381 P.3d 1167
Utah Ct. App.2016Background
- Denison hired KGL under a construction contract; KGL walked off the job owing >$2M to subs/suppliers and leaving ~$454,000 unpaid of the contract balance. Denison completed the project, paid subcontractors (~$1.86M) and incurred completion costs (~$355,000).
- Parties agreed to binding arbitration and an Arbitration Agreement that limited an interim award to 5 pages and required an "interim award on the merits" by Jan 10, 2014, with a final award due after proof of fees but no later than Feb 28, 2014.
- The arbitrator warned he might exceed five pages; parties consented and extended the interim deadline to Jan 10. He issued a 19‑page Interim Award on Jan 11 finding KGL breached, awarding Denison damages subject to verification.
- KGL objected, arguing the Interim Award was untimely and incomplete (verification request, two change‑order claims not addressed, hearing reopened for Denison). Denison supplied verification; the arbitrator later said he had not relied on it and issued a Final Award on Feb 28 keeping the earlier damages and adding fees — total ≈ $4.82M.
- District court confirmed the Final Award; KGL appealed claiming (1) arbitrator exceeded authority (untimely/interim incomplete/reopening/reconsideration) and (2) evident partiality. The appellate court affirmed.
Issues
| Issue | KGL's Argument | Denison's Argument | Held |
|---|---|---|---|
| Whether arbitrator exceeded authority by issuing an interim award after the Jan 10 deadline | Interim Award (Jan 11) was untimely and thus exceeded authority because it left damages subject to verification and didn’t resolve two change‑order claims | The Interim Award adjudicated the merits (breach, prevailing party, damages subject only to mathematical verification); parties consented to page/deadline flexibility; any delay harmless | Court: No excess of authority; Interim Award was "on the merits," delay harmless and not ground to vacate Final Award |
| Whether arbitrator exceeded authority by requesting verification / reopening hearing for Denison only | Request for verification and reopening amounted to reopening the hearing unfairly and exceeded authority | Request was limited to verifying amounts (math/accounting); arbitrator later withdrew reliance on the verification; any irregularity was harmless | Court: No excess of authority; request was for verification only, ultimately not considered, and harmless |
| Whether arbitrator’s reconsideration of record after Interim Award exceeded authority | Reconsideration after deadline was untimely and impermissible reconsideration of evidence | Arbitration Agreement did not prohibit reconsideration; reconsideration produced no substantive change to award | Court: Reconsideration was at most procedural irregularity; no prejudice; not a basis to vacate |
| Whether arbitrator demonstrated evident partiality | Actions (reopening for Denison, reconsideration, not addressing some claims, rulings favoring Denison) show neutral arbitrator was biased | Rulings reflect evaluation of evidence; allegations speculative; arbitrator removed verification request and did not rely on extra submissions | Court: No evident partiality; plaintiff failed to produce direct, certain evidence of bias; confirmation affirmed |
Key Cases Cited
- Softsolutions, Inc. v. Brigham Young Univ., 1 P.3d 1095 (Utah 2000) (review of arbitration awards is highly deferential)
- Buzas Baseball, Inc. v. Salt Lake Trappers, Inc., 925 P.2d 941 (Utah 1996) (arbitrator exceeds authority when award is without foundation or beyond submission)
- Allred v. Educators Mut. Ins. Ass’n of Utah, 909 P.2d 1263 (Utah 1996) (arbitration awards not disturbed if proceedings were fair and substantial rights respected)
- DeVore v. IHC Hosps., Inc., 884 P.2d 1246 (Utah 1994) (evident partiality requires direct and certain evidence; review standards)
- Intermountain Power Agency v. Union Pac. R.R. Co., 961 P.2d 320 (Utah 1998) (arbitrator may decide on any reasonable ground presented; courts won’t second‑guess basis)
- Cat Charter, LLC v. Schurtenberger, 646 F.3d 836 (11th Cir. 2011) (definition of a "reasoned" award as stating reasons/justifications)