216 N.C. App. 397
N.C. Ct. App.2011Background
- Defendant Freeman held a credit card; the card agreement required binding arbitration by NAF.
- Plaintiff filed an arbitration claim with NAF and served hearing notices on Freeman; NAF issued a 2008 arbitration award in plaintiff's favor for $2,386.35.
- Plaintiff then filed a motion to confirm the award in North Carolina federal court on January 19, 2010.
- In 2009, Minnesota AG action revealed NAF conflicts of interest; Swanson v. NAF involved ownership changes and consent judgment restricting new consumer arbitrations.
- Freeman answered plaintiff's motion to confirm and asserted class-action counterclaims; plaintiff moved to dismiss counterclaims under Rule 12(b)(6) on April 26, 2010.
- Trial court confirmed the award and dismissed Freeman's counterclaims; Freeman appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of challenge to the arbitration award | Freeman was untimely under §12; he did not timely challenge existence of arbitration or file to vacate. | Equitable tolling should apply due to undisclosed conflicts of interest at the time of award. | No timely challenge; equitable tolling rejected; award confirmed. |
| Existence of an arbitration agreement properly before court | Howell controls; Freeman did not contest arbitration existence timely; issue not properly before court. | There was no valid arbitration agreement due to undisclosed conflicts. | Howell controlling; issue not properly before court. |
| Equitable tolling applicability to §12 period | Equitable tolling does not apply because no motion to vacate was filed within three months. | Tolling should apply given nondisclosure of conflicts at time of award. | Equitable tolling not applicable; §12 time-barantage stands. |
| Scope of proper counterclaims after motion to confirm | Only defenses under 9 U.S.C. §§ 10-11 may be asserted; others are improper. | State-law counterclaims are permissible as related defenses. | Only §10-11 counterclaims allowed; state-law counterclaims properly dismissed. |
Key Cases Cited
- Advantage Assets, Inc. II v. Howell, 190 N.C.App. 443, 663 S.E.2d 8 (2008) (FAA allows challenge to existence of arbitration; failure to contest timely fatal)
- Florasynth, Inc. v. Pickholz, 750 F.2d 171 (2d Cir. 1984) (confirmation is summary; no tolling after three months)
- Taylor v. Nelson, 788 F.2d 220 (4th Cir. 1986) (tolling not permitted; three-month limit governs vacatur)
- Hall Street Assocs. v. Mattel, 552 U.S. 576 (2008) (FAA grounds cannot be expanded by contract)
- Booth v. Hume Pub., Inc., 902 F.2d 925 (11th Cir. 1990) (limited counterclaims to §10 and §11 in motion to confirm)
- O.R. Securities v. Professional Planning Assoc., 857 F.2d 742 (11th Cir. 1988) (summary nature of arbitration review)
- Diapulse Corp. of America v. Carba, Ltd., 626 F.2d 1108 (2d Cir. 1980) (restrictive judicial review after arbitration)
- Amicizia Societa Navegazione v. Chilean Nitrate and Iodine Sales Corp., 274 F.2d 805 (2d Cir. 1960) (narrow role of courts post-arbitration)