The Tenth Circuit recently upheld a district court’s confirmation of an arbitral award ordering a nursing home (“THI”) to pay fees and costs associated with the arbitration of a wrongful death claim. A personal representative (“Lovato”) of Guadalupe Duran’s estate prevailed in an arbitration of her wrongful death claim against THI that resulted in nearly a half million dollars in compensatory damages, as well as almost $250,000 in arbitration fees, costs, pre-, and post-judgment interest granted in a post-arbitration motion pursuant to the New Mexico Uniform Arbitration Act (“NMUAA”).
THI argued that the arbitrator exceeded his authority by awarding fees and costs under the NMUAA where the arbitration agreement designated the Federal Arbitration Act (“FAA”)—which does not authorize recovery of costs and interest—as the governing law. Citing the high burden a challenging party faces in attempting to overturn an arbitral award, the Tenth Circuit rejected this argument. First, THI did not establish that the FAA prohibits costs and interests, only that the FAA does not expressly authorize such an award. Second, the FAA displaces conflicting state law (such as the NMUAA) only to the extent the state law actually conflicts with or undermines the goals of the FAA—which the NMUAA costs and interest provision did not. Finally, the court found the arbitration agreement’s terms supported the award of costs and interest by delegating broad authority to the arbitrator and by invoking the National Arbitration Forum Code of Procedure, which allows any legal, equitable, or other remedy or relief to be granted.
The Tenth Circuit swiftly dismissed THI’s second argument that the arbitrator manifestly disregarded the law. In rejecting it, the court assumed without deciding the manifest disregard exception’s continuing validity. Harkening back to its analysis in rejecting THI’s first argument, the court noted the arbitrator did not exceed his authority. Furthermore, there was no evidence he was willfully inattentive to governing law.
THI of N. M. at Vida Encantada, LLC v. Lovato, No. 16-2041 (10th Cir. July 25, 2017).
