Opinion ID: 2552191
Heading Depth: 3
Heading Rank: 5

Heading: Automatic Termination of the Agreement

Text: ¶ 35 Fifth, Softsolutions argues that the district court erred in refusing to vacate or modify the award because the arbitrator erroneously awarded royalties on software sales made after the Agreement had automatically terminated by its own terms. Specifically, Softsolutions argues that the Agreement automatically terminated under paragraph 14.2D and E, on January 24, 1994, if not earlier, and by awarding royalties on sales after this date, the arbitrator blatantly exceeded his powers. ¶ 36 Paragraph 14.2 provides: This Agreement shall be terminated automatically in the event of occurrence of any one of the following circumstances: . . . D. In the event Softsolutions shall cease to carry on its business; or E. In the event that there is a transfer or sale of the Softsolutions' business purporting to transfer or assign this Agreement or licensed technology without the prior express written consent of BYU; except as otherwise permitted herein. ¶ 37 The arbitrator did not explicitly address the automatic termination provision of 14.2 in making the arbitration award. However, in assessing whether the award should be vacated, the district court stated that the first prong of the Buzas test was met because the arbitrator was charged with determining the amount of royalties Softsolutions owed BYU as well as determining whether the use of D-Search was discontinued so that royalties stopped accruing. In essence, the district court determined that an award which included royalties for periods before and after January 24, 1994, fit squarely within the Submission Agreement. We agree. ¶ 38 In addressing the second prong of Buzas, the district court recognized that the arbitrator did not give detailed reasons on this issue, but indicated that in arbitration law, arbitrators are not required to provide detailed reasons for every facet of their award. We agree. The court determined that the arbitrator did not act irrationally or inconsistently with paragraph 14.2D of the Agreement because the arbitrator could have found that the stock sale of STC to WordPerfect did not mean STC ceased to carry on business under 14.2D. This is a rational interpretation. ¶ 39 With respect to Softsolutions' claim that the arbitrator exceeded his authority by disregarding paragraph 14.2E, given the sale of Softsolutions' business, STC, which purported to transfer or assign the licensed technology to WordPerfect without BYU's consent, the court found that the arbitrator did not act irrationally or inconsistently. It based its ruling on the following rationale: (1) The arbitrator could have reasonably found a violation of paragraph 14.5 in that STC failed to return D-Search after the stock sale to WordPerfect, (2) paragraph 14.2 (the automatic termination provisions) must be viewed in context with paragraph 14.5 (requiring the return of D-Search in the event of termination), (3) BYU had no notice of the stock sale because of the violation of paragraph 14.5, and therefore (4) Softsolutions cannot claim termination under 14.2E to avoid royalty payments, yet exclusively possess D-Search in violation of paragraph 14.5 of the Agreement. We conclude that this analysis also meets the test of reasonability and rationality under Buzas. As such, the district court did not err in refusing to vacate the award on this basis. Furthermore, because the issue of earned royalties was submitted for decision, the court properly refused to modify the award.