UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

N o . 99-1009WMKc

Legion Insurance Co., *

*

Appellee, *

* Appeal from the United States

V . * District Court for the * Western District of Missouri

VCW, Inc .; Preferred *

Administrative Services, Inc., *

*

Appellants. *

Appellee's petition for rehearing by the panel has been considered

by the court and is granted. The opinion and judgment of this court

entered on October 21, 1999, are vacated.

On the court's own motion the opinion of October 21, 1999, is withdrawn

and the attached opinion is filed in its stead.

November 24, 1999

Order Entered at the Direction of the Court:

Clerk, U.S. Court of Appeals, Eighth Circuit
1The Honorable Andrew W. Bogue, United States District Judge for the District

of South Dakota, sitting by designation.

2See Domino Group, Inc. v. Charlie Parker Memorial Found., 985 F.2d 417, 420

(8th Cir. 1993); Local P-9, United Food and Commercial Workers Int'l Union, v.

George A. Hormel & Co., 776 F.2d 1393, 1394 (8th Cir. 1985).

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 99-1009

___________

Legion Insurance Co., *

*

Appellee, *

* Appeal from the United States

v. * District Court for the 

* Western District of Missouri.

VCW, Inc.; Preferred Administrative *

Services, Inc., *

*

Appellants. *

___________

Submitted: September 16, 1999

Filed: November 24, 1999

___________

Before BEAM and FAGG, Circuit Judges, and BOGUE,1 District Judge.

___________

BEAM, Circuit Judge.

The doctrine of functus officio prevents arbitrators from revisiting a final award

after the final award has been issued.2 In this appeal by VCW, Inc., and Preferred
-2-

Administrative Services, Inc. (PAS), we hold that this doctrine prevented an arbitration

panel from rescinding a final arbitration award after a federal district court decided to

vacate in part and confirm in part that award. We also hold that the district court erred

when it used section 10 of the Federal Arbitration Act (FAA) to both vacate and

confirm the award.

I. BACKGROUND

VCW markets insurance policies to truckers. In 1993, Legion Insurance Co. and

VCW agreed that Legion would provide insurance policies and that VCW would

market the policies. The deal provided, in part, that: (1) VCW would collect premiums

for Legion; (2) PAS, a VCW affiliate, would adjust and administer claims; (3) Legion

would reinsure the risk with Mutual Indemnity (Bermuda) Ltd. (Mutual); and (4) VCW

would post letters of credit in favor of Mutual as a security deposit.

Ultimately, the parties became disgruntled with each other's performance.

Legion asserted that VCW failed to remit premiums and VCW contended that Legion

and Mutual wrongfully refused to reduce VCW's letters of credit obligations. The

claims were submitted to an arbitration panel. Resolution of the claims set off a

decisional ping-pong match between the arbitration panel and the federal district court.

First, the arbitration panel heard both Legion's and VCW's claims and issued an

"Interim Order" that instructed VCW to pay premiums to Legion. The order also

instructed Mutual Indemnity to reduce the amount of VCW's letters of credit.

Legion then asked the district court to nullify the portion of the arbitration award

that reduced the letters of credit. The district court granted Legion's request, finding

that the arbitration panel had exceeded its powers in arbitrating the issue. Thus, the

district court vacated that portion of the arbitration panel's order, but confirmed the

portion of the order that awarded unpaid premiums.
3Legion has moved to supplement the record on appeal. We grant that motion,

but note that the supplemental information has no bearing on our decision. 

4We review questions of law de novo. See United States v. Garner, 181 F.3d

988, 991 (8th Cir. 1999). 

-3-

Not satisfied with the district court ruling, VCW and PAS returned to the

arbitration panel and requested that the panel rescind its award of premiums to Legion.

The arbitration panel granted the request. The panel stated that it had intended its

original award of premiums to be indivisible from the award of a reduction of the letters

of credit.

Finally, Legion returned to district court and filed a motion to vacate the

arbitration panel's second order that rescinded the award of premiums. The district

court then vacated the panel's order, ruling that the doctrine of functus officio barred

the panel from rescinding the award.

VCW and PAS appeal the district court's order vacating the panel's second order.

 VCW and PAS also appeal the district court's decision to vacate in part and to confirm

in part the arbitration panel's first order.3

II. DISCUSSION

A. Applicability of the Functus Officio Doctrine

VCW first argues that the functus officio doctrine is inapplicable because the

arbitration panel's first order was not final.4 "Whether the award indicates that [it] is

final and whether the arbitrator intended the award to be final are factors in determining

if an arbitration award is final." Local 36, Sheet Metal Workers Int'l Assoc. v. Pevely

Sheet Metal Co., 951 F.2d 947, 949 (8th Cir. 1992).
-4-

In this case, we have no doubt that the arbitration panel intended the award of

premiums to be a final order. This intent is shown by language in the order itself that

instructs the parties to seek further relief in federal district court. The arbitrators

certainly would not have so instructed if they had planned to revisit, and possibly

rescind, the award of premiums at a later date. Moreover, the parties must have felt

that the arbitrators intended the award of premiums to be final because there is nothing

in the record to indicate that either side argued to the district court that the court did not

have jurisdiction to review the award for lack of finality.

VCW also argues that the order was not final because the panel still had to

decide additional issues, such as the amount of adjustments to the award of premiums.

An award cannot be final if significant issues still need to be determined. See id.

However, we do not think that a minor adjustment to the award creates an important

issue. Further, an order does not have to be final in all aspects for the functus officio

doctrine to apply. See Domino Group, Inc. v. Charlie Parker Memorial Found., 985

F.2d 417 (8th Cir. 1993) (applying functus officio doctrine when the arbitrator still had

to clarify an award of damages).

Because we find the order was final, VCW is only entitled to relief if an

exception to the doctrine applies. Neither of the two exceptions to the doctrine that

have been recognized in this circuit is applicable. See Local P-9, United Food and

Commercial Workers Int'l Union v. George A. Hormel & Co., 776 F.2d 1393, 1394

(8th Cir. 1985) (recognizing exceptions to the functus officio doctrine for mistakes

evident on the face of the award and for changes when the parties consent). VCW

urges that we create an additional exception that would allow arbitrators to clarify a

final award that is incomplete because the award failed to address a post-award

contingency. To bolster this argument, VCW relies principally on two cases from other

circuits. See International Bhd. of Teamsters v. Silver State Disposal Serv., Inc., 109

F.3d 1409 (9th Cir. 1997); Glass, Molders, Pottery, Plastics and Allied Workers Int'l

Union v. Excelsior Foundry Co., 56 F.3d 844 (7th Cir. 1995).
-5-

But, even if we were to adopt this broad exception, this case is completely

different from the cases on which VCW relies. In both Glass and International

Brotherhood of Teamsters, the arbitrators clarified an award prior to district court

review. See International Bhd. of Teamsters, 109 F.3d at 1410; Glass, 56 F.3d at 845-

46. In this case, the arbitration panel clarified the award after the district court acted

on the award. VCW has not cited any case in which the functus officio doctrine was

not applied after the district court vacated or confirmed the final award. VCW's failure

to cite such a case is not surprising because such a result would effectively grant an

arbitration panel power to conduct appellate review of a federal district court decision.

This would be absurd. Thus, we reject VCW's argument that this case falls within an

exception to the functus officio doctrine.

B. The District Court Decision to Vacate in Part and Confirm in Part

VCW argues, and we agree, that the district court erred when it used section 10

of the FAA to vacate in part and confirm in part the arbitration panel's first order. We

review de novo a district court's decision to vacate an arbitration award. See Executive

Life Ins. Co. v. Alexander Ins. Ltd., 999 F.2d 318, 320 (8th Cir. 1993).

The FAA creates only two avenues for attacking an arbitration award. Under

section 10, a district court may vacate an award; under section 11, a district court may

modify an award. Section 10 allows a district court to vacate an arbitration award

when: the award was procured by corruption; the arbitrators had a conflict of interest;

the arbitrators committed prejudicial misconduct in refusing to postpone a hearing or

in refusing to hear material evidence; or the arbitrators exceeded their powers. See 9

U.S.C. § 10. Section 11 allows a district court to modify an arbitration award when:

an award contains an evident material miscalculation or misdescription; an award was

made by the arbitrators in a matter not submitted to them; or an award is imperfect in

form. See 9 U.S.C. § 11. In this case, the district court, applying section 10, decided
5Our precedents are somewhat unclear as to whether a district court may ever

partially vacate an award using the standards of section 10. See Centralab, Inc. v.

Local No. 816, Int'l Union of Elec., Radio and Machine Workers, 827 F.2d 1210 (8th

Cir. 1987) (upholding a district court that used section 10 to vacate one part and

confirm another part of an arbitration award); UHC Mgmt. Co. v. Computer Sciences

Corp., 148 F.3d 992 (8th Cir. 1998) (holding that section 11 applies when a litigant

seeks to have part of an arbitration award nullified and part of an award confirmed).

Because the arbitration panel was explicit in its intent to make an indivisible award, we

need not decide all the components of this issue today.

-6-

to vacate in part and confirm in part the award because it determined that the arbitration

panel exceeded its authority in arbitrating the letters of credit issue.

While this determination is of concern to us, we make no finding at this time as

to whether the district court was correct. Under the conditions of this appeal, we need

not reach the question of panel authority.

Our review of the initial arbitration order convinces us that the arbitration panel

intended the award of premiums to be indivisible from the award on the letters of

credit. Whatever the rule may be under different circumstances, when a panel by the

language it uses makes clear that it intends its award to be indivisible, the district court

must take the award as it finds it and either vacate the entire award using section 10 or

modify the award using section 11.5 Moreover, in this instance, to vacate only a

portion of the award would result in an unintended windfall in favor of Legion.

Because the district court erred when it decided to vacate only part of the award using

section 10 and did not determine whether the award could be modified using section

11, we remand for further consideration of the dispute.

III. CONCLUSION
-7-

Accordingly, we affirm in part, reverse in part, and remand for further

proceedings consistent with this opinion.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.