Garlock v. 3DS Properties, 930 N.W.2d 503

Background

In March 2015 the Garlocks purchased a home from 3DS Properties; the purchase agreement contained a bolded arbitration notice and an arbitration/mediation clause. 3DS member Keith Donner signed the seller disclosure; listing agent Ryan Basye was also named.
The Garlocks sued sellers and agent in May 2016 alleging concealed defects, fraudulent concealment, negligent misrepresentation, and related claims; defendants moved to compel arbitration or stay.
The district court stayed the litigation (Sept. 2016) awaiting mediation or arbitration; the Garlocks then demanded expedited arbitration and the parties proceeded to a multi‑day arbitration in June 2017 with court reporter and counsel present.
The arbitrator confirmed on the record each party’s consent to be bound; after hearing, the arbitrator entered an award for the defendants and allocated arbitration costs to the Garlocks.
The Garlocks filed to vacate the award (arguing partiality, public‑policy conflict, and refusal to postpone despite pending rehearing), and defendants moved to confirm; the district court (Mar. 2018) granted rehearing, held the arbitration clause unenforceable under Neb. Rev. Stat. §25‑2602.02 (failure to underline notice), declared arbitration void, vacated the award, reallocated arbitration costs, and denied confirmation.
Defendants appealed; the Nebraska Supreme Court held the UAA (not the FAA) governed, found the Garlocks waived arbitrability by participating and agreeing to be bound, concluded the district court erred in vacating and in declining to confirm, and reversed and remanded with directions to confirm the award.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Which statute governs (FAA v. UAA)?	FAA applies because interstate commerce was involved (internet advertising, appliances).	Transaction was a simple intrastate residential sale governed by UAA.	UAA governs; a simple residential sale is inherently intrastate here.
Did Garlocks waive challenge to arbitrability?	Arbitration clause was void; court stay reconsideration made arbitration improper.	Garlocks voluntarily initiated and participated in arbitration and agreed on the record to be bound.	Waiver: Garlocks participated without timely objection and expressly agreed to be bound, so they waived arbitrability.
Was the arbitration clause unenforceable under §25‑2602.02 (underlining requirement)?	Clause invalid because the required notice sentence was not underlined.	Even if formatting defect existed, parties’ post‑agreement conduct and consent made arbitration enforceable.	Court erred to decide clause unenforceable after arbitration concluded; any clause‑validity attack should have been raised in vacatur context and was waived by participation.
Was vacatur or confirmation required under UAA?	Vacatur warranted (partiality, refusal to postpone, public‑policy).	No valid ground for vacatur; court must confirm under §25‑2612 absent proper grounds.	Vacatur was improper (no evidentiary support; §25‑2613(a)(5) unavailable due to waiver); court should have confirmed award and entered judgment.

Key Cases Cited

Wilczewski v. Charter West Nat. Bank, 295 Neb. 254, 889 N.W.2d 63 (Neb. 2016) (FAA may apply when sale is part of a broader program/activity affecting interstate commerce)
Ronald J. Palagi, P.C. v. Prospect Funding Holdings, 302 Neb. 769, 925 N.W.2d 344 (Neb. 2019) (standards for appellate review of arbitration rulings and FAA/UAA choice‑of‑law analysis)
State v. Henderson, 277 Neb. 240, 762 N.W.2d 1 (Neb. 2009) (public‑policy may justify refusing to enforce an arbitration award under limited circumstances)
Drummond v. State Farm Mut. Auto. Ins. Co., 280 Neb. 258, 785 N.W.2d 829 (Neb. 2010) (UAA §25‑2612 requires confirmation of award absent timely, meritorious grounds to vacate/modify)
Kremer v. Rural Community Ins. Co., 280 Neb. 591, 788 N.W.2d 538 (Neb. 2010) (order compelling/staying proceedings for arbitration is a final order for appeal)