NM Stat § 44-7A-24 (2021)
2021 New Mexico Statutes|Chapter 44 - Miscellaneous Civil Law Matters|Article 7A - Uniform Arbitration|Section 44-7A-24 - Vacating award.

(a) Upon motion to the court by a party to an arbitration proceeding, the court shall vacate an award made in the arbitration proceeding if: (1) the award was procured by corruption, fraud or other undue means; (2) there was: (A) evident partiality by an arbitrator appointed as a neutral arbitrator; (B) corruption by an arbitrator; or (C) misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding; (3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy or otherwise conducted the hearing contrary to Section 16 [44-7A-16 NMSA 1978], so as to prejudice substantially the rights of a party to the arbitration proceeding; (4) an arbitrator exceeded the arbitrator's powers; (5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection under Section 16(c) not later than the beginning of the arbitration hearing; or (6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in Section 10 [44-7A-10 NMSA 1978] so as to prejudice substantially the rights of a party to the arbitration proceeding. (b) A motion under this section must be filed within ninety days after the movant receives notice of the award pursuant to Section 20 [44-7A-20 NMSA 1978] or within ninety days after the movant receives notice of a modified or corrected award pursuant to Section 21 [44-7A-21 NMSA 1978], unless the movant alleges that the award was procured by corruption, fraud or other undue means, in which case the motion must be made within ninety days after the ground is known or by the exercise of reasonable care would have been known by the movant. (c) If the court vacates an award on a ground other than that set forth in Subsection (a)(5), it may order a rehearing. If the award is vacated on a ground stated in Subsection (a)(1) or (2), the rehearing must be before a new arbitrator. If the award is vacated on a ground stated in Subsection (a)(3), (4) or (6), the rehearing may be before the arbitrator who made the award or the arbitrator's successor. The arbitrator must render the decision in the rehearing within the same time as that provided in Section 20(b) [44-7A-20 NMSA 1978] for an award. If the court denies a motion to vacate an award, it shall confirm the award unless a motion to modify or correct the award is pending. History: Laws 2001, ch. 227, § 24. ANNOTATIONSCompiler's note. — Laws 2002, ch. 227, § 33 repealed the former Uniform Arbitration Act [44-7-1 to 44-7-22 NMSA 1978], enacted by Laws 1971, ch. 168, §23. It was repleced by Sections 44-7A-1 to 44-7A-32 NMSA 1978.The Uniform Arbitration Act compiled as 44-7A-1 to 44-7A-32 NMSA 1978 was enacted effective July 1, 2001. Cases under prior law. — The pre-2001 cases cited below were decided under the former Uniform Arbitration Act, Sections 44-7-1 to 44-7-22 NMSA 1978. Provisions exclusive. — Sections 44-7-12 and 44-7-13 NMSA 1978 (now 44-7A-25 NMSA 1978) establish the statutory grounds for vacating, modifying, or correcting an award. In the absence of any of these statutory grounds, the court must confirm an award submitted for review. Fernandez v. Farmers Ins. Co., 1993-NMSC-035, 115 N.M. 622, 857 P.2d 22. Motion filing limitation. — The time limit contained in Subsection B [(b)] of former section for filing a motion to vacate an award applies in arbitration proceedings, not the one-year limitation period set forth in Rule 1-060(B)(6) NMRA. Medina v. Foundation Reserve Ins. Co., 1997-NMSC-027, 123 N.M. 380, 940 P.2d 1175. Potential neutral arbitrators need not sever all their ties with the business world. Ormsbee Dev. Co. v. Grace, 668 F.2d 1140 (10th Cir.), cert. denied, 459 U.S. 838, 103 S. Ct. 84, 74 L. Ed. 2d 79 (1982). Record not required for appeal. — The fact that a record is permitted in the arbitration proceeding cannot be construed to mean that a record is a prerequisite to the appeal provisions afforded by the Uniform Arbitration Act. Malibu Pools of N.M., Inc. v. Harvard, 1981-NMSC-117, 97 N.M. 106, 637 P.2d 537. Misconduct of arbitrator in public-sector arbitration. — Where a public sector employer and a union reached an impasse in the negotiation of a new collective bargaining agreement, and the impasse was submitted to arbitration pursuant to the Public Employee Bargaining Act; during the arbitration hearing, the arbitrator permitted the union to make a revised offer and to modify the revised offer several times and asked the parties to confer in an effort to narrow the issues; and at the conclusion of the hearing, the arbitrator suggested modifications of the party's offers that would be more to the liking of the arbitrator and directed the parties to submit modified offers, the arbitrator exceeded the arbitrator's authority under the Public Employee Bargaining Act requiring the arbitrator's award to be vacated on the ground of misconduct under the Uniform Arbitration Act. National Union of Hosp. Employees v. UNM Bd. of Regents, 2010-NMCA-102, 149 N.M. 107, 245 P.3d 51, cert. denied, 2010-NMCERT-010, 149 N.M. 64, 243 P.3d 1146. Arbitrator did not exceed the arbitrator's powers. — Where the state and the unions entered into collectively bargaining agreements that covered salary increases for union employees; the legislature would have to appropriate eight million dollars to fund the salary increases for union employees and sixteen million dollars to fund the same salary increases for all employees; the legislature appropriated thirteen million dollars for salary increases for all employees; the state determined that there were not sufficient funds to cover the full salary increases for union employees and implemented salary increases for all employees that differed from those required by the agreements; the state stipulated to arbitrate whether it had violated the agreements and what the remedy should be for a violation; during the arbitration, the state presented evidence concerning its interpretation of the legislative appropriation bills and whether the legislature had appropriated sufficient funds to cover the union salary increases; and the arbitrator determined that the appropriation bills required only that salary increases for all employees total the average salary increases specified in the appropriation bills, that the legislature had appropriated sufficient funds to cover the salary increases required by the agreements and smaller increases for non-union employees, and that the state's pay package violated the terms of the agreements, the arbitrator did not exceed the arbitrator's authority by directing the state to pay union employees the salary increases required by the agreements. State v. AFSCME Council 18, 2012-NMCA-114, 291 P.3d 600, cert. granted, 2012-NMCERT-011. Grounds for vacation where record unavailable. — Where a record of the arbitration proceeding is unavailable, an aggrieved party is not thereby precluded from asserting and proving any grounds set forth in this section for vacation of an arbitration award. Malibu Pools of N.M., Inc. v. Harvard, 1981-NMSC-117, 97 N.M. 106, 637 P.2d 537. Record on appeal to contain evidence of claims regarding vacation of award. — Where a party claims that the trial court should vacate the award because the arbitrator allegedly evidenced partiality and exceeded his powers, and the trial court judge reviews the record of the arbitration proceedings, but his findings do not indicate whether the record contains substantial evidence supporting or negating such claims, nor is the record of the arbitration proceedings made a part of the record for appeal, the case will be remanded to the district court to determine whether the arbitration record supports confirmation, or, in the alternative, vacation or modification of the award. Daniels Ins. Agency, Inc. v. Jordan, 1982-NMSC-148, 99 N.M. 297, 657 P.2d 624. Appellee may argue any grounds for affirmance. — An appellee who does not claim that the trial court erred in vacating an arbitration award has no duty to preserve that issue on appeal. It may argue any grounds for affirmance on appeal and the appellate court will uphold the trial court's decision if it is legally mandated, regardless of whether the trial court's rationale was wrong. Bruch v. CNA Ins. Co., 1994-NMSC-020, 117 N.M. 211, 870 P.2d 749, overruled on other grounds by Padilla v. State Farm Mut. Auto. Ins. Co., 2003-NMSC-011, 133 N.M. 661, 68 P.3d 901. Consent to arbitration required. — By incorporating this section, 66-5-303 NMSA 1978 expressly contemplates a district court vacating an arbitration award where the parties did not consent to arbitration. It would be untenable, therefore, to hold that the legislature, in drafting the current uninsured motorist statute, intended to compel arbitration where the parties had agreed not to arbitrate. McMillian v. Allstate Indem. Co., 2004-NMSC-002, 135 N.M. 17, 84 P.3d 65. Scope of review. — It is not the function of the court to hear the case de novo and consider the evidence presented to the arbitrators, but rather to conduct an evidentiary hearing and enter findings of fact and conclusions of law upon each issue raised in the application to vacate or modify the award. Melton v. Lyon, 1989-NMSC-027, 108 N.M. 420, 773 P.2d 732. Once an arbitration award is entered, the finality of arbitration weighs heavily in its favor and cannot be upset except under exceptional circumstances. Melton v. Lyon, 1989-NMSC-027, 108 N.M. 420, 773 P.2d 732. Errors of law and fact. — The district court does not have the authority to review arbitration awards for errors as to the law or the facts; if the award is fairly and honestly made and if it is within the scope of the submission, the award is a final and conclusive resolution of the parties' dispute. Fernandez v. Farmers Ins. Co., 1993-NMSC-035, 115 N.M. 622, 857 P.2d 22. Under appropriate circumstances the district court may find an arbitration panel's mistake of fact or law so gross as to imply misconduct, fraud, or lack of fair and impartial judgment, each of which is a valid ground for vacating an award. Fernandez v. Farmers Ins. Co., 1993-NMSC-035, 115 N.M. 622, 857 P.2d 22. Legal and factual mistakes, such as applying the wrong standard of proof, do not comprise an abuse of power under Subsection A(3) (now (a)(4)). Town of Silver City v. Garcia, 1993-NMSC-037, 115 N.M. 628, 857 P.2d 28. Preservation of objections. — Under Subsection (a)(5) of Section 44-7A-24 NMSA 1978, a party may continue to argue that there is no agreement to arbitrate even after arbitration is completed, so long as he preserves his objections before the hearing begins. Alexander v. Calton & Assocs., Inc., 2005-NMCA-034, 137 N.M. 293, 110 P.3d 509. Alleged misconduct of panel as grounds. — A trial court errs in refusing to hear evidence of an arbitration panel's alleged misconduct for its failure to hear evidence material to the controversy. Malibu Pools of N.M., Inc. v. Harvard, 1981-NMSC-117, 97 N.M. 106, 637 P.2d 537. Material evidence not excluded. — "Material" evidence is evidence that relates to the matter in dispute or has a reasonable bearing on the issue to be decided in a given case. In the instant case, the stipulated issue to be decided by the arbitrator was whether the policeman had sex with a minor while on duty. Evidence that the policeman had sex with women other than the minor while on duty is not material to the specific issue presented to the arbitrator for decision and thus does not provide a basis for vacating the arbitration award under Subsection A(4) (now (a)(3)). Town of Silver City v. Garcia, 1993-NMSC-037, 115 N.M. 628, 857 P.2d 28. Arbitrator partiality. — To vacate an arbitration award under Subsection A(2) (now (a)(2)(A)), evidence of arbitrator partiality must be direct, definite and capable of demonstration rather than remote, uncertain, or speculative. Partiality cannot be imputed from the methods by which an arbitrator considers and evaluates evidence. Partiality cannot be inferred from adverse evidentiary rulings or from the enforcement of procedural rules. Town of Silver City v. Garcia, 1993-NMSC-037, 115 N.M. 628, 857 P.2d 28. The arbitrator's predisposition to discredit testimony not yet given suggests that the arbitration award could be vacated due to the arbitrator's apparent lack of impartiality. Jaycox v. Ekeson, 1993-NMSC-036, 115 N.M. 635, 857 P.2d 35. Arbitrator's right to appeal district court order vacating arbitration award. — Where husband and wife dissolved their marriage by stipulated judgment, and where, following a dispute over the implementation of the stipulated judgment, husband and wife entered into a settlement agreement that required the parties to submit all disputes or claims to final and binding arbitration, and where the district court vacated the arbitrator's arbitration award and disqualified the arbitrator from serving as arbitrator, finding that the arbitrator demonstrated evident partiality, the arbitrator had the right to appeal the district court's order because the arbitrator was a party under the settlement agreement and the district court's order directly and sufficiently aggrieved the arbitrator such that he had a right to appeal the order. Rogers v. Red Boots Invs., 2020-NMCA-028, cert. denied.Standard to evaluate claims of evident partiality. — To demonstrate evident partiality, the party seeking vacatur has the burden of proving that a reasonable person would have to conclude that an arbitrator was partial to the other party to the arbitration. Furthermore, the party asserting evident partiality must establish specific facts that indicate improper motives on the part of the arbitrator. A party need not prove that the arbitrator, in fact, had improper motives, but a party seeking vacatur must put forward facts that objectively demonstrate such a degree of partiality that a reasonable person could assume that the arbitrator had improper motives. The party challenging the award must prove the existence of evident partiality by clear and convincing evidence, which is evidence that instantly tilts the scales in the affirmative when weighed against the evidence in opposition and the fact-finder's mind is left with an abiding conviction that the evidence is true. Rogers v. Red Boots Invs., 2020-NMCA-028, cert. denied.No abuse of discretion in vacating arbitration award. — Where husband and wife dissolved their marriage by stipulated judgment, and where, following a dispute over the implementation of the stipulated judgment, husband and wife entered into a settlement agreement that required the parties to submit all disputes or claims to final and binding arbitration, and where the district court vacated the arbitrator's arbitration award and disqualified the arbitrator from serving as arbitrator, finding that the arbitrator demonstrated evident partiality, the district court did not abuse its discretion in vacating the arbitration award because the arbitrator intentionally disregarded the district court's limitation on the arbitrability of a provision in the settlement agreement related to costs and fees and disregarded the district court's warning not to proceed to arbitration while a motion to appoint a new arbitrator was pending. The arbitrator's repeated disregard for the district court's ruling, in favor of husband and against wife, is direct, definite, and demonstrative evidence from which a reasonable person would have to conclude that the arbitrator was partial and had improper motives in favor of husband and against wife. Rogers v. Red Boots Invs., 2020-NMCA-028, cert. denied. Requesting trial if award exceeds statutory minimum. — The limited de novo appeal provision in an insurance contract, providing for mandatory arbitration which would be binding on both parties for any award of damages not exceeding the limits of the Mandatory Financial Responsibility Act but providing for de novo appeal by either party of awards over that amount, violates public policy and is void as substantively unconscionable. Padilla v. State Farm Mut. Auto. Ins. Co., 2003-NMSC-011, 133 N.M. 661, 68 P.3d 901, overruling Bruch v. CNA Ins. Co., 1994-NMSC-020, 117 N.M. 211, 870 P.2d 749. Burden of establishing fraud. — The party asserting fraud must establish it by clear and convincing evidence and must show that due diligence could not have resulted in discovery of the fraud prior to arbitration. Foster v. Turley, 808 F.2d 38 (10th Cir. 1986). Fraud, corruption and undue means established. — In a proceeding to vacate an arbitration award of uninsured motorist benefits, there was substantial evidence to support findings of fact and conclusions of law that the insured obtained the award through fraud, corruption, and undue means. Medina v. Found. Reserve Ins. Co., 1997-NMSC-027, 123 N.M. 380, 940 P.2d 1175. Failure to postpone. — Because the appellant was prejudiced by the arbitrator's failure to give him proper notice of the third hearing, and because the failure to give notice was sufficient cause to require the arbitrator to postpone the hearing, the trial court erred when it failed to vacate the arbitration award pursuant to Subsection A(4) (now (a)(3)). Jaycox v. Ekeson, 1993-NMSC-036, 115 N.M. 635, 857 P.2d 35. Arbitrators authorized to suggest appropriate amount of punitive damages. — The arbitration panel did not exceed its powers where, in a dispute between an insured and the automobile insurance company, it suggested the appropriate amount of punitive damages to be assessed, if the proper court determined that punitive damages should be awarded. Stewart v. State Farm Mut. Auto. Ins. Co., 1986-NMSC-073, 104 N.M. 744, 726 P.2d 1374. Improper licensure defense waived. — Where both parties agreed to have all their disputes settled by arbitration and participated fully in the process without objection or reservation, failure to raise the issue of proper licensure under 60-13-30A NMSA 1978, when the merits of the dispute were heard before the arbitration board, waived the issue as a defense. Spaw-Glass Constr. Servs., Inc. v. Vista De Santa Fe, Inc., 1992-NMSC-067, 114 N.M. 557, 844 P.2d 807. Am. Jur. 2d, A.L.R. and C.J.S. references. — 4 Am. Jur. 2d. Alternative Dispute Resolution § 234 et seq. Perjury as ground of attack on judgment entered upon award in arbitration, 99 A.L.R. 1202. Right of arbitrator to consider or to base his decision upon matters other than those involved in the legal principles applicable to the questions at issue between the parties, 112 A.L.R. 873. Right of arbitrators to act on their own knowledge of facts, or factors relevant to questions submitted to them, in absence of evidence in that regard, 154 A.L.R. 1210. Time and jurisdiction for review, reopening, modification or reinstatement of award or agreement, 165 A.L.R. 9 Arbitrator's viewing or visiting premises or property alone as misconduct justifying vacation of award, 27 A.L.R.2d 1160. Arbitrator's consultation with outsider or outsiders as misconduct justifying vacation of award, 47 A.L.R.2d 1362. Disqualification of arbitrator by court or stay of arbitration proceedings prior to award, on ground of interest, bias, prejudice, collusion or fraud of arbitrators, 65 A.L.R.2d 755. Time for impeaching arbitration award, 85 A.L.R.2d 779. Construction and effect of contractual or statutory provisions fixing time within which arbitration award must be made, 56 A.L.R.3d 815. What constitutes corruption, fraud, or undue means in obtaining arbitration award justifying avoidance of award under state law, 22 A.L.R.4th 366. Participation in arbitration proceedings as waiver to objections to arbitrability under state law, 56 A.L.R.5th 757. Setting aside arbitration award on ground of interest or bias of arbitrators - insurance appraisals or arbitrations, 63 A.L.R.5th 675. Setting aside arbitration award on ground of interest or bias of arbitrators - torts, 64 A.L.R.5th 475. Setting aside arbitration award on ground of interest or bias of arbitrator - labor disputes, 66 A.L.R.5th 611. Setting aside arbitration award on ground of interest or bias of arbitrators - commercial, business, or real estate transactions, 67 A.L.R.5th 179. Vacating on public policy grounds arbitration awards reinstating discharged employees state cases, 112 A.L.R.5th 263, §§ 17-36. Construction and application of § 10(a)(4) of Federal Arbitration Act (9 USCS § 10(a)(4)) providing for vacating of arbitration awards where arbitrators exceed or imperfectly execute powers, 136 A.L.R. Fed. 183. Construction and application of § 10 (a)(1)-(3) of Federal Arbitration Act (9 USCS § 10 (a)(1)-(3)) providing for vacating of arbitration awards where award procured by fraud, corruption, or undue means, where arbitrators evidence partiality or corruption and where arbitrators engage in particular acts of misbehavior, 141 A.L.R. Fed. 1 Vacating on public policy grounds arbitration awards reinstating discharged employees, 142 A.L.R. Fed. 387. Refusal to enforce foreign arbitration awards on public policy grounds, 144 A.L.R. Fed. 481. Vacating arbitration awards as contrary to National Labor Relations Act, 147 A.L.R. Fed. 77. 6 C.J.S. Arbitration § 150 et seq.