Court Opinion

ID: 6116344
Source: CourtListenerOpinion
Date Created: 2022-02-03 17:18:50.277918+00
Date Added: 2024-06-11T08:59:51.155307
License: Public Domain

2022 UT 4

                               IN THE

       SUPREME COURT OF THE STATE OF UTAH

                          AHHMIGO, LLC,
                            Appellant,
                                 v.
               THE SYNERGY COMPANY OF UTAH, LLC,
                            Appellee.

                          No. 20200770
                    Heard: November 10, 2021
                     Filed February 3, 2022

                         On Direct Appeal

                      Third District, Salt Lake
                     The Honorable Kara Pettit
                          No. 180901505

                            Attorneys:
 Troy L. Booher, Beth E. Kennedy, Dick J. Baldwin, David J. Jordan,
          David L. Mortensen, Salt Lake City, for appellant
   Jonathan O. Hafen, Rachel Lassig Wertheimer, Salt Lake City,
           William D. Meyer, Boulder, CO, for appellee

         JUSTICE PEARCE authored the opinion of the Court,
      in which ASSOCIATE CHIEF JUSTICE LEE, JUSTICE PETERSEN,
              JUDGE HAGEN, and JUDGE HARRIS joined.
     Having recused themselves, CHIEF JUSTICE DURRANT and
   JUSTICE HIMONAS did not participate herein; Court of Appeals
       JUDGE DIANA HAGEN and JUDGE RYAN M. HARRIS sat.

   JUSTICE PEARCE, opinion of the Court:
                          INTRODUCTION
   ¶1 Ahhmigo, LLC (Ahhmigo) contracted with The Synergy
Company of Utah, LLC (Synergy) to purchase ingredients it planned
to use to craft an energy drink. The contract required Ahhmigo to
make a series of payments in advance of shipment. Ahhmigo made a
                   AHHMIGO, LLC v. SYNERGY CO.
                        Opinion of the Court

portion of these payments but ran into some product development
issues and eventually repudiated the contract.
    ¶2 Ahhmigo sought a refund of the payments it had made to
Synergy for product it had never received. In arbitration
proceedings, Synergy contended that the contract permitted it to
keep those payments. The arbitrator ruled in favor of Synergy.
Ahhmigo moved the district court to vacate the arbitrator’s ruling,
claiming that the arbitrator had manifestly disregarded the law. The
district court denied Ahhmigo’s motion.
    ¶3 Ahhmigo argues that the district court erred. But Ahhmigo
never presented the issue it now wants us to rule on to the district
court. And our preservation rules do not permit a party to raise an
issue for the first time on appeal. We thus affirm. But we take the
opportunity to express some qualms about the way we have talked
about what it means for an arbitrator to manifestly disregard the law
in hopes of prompting a robust discussion in a later case where the
issue has been properly preserved.
                         BACKGROUND
     ¶4 Synergy agreed to sell two blended powders in bulk
(Product) to Ahhmigo that Ahhmigo planned to use to make a new
energy drink. The terms of the sale were set forth in two blanket
purchase orders (Initial BPOs). The Initial BPOs contained the
following provision: “If, for any reason, Buyer does not take
shipment of all Product ordered on the Agreement, Buyer will still
be responsible for paying the entire amount of the Agreement” (the
Subject Provision).
    ¶5 Because of product development issues, Ahhmigo failed to
accept shipment of the Product as the Initial BPOs required. At
Ahhmigo’s request, the parties executed a new BPO. When its
product development issues persisted, Ahhmigo again requested
another revised BPO. Under the revised BPO (RBPO), Ahhmigo
agreed to make a series of specified payments prior to shipment.
Ahhmigo also agreed, once again, to the Subject Provision.
     ¶6 Several months later, Ahhmigo requested, and Synergy
shipped, some Product. Ahhmigo also made some pre-shipment
payments. But Ahhmigo was unable to develop its proposed energy
drink and ultimately failed to fully pay for or request shipment of
the remaining Product.
    ¶7 Four years later, Ahhmigo filed a Complaint and Demand for
Arbitration against Synergy. Ahhmigo’s complaint asserted six

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causes of action: breach of contract, breach of implied duty of good
faith and fair dealing, reasonable reliance, unjust enrichment,
conversion, and fraud. Synergy agreed to arbitrate Ahhmigo’s
claims.
     ¶8 The arbitrator dismissed four of Ahhmigo’s causes of action.
The parties held a seven-day arbitration on the remaining two
claims: breach of contract and breach of the implied covenant of
good faith and fair dealing. Ahhmigo asserted that Synergy had
breached the parties’ contract by, among other things, failing to
deliver the remaining Product to Ahhmigo, and by failing to refund
Ahhmigo the payments it had made for Product it had never
received. Ahhmigo also asserted that Synergy had breached the
implied duty of good faith and fair dealing in part by “[s]eeking to
impose an interpretation” of the Subject Provision that would entitle
Synergy to the full purchase price. In Ahhmigo’s view, this was “an
unenforceable penalty/liquidated damages provision.” And
Ahhmigo set out to convince the arbitrator that Synergy had violated
the implied covenant by persisting in that interpretation.
    ¶9 The arbitrator concluded that Ahhmigo had “failed to prove
any damages” and ruled in favor of Synergy. The arbitrator first
determined that “Ahhmigo never established that Synergy ever
refused to deliver Product to Ahhmigo.” To the contrary, “Ahhmigo
specifically stated it no longer wanted the Product.”
    ¶10 The arbitrator next rejected Ahhmigo’s argument that the
Subject Provision was an unenforceable penalty. Specifically, the
arbitrator rejected Ahhmigo’s argument that the Uniform
Commercial Code (UCC) prevented Synergy from keeping
Ahhmigo’s payments and any existing resale proceeds.1 The
arbitrator reasoned that “[t]he UCC provides defaults that the parties
are free to contract around.” And by agreeing to the Subject
Provision, Ahhmigo and Synergy had effectively “modifie[d] the
terms of the UCC.”2 The arbitrator then determined that the Subject

_____________________________________________________________
   1 The arbitrator noted that “Synergy admitted it did ultimately
resell the ingredients that would have gone to . . . manufacture the
Product Ahhmigo ordered.” However, he later concluded that “[n]o
Product, as defined in the RBPO[,] was ever resold by Synergy in a
public or private sale.”
   2The arbitrator reasoned that even if the parties had not modified
the UCC, Synergy was nonetheless entitled to “retain[] its profit
                                                       (continued . . .)

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                   AHHMIGO, LLC v. SYNERGY CO.
                        Opinion of the Court

Provision was not unreasonable, “did not constitute a penalty under
the UCC,” and meant that “Ahhmigo still had to pay for Product
even if it didn’t accept delivery.”
    ¶11 Ahhmigo moved the district court to vacate the arbitration
award. Ahhmigo argued that the arbitrator had manifestly
disregarded the law when he chose not to apply controlling case law
of which he was aware.3 Specifically, Ahhmigo argued that Madsen v.
Murrey & Sons Co., 743 P.2d 1212 (Utah 1987) determined the
remedies available to a seller when a buyer fails to take delivery of
goods. In Ahhmigo’s view, Madsen dictated that “if a buyer breaches
a contract by failing to take delivery of goods, the court (or
arbitrator) must calculate whether the buyer is entitled to a refund,
pursuant to [the UCC].” Ahhmigo claimed that by declining to
calculate whether Ahhmigo was entitled to a refund under the UCC,
the arbitrator had “manifestly disregarded controlling Utah Supreme
Court caselaw and allowed an almost $2 million windfall to
Synergy.”
    ¶12 The district court denied Ahhmigo’s motion and
confirmed the arbitration award. It concluded that the arbitrator had
not manifestly disregarded the law by failing to apply Madsen
because “Madsen [wa]s not a clearly governing legal principle that
the Arbitrator decided to ignore or pa[id] no attention to in issuing
the Arbitration Award.” The district court reasoned that the
arbitrator had “appreciate[d] the existence” of Madsen but had
determined that it just did not apply to the facts of this case because
unlike the parties in Madsen, “the parties contracted around the
default damages provisions in the UCC, . . . by including [the Subject
Provision]” in their agreement.
    ¶13 Ahhmigo appeals. It now argues that the arbitrator
manifestly disregarded the law when he defied an alleged
stipulation between the parties and equated the Subject Provision
with a liquidated damages provision. And it argues that the district

from the anticipated sale to Ahhmigo” because it was a lost volume
seller.
   3 Ahhmigo contended that it had “repeatedly cited, briefed and
argued that . . . Madsen was on point and controlling authority” both
“[i]n prehearing briefing and during the hearing” before the
arbitrator.

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court erred when it failed to vacate the arbitration award for that
reason.
                             ANALYSIS
 I. WE DO NOT REACH THE QUESTION AHHMIGO PRESENTS
     ON APPEAL BECAUSE AHHMIGO DID NOT RAISE IT
                IN THE DISTRICT COURT
    ¶14 Ahhmigo asks us to reverse the district court and vacate
the arbitration award. Ahhmigo argues that the arbitrator manifestly
disregarded the law when he failed to credit an alleged stipulation
between the parties that the Subject Provision was not a liquidated
damages provision. Ahhmigo argues that the arbitrator’s approach
created space for the arbitrator to avoid calculating Synergy’s actual
damages under the UCC formula we applied in Madsen v. Murrey
& Sons Co., 743 P.2d 1212 (Utah 1987), and instead “allow[ed]
Synergy to keep all of Ahhmigo’s payments as damages for
Ahhmigo’s breach, even if Synergy chose to resell the Product
Ahhmigo paid for.”
    ¶15 Synergy argues that Ahhmigo did not preserve the issue it
now raises on appeal—that is, whether the arbitrator manifestly
disregarded the law when he ignored a supposed stipulation of the
parties.
      ¶16 “[A]n appellant must properly preserve an issue in the
district court before it will be reviewed on appeal.” O’Dea v. Olea,
2009 UT 46, ¶ 15, 217 P.3d 704. “An issue is preserved for appeal
when it has been ‘presented to the district court in such a way that
the court has an opportunity to rule on [it].’” Patterson v. Patterson,
2011 UT 68, ¶ 12, 266 P.3d 828 (alteration in original) (quoting In re
Adoption of Baby E.Z., 2011 UT 38, ¶ 25, 266 P.3d 702). “To provide
the court with this opportunity, ‘the issue must be specifically raised
. . ., and must be supported by evidence and relevant legal
authority.’” State in Int. of D.B., 2012 UT 65, ¶ 17, 289 P.3d 459
(quoting Donjuan v. McDermott, 2011 UT 72, ¶ 20, 266 P.3d 839).
When a party “ha[s] failed to preserve an issue in the [district] court,
but seeks to raise it on appeal[,] . . . the party must argue an
exception to preservation.”4 State v. Johnson, 2017 UT 76, ¶ 17, 416
P.3d 443.

_____________________________________________________________
   4  “This court has recognized three distinct exceptions to
preservation: plain error, ineffective assistance of counsel, and
                                                    (continued . . .)

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                     AHHMIGO, LLC v. SYNERGY CO.
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       ¶17 Ahhmigo does not argue an exception to preservation.
Ahhmigo instead argues that it “preserved the issue by submitting
. . . to the district court the issue of whether Synergy was entitled to
keep both Ahhmigo’s payments and the resale proceeds.” According
to Ahhmigo, “[t]hat issue includes [its] argument about liquidated
damages because Utah law limits damages by excluding proceeds
from resale, unless a liquidated damages provision provides
otherwise.”
    ¶18 Ahhmigo’s effort to evade our preservation rule by
“broadly defining the issue” it raised in the district court is
unavailing. See Patterson, 2011 UT 68, ¶ 11 (internal quotation marks
omitted). “[W]e view issues narrowly.” Johnson, 2017 UT 76, ¶ 14 n.2
(emphasis omitted). And we recognize that an appellant raises a new
issue when the appellant raises a legal theory “entirely distinct”
from the legal theory the appellant raised to the district court. See id.
     ¶19 In the district court, Ahhmigo’s legal theory focused on
whether the arbitrator manifestly disregarded the law when he
failed to apply the damages framework we used in Madsen, 743 P.2d
at 1215–17.5 In its motion to vacate, Ahhmigo argued that:
       [T]he Arbitrator was obligated to apply well-
       established and controlling Utah authority. Instead, he
       ignored the Supreme Court decision in Madsen . . . .
       Given this disregard for controlling authority, the
       Court should vacate the Arbitration Decision and
       remand for a new arbitration proceeding consistent
       with the decision in Madsen.

exceptional circumstances.” State v. Johnson, 2017 UT 76, ¶ 19, 416
P.3d 443.
   5 This was also the issue Ahhmigo raised in its retention letter.
There, Ahhmigo, in an effort to convince this court to not pour this
matter over to the court of appeals, stated that “[t]he issue on appeal
concerns whether the arbitrator manifestly disregarded the
controlling law when it failed to calculate Synergy’s damages and
instead awarded a double recovery.” Ahhmigo also confirmed this
issue as the issue it raised to the district court, representing that in its
motion to vacate, “[it] argued that the arbitrator manifestly
disregarded controlling law when it failed to calculate Synergy’s
damages under the UCC and this court’s precedent.”

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But the legal theory Ahhmigo now raises on appeal is, in Ahhmigo’s
words, “whether the arbitrator manifestly disregarded the law when
he chose to ignore the parties’ stipulation that the contract did not
contain a liquidated damages provision.”
    ¶20 This issue—whether an arbitrator manifestly disregards
the law when he acts in violation of an alleged stipulation of the
parties—presents an “entirely new legal theor[y]” from the one
Ahhmigo placed before the district court. See Johnson, 2017 UT 76,
¶ 14 n.2. Because the district court was not asked to rule on that
theory, our preservation rules prevent us from reaching it.
     ¶21 Ahhmigo argues that it “expressly raised the liquidated
damages point” in its motion to vacate. There, Ahhmigo made two
incidental references to an alleged agreement between the parties.
Ahhmigo stated that “[u]nless justified as liquidated damages
(which the parties and the Arbitrator agreed were not involved
here), any damages beyond Synergy’s actual losses would constitute
an unenforceable penalty.” Ahhmigo also stated, in a footnote, that
“the Arbitrator correctly concluded that the instant matter did not
involve liquidated damages, noting that ‘both Parties assert that this
is not a liquidated damages case.’”
     ¶22 Ahhmigo misses the point of our preservation rule. “A
party may not preserve an issue by ‘merely mentioning’ it.” In re
Guardianship of A.T.I.G., 2012 UT 88, ¶ 21, 293 P.3d 276 (quoting Pratt
v. Nelson, 2007 UT 41, ¶ 15, 164 P.3d 366). Rather, “[t]he party must
put forth enough evidence that ‘the issue [is] [specifically and]
sufficiently raised to a level of consciousness before the [district]
court.’” Salt Lake City v. Josephson, 2019 UT 6, ¶ 12, 435 P.3d 255
(second alteration in original) (quoting State v. Sanchez, 2018 UT 31,
¶ 30, 422 P.3d 866). At best, Ahhmigo briefly mentioned the alleged
agreement between the parties to the district court. This, as our
preservation rule makes clear, is not enough.
     ¶23 We also add that our preservation rule serves as the means
to two ends. See Patterson, 2011 UT 68, ¶ 15. The first of these ends—
judicial economy—“is most directly frustrated when an appellant
asserts unpreserved claims that require factual predicates.”6 Id. “For
this reason, the preservation rule should be more strictly applied
when the asserted new issue or theory ‘depends on controverted
_____________________________________________________________
   6 Fairness is the other goal underlying our preservation rule. See
Patterson, 2011 UT 68, ¶ 15.

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                    AHHMIGO, LLC v. SYNERGY CO.
                         Opinion of the Court

factual questions whose relevance thereto was not made to appear at
[the district court].’” Id. (quoting James v. Preston, 746 P.2d 799, 801
(Utah Ct. App. 1987)). The issue Ahhmigo presents on appeal
depends on a controverted factual question: whether the parties
stipulated or otherwise agreed that the Subject Provision would not
be treated as a liquidated damages provision. Indeed, Synergy insists
that “no such stipulation occurred.”7 Ahhmigo never asked the
district court to resolve that question, and our preservation rule
counsels against us taking it on in the first instance. We thus affirm
the district court’s ruling.
                      II. MANIFEST DISREGARD
    ¶24 Although we do not reach the merits of Ahhmigo’s
argument, the parties’ briefing suggests to us that we may, when the
opportunity arises, need to address some ambiguities in our case
law. And so we offer the following in hopes of prompting further
discussion about the manifest disregard standard in a case where the
issue has been properly preserved. We start by examining the
Federal Arbitration Act (FAA), which serves as the model for the
Utah Uniform Arbitration Act.
                     A. The Split on the (Hall) Street
    ¶25 The FAA governs the federal arbitration process. See 9
U.S.C. §§ 1–16. “Congress enacted the FAA to replace judicial
indisposition to arbitration with a ‘national policy favoring [it] and
plac[ing] arbitration agreements on equal footing with all other
contracts.’” Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581
(2008) (alterations in original) (citation omitted). In line with this
policy, the FAA specifies grounds on which a U.S. district court may,
upon motion, vacate an arbitration award. 9 U.S.C. § 10(a). One such
ground exists “where the arbitrator[] exceed[s] their powers.” Id.
§ 10(a)(4).8

_____________________________________________________________
   7 We could not confirm the existence of the stipulation in the
record. And while we recognize that this may be the product of the
limited record an arbitration proceeding may generate, we also
recognize that it may be because, as Synergy claims, no such
stipulation occurred.
   8   Other grounds include:
            (1) where the award was procured by corruption,
         fraud, or undue means;
                                                   (continued . . .)

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     ¶26 In Wilko v. Swan, the United States Supreme Court seemed
to add to the statutory grounds for vacatur. 346 U.S. 427 (1953),
overruled on other grounds by Rodriguez de Quijas v. Shearson/Am.
Express, Inc., 490 U.S. 477 (1989). The Court stated, albeit in dicta, that
“the interpretations of the law by the arbitrators in contrast to manifest
disregard are not subject, in the federal courts, to judicial review for
error in interpretation.” Id. at 436–37 (emphasis added). After Wilko,
each of the circuit courts eventually recognized “manifest disregard
[of the law]” as either an implicit or nonstatutory ground for vacatur
under the FAA. See Coffee Beanery, Ltd. v. WW, L.L.C., 300 Fed. Appx.
415, 419 (6th Cir. 2008) (listing cases).
    ¶27 The U.S. Supreme Court later acknowledged the
“vagueness of Wilko’s phrasing” in Hall Street, 552 U.S. at 585. But
the Court’s explanation was not the tonic needed to cure the
vagueness. The Court pontificated that,
       Maybe the term “manifest disregard” was meant to
       name a new ground for review, but maybe it merely
       referred to the [FAA] grounds [for vacatur] collectively,
       rather than adding to them. Or, as some courts have
       thought, “manifest disregard” may have been
       shorthand for . . . the paragraphs authorizing vacatur
       when the arbitrators were “guilty of misconduct” or
       “exceeded their powers.”
Id. And while Hall Street refused to read Wilko to allow parties to
contractually expand the grounds for vacatur under the FAA, which
it considered “exclusive,” it ultimately declined to determine
whether those grounds could be expanded judicially. Id. at 585–87;
see also Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 672
n.3 (2010) (“We do not decide whether ‘“manifest disregard”’
survives our decision in [Hall Street] as an independent ground for

           (2) where there was evident partiality or corruption
       in the arbitrators . . .;
           (3) where the arbitrators were guilty of misconduct
       in refusing to postpone the hearing, . . . or in refusing
       to hear evidence pertinent and material to the
       controversy; or of any other misbehavior . . .; or
           (4) where the arbitrators . . . so imperfectly executed
       [their powers] that a mutual, final, and definite award
       upon the subject matter submitted was not made.
9 U.S.C. § 10(a)(1)–(4).

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review or as a judicial gloss on the enumerated grounds for vacatur
set forth [in the FAA].”).
     ¶28 The question Hall Street left unanswered created a split
among jurisdictions as to whether the manifest disregard standard
remains a viable ground for vacatur. Some jurisdictions have read
Hall Street to confine the grounds for vacatur to only those
specifically enumerated in the statute. See, e.g., Med. Shoppe Int’l, Inc.
v. Turner Invs., Inc., 614 F.3d 485, 489 (8th Cir. 2010); Frazier v.
CitiFinancial Corp., LLC, 604 F.3d 1313, 1324 (11th Cir. 2010).
      ¶29 Others have maintained the standard’s viability. Those
that do generally fall into two camps. The first seems to treat the
manifest disregard standard as a nonstatutory, standalone ground
for vacatur. See Coffee Beanery, 300 Fed. Appx. at 418–19. And the
second sees the standard as a judicial gloss on the court’s statutorily-
granted authority to vacate an arbitration award where the arbitrator
has exceeded her own powers. See Seneca Nation of Indians v. New
York, 988 F.3d 618, 625 (2nd Cir. 2021); Comedy Club, Inc. v. Improv W.
Assocs., 553 F.3d 1277, 1290 (9th Cir. 2009). But both camps seem to
interpret the standard to mean, in essence, that the arbitrator
appreciated but “willfully flouted” a controlling legal principle. See,
e.g., Seneca Nation of Indians, 988 F.3d at 626.
                       B. Manifest Disregard in Utah
    ¶30 The Utah Uniform Arbitration Act (UUAA) governs
arbitrations under Utah law. See UTAH CODE § 78B-11-101 to -131.
Like the FAA, the UUAA sets forth grounds on which a district court
must, upon motion, vacate an arbitration award. Id. § 78B-11-124(1).
And like the FAA, the UUAA permits a court to vacate an arbitration
award when “an arbitrator exceed[s] the arbitrator’s authority.”9 Id.
§ 78B-11-124(1)(d).

_____________________________________________________________
   9   A court may also vacate an arbitration award if:
            (a) the award was procured by corruption, fraud, or
         other undue means;
            (b) there was: (i) evident partiality by an arbitrator
         appointed as a neutral arbitrator; (ii) corruption by an
         arbitrator; or (iii) misconduct by an arbitrator
         prejudicing the rights of a party to the arbitration
         proceeding;
            (c) an arbitrator refused to postpone the hearing
         upon showing of sufficient cause for postponement,
                                                          (continued . . .)

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     ¶31 We first acknowledged the connection federal jurisdictions
had made between the statutory grounds for vacatur and the
manifest disregard standard in Buzas Baseball, Inc. v. Salt Lake
Trappers, Inc., 925 P.2d 941 (Utah 1996). In Buzas Baseball, the
Trappers appealed the trial court’s modification of an arbitration
award. Id. at 946. The trial court’s modification was based, in part, on
its conclusion that the arbitrator had manifestly disregarded the law
prohibiting double recoveries. Id. at 946, 951.
    ¶32 We prefaced our analysis by admitting that we addressed
the manifest disregard standard “because it was raised by Buzas
Baseball and relied upon by the trial court below.” Id. at 951 n.8. And
while we applied it to conclude that the trial court had erred in
modifying the arbitration award because “nothing in the record
establishe[d] that the arbitrators knew of the rule prohibiting double
recovery and disregarded it,” id. at 951, we expressly “reserve[d] the
issue of whether [the manifest disregard standard] [wa]s recognized
in Utah,” id. at 951 n.8.
     ¶33 We next discussed the manifest disregard standard in
Pacific Development, L.C. v. Orton, 2001 UT 36, 23 P.3d 1035. There, a
developer appealed the district court’s confirmation of an arbitration
award. Id. ¶ 1. The developer alleged, in part, that the arbitrator had
“manifestly disregarded the law pertaining to th[e] covenant [of
good faith and fair dealing].” Id. ¶ 15. Before addressing each of the
developer’s grounds for appeal, we again acknowledged the
connection between the manifest disregard standard and section
78B-11-124(1)(d) of the UUAA. Id. ¶ 7 n.3. And we explained that the
developer’s argument that the arbitrator had manifestly disregarded
the law “turn[ed] on whether the arbitrator [had] exceeded his
authority.” Id. We then concluded that “the arbitrator’s decision
explicitly addressed the covenant of good faith and fair dealing,” id.
¶ 15, and “[the developer]’s manifest disregard argument simply
amount[ed] to a ‘manifest disagreement’ with the arbitrator’s

     refused to consider evidence material to the
     controversy, or otherwise conduct the hearing contrary
     to Section 78B-11-116, . . .;
         ...
         (e) there was no agreement to arbitrate, . . .;
         (f) the arbitration was conducted without proper
     notice of the initiation of an arbitration . . . .
UTAH CODE § 78B-11-124(1)(a)–(c), (e)–(f).

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findings and final award,” id. (citing Pac. Dev., L.C. v. Orton, 1999 UT
App 217, ¶ 16, 982 P.2d 94). And this, we said, did not entitle the
developer to reversal. Id. ¶ 16.
     ¶34 The manifest disregard standard assumed its current form
in Westgate Resorts, Ltd. v. Adel, 2016 UT 24, 378 P.3d 93. There, we
explained that a district court may vacate an arbitrator’s decision “if
the [arbitrator] ‘exceeded [their] authority,’ or if [their] decision
demonstrate[d] a manifest disregard of the law.’” Id. ¶ 10 (internal
citation omitted). We further explained that while “the ‘manifest
disregard’ doctrine derives from the ‘exceeded its authority’ rule, the
two entail different standards of review.” Id. The manifest disregard
standard, we reasoned, “is an extremely deferential standard,” id.
¶ 11, whereas “we s[aw] no reason to defer to the [arbitration]
panel’s construction of the UUAA sections that govern the panel’s
own powers,” id. ¶ 11–12.
    ¶35 We articulated a tripartite test that a court was to employ
to decide if an arbitrator had manifestly disregarded her authority:
       First, the [arbitrator]’s decision must actually be in
       error. Second, the error “must have been obvious and
       capable of being readily and instantly perceived by the
       average person qualified to serve as an arbitrator.”
       Third, the [arbitrator] must have “appreciate[d] the
       existence of a clearly governing legal principle but
       decide[d] to ignore or pay no attention to it.”
Id. ¶ 11 (third and fourth alterations in original) (citing Buzas
Baseball, 925 P.3d at 951). We applied that test to conclude that the
arbitration panel had not manifestly disregarded the law. Id. ¶ 26.
    ¶36 But while we applied the manifest disregard standard in
Westgate, we also “recognize[d] there may be issues with the
standard’s compatibility with the UUAA.” Id. ¶ 10 n.3. We
“render[ed] no decision on the matter,” however, because “the
parties [did] not ask[] us to abandon the standard and Westgate’s
challenge to the arbitration award fail[ed] even under the manifest
disregard standard.” Id.
    ¶37 In the interest of facilitating discussion in a later case, we
note two things about the manifest disregard standard. First, we
have never applied the standard to vacate an arbitration award.
   ¶38 Second, we have been less than clear when we have talked
about the link between the manifest disregard standard and the
UUAA.

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    ¶39 In Buzas Baseball, for example, we spoke of the manifest
disregard standard as a “judicially created doctrine stemming from
the exceeding authority statutory ground.” 925 P.2d at 951 (emphasis
added). That if an arbitrator has manifestly disregarded the law,
“they can be said to have exceeded their authority.” Id.; see also Pac.
Dev., 2001 UT 36, ¶ 7 n.3 (“The contention that an arbitrator has
manifestly disregarded the law is a judicially created doctrine
derived from the statutory provision that an arbitrator’s decision
may be challenged if an arbitrator has exceeded his or her
authority.”).
     ¶40 But in Westgate, we seemed to, at the very least, weaken
the connection we had described in Buzas Baseball. In Westgate, we
suggested that the manifest disregard standard and section 78B-11-
124(1)(d) of the UUAA were two separate grounds on which a court
might vacate an arbitration award. See 2016 UT 24, ¶ 10. We then
really muddied the waters, explaining that the manifest disregard
standard “derives from” section 78B-11-124(1)(d) but that each
“entail[s] different standards of review.” Id.; see id. ¶ 12–13 (dubbing
the manifest disregard standard “an extremely deferential standard”
but “see[ing] no reason to defer to the [arbitrator’s] interpretation of
th[e] statutes” that govern the arbitrator’s own authority). Under our
case law, then, we cannot say whether the manifest disregard
standard operates as only a gloss on section 78B-11-124(1)(d) of the
UUAA, or whether it is a standalone ground on which a court may
vacate an arbitration award. And if it is the latter, we have yet to
come across any justification for our decision to add something to
the statute that the Legislature did not. See, e.g., Berrett v. Purser
& Edwards, 876 P.2d 367, 370 (Utah 1994) (“A cardinal rule of
statutory construction is that courts are not to infer substantive terms
into the text that are not already there. Rather, the interpretation
must be based on the language used, and the court has no power to
rewrite the statute to conform to an intention not expressed.”).
    ¶41 The standard’s murky origins lead us to wonder if perhaps
manifest disregard of the law is better thought of as a way of sussing
out whether the arbitrator exceeded her authority in a manner that
deprived the parties of the benefit of their bargain.
    ¶42 “Arbitration is a matter of contract law.” Ellsworth v. Am.
Arb. Ass’n, 2006 UT 77, ¶ 14, 148 P.3d 983; see also UTAH CODE § 78B-
11-108(1) (instructing a court to order arbitration if it finds that an
enforceable agreement to arbitrate exists). “The parties to the
arbitration determine the scope and questions to be resolved during
the proceedings.” Buckner v. Kennard, 2004 UT 78, ¶ 18, 99 P.3d 842.

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                     AHHMIGO, LLC v. SYNERGY CO.
                          Opinion of the Court

And precisely because arbitration is a bargained-for remedy, an
arbitrator cannot (manifestly) disregard the boundaries the parties
have set for her. To the contrary, “arbitration contracts are to be
enforced according to their terms, and . . . in the manner to which the
parties have agreed.” Id.
    ¶43 Fittingly, each of the grounds for vacatur the UUAA
provides seems designed to ensure that the parties receive the
arbitration they contracted for. For example, a district court can
vacate an award if the arbitrator or the arbitration proceeding is
corrupt, fraudulent, impartial, or otherwise unfairly prejudicial. See
UTAH CODE § 78B-11-124(1)(a)–(f). These grounds all protect against
something interfering with a party receiving the neutral arbitration
they agreed to in the contract. See Util. Trailer Sales of Salt Lake, Inc. v.
Fake, 740 P.2d 1327, 1329 (Utah 1987) (“As a general rule, awards will
not be disturbed on account of irregularities or informalities, or
because the court does not agree with the award, so long as the
proceeding has been fair and honest and the substantial rights of the
parties have been respected.”).
     ¶44 In this context, the manifest disregard standard might be
better viewed as a tool to inquire whether the arbitrator deprived the
parties of their bargained-for arbitration by disregarding the law that
the parties agreed would apply. That is, an arbitrator might
manifestly disregard the law if the parties’ contract calls for Utah
law, but the arbitrator prefers Colorado law and applies that instead.
In that case, the parties did not get what they expected to get when
they contracted—the application of Utah law to their dispute.
    ¶45 At the very least, even our limited application of the
manifest disregard standard causes us to view with suspicion a
standard that permits a party to ask a district court to vacate an
award based upon what is, in essence, an argument that the
arbitrator misapplied the law dressed up as an argument that the
arbitrator disregarded the law.
     ¶46 When a party voluntarily agrees to arbitrate, she agrees to
forego the protections of a substantive judicial review of the merits
of the arbitration decision. A party should not be able to participate
in arbitration and then subject the resulting arbitration award to the
review it rebuffed in the first place. After all, arbitration is, “[a]t its
core, . . . supposed to be an alternative to litigation in a court of law,
not a prelude to it.” UNIF. ARB. ACT § 23 cmt. B, 1 (UNIF. L. COMM’N
2000).

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                            Cite as: 2022 UT 4
                          Opinion of the Court

                             CONCLUSION
     ¶47 Ahhmigo asks us to reverse the district court’s denial of its
motion to vacate because it claims that the arbitrator manifestly
disregarded the law when he failed to honor a stipulation the parties
had purportedly struck. But Ahhmigo did not present this issue to
the district court, or, at the very least, did not present it to the district
court in a way that would have alerted the district court that it was
being asked to consider it. The issue is therefore unpreserved. We
affirm the district court.

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