Karo v. NAU Country Ins. Co.
297 Neb. 798
| Neb. | 2017Background
- Farmers Matt and Michael Karo held federally reinsured crop insurance administered by NAU Country Insurance Company and filed prevented-planting claims for 2012 acres allegedly unplantable due to wet conditions.
- NAU denied coverage; the parties’ policy required binding arbitration, and an arbitrator issued an award in favor of NAU on January 21, 2014, denying the Karos’ claims.
- The Karos filed a state-court “Petition for Judicial Review” (treated as an application to vacate under FAA §10) on May 15, 2014 — more than three months after the award — and provided notice by U.S. mail.
- NAU moved to dismiss; the district court rejected dismissal, the parties proceeded to summary judgment, and the court vacated the arbitration award under FAA §10(a)(4), finding the arbitrator exceeded his powers/manifestly disregarded the law.
- NAU appealed. The Nebraska Supreme Court first addressed whether the district court had jurisdiction under the FAA, focusing on the §12 three‑month notice requirement for motions to vacate.
Issues
| Issue | Plaintiff's Argument (Karos) | Defendant's Argument (NAU) | Held |
|---|---|---|---|
| Whether FAA governs dispute | Karos conceded FAA applies to federally reinsured crop insurance | NAU agreed FAA governs | FAA applies because the contract involves interstate commerce |
| Whether §12’s 3‑month notice requirement is jurisdictional | Karos: late service should be treated as waived/defense; case proceeded without dismissal | NAU: timely service is a mandatory statutory precondition | The 3‑month notice under §12 is jurisdictional; failure to comply deprived the court of authority to review |
| Whether district court properly vacated award under §10(a)(4) (arbitrator exceeded powers/manifest disregard) | Karos relied on §10(a)(4) and manifest-disregard arguments to vacate | NAU argued the award should stand and appealed vacatur | Court did not reach merits: vacated district court judgment as void for lack of jurisdiction due to §12 failure |
| Effect of lack of jurisdiction on appealability | Karos proceeded to obtain judgment and triggered appeal | NAU appealed district court judgment | Because district court’s vacatur was void, it could not confer appellate jurisdiction; appeal dismissed |
Key Cases Cited
- Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598 (8th Cir. 1981) (holding timely service under FAA §12 is precondition to judicial review)
- Bowles v. Russell, 551 U.S. 205 (U.S. 2007) (statutory time limits for filing appeals are jurisdictional)
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (FAA provides limited, expedited judicial review of arbitration awards)
- Sebelius v. Auburn Regional Medical Center, 568 U.S. 145 (U.S. 2013) (clear-statement rule for treating statutory limits as jurisdictional)
- Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (U.S. 2000) (sections of FAA construed together for venue/jurisdictional purposes)
- John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (U.S. 2008) (distinguishing jurisdictional time bars from waivable statutes of limitations)