Karo v. NAU Country Ins. Co.
297 Neb. 798
Neb.2017Background
- Matt and Michael Karo held federally reinsured crop‑insurance policies serviced by NAU Country and filed prevented‑planting claims for 2012; NAU denied coverage and the parties arbitrated.
- The arbitrator denied the Karos’ claims by award dated January 21, 2014; the award was received January 23, 2014.
- The Karos filed a state‑court “Petition for Judicial Review” seeking vacatur under 9 U.S.C. § 10 on May 15, 2014 and served NAU by U.S. mail — more than three months after the award.
- NAU moved to dismiss early; the district court denied dismissal, later granted the Karos’ summary judgment motion, and vacated the arbitration award under § 10(a)(4) (arbitrator exceeded powers/manifest disregard).
- NAU appealed. The Nebraska Supreme Court considered whether the FAA governs and, crucially, whether the § 12 three‑month notice requirement for motions to vacate is jurisdictional, because the Karos’ filing was untimely.
Issues
| Issue | Plaintiff's Argument (Karo) | Defendant's Argument (NAU) | Held |
|---|---|---|---|
| Does the FAA govern disputes from federally reinsured crop insurance? | FAA applies because the contracts involve interstate commerce. | FAA governs and controls federal standard for judicial review. | FAA governs arbitration of federally reinsured crop insurance. |
| Was the Karos’ § 10 vacatur application timely under § 12 (served within 3 months)? | Filing in state court and service by mail on May 15, 2014 was sufficient despite being >3 months. | The § 12 notice must be served within 3 months; Karos’ service was untimely. | Karos’ application was untimely; service did not meet § 12’s three‑month requirement. |
| Is the § 12 three‑month notice requirement jurisdictional (nonwaivable, must be considered sua sponte)? | The time limit is a claim‑processing rule and can be waived if defendant fails to raise it. | The FAA’s notice/time provisions define the doorway to judicial review and are jurisdictional. | § 12’s three‑month notice requirement is jurisdictional; failure deprives court of authority to vacate. |
| Does the district court’s vacatur create an appealable judgment if entered without jurisdiction? | Vacatur judgment was proper on the merits; appellate review available. | If district court lacked FAA jurisdiction, its vacatur order is void and cannot confer appellate jurisdiction. | The district court lacked jurisdiction; its judgment is void. Appeal dismissed for lack of jurisdiction. |
Key Cases Cited
- Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598 (8th Cir. 1981) (failure to serve § 12 notice within three months forfeits judicial review under the FAA)
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (describing FAA’s streamlined procedures for expedited judicial review)
- Bowles v. Russell, 551 U.S. 205 (U.S. 2007) (statutory time limits for taking appeals are jurisdictional)
- John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (U.S. 2008) (distinguishing jurisdictional time bars from claim‑processing rules)
- Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145 (U.S. 2013) (adopting a clear‑statement approach to determine whether a statutory time limit is jurisdictional)
- Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (U.S. 2000) (analyzing §§ 9–11 of FAA together when interpreting venue and procedure)