Seldin v. Estate of Silverman
305 Neb. 185
| Neb. | 2020Background:
- Dispute between family factions ("Omaha Seldins" v. "Arizona Seldins") over partition/separation of jointly owned real estate and related ancillary claims; parties agreed to binding arbitration under a Separation Agreement incorporating AAA rules.
- Arbitration (after change of arbitrator) included extensive discovery and 53 hearing days, produced 12 interim awards and a final net award of $2,997,031 in favor of the Omaha Seldins (April 27, 2017); parties were jointly and severally liable per the agreement.
- A contested issue concerned Sky Financial (an Arizona LLC): Omaha tendered Sky Financial to the arbitrator as an interpleader; arbitrator accepted and later awarded damages and recessionary relief related to securities claims involving Sky Financial.
- Arizona Seldins moved to vacate/modify the award alleging arbitrator misbehavior/evident partiality, public policy violation (windfall/double recovery), improper attorney-fee award, miscalculation of interest, and untimely claims; Scott separately challenged aspects relating to his personal liability and interim awards.
- The district court (Douglas County) confirmed the arbitration award, denied motions to vacate/modify, and imposed statutory sanctions under Neb. Rev. Stat. §25-824, awarding attorney fees; the Omaha Seldins later sought correction to include additional counsel fees omitted from the district court’s calculation.
- Nebraska Supreme Court: affirmed confirmation and sanctions, rejected public-policy vacatur under the FAA, upheld arbitrator’s fee award as within his contractual interpretation, and increased the fee judgment to include the omitted $211,676.50 (total $342,860.95).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing law: FAA v. Nebraska UAA | Arizona Seldins argued FAA governs because arbitration involves interstate commerce | Omaha agreed FAA governs | FAA governs (arbitration involves interstate commerce) |
| Timeliness/notice under FAA §12 | Arizona Seldins: their July 25 motion complied with Nebraska §25-910 and thus FAA §12 timing | Omaha argued some public-policy claims untimely | Notice complied with §25-910 within 3 months; motion timely; court had jurisdiction |
| Arbitrator misbehavior / evident partiality for accepting Sky Financial | Arizona Seldins / Scott: arbitrator’s acceptance of Sky Financial was misconduct/created apparent partiality; lack of written mutual consent purportedly violated disqualification rule | Omaha: parties consented at hearing; AAA rules allow interim measures; no evidence of bias | No misconduct; parties expressly consented; no evident partiality shown; objection waived |
| Vacatur on public-policy grounds | Arizona Seldins: award produces windfall/double recovery violating Nebraska public policy | Omaha: FAA preempts public-policy vacatur; Hall Street limits vacatur to FAA §10 grounds | Public-policy is not a valid ground under FAA; public-policy vacatur rejected; Henderson’s language inconsistent with FAA disapproved |
| Arbitrator’s award of attorney fees (conflict with Separation Agreement) | Arizona Seldins: Separation Agreement precludes fee awards generally | Omaha: arbitrator reasonably construed agreement to allow fees for ancillary Sky Financial securities claims; AAA rules permit such relief | Arbitrator’s interpretation was within his powers; fee award stands |
| Sanctions under Neb. Rev. Stat. §25-824 | Omaha: sought fees for defending frivolous motions to vacate/interim applications | Arizona/Scott: sanctions improper; some filings made out of caution | District court did not abuse discretion; sanctions affirmed as claims/applications were frivolous or without rational basis |
| Scott’s objections: description of “Respondents” / joint/several liability | Scott: evident material mistake; he had no personal securities violation; award should be corrected as to him | Omaha: separation agreement defines parties and establishes contractual joint/several liability; Scott agreed to that scheme | No evident material mistake; Scott bound by agreement; motion denied |
| Claims bar date / relation back | Scott: Sky Financial claim untimely; arbitrator exceeded power by allowing untimely amendment without proper relation-back analysis | Omaha: arbitrator granted leave under agreement and Fed. R. Civ. P. 15(a)(2) principles; amendment related back | Arbitrator acted within authority in permitting amendment; not grounds for vacatur |
| Cross-appeal (fee amount / acceptance of benefits) | Omaha: district court omitted Bryan Cave fees; seeks increase to $342,860.95 | Arizona: registration of judgment in Arizona shows acceptance of benefits, precluding appeal | Court increased fee award to include omitted $211,676.50; registration did not bar cross-appeal |
Key Cases Cited
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (FAA §§10–11 provide exclusive statutory grounds to vacate/modify an arbitration award)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (U.S. 2013) (courts must defer to arbitrators’ contract interpretations)
- Paperworkers v. Misco, Inc., 484 U.S. 29 (U.S. 1987) (courts should not engage in arbitrator factfinding when reviewing awards)
- Wilko v. Swan, 346 U.S. 427 (U.S. 1953) (historical discussion of judicial review standards addressed by later cases)
- Southland Corp. v. Keating, 465 U.S. 1 (U.S. 1984) (FAA preempts conflicting state law and applies in state courts)
- Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524 (U.S. 2019) (arbitrability and enforcement of arbitration agreements are matters for courts to enforce according to their terms)
- State v. Henderson, 277 Neb. 240 (Neb. 2009) (Nebraska case recognizing public-policy vacatur under UAA—discussed and limited by this opinion)
- Dowd v. First Omaha Sec. Corp., 242 Neb. 347 (Neb. 1993) (evident partiality standard under Nebraska precedent; distinguished under FAA review)