216 N.C. App. 482
N.C. Ct. App.2011Background
- In 2005, Dr. Williams learned of the Village of Penland development as an investment opportunity through a broker.
- Plaintiffs purchased 20 lots in Penland; Williams Consulting LLC obtained a loan from UCB to finance 11 of those lots, for $1,031,250, via promissory note and deed of trust with a personal guaranty by Dr. Williams.
- Developers allegedly misused funds and the project failed; several developers pled guilty to federal crimes related to the project; Williams defaulted on the loan and Williams’s guaranty was not honored.
- Disputes arose over how much Plaintiffs must repay the loans obtained through UCB for their Penland investment.
- UCB moved to compel arbitration under the promissory note’s arbitration clause and to stay/dismiss related claims; Judge Patti compelled arbitration on 3 November 2008 and dismissed Adelle Williams’ claims.
- Arbitration proceeded; Arbitrator Thorpe issued an interim award (Oct. 25, 2009) and a final award (Nov. 3, 2009) awarding Plaintiffs damages on UDTPA claim and offsetting UCB’s claim, resulting in Plaintiffs owing roughly half of the outstanding indebtedness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA grounds support vacating the award | Plaintiffs claim manifest disregard/ exceeded authority. | Court must limit review to §9-11; Hall Street narrowed non-statutory review. | No manifest disregard shown; award affirmed; limited FAA review applies. |
| Whether the award was vacated for public policy or miscalculation | Awards violated UDTPA and involved miscalculation. | No clear miscalculation or public policy violation shown. | Public policy and miscalculation grounds not established; award not vacated or modified. |
| Whether summary judgment against UCBI was proper | UCBI liable as successor; arbitration not binding on UCBI. | UCBI not a lender; no involvement with Plaintiffs; res judicata considerations via arbitration. | Summary judgment in favor of UCBI affirmed. |
| Scope of appeal and preservation of challenge to Judge Patti's order | Challenge to 3 November 2008 order apnea; preserve issue on arbitration. | Appellants abandoned challenge to Patti order; only Bell orders preserved. | Appeal deemed to have abandoned Patti order challenges; Bell orders affirmed. |
Key Cases Cited
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (FAA review is limited to statutory grounds; non-statutory review reduced)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S. Ct. 1758 (Supreme Court 2010) (addressing manifest disregard and scope of arbitration review post-Hall)
- Dawahare v. Spencer, 210 F.3d 666 (6th Cir. 2000) (standard for proving manifest disregard of law in arbitration)
- Three S Delaware v. DataQuick Information Systems, 492 F.3d 520 (4th Cir. 2007) (standard to evaluate manifest disregard in Fourth Circuit)
- Apex Plumbing Supply v. U.S. Supply Co., 142 F.3d 188 (4th Cir. 1998) (modification of arbitration awards for mathematical error; no implicit mind-reading)
- Major League Baseball Players Assn. v. Garvey, 532 U.S. 504 (U.S. 2001) (arbitrator's authority and scoping; not to fashion public policy)
- Dooley v. R.R., 163 N.C. 454 (NC 1913) (federal statutory interpretation applied in state court context)
- Enoch v. Inman, 164 N.C.App. 415 (N.C. App. 2004) (persuasive federal authority for arbitration-review standards)
- Security Mills v. Trust Co., 281 N.C. 525 (N.C. 1972) (context for statutory construction in North Carolina)