The Arizona Court of Appeals, Division One holds that an arbitration award cannot be vacated (1) under A.R.S. § 12-3023(A)(1) in the absence of evidence of corruption, fraud or undue means in securing the award and (2) under A.R.S. § 12-3023(A)(3) in the absence of evidence that the arbitrator abused their discretion in proceeding with the hearing.

A general contractor and subcontractor submitted to binding arbitration governed by the AAA rules to resolve performance and payment disputes. The subcontractor issued requests for production to the general contractor. The general contractor responded, objecting to the production of certain documents. Months later and days before the arbitration hearing, the subcontractor argued for the first time that the general contractor’s objections and withholding of documents constituted a deliberate refusal to provide the subcontractor exculpatory information and that such documents should be assumed to undercut the general contractor’s narrative. The arbitrator issued an award precluding the general contractor from recovering delay damages due to nondisclosure, but also precluding the subcontractor from recovering certain damages. The general contractor moved the superior court to confirm the arbitration award and enter judgment. The subcontractor moved to vacate the award, citing to A.R.S. § 12-3023(A)(1) and A.R.S. § 12-3023(A)(3).  The superior court vacated the arbitration award on both grounds. The general contractor appealed.

The court of appeals vacated the order of the superior court and remanded for the trial court to confirm the arbitration award, concluding that the superior court abused its discretion by vacating the award under either A.R.S. § 12-3023(A)(1) or A.R.S. § 12-3023(A)(3).

First, the court of appeals held that the record did not support a finding that, because of the general contractor’s withholding of information, the award was procured by corruption, fraud or other undue means under A.R.S. § 12-3023(A)(1). Rather, looking to the facts, in which the subcontractor asked for the withheld information from the general contractor only once, the general contractor clearly stated which categories of information it would not produce and provided the basis for its objections, the subcontractor delayed months before expressing dissatisfaction with the production and did so mere days before the arbitration hearing, and the subcontractor failed to request that the arbitrator order the production of the withheld documents, A.R.S. § 12-3023(A)(1) had not been satisfied.

Second, the court of appeals held that the record did not support the superior court’s finding that the arbitrator abused their discretion in proceeding with the hearing under A.R.S. § 12-3023(A)(3), where the subcontractor did not timely raise its concerns with the general contractor’s production, the record lacked evidence that the subcontractor requested a postponement of the hearing, and the subcontractor waived its objection to the denial of the alleged request for postponement.   

Judge Campbell authored the opinion, which Judges Cattani and McMurdie joined.

Posted by: BriAnne Illich Meeds