term “involving commerce” in the FAA as the functional equivalent of 

the more familiar term “affecting commerce”—words of art 

that ordinarily signal the broadest permissible exercise of 

Congress’ Commerce Clause power.9 As such, we have held the 

FAA “‘embodies Congress’ intent to provide for the enforcement of arbitration agreements within the full reach of the 

Commerce Clause.’”10

We applied this reasoning in Wilczewski v. Charter West Nat. 

Bank11 to hold that an arbitration provision in a purchase agreement for the sale of residential property was governed by the 

FAA because the residential property was being sold by a bank 

as part of a foreclosure. We reasoned:

The nationwide impact of residential real estate lending was a central focus of the Housing and Economic 

Recovery Act of 2008, which Congress passed in response 

to a national financial crisis. Generally, residential real 

estate lending affects interstate commerce. And the sale 

to the [buyers] was merely the last step of [the selling 

bank’s] loan, foreclosure, acquisition of title, and resale 

of its security.12

But in Wilczewski, we confined our holding to the foreclosure 

sale at issue, which was part of a “comprehensive practice or 

activity of lending money on residential real estate, enforcing liens, acquiring title, and reselling.”13 And even though 

the commercial transaction in Wilczewski culminated in the 

sale of a residential home, we distinguished it from transactions that “merely addressed individual sales of residential 

9 Wilczewski v. Charter West Nat. Bank, 295 Neb. 254, 889 N.W.2d 63 

(2016).

10 Id. at 260, 889 N.W.2d at 68.

11 Wilczewski, supra note 9.

12 Id. at 263, 889 N.W.2d at 69-70.

13 Id. at 264, 889 N.W.2d at 70.
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real estate”14 and left for another day the question of “whether 

the FAA applies to a simple contract for the sale of residential 

real estate.”15

3DS, Donner, and Basye argue that the FAA applies to the 

purchase agreement in this case, because “[i]nstruments of 

interstate commerce were utilized.”16 They point to the use of 

the internet to advertise the property and the purchase of appliances when preparing the house for sale. But in Wilczewski, we 

held that such tangential details should not control.17 Rather, 

we determined the proper inquiry is whether the “program or 

activity” at issue affects interstate commerce.18

[3] In Wilczewski, interstate commerce was affected 

because the sale was part of a program or activity of loaning 

money secured by residential real estate. But here, the activity involved nothing more than a simple contract for the sale 

of residential real estate. Although there was evidence that 

3DS and Donner are engaged in the business of acquiring and 

reselling residential real estate for profit, we find this case 

presents “a simple contract for the sale of residential real 

estate.”19 And, while more complex transactions may implicate interstate commerce, we hold that a simple contract for 

the sale of residential real estate is an inherently intrastate 

activity.20 On the facts of this case, the UAA governs the 

purchase agreement. The district court did not err in applying 

14 Id.

15 Id.

16 Brief for appellant Basye at 25.

17 Wilczewski, supra note 9.

18 Id. at 264, 889 N.W.2d at 70.

19 Id.

20 See, Garrison v. Palmas Del Mar Homeowners Ass’n., Inc., 538 F. Supp. 

2d 468 (2008); Saneil v. Robards, 289 F. Supp. 2d 855 (W.D. Ky. 2003); 

SI V, LLC v. FMC Corp., 223 F. Supp. 2d 1059 (N.D. Cal. 2002); Cecala 

v. Moore, 982 F. Supp. 609 (N.D. Ill. 1997); Bradley v. Brentwood Homes, 

Inc., 398 S.C. 447, 730 S.E.2d 312 (2012).
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the UAA rather than the FAA. The first assignment of error 

has no merit.

Jurisdicti

Having determined the UAA governs the purchase agreement in this case, we next address our jurisdiction to consider 

this interlocutory appeal. It is the duty of an appellate court to 

determine whether it has jurisdiction over the matter before it, 

even where no party has raised the issue.21

Section 25-2620 of the UAA provides:

(a) An appeal may be taken from:

(1) An order denying an application to compel arbitration made under section 25-2603;

(2) An order granting an application to stay arbitration 

made under subsection (b) of section 25-2603;

(3) An order confirming or denying confirmation of 

an award;

(4) An order modifying or correcting an award;

(5) An order vacating an award without directing a 

rehearing; or

(6) A judgment or decree entered pursuant to the provisions of the [UAA].

(b) The appeal shall be taken in the manner and to the 

same extent as from orders or judgments in a civil action.

This appeal was taken from an order that denied confirmation 

of an arbitration award and vacated an award without directing 

a rehearing. We therefore have appellate jurisdiction pursuant 

to § 25-2620(a)(3) and (5), and it is unnecessary to consider 

whether the orders appealed from are also final, appealable 

orders under Neb. Rev. Stat. § 25-1902 (Reissue 2016).22

Waiver of Challenge to Arbitrab

The trial court’s order of March 8, 2018, and the parties’ 

briefs on appeal focus primarily on the enforceability of the 

21 See McCullough v. McCullough, 299 Neb. 719, 910 N.W.2d 515 (2018).

22 See, generally, Kremer, supra note 1.
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arbitration provision in the purchase agreement and the arbitrability of the parties’ dispute. But given the procedural posture 

of this case and the parties’ agreement on the record before the 

arbitrator to proceed with arbitration of their dispute, we first 

address whether the Garlocks’ challenge to arbitrability has 

been waived in this case.

After the litigation was stayed by the district court to permit mediation or arbitration—an order from which no party 

appealed23—all parties voluntarily submitted to and completed 

binding arbitration. And they did so despite a pending motion 

for rehearing before the district court that ordered the stay. 

The arbitrator found that “all Respondents agreed in writing to waive any challenge to the binding nature of the 

arbitration proceedings” and that “[t]he Parties also made 

the same representation on the record before the close of 

[the] Hearing.”

Nebraska’s appellate courts have not yet addressed whether, 

or under what circumstances, a party’s participation in an arbitration proceeding without objection may result in a waiver of 

that party’s right to subsequently challenge arbitrability under 

state law. But many other states and several U.S. Circuit Courts 

of Appeal have considered the question.24

[4,5] As a general rule, these courts hold that voluntary 

participation in an arbitration proceeding on the merits of a 

dispute will result in a waiver or forfeiture of the right to later 

challenge arbitrability.25 In other words, a party may not voluntarily submit a dispute to arbitration and, after an unfavorable result, petition the courts to find the dispute was not 

23 See id.

24 See Annot., Participation in Arbitration Proceedings as Waiver of 

Objections to Arbitrability Under State Law, 56 A.L.R.5th 757 (1998).

25 Id., §§ 2 and 3. See 21 Richard A. Lord, A Treatise on the Law of Contracts 

by Samuel Williston § 57:102 (4th ed. 2017) (“one who voluntarily and 

without objection participates in arbitration proceedings waives the right 

to object thereafter to the arbitrability of previously decided issues”).
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arbitrable.26 If, however, a party clearly and explicitly makes 

known to the arbitrator, prior to a hearing on the merits, that 

he or she objects to the arbitrability of an issue, that party’s 

participation in the arbitration will not preclude a later judicial 

challenge to arbitrability.27

The principle that a party may waive arbitrability by not 

timely objecting has been effectively codified under the UAA, 

which authorizes judicial vacatur of an arbitration award when 

“[t]here was no arbitration agreement and the issue was not 

adversely determined in proceedings under section 25-2603, 

and the party did not participate in the arbitration hearing 

without raising the objection[.]”28

In the instant case, the conduct of the Garlocks resulted in a 

waiver of the right to challenge arbitrability. After the district 

court stayed the lawsuit pending either mediation or arbitration, the Garlocks initiated arbitration proceedings. Six months 

later, the Garlocks asked the district court to reconsider its stay, 

but they did not seek a judicial stay of the ongoing arbitration 

proceedings under § 25-2603(b) despite the fact that the arbitration hearing was imminent. Instead, the Garlocks voluntarily 

proceeded with the arbitration hearing and never raised an 

objection to arbitrability before the arbitrator. To the contrary, 

they expressly agreed on the record to be bound by the decision of the arbitrator, and they asked the arbitrator to secure 

similar agreements on the record from all other parties, which 

he did. Thus, while it is possible for a party to participate in 

26 See, e.g., Howard Univ. v. Metro. Campus Police Officer’s Un., 512 F.3d 

716 (D.C. Cir. 2008); Fortune, Alsweet & Eldridge, Inc. v. Daniel, 724 

F.2d 1355 (9th Cir. 1983); Bacon Const. Co. v. Dept. of Public Works, 294 

Conn. 695, 987 A.2d 348 (2010); First Health Group Corp. v. Ruddick, 

393 Ill. App. 3d 40, 911 N.E.2d 1201, 331 Ill. Dec. 971 (2009).

27 See, e.g., Opals on Ice Lingerie v. Body Lines Inc., 320 F.3d 362 (2d Cir. 

2003); AGCO Corp. v. Anglin, 216 F.3d 589 (7th Cir. 2000); Azcon Const. 

Co. v. Golden Hills Resort, 498 N.W.2d 630 (S.D. 1993).

28 § 25-2613(a)(5) (emphasis supplied).
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an arbitration and still preserve an objection to arbitrability, the 

Garlocks did not do so here.

We find, on this record, that all parties voluntarily submitted 

their dispute to arbitration without objecting to arbitrability, 

and thereby waived the right to seek a judicial determination 

that the dispute was not arbitrable.

Court Erred in Rul

Motion for Reh

In their second assignment, 3DS, Donner, and Basye argue 

the district court erred when it found the arbitration provision 

in the purchase agreement was unenforceable. Given the context and timing of the court’s finding in that regard, we agree 

the court erred.

The court’s finding on arbitrability was not made until after 

the parties had agreed to be bound by the arbitrator’s decision, 

had participated in the arbitration hearing, and had received 

the arbitrator’s award. Fully aware that the parties’ dispute had 

already been arbitrated, and with the complete record of the 

arbitration proceeding offered into evidence on the competing 

motions to vacate and confirm the arbitration award, the court 

nevertheless granted an earlier motion for rehearing and then 

concluded, after the fact, that the entire arbitration was a nullity because the arbitration provision in the purchase agreement 

was unenforceable under the UAA.

But by the time the court ruled on the motion for rehearing, 

the parties had already consented to, and completed, arbitration. Once the arbitration award was entered, challenges to 

that award—including claims that there was no enforceable 

arbitration agreement—were properly taken up in the context 

of the Garlocks’ motion to vacate the award. Thus, instead of 

ruling on a motion for rehearing that could no longer provide 

the relief sought, the district court should have proceeded 

directly to consideration of the Garlocks’ application to vacate 

the arbitration award and the competing motion to confirm the 

award brought by 3DS and Donner.
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Error to Vacate A

Under § 25-26

Section 25-2613 provides in relevant part:

(a) Upon application of a party, the court shall vacate 

an award when:

(1) The award was procured by corruption, fraud, or 

other undue means;

(2) There was evident partiality by an arbitrator 

appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;

(3) The arbitrators exceeded their powers;

(4) The arbitrators refused to postpone the hearing 

upon sufficient cause being shown therefor, refused to 

hear evidence material to the controversy, or otherwise 

so conducted the hearing, contrary to the provisions of 

section 25-2606, as to prejudice substantially the rights 

of a party;

(5) There was no arbitration agreement and the issue 

was not adversely determined in proceedings under section 25-2603, and the party did not participate in the arbitration hearing without raising the objection; or

(6) An arbitrator was subject to disqualification pursuant to section 25-2604.01 and failed, upon receipt of 

timely demand, to disqualify himself or herself as required 

by such section.

The fact that the relief was such that it could not or 

would not be granted by a court of law or equity is not 

ground for vacating or refusing to confirm the award.

The Garlocks sought to vacate the award on three grounds: 

(1) The arbitrator was “partial to the Defendants,” (2) the 

award was “contrary to the public policy” of Nebraska, and 

(3) the arbitrator “refused to postpone” the arbitration hearing. 

The Garlocks’ first and third grounds for vacatur are recognized in § 25-2613, and their second ground (that the award 

was contrary to public policy) was recognized by this court in 
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State v. Henderson29 as a reason to refuse to enforce an arbitration award.

But at the hearing on the motion to vacate, the Garlocks 

did not offer evidence to support any of these three grounds. 

Instead, they offered only the record of the proceedings before 

the arbitrator and argued the question of arbitrability, claiming 

the “arbitration clause [in the purchase agreement] is void.”

[6] As stated, § 25-2613(a)(5) authorizes vacating an arbitration award when “[t]here was no arbitration agreement and 

the issue was not adversely determined in proceedings under 

section 25-2603, and the party did not participate in the arbitration hearing without raising the objection[.]” Because the 

Garlocks voluntarily participated in the arbitration hearing 

without raising any objection to arbitrability, they may not now 

rely on § 25-2613(a)(5) to support judicial vacatur.

Without evidence to support any of the three grounds raised 

in the Garlocks’ application, and because the Garlocks cannot 

rely on § 25-2613(a)(5) to support their request for judicial 

vacatur, it was error for the district court to vacate the arbitration award.

Error Not to Confirm A

Under § 25-26

Section 25-2612 provides:

Within sixty days of the application of a party, the 

court shall confirm an award, unless within the time 

limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case 

the court shall proceed as provided in sections 25-2613 

[vacating an award] and 25-2614 [modifying or correcting an award].

[7,8] When a party seeks to confirm an arbitration award 

pursuant to the UAA, a court must confirm that award unless 

29 Henderson, supra note 5 (holding court may refuse to enforce arbitration 

award contrary to public policy that is explicit, well defined, and dominant).
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a party has sought to vacate, modify, or correct the award and 

grounds for such vacation, modification, or correction exist.30

We have stated that “§ 25-2612 does not allow for the exercise of discretion by the court when a request of confirmation 

is made where there has been no application for vacation or 

modification.”31

Here, no party sought to modify the award, and the Garlocks’ 

application to vacate the award was meritless. As such, it 

was error to overrule the application to confirm the award. 

Instead, the district court should have confirmed the arbitration award pursuant to § 25-2612 and then entered judgment 

in conformity therewith pursuant to § 25-2615. For the sake 

of completeness, we also note that absent a timely application 

to modify under § 25-2614, it was plain error for the district 

court to modify the arbitration award by reallocating the arbitration expenses.32

CONCLUSION

For the foregoing reasons, we find the second, third, and 

fourth assignments of error have merit and we reverse, and 

remand with directions to confirm the arbitration award and to 

enter judgment in conformity therewith.

Reversed and remanded with direct

30 See Drummond v. State Farm Mut. Auto. Ins. Co., 280 Neb. 258, 785 

N.W.2d 829 (2010).

31 Id. at 262, 785 N.W.2d at 833.

32 See § 25-2611 (“[u]nless otherwise provided in the agreement to arbitrate, 

the arbitrators’ expenses and fees together with other expenses, not 

including counsel fees, incurred in the conduct of the arbitration shall be 

paid as provided in the award”).