August 11, 2020

Volume X, Number 224

August 11, 2020

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August 10, 2020

Subscribe to Latest Legal News and Analysis

Maryland District Court Finds Damages Award, Not Liability Award Was “Final” Decision Triggering Time to Challenge Award Under FAA

The plaintiff moved to vacate an arbitration award and the defendant moved to dismiss and confirm. The defendant’s dismissal motion challenged confirmation of an arbitration award, arguing that the matter was filed in violation of the arbitration agreement’s confidentiality clause, was prohibited by the defense of arbitration and award, failed to comply with the Federal Arbitration Act, was untimely, and failed to include any legal authority.

The court dispensed with the defendant’s first argument, as the arbitration agreement expressly preserved the parties’ statutory right to judicial review of arbitration proceedings. As to the second argument – that confirmation is prohibited by the defense of arbitration and award – the court noted that the plaintiff was not attempting to re-litigate the claims that were resolved by the arbitration but rather “exercise its statutory right to request that a district court vacate the arbitration award.”

As to the third argument, timeliness, the FAA requires that a party challenging an arbitration award serve notice on the adverse part “within three months after the award is filed or delivered,” which period begins to run once the arbitrator issues its final award. Here, the liability award was issued on July 9, 2018, and the damages award on January 3, 2019. Thus, the plaintiff’s complaint, filed on January 25, 2019, was within the three-month period. Additionally, “[a]lthough the FAA provides that the sole method for challenging an arbitration award is by serving a motion to vacate within three months of the final award and does not expressly permit a party to initiate a challenge to an arbitration award by filing a complaint, a court may construe a complaint challenging an arbitration decision as a motion to vacate when doing so would not prejudice the opposing party.” Finding no prejudice, the court rejected the defendant’s third argument.

As to the fourth argument – that the plaintiff failed to include any legal authority to support vacating the arbitration award – the court noted that, in considering a Rule 12(b)(6) motion, its “role is not to determine whether a party has proven its case” but rather “to determine whether a party has stated a claim for which relief can be granted.” Finding that the complaint met this requirement, the court rejected the defendant’s argument.

The parties cross-moved for summary judgment. The court rejected the plaintiff’s argument that the arbitrator exceeded her legal authority and manifestly disregarded the law, and confirmed the award.

Benchmark Elecs., Inc. v. Myers, No. 8:19-cv-00242 (D. Md. Dec. 3, 2019).

©2011-2020 Carlton Fields, P.A. National Law Review, Volume X, Number 28

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About this Author

Nora A. Valenza-Frost, Carlton Fields, Insurance lawyer
Associate

Nora Valenza-Frost represents U.S. and international insurers and reinsurers in arbitration and litigation involving complex claims, coverage and regulatory issues across all lines of business.

Nora provides coverage opinions for claims involving several lines of business, including commercial general liability (CGL), professional liability, directors and officers liability (D&O), contractor’s protective professional indemnity (CPPI), errors and omissions (E&O), excess and surplus lines, property, workers’ compensation, business interruption, life and health, pollution,...

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