Opinion ID: 6324599
Heading Depth: 1
Heading Rank: 4

Heading: analysis

Text: [3] Before considering the arbitration issues before us, we note that the parties generally argue that this matter is governed by Nebraska’s Uniform Arbitration Act (UAA). 11 As such, we limit our discussion to the UAA. In Nebraska, judicial review of an arbitration award is severely limited. 12 Section 25-2612 provides that “[w]ithin 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 and 25-2614.” Confirmation of an arbitration award finalizes the award and makes the award a judgment of the court. 13 Upon the granting of an order confirming, modifying, or correcting an award, a judgment or decree shall be entered in conformity therewith and be enforced as any other judgment or decree. 14 In the instant matter, everyone agrees that § 25-2612 governs Lyconic’s motion to confirm and that there was no request to vacate, modify, or correct the award. Both the trial court and the Court of Appeals recognized this in their analyses. Despite this recognition, neither court followed the legislative commands of § 25-2612 and each court erred, respectively, in 10 McEwen v. Nebraska State College Sys., 303 Neb. 552, 931 N.W.2d 120 (2019). 11 Neb. Rev. Stat. §§ 25-2601 to 25-2622 (Reissue 2016). 12 See State v. Henderson, 277 Neb. 240, 762 N.W.2d 1 (2009), disapproved on other grounds, Seldin v. Estate of Silverman, 305 Neb. 185, 939 N.W.2d 768 (2020). 13 86 Am. Jur. Trials 111, § 263 (2002 & Supp. 2021), citing Bacardi Intern. Ltd. v. V. Suarez & Co., Inc., 719 F.3d 1 (1st Cir. 2013); R & Q Reinsurance Co. v. Utica Mut. Ins. Co., 18 F. Supp. 3d 389 (S.D.N.Y. 2014). 14 § 25-2615. - 832 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 failing to do so. We conclude that the district court erred in modifying rather than confirming the award and that the Court of Appeals, though correct in vacating the judgment, erred in finding the arbitrator’s award to be ambiguous and erred in instructing that the matter be remanded to the arbitrator. Courts must give extreme deference to the arbitrator’s conclusions; the standard of judicial review of arbitral awards is among the narrowest known to law. 15 A court may not overrule an arbitrator’s decision simply because the court believes that its own interpretation of the contract, or the facts, would be the better one. 16 The role of the court in the arbitration process is specifically addressed and limited by the UAA. 17 To allow full judicial scrutiny of an arbitration award would frustrate the purpose of having arbitration at all—the quick resolution of disputes and the avoidance of the expense and delay associated with litigation. 18 Strong deference is due to an arbitrative tribunal, because when parties agree to arbitration, they agree to accept whatever reasonable uncertainties might arise from the process. 19 Where arbitration is contemplated, the courts are not equipped to provide the same judicial review given to structured judgments defined by procedural rules and legal principles. Parties should be aware that they get 15 Mid Atlantic Capital Corp. v. Bien, 956 F.3d 1182 (10th Cir. 2020). See Health Plan of Nevada v. Rainbow Med., LLC, 120 Nev. 689, 100 P.3d 172 (2004) (citing cases). 16 Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 133 S. Ct. 2064, 186 L. Ed. 2d 113 (2013); W. R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 103 S. Ct. 2177, 76 L. Ed. 2d 298 (1983); Steelworkers v. Enterprise Corp., 363 U.S. 593, 80 S. Ct. 1358, 4 L. Ed. 2d 1424 (1960); Intern. Broth. of Elec. Workers v. O.K. Elec. Co., 793 F.2d 214 (8th Cir. 1986). 17 Hartman v. City of Grand Island, 265 Neb. 433, 657 N.W.2d 641 (2003). 18 Id., citing Jones v. Summit Ltd. Partnership Five, 262 Neb. 793, 635 N.W.2d 267 (2001). 19 Id. - 833 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 what they bargain for and that arbitration is far different from adjudication. 20 In Cinatl, 21 this court addressed a court’s obligation with respect to confirming an award when there is no pending motion to modify or correct an award. There, the district court denied a timely application to vacate an arbitration award. Several months later, the court granted an amended motion to confirm the arbitrator’s award, noting there was no pending motion to modify or correct the award. On appeal, we affirmed and explained that when an arbitration has already occurred and a party seeks to vacate, modify, or confirm an award, an extraordinary level of deference is given to the underlying award itself. 22 We noted that the UAA does not allow for the exercise of discretion by the court when a request for confirmation is made and there is no pending application for vacation, modification, or correction. 23 In Garlock v. 3DS Properties, 24 this court held that the trial court erred in granting one party’s request to vacate an arbitration award over another party’s request to confirm the award, because no party sought to modify the award and the movant offered no evidence in support of the request for vacatur. Under § 25-2612, “the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award.” (Emphasis supplied.) As a general rule, the word “shall” in a statute is considered mandatory and is inconsistent with the idea of discretion. 25 20 Id. 21 Cinatl, supra note 5. 22 Id. 23 Id., citing Garlock v. 3DS Properties, 303 Neb. 521, 930 N.W.2d 503 (2019). 24 Garlock, supra note 23. 25 Cinatl, supra note 5. - 834 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 The present case is reminiscent of this court’s decision in Ronald J. Palagi, P.C. v. Prospect Funding Holdings, 26 which concerned a motion to confirm an arbitration award under the Federal Arbitration Act. After an arbitration was completed, a personal injury claimant brought an interpleader action regarding settlement proceeds, but did not move to vacate, modify, or correct the award of arbitration. The district court confirmed the award, and the claimant argued on appeal that the arbitration agreement was invalid and unenforceable. We rejected the claimant’s arguments, finding they had “ignore[d] that these issues have already been resolved against them in binding arbitration, and they did not thereafter seek to vacate, modify, or correct the arbitration award within the time period permitted under the [Federal Arbitration Act].” 27 We found the claimant’s arguments lacked merit, because they were “premised on a fundamental misunderstanding of the limited role of the court once an arbitration award is entered, a motion to confirm is filed, and there has been no timely motion to vacate, modify, or correct the award.” 28 Here, pursuant to § 25-2612, Lyconic requested confirmation of the award on May 5, 2016. The court held a hearing on May 18. In an email, on May 31, the court stated it would grant the application but did not enter an order doing so. Not until September 6, 2019, did the court confirm the award and reduce it to a judgment. When the court did confirm the award, it adopted Lyconic’s interpretation of the award, which was inaccurate and was a modification rather than confirmation of the award. Recall that the arbitrator’s award stated, in relevant part, “Lyconic’s obligation to provide termination assistance extends 122 days from the termination date, expiring November 11, 26 Ronald J. Palagi, P.C. v. Prospect Funding Holdings, 302 Neb. 769, 925 N.W.2d 344 (2019). 27 Id. at 783, 925 N.W.2d at 354. 28 Id. - 835 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 2016. Signal 88 is obligated to pay for Lyconic’s services at the renewal rate of $25,000 per month.” (Emphasis supplied.) However, the district court’s order stated, in relevant part, “[T]he Arbitrator found that Signal 88 is obligated to pay Lyconic for 122 days of Termination Assistance at the renewal rate of $25,000 per month.” (Emphasis suppled.) Lyconic misconstrued the arbitrator’s findings regarding termination assistance, which resulted in the court’s entering a monetary judgment against Signal 88. Though, as mentioned, there was no formal motion to modify the award, we agree with Signal 88’s argument that by adopting Lyconic’s position, the district court modified rather than confirmed the award. We conclude the district court erred in doing so and exceeded the appropriate role of the court under the UAA. The purpose of arbitration is to resolve disputes, not to create new ones. 29 [4] When a court modifies or corrects an arbitration award, it shall do so to effectuate the intent of the arbitrator. 30 Courts are not to modify or correct matters affecting the merits which reflect the intent of the arbitrator. 31 Lyconic’s misconstruction of the award implied that an ambiguity existed in the court’s language that needed to be resolved. The Court of Appeals to an extent accepted Lyconic’s framing of the issues when it said that the parties had “simply assert[ed] different interpretations and meanings to the words used by the arbitrator in its award.” 32 But a more accurate description of the dispute would be that Lyconic asserted its interpretation, and Signal 88 asserted that 29 Bell Aerospace Co. Div. of Textron v. Local 516, Int. U., Etc., 500 F.2d 921 (2d Cir. 1974). 30 See Gen. Acc. Ins. Co. v. MSL Enterprises, 143 N.C. App. 453, 547 S.E.2d 97 (2001). 31 Id. See, Gas Aggregation Services v. Howard Avista, 319 F.3d 1060 (8th Cir. 2003); Office & Prof. Employees v. Brownsville Gen. Hosp., 186 F.3d 326 (3d Cir. 1999). 32 Signal 88, supra note 1, 29 Neb. App. at 543, 956 N.W.2d at 316. - 836 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 Lyconic’s interpretation should be disregarded and the award should be confirmed as intended by the arbitrator. As the Court of Appeals correctly pointed out, “[a]lthough Signal 88 assigns [10] assignments of error, they can generally be restated as claiming that the district court erred by modifying the arbitrator’s award, rather than simply confirming it.” 33 The appellate court then found the award ambiguous and determined that the district court’s confirmation of the award needed to be vacated and the matter resubmitted to the arbitrator to resolve the ambiguity. Despite there being no explicit provision in the UAA for a remand for an ambiguous award, the Court of Appeals properly noted that § 25-2610 authorizes an arbitrator to clarify an award upon submission by the court. Additionally, case law in other jurisdictions has uniformly established that a remand to the arbitrator is appropriate in cases where the award is ambiguous. 34 An award may be recommitted for clarification where it is ambiguous to such an extent that it is impossible to determine its meaning and intent. 35 “An ambiguous award should be remanded to the arbitrators so that the court will know exactly what it is being asked to enforce.” 36 [5,6] However, remand for clarification is not the preferred course. 37 When possible, courts should avoid remanding on 33 Id. at 541, 956 N.W.2d at 314. 34 M & C Corp. v. Erwin Behr GmbH & Co., 326 F.3d 772 (6th Cir. 2003); Hyle v. Doctor’s Associates, Inc., 198 F.3d 368 (2d Cir. 1999); Colonial Penn Ins. Co. v. Omaha Indem. Co., 943 F.2d 327 (3d Cir. 1991); LLT Intern., Inc. v. MCI Telecommunications Corp., 69 F. Supp. 2d 510 (S.D.N.Y. 1999). 35 6 C.J.S. Arbitration § 231 (2016). 36 Americas Ins. Co. v. Seagull Compania Naviera, 774 F.2d 64, 67 (2d Cir. 1985). 37 See, Flender Corp. v. Techna-Quip Co., 953 F.2d 273, 280 (7th Cir. 1992) (“remand for clarification is a disfavored procedure”); Colonial Penn Ins. Co., supra note 34; Ethyl Corp. v. United Steelworkers of America, 768 F.2d 180 (7th Cir. 1985); Gen. Acc. Ins. Co., supra note 30. - 837 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 the basis of ambiguity because of the interest in prompt and final arbitration. 38 Where an ambiguity can be resolved by the record, the district court need not remand for clarification; but where the ambiguity is not resolved by the record, the court must remand for clarification. 39 The record indicates that the parties’ agreement obligated Lyconic to provide software services to Signal 88 at the rate of $25,000 per month. Additionally, upon termination of the agreement, Lyconic would provide termination assistance at its then-hourly rate. Nothing in the parties’ agreement, the addendums thereto, or the arbitrator’s award would support Lyconic’s contention that Signal 88 was obligated to pay $25,000 per month for termination assistance. When viewed in context, the record establishes the arbitrator intended its award to merely determine the effective termination date to be July 1, 2016, and that Lyconic was obligated to provide termination assistance until November 11. [7,8] When an arbitration award is reviewed by a court, every reasonable presumption and intendment will be made in favor of the award and of the arbitrator’s acts and proceedings. 40 An award does not become so vague and indefinite as to be unenforceable simply because a party can argue that a portion of it may be unclear or ambiguous. 41 38 Teamsters Local No. 579 v. B & M Transit, Inc., 882 F.2d 274 (7th Cir. 1989). 39 See, id.; Fischer v. CGA Computer Associates, Inc., 612 F. Supp. 1038 (S.D.N.Y. 1985); Foster v. City of Fairbanks, 929 P.2d 658 (Alaska 1996); SCSJ Enters. v. Hansen & Hansen Enters., 319 Ga. App. 210, 734 S.E.2d 214 (2012); Osborn v. Packard, 117 P.3d 77 (Colo. App. 2004); 2 Martin Domke et al., Domke on Commercial Arbitration §§ 40:10 and 40:11 (3d ed. 2021). 40 Kellogg v. Middlesex Mut. Assurance Co., 326 Conn. 638, 165 A.3d 1228 (2017). See Foster, supra note 39. 41 Broth. Ry. Carmen v. Belt Ry. Co. of Chicago, 658 F. Supp. 136 (N.D. Ill. 1987). - 838 - Nebraska Supreme Court Advance Sheets 310 Nebraska Reports SIGNAL 88 v. LYCONIC Cite as 310 Neb. 824 We conclude that the arbitrator’s intent was clear, that the award is unambiguous, and that clarification is unnecessary. As such, the Court of Appeals erred in finding the award ambiguous and in ordering a remand to the arbitrator for clarification.