Summary
The Nebraska Supreme Court held that Nebraska’s Uniform Arbitration Act, rather than the Federal Arbitration Act, governed a simple residential real estate sale. It further held that the purchasers waived their challenge to arbitrability by voluntarily participating in the arbitration without timely objecting and agreeing to be bound by the arbitrator’s decision. The court reversed the district court’s order vacating the award and remanded with directions to confirm it.
Topics
Practice areas
Questions Presented
- Whether the Federal Arbitration Act or Nebraska's Uniform Arbitration Act governed the arbitration provision in the residential real estate purchase agreement.
- Whether the parties' voluntary participation in arbitration without timely objecting waived the Garlocks' later challenge to arbitrability.
- Whether the district court erred by vacating the arbitration award under the Uniform Arbitration Act.
- Whether the district court was required to confirm the arbitration award when the application to vacate was meritless.
- Whether the Nebraska Supreme Court had appellate jurisdiction over the appeal.
Holdings
- A simple contract for the sale of residential real estate is an inherently intrastate activity; therefore, the Nebraska Uniform Arbitration Act, rather than the Federal Arbitration Act, governed this purchase agreement.
- A party that voluntarily participates in arbitration on the merits without clearly and explicitly objecting to arbitrability before the hearing waives the right to later seek a judicial determination that the dispute was not arbitrable.
- Because the Garlocks voluntarily participated in the arbitration hearing without objecting to arbitrability, they could not rely on Neb. Rev. Stat. § 25-2613(a)(5) to obtain judicial vacatur of the award.
- Under the UAA, a court must confirm an arbitration award unless a party has timely sought vacatur, modification, or correction and a statutory ground for that relief exists.
- The Nebraska Supreme Court had appellate jurisdiction because the appeal challenged an order denying confirmation and vacating an arbitration award without directing a rehearing.
Key quotations
“Although there was evidence that 3DS and Donner are engaged in the business of acquiring and reselling residential real estate for profit, we find this case presents “a simple contract for the sale of residential real estate.”” (531-532)
“we hold that a simple contract for the sale of residential real estate is an inherently intrastate activity.” (532)
“As a general rule, these courts hold that voluntary participation in an arbitration proceeding on the merits of a dispute will result in a waiver or forfeiture of the right to later challenge arbitrability.” (534)
“We find, on this record, that all parties voluntarily submitted their dispute to arbitration without objecting to arbitrability, and thereby waived the right to seek a judicial determination that the dispute was not arbitrable.” (535)
“When a party seeks to confirm an arbitration award pursuant to the UAA, a court must confirm that award unless a party has sought to vacate, modify, or correct the award and grounds for such vacation, modification, or correction exist.” (538)
Factual background
The Garlocks purchased a home in Omaha from 3DS Properties under a purchase agreement containing a mediation and binding-arbitration provision. After discovering alleged defects, they sued 3DS, its member Keith Donner, and listing agent Ryan Basye. The Garlocks initiated arbitration, participated in a two-day evidentiary hearing with counsel, and expressly agreed on the record to be bound by the arbitrator's decision. The arbitrator rejected their claims and awarded in favor of the defendants, after which the Garlocks sought vacatur.
Procedural history
The purchasers sued the sellers and agent over alleged defects and misrepresentations in a residential home sale. The district court stayed the action, and all parties voluntarily participated in binding arbitration without objecting to arbitrability. After the arbitrator ruled for the defendants, the district court found the arbitration provision unenforceable, vacated the award, denied confirmation, and reallocated arbitration costs. The Nebraska Supreme Court reversed and remanded with directions to confirm the award and enter judgment in conformity with it.
Remand instructions
Confirm the arbitration award and enter judgment in conformity with the award. The district court must not reallocate the arbitration expenses absent a timely application to modify under § 25-2614.