Chapter 17 - § 17.5 • PROCEDURES FOR VACATING THE AWARD

• Jurisdiction: Colorado

§ 17.5 • PROCEDURES FOR VACATING THE AWARD

§ 17.5.1—Procedures For Vacating The Award Under The CUAA

Cases decided under the CUAA provide some guidance. An application under the CUAA to the arbitrator under § 211 to modify the award tolls the 30-day time limit in which to seek judicial review.²⁶⁵ A confirmation of the award and judgment might terminate rights under this statute.

Under the CUAA, an arbitrator's order dismissing a demand on the merits is an "award" that is subject to confirmation or challenge, notwithstanding that a party's entitlement to attorney fees and costs remains pending before the arbitrator. Therefore, the time limits for filing a motion to vacate begin running upon the order being issued.²⁶⁶ The same result should be expected under the CRUAA.

In a proper judicial proceeding to challenge an award, extrinsic evidence may be admissible to establish misconduct. A court may also receive testimony from the arbitrator to explain what took place before him or her, what was in controversy, and what matters entered into his or her decision-making process.²⁶⁷ However, generally, an arbitrator cannot be questioned concerning his or her thought processes.²⁶⁸ The arbitrator may also testify to define his or her intent in the award, and to clarify any ambiguity.²⁶⁹ See §§ 11.11 and 11.12.

A court is not required to hold an evidentiary hearing on a motion to vacate. The Colorado Court of Appeals noted that an application to the court under § 202 of the CUAA "shall be by motion and shall be heard in the manner and upon the notice provided by law or rule of court for the making and hearing of motions."²⁷⁰ Further, C.R.C.P. 121, § 1-15(4) provides that, if possible, motions shall be determined upon written motion and briefs, but the court may order an evidentiary hearing.

§ 17.5.2—Procedures For Vacating The Award Under The CRUAA

C.R.S. § 13-22-223(2) (2016) provides that a motion to vacate the award shall be filed with the court within 91 days after the movant receives notice of the award or modified or corrected award, or within 91 days after the movant knew, or by exercise of reasonable care should have known, of the ground of corruption, fraud, or other undue means. No decisions have yet been rendered in Colorado under this provision.²⁷¹

The CRUAA, C.R.S. § 13-22-205, provides:

(1) Except as otherwise provided in section 13-22-228, an application for judicial relief under this part 2 must be made by motion to the court and heard in the manner provided by law or court rule for making and hearing motions.
(2) Unless a civil action involving the agreement to arbitrate is pending, notice of an initial motion to the court under this part 2 must be served in the manner provided by law for the service of a summons in a civil action. Otherwise, notice of the motion must be given in the manner provided by law or court rule for serving motions in pending cases.

An evidentiary hearing need not be held on a motion to vacate. However, when there are contested issues of fact as to the ground asserted for a vacation of the award, the court must hold an evidentiary hearing or make findings of fact and conclusions of law.²⁷² Section 205 incorporates the Colorado Rules of Civil Procedure for motions.²⁷³

§ 17.5.3—Procedures For Vacating The Award Under The FAA

Time in Which to File the Motion

Section 12 of the FAA provides that a motion to vacate shall be served within three months after the award is filed or delivered. However, the time period may be equitably tolled.²⁷⁴ The statute defines the means of service.

Generally, any motion to vacate an award can be made only after a final award is entered. See § 17.2. Generally, interim awards cannot be appealed. For example, after an interim award on liability, a respondent was denied an appeal on the ground of bias. The respondent "is entitled to its day in court to challenge the fairness of the proceeding and partiality of the arbitrators—just not until the panel has concluded its work and issued a final award."²⁷⁵

The motion to vacate, modify, or correct an award must be made under FAA § 12 within three months after the award is filed or delivered.²⁷⁶ That three-month period also bars the assertion of invalidity defenses to a motion to confirm.

The doctrine of equitable tolling may apply to this three-month limitation period. The Ninth Circuit held that the three-month period was tolled by equitable tolling.²⁷⁷ A unanimous award had been entered against claimant Move. Four years later, Move learned, in essence, that the chair of the panel, selected by the parties from a FINRA list, was an imposter — he was posing as a person with a similar name. Move moved to vacate the award within a few months after learning the chair was an im-poster. The Ninth Circuit confirmed the district court's findings that (1) Move acted with due diligence in pursuing its claim, and (2) tolling would not prejudice respondent.

A motion to vacate is barred if not made within the statutory time limit.²⁷⁸ The Montana Supreme Court held that the FAA three-month time limit for challenging an award did not apply if the arbitrator was not selected in accordance with the arbitration agreement. The award was invalid ab initio, and apparently a statutory ground for vacatur need not be shown.²⁷⁹

At least one court has enforced a shorter contractual period for giving notice that the award is invalid in whole or in part.²⁸⁰

The Seventh Circuit, in Webster v. A. T. Kearney, Inc.,²⁸¹ defined procedural rules governing the statutory three-month time limit in which to file motions to vacate. Section 6 "removes actions to confirm or vacate arbitration awards from the realm of civil cases governed by the Federal Rules of Civil Procedure."²⁸² That means that scheduling conferences and briefing are not required. A motion to vacate, and not a complaint or motion to dismiss, commences the proceeding, but should be accompanied with everything the movant desires the court to consider in support of that motion. The responding party may file a motion to confirm, also with whatever supporting material is necessary for a confirmation.

Here, the award was issued, placed in the mail, and transmitted via e-mail on January 4, 2006. Webster's attorney's computer received the e-mail on January 4, although he did not open the e-mail until January 5. He filed a motion to vacate the award on April 3, 2006, and served it on April 5, 2006. The court held the motion was not filed or delivered to the opposing party or his attorney within "three months after the award is filed or delivered" as provided by FAA § 12.

The three-month statute of limitations began to run when the award was "filed or delivered." The AAA rules were agreed to by the parties, and provided that the parties were deemed to have consented to service of the award by mail, and for legal delivery upon placing the award in the mail. Therefore, the date of delivery was January 4, when the award was placed in the mail.

The statute of limitations was tolled under § 12 when notice of the motion to vacate was "served upon the opposing party or his attorney," and not the date of filing of the motion. Since service was not until April 5, 2006, the motion was time-barred under § 12.

State Versus Federal Court Time Limits

It is possible that a state court applying the FAA may still follow state law time limits. It is unclear which time limit applies in a federal court case in which the state statute applies, or in a state court case in which the federal statute is applicable. The most cautious advice would be to follow the rule with the shorter time limit.

Pleading Procedures

Procedures were defined more specifically by the Eleventh Circuit in O.R. Securities, Inc. v. Professional Planning Associates:²⁸³

• An application to vacate an award "shall be made and heard in the manner provided by law for the making and hearing of motions." FAA § 9.
• F.R.C.P. 81(a)(3) provided that the rules apply to proceedings under the FAA "only to the extent that matters of procedures are not

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