506 P.3d 536
Utah2022Background
- Ahhmigo contracted with Synergy to buy bulk blended powders; the contract contained a "Subject Provision" requiring Buyer to pay the full contract price even if Buyer refused shipment.
- Ahhmigo made some pre-shipment payments, later failed to accept remaining product due to development problems, and ultimately repudiated the contract.
- Ahhmigo demanded refunds for payments on product it never received; arbitration followed on breach of contract and breach of implied covenant claims.
- The arbitrator found for Synergy, concluding Ahhmigo repudiated delivery, the Subject Provision was enforceable (parties could contract around UCC defaults), and Ahhmigo proved no damages.
- Ahhmigo moved in district court to vacate the award, arguing the arbitrator manifestly disregarded controlling law (Madsen) and failed to calculate UCC damages; the district court denied the motion.
- The Utah Supreme Court affirmed because Ahhmigo failed to preserve the specific argument it raised on appeal (that the arbitrator ignored a party stipulation regarding liquidated damages), and the Court declined to reach the merits while commenting on the manifest-disregard doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preservation: whether Ahhmigo preserved its argument that the arbitrator ignored a stipulation that the Subject Provision was not liquidated damages | Ahhmigo: preserved generally by arguing arbitrator ignored controlling law and mentioning the parties agreed liquidated damages were not involved | Synergy: Ahhmigo never asked the district court to decide the stipulation question; issue unpreserved | Court: Unpreserved — Ahhmigo raised a distinct legal theory on appeal that the district court never had occasion to rule on; affirm. |
| Manifest disregard / merits: whether arbitrator manifestly disregarded law by avoiding a UCC damage calculation under Madsen | Ahhmigo: arbitrator ignored Madsen and allowed Synergy a double recovery (kept payments plus resale proceeds) | Synergy: arbitrator applied the parties' contract (Subject Provision) and concluded parties modified UCC defaults; no manifest disregard | Court: Did not reach merits; offered discussion that manifest-disregard is a narrow, deferential doctrine tied to whether an arbitrator exceeded agreed authority and stressed preservation and limits on judicial review. |
Key Cases Cited
- Madsen v. Murrey & Sons Co., 743 P.2d 1212 (Utah 1987) (governing seller's remedies and UCC damages when buyer fails to take delivery)
- Buzas Baseball, Inc. v. Salt Lake Trappers, Inc., 925 P.2d 941 (Utah 1996) (discussed manifest-disregard concept and connection to arbitrator exceeding authority)
- Pacific Dev., L.C. v. Orton, 23 P.3d 1035 (Utah 2001) (applied manifest-disregard inquiry and treated it as rooted in exceeded-authority statutory ground)
- Westgate Resorts, Ltd. v. Adel, 378 P.3d 93 (Utah 2016) (articulated tripartite manifest-disregard test and noted doctrinal tensions)
- Hall St. Assocs. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (announced limits on expanding FAA vacatur grounds and questioned manifest-disregard's status)
- Wilko v. Swan, 346 U.S. 427 (U.S. 1953) (earlier discussion suggesting arbitration law interpretations are generally not judicially reviewable)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (U.S. 2010) (noting unresolved status of manifest-disregard as independent ground for vacatur)