- Case Type:
- Case Status:
- 20-2278/21-1004, 2022 WL 1055497 (6th Circuit, Apr 08,2022) Published
- Bankruptcy Court correctly confirmed Arbitration Award and District Court correctly affirmed Bankruptcy Court. Arbitration award correctly entered and entitled to confirmation and enforcement.
- Procedural context:
- After entry of arbitration decision, Bankruptcy Trustee moved in District Court to confirm award. District Court remanded to arbitrators for clarification of award. After arbitrators issued explanation, District Court confirmed award. Defendant appealed to the Sixth Circuit which affirmed.
- Case began as adversary by Chapter 7 Trustee to recover amounts allegedly owed by Defendant to Debtor. While pending trial, the parties agreed to arbitrate with the decision to be in a "brief reasoned decision". Arbitrators found for the Trustee but did not include "brief reasoned decision" instead entering one-sentence award in favor of Trustee. The Trustee moved in the District Court to confirm the award, Defendant opposed, asserting that the decision did not constitute a "brief reasoned decision". District Court agreed and remanded the matter to the arbitrators but did not vacate the award. The Trustee submitted a proposed Award (similar to proposed findings of fact and conclusions of law after trial). Defendant did not submit any further information to the arbitrators. The arbitrators issued a new decision laying out in detail the reasoning behind the earlier decision and the calculation of damages which exactly matched the amount set out in the prior award. Trustee again sought District Court confirmation of the award. Defendant objected, arguing that the original award was "tainted" under 9 USC Section 10(a), claiming that the original award was "so imperfectly executed" that it could not be relied upon as the initial award did not constitute the "brief reasoned award" required by the Arbitration Agreement, The Court rejected this argument, holding that an imperfect award does not amount to one where the arbitrators exceeded their powers or so imperfectly executed the power as to make the result unreliable, and there were no circumstances that would indicate a manifest disregard of the law or other outrageous circumstances. Defendant next alleged that the remand and issuance of the second award violated functus officio, which prohibits remanding a matter to the panel after termination of the arbitrators' appointment. The Court rejected this, holding that sending the original award back to the panel for clarification was not the same as sending the matter back to the panel for a new arbitration and there was no prohibition against asking the panel to clarify an otherwise ambiguous decision. Entry of the award post-remand was within scope of mandate issued by District Court to clarify and explain the award. Finally, Defendant argued that accepting the proposed findings of fact and conclusions of law from the Trustee was improper. The Court rejected this contention, noting that nothing in the Arbitration Act or the Arbitration Agreement precluded the arbitrators from requesting submissions and the fact that Defendant had the opportunity to submit its own version but did not do so did not convert the Trustee's submission into an ex parte contact.
- Boggs, Thapar and Bush
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