Opinion ID: 1057587
Heading Depth: 3
Heading Rank: 2

Heading: Tennessee Uniform Arbitration Act

Text: Having determined that the parties' consent order was not governed by Rule 31, we turn to Mother's contention that the TUAA applies to the consent order in this case. In Tennessee, parties may agree to binding arbitration of their disputes even after legal proceedings have been commenced, as long as the substance of their dispute is properly amenable to binding arbitration and does not require adjudication by a court. In such circumstances, the arbitration proceeding is not governed by Tennessee Supreme Court Rule 31 and instead is governed by the TUAA. See Tenn.Code Ann. §§ 29-5-301 to -320. The TUAA provides that (a) A written agreement to submit any existing controversy to arbitration ... is valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the revocation of any contract.... (b) The making of an agreement described in this section providing for arbitration in this state confers jurisdiction on the court to enforce the agreement under this part and to enter judgment on an award thereunder. Tenn.Code Ann. § 29-5-302. We have held that [a] judgment by consent is in substance a contract of record made by the parties and approved by the court. Third Nat. Bank v. Scribner, 212 Tenn. 400, 370 S.W.2d 482, 486 (1963). We therefore conclude that Mother and Father's agreement to arbitrate embodied in the consent order falls within the scope of the TUAA. See Pugh's Lawn Landscape, Co. v. Jaycon Dev. Corp., 320 S.W.3d 252, 256 (Tenn. 2010). The grounds on which a trial court may vacate, modify, or correct an arbitration award under the TUAA are limited. See Tenn.Code Ann. §§ 29-5-312 to -314; [6] see also Pugh's, 320 S.W.3d at 258 & n. 5; Arnold v. Morgan Keegan & Co., Inc., 914 S.W.2d 445, 448 (Tenn.1996). The scope of the trial court's review as included in the consent order is much broader than the trial court's review under the TUAA. Specifically, the consent order states that [i]n the event of an appeal, the decision of the arbitrator shall be binding pending the resolution of the matter by the Trial Court, and said decision shall carry with it a presumption of correctness. Thus, it appears that Mother and Father attempted to enter into binding arbitration while preserving their right to appeal to the trial court and expanding the trial court's scope of judicial review. We faced a similar situation in Pugh's Lawn Landscape Co. v. Jaycon Development Corp., 320 S.W.3d at 255. In Pugh's, as in this case, the parties agreed to arbitrate their dispute by entering into a consent order that provided for a broader scope of judicial review than is contemplated under the TUAA. We take this opportunity to reaffirm our holding in Pugh's that the judicial review of an arbitrator's award is confined to the grounds enumerated in the TUAA. Id. at 254. We therefore invalidate the provision in the consent order embodying the agreement to arbitrate that purports to expand the trial court's scope of judicial review. Having held that a provision in the agreement to arbitrate is invalid, we now must determine whether to reform or rescind the agreement to arbitrate. If we reform the agreement, our review would occur pursuant to the narrow review provisions of the TUAA. If we rescind the agreement, we would remand the case to the trial court to adjudicate the merits of the parties' dispute. Applying traditional contract principles in Pugh's, we rescinded the agreement on the basis that the provision authorizing expanded judicial review was material to the parties' agreement and that its failure constituted a mutual mistake that was sufficient to defeat the contract. Id. at 255. Our analysis in Pugh's applies with equal force in this case. As we explained, a consent order cannot be set aside unless entered through fraud or mistake.... [A] mistake exists in a legal sense when a person, acting on an erroneous conviction of law or fact, executes an instrument that he or she would not have executed but for the erroneous conviction. A court may not rescind a contract for mistake unless the mistake is innocent, mutual, and material to the transaction and unless the complainant shows an injury. Id. at 261 (citations omitted). It is clear from the language of the consent order in this case that both parties agreed in good faith to preserve their right to appeal to the trial court and to expand the trial court's scope of judicial review. Thus, the mistake was mutual and innocent. Unlike the consent order in Pugh's, however, the consent order in this case does not describe the provision for judicial review as material consideration for the agreement to arbitrate. Nonetheless, the provision for expanded judicial review embodies a basic assumption on which the agreement to arbitrate was based and as such is material. See Restatement (Second) of Contracts § 152(1) (1981). [7] Likewise, the complainant, Father, has shown an injury in that his right to appeal is substantially limited by the failure of the consent order's judicial review provision. We therefore rescind the parties' agreement and hold that the failure of the judicial review provision in the parties' consent order renders their agreement to arbitrate invalid.