270 So. 3d 785
La. Ct. App.2019Background
- Rain CII Carbon, LLC contracted with ReCon Engineering for a power-generation project and later sued ReCon and others; ReCon compelled Rain to arbitrate.
- Rain sought joinder of ReCon’s insurers (Catlin, Alterra, First Financial, Chartis, Illinois National); insurers successfully opposed joinder and were not parties to the arbitration.
- The arbitrator awarded Rain $4,430,404.74 against ReCon after a September 28, 2017 hearing; Rain filed to confirm the award in Orleans Parish civil court.
- The insurers intervened in the confirmation proceeding and moved to vacate the award, claiming lack of notice and other defenses.
- Rain filed a dilatory exception of lack of procedural capacity, arguing insurers were not parties to the arbitration and thus could not move to vacate; the trial court sustained that exception, confirmed the award, and assessed costs to the intervenors.
- The insurers appealed; the appellate majority affirmed, holding non-parties to arbitration lack statutory capacity to seek vacatur under the Louisiana Arbitration Act and FAA; one judge dissented.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurers had procedural capacity to intervene and seek vacatur of arbitration award | Insurers were not parties to arbitration so lack capacity to file post-award challenges; confirmation must be granted absent a valid motion to vacate | Insurers, as interested nonparties, had a justiciable interest and could intervene in confirmation to protect or enforce rights | Held: Insurers lacked procedural capacity; confirmation proper (majority) |
| Whether only a ‘‘party to the arbitration’’ may move to vacate/modify under La. R.S. 9:4209/FAA | Rain: statutory text limits post-award judicial relief to parties to the arbitration | Insurers: statute does not bar intervention by interested nonparties in confirmation proceedings | Held: Only parties to arbitration may file those statutory motions; insurers not parties, so no vacatur motion valid (majority) |
| Whether the arbitrator manifestly disregarded law or lacked jurisdiction such that award should be vacated | Insurers argued arbitrator exceeded jurisdiction and manifestly disregarded law; hence vacatur warranted | Rain: Insurers waived ability to contest arbitration by opposing joinder and not being parties; procedural bar prevents merits review | Held: Court declined to reach merits because insurers lacked procedural capacity to seek vacatur; confirmation affirmed |
| Proper characterization of the trial court’s ruling (lack of procedural capacity vs. no right of action) | Rain framed objection as lack of procedural capacity; if viewed alternatively, Rain argued insurers also had no right of action | Insurers argued neither exception fit; they had both capacity and right to intervene | Held: Majority affirmed on lack of procedural capacity (and noted same result would pretermit vacatur issues); dissent argued exception inapplicable and intervention proper |
Key Cases Cited
- English Turn Prop. Owners Ass'n v. Taranto, 219 So.3d 381 (La. App. 4th Cir.) (standards for dilatory exception of lack of procedural capacity)
- Wells v. Fandal, 136 So.3d 83 (La. App. 5th Cir.) (de novo review of procedural-capacity exception)
- Mt. Zion Baptist Ass'n v. Mt. Zion Baptist Church #1 of Revilletown Park, 207 So.3d 414 (La. App. 1st Cir.) (procedural-capacity doctrine and representative capacity requirements)
- Woodlawn Park Ltd. P'ship v. Doster Constr. Co., Inc., 623 So.2d 645 (La.) (distinction between lack of procedural capacity and no right of action)
- Montelepre v. Waring Architects, 787 So.2d 1127 (La. App. 4th Cir.) (arbitration awards have res judicata effect)