Arbitration: Challenging the Award: Part X
Challenging or Confirming the Award in Court—
Beware of the Time for Filing!

By: Samuel Wampler

Reprinted from March 2006 ohioconstructionlaw.com

I thought we would break from our review of cases where an arbitration award was challenged on grounds set forth in R.C. § 2711.10. This month produced a very interesting case where an award was effectively overturned because the party obtaining the favorable ruling failed to act in accordance with the statutory requirements for enforcing the award, MBNA America Bank, N.A. v. Terry, 2006 Ohio 972 (Lucas App. 2006).

MBNA was not a construction case. Instead it was a dispute between MBNA, a large credit card company, and one of its cardholders, Terry. The amount in dispute was not substantial, but the lesson to be learned from this case is.

What makes this case interesting is the fact that there were two separate arbitration proceedings. Terry filed the first claim against MBNA with the National Arbitration Council; it resulted in an award for Terry in the amount of $15,483.30. MBNA did not participate in this arbitration. MBNA later filed the second claim with the National Arbitration Forum, as provided in the parties’ written agreement. This arbitration resulted in two awards, one for $5,534 and one for $10,782. The chronology becomes important here and is as follows:

05/09/03 – award in favor of Terry for $15,483.30

10/21/03 – award in favor of MBNA for $5,534.00

12/12/03 – award in favor of MBNA for $10,782.0

05/24/04 – MBNA filed motion and application to confirm its awards

07/22/04 – Terry filed answer and counterclaim requesting judgment on his award

Interim – MBNA filed a motion to strike the answer and counterclaim for failure to comply with R.C. Chapter 2711 (the Ohio Arbitration Act)

9/20/04 – Terry opposed the motion to strike and filed a motion to confirm his award

6/13/05 – trial court confirmed MBNA’s awards and granted its motion to strike Terry’s answer and counterclaim.

In affirming the trial court’s decision, the Court of Appeals pointed to four important provisions of the Ohio Revised Code, some of which should be familiar to regular readers:

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2711.09.	At any time within one year after an award in an arbitration proceeding is made, any party to the arbitration may apply to the court of common pleas for an order confirming the award. Thereupon, the court shall grant such an order and enter judgment thereon, unless the award is vacated, modified, or corrected as prescribed in sections 2711.10 and 2711.11 of the Revised Code.
2711.10.	Court may vacate award In any of the following cases, the court of common pleas shall make an order vacating the award upon the application of any party to the arbitration if: The award was procured by corruption, fraud, or undue means. [There was] Evident partiality or corruption on the part of the arbitrators, or any of them. The arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced. The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. If an award is vacated and the time within which the agreement required the award to be made has not expired, the court may direct a rehearing by the arbitrators.
2711.11.	Court may modify award In any of the following cases, the court of common pleas in the county wherein an award was made in an arbitration proceeding shall make an order modifying or correcting the award upon the application of any party to the arbitration if: There was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award; The arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matters submitted; The award is imperfect in matter of form not affecting the merits of the controversy. The order shall modify and correct the award, so as to effect the intent thereof and promote justice between the parties.
2711.13.	Motion to vacate, modify, or correct an award; service After an award in an arbitration proceeding is made, any party to the arbitration may file a motion in the court of common pleas for an order vacating, modifying, or correcting the award as prescribed in sections 2711.10 and 2711.11 of the Revised Code.   Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is delivered to the parties in interest, as prescribed by law for service of notice of a motion in an action. For the purposes of the motion, any judge who might make an order to stay the proceedings in an action brought in the same court may make an order, to be served with the notice of motion, staying the proceedings of the adverse party to enforce the award.

While Terry obtained a favorable arbitration ruling, he failed to capitalize on it in two ways:

1. He failed to apply to the common pleas court to confirm his award against MBNA within one year of the award. He obtained his award on 05/09/03, yet he did not apply to have the award confirmed until over sixteen months later, on 09/20/04.

2. He did not object to MBNA’s awards within three months after the awards were made. Even if the court were to construe Terry’s answer and counterclaim to be objections under Chapter 271, they were filed some seven months after the second award.

The Court of Appeals followed the letter of the Ohio Arbitration Act and affirmed the trial court’s decision to confirm MBNA’s arbitration award, as MBNA’s application for confirmation was filed in a timely manner, and further because Terry failed to object to the award within the three-month period required by R.C. § 2711.13. The Court of Appeals also affirmed the trial court’s decision not to confirm the award in Terry’s favor because Terry waited over one year to apply for confirmation of that award.

The lesson to be learned from this case is that getting the award sometimes is just the beginning of the battle. You must pay careful attention not only to the rules for the arbitration hearing itself, but also to the restrictions placed on enforcing or challenging the award, including time restrictions. The lesson was an expensive one for Terry, but for those of you reading this column, it is free.

Next month we will start looking at the rules that govern mediation of construction disputes.