Summary
The Utah Supreme Court held that a combined order denying confirmation of an arbitration award, vacating the award, and directing a rehearing is not a final order subject to appeal as of right under the Utah Uniform Arbitration Act. The court further held that a party-appointed arbitrator is not subject to the statutory evident-partiality standard applicable to a neutral arbitrator. Because the record showed no corruption, misconduct prejudicing Westgate, or evident partiality by a neutral arbitrator, the court reversed the vacatur of the arbitration award and remanded.
Topics
Practice areas
Questions Presented
- Whether a combined district court order denying confirmation of an arbitration award, vacating the award, and directing a rehearing is a final order or otherwise appealable as of right under section 78B-11-129 of the Utah Uniform Arbitration Act.
- Whether Consumer Protection Group properly pursued an interlocutory appeal under Utah Rule of Appellate Procedure 5.
- Whether the Utah Uniform Arbitration Act authorized vacatur based on a party-appointed arbitrator's failure to disclose a first-cousin relationship with a shareholder in opposing counsel's law firm.
- Whether a party-appointed arbitrator is subject to the disclosure and evident-partiality standards applicable to a neutral arbitrator.
Holdings
- A combined order denying confirmation of an arbitration award and vacating the award while directing a rehearing is not a final, appealable order under section 78B-11-129 of the Utah Uniform Arbitration Act and does not create an appeal as of right.
- Because the order vacating the arbitration award directed a rehearing and was not among the orders granting a right to direct appeal, CPG properly sought an interlocutory appeal under Utah Rule of Appellate Procedure 5.
- An arbitrator appointed by one party is not an arbitrator appointed as a neutral merely because the arbitrator later declares himself or herself neutral; neutrality is determined at the time of appointment.
- Under the Utah Uniform Arbitration Act, a party-appointed arbitrator's failure to disclose a relationship supports vacatur only if the statutory grounds in section 78B-11-124(1)(b)—evident partiality by a neutral arbitrator, corruption, or misconduct prejudicing a party's rights—are established.
Key quotations
“We overrule Hicks on this issue and determine that combined orders denying confirmation of an arbitration award and vacating an award while directing a rehearing are not final orders subject to appeal under section 129.” (425)
“Under subsection 118(4), the failure to disclose a relationship can support vacatur only if it also meets one of the provisions outlined in subsection 124(1)(b). None of those have been shown here.” (427)
“Justice is not served by vacating an award simply because an arbitrator did not disclose a nonprejudicial relationship.” (427)
Factual background
Westgate and Consumer Protection Group litigated claims and counterclaims, with CPG's Utah Pattern of Unlawful Activity Act claims sent to arbitration. CPG-appointed arbitrator Richard Burbidge was a first cousin of George Burbidge II, a shareholder in the law firm representing CPG, but neither Burbidge disclosed the relationship. The arbitration panel awarded CPG $65,500, and the district court vacated the award despite the absence of any allegation or evidence of actual bias, corruption, misconduct, or prejudice.
Procedural history
Westgate moved to compel arbitration of Consumer Protection Group's claims under the Utah Pattern of Unlawful Activity Act, and the district court ordered those claims to arbitration. The arbitration panel awarded CPG $65,500. The district court vacated the award and denied confirmation based on an arbitrator's failure to disclose a first-cousin relationship with a shareholder in CPG's law firm. The Utah Supreme Court granted CPG permission to pursue an interlocutory appeal, held that the appeal was proper, reversed the vacatur order, and remanded.
Remand instructions
Remand for actions consistent with the opinion; the district court's order vacating the arbitration award is reversed.