494 P.3d 378
Or. Ct. App.2021Background
- 3000 Investment Corp. obtained an arbitration award against Heather Teed, who owned land subject to plaintiff’s easement.
- The arbitrator found Teed required to perform certain “stabilization work” to protect the easement, which included work related to stairs, a path, and planting.
- The arbitration award also upheld a contract provision awarding a monthly incentive fee for delay in completing the stabilization work.
- Teed moved in circuit court to vacate the arbitration award under ORS 36.705(1)(d), asserting the arbitrator exceeded his powers; the court confirmed the award.
- Teed appealed to the Oregon Court of Appeals challenging (1) the arbitrator’s contract interpretation requiring stair/path/planting work and (2) the refusal to declare the incentive-fee provision void as against public policy.
- The Court of Appeals applied the deferential standard for reviewing arbitration decisions and affirmed the trial court’s confirmation of the award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrator exceeded powers by interpreting the agreement to require stairs/path/planting as part of "stabilization work" | Arbitrator properly construed the contract to include that work to protect plaintiff’s easement | Arbitrator misinterpreted the contract and imposed obligations beyond the parties’ agreement | Court held arbitrator did not exceed powers; interpretation—even if error—was not "so gross" as to void the award |
| Whether the arbitrator exceeded powers by refusing to declare the monthly incentive-fee provision void as against public policy | Incentive fee provision is enforceable and not contrary to public policy | Provision is void as against public policy and thus exceeds arbitrator's authority to enforce | Court held arbitrator did not exceed powers; refusal to invalidate the provision was within arbitrator’s authority |
Key Cases Cited
- Nieto v. City of Talent, 295 Or App 625, 436 P3d 82 (2019) (describing deferential standard for reviewing legal questions decided in arbitration)
- Brewer v. Allstate Insurance Co., 248 Or 558, 436 P2d 547 (1968) (arbitrator’s legal errors do not vitiate award unless they are gross and strike at the heart of decision-making)
- Native Sun v. L & H Development, Inc., 149 Or App 623, 944 P2d 995 (1997) (applying Brewer and explaining that contract-interpretation errors by arbitrators typically do not show they exceeded authority)