Nolan v. Kenner – 3/31/2011

April 6, 2011

Arizona Court of Appeals Division One Holds That Representation By A Non-Arizona Attorney In Arbitration Is Not Grounds To Vacate An Arbitration Award.

Nolan obtained an arbitration award against Kenner for damages and attorney’s fees.  During the arbitration, Nolan’s counsel was not licensed to practice law in Arizona.  When Nolan filed an application for confirmation of the award at the superior court, Kenner argued that the award should be vacated because of Nolan’s representation by a non-Arizona attorney.  Alternatively, Kenner argued that the superior court should at least vacate the attorney’s fees portion of the award.  The superior court confirmed the whole award and Kenner appealed.

The Court of Appeals affirmed.  When asked to confirm an arbitration award, the superior court may reject an award for a limited number of reasons, including that the award was the result of “corruption, fraud or other undue means.”  A.R.S. § 12-1512(A)(1).  At the superior court, Kenner argued that the use of a non-Arizona attorney qualified as “undue means.”  The Court rejected that argument, explaining that the statutory exception for “undue means” requires proof of “intentional misconduct” that is similar in “gravity to corruption or fraud.”  Furthermore, a court may only reject an award for “undue means” when the means are “not discoverable upon the exercise of due diligence prior to the arbitration.”  A.G. Edwards & Sons, Inc. v. McCollough, 967 F.2d 1401, 1404 (9th Cir 1992).  Although the issue was never raised during arbitration, Nolan’s attorney took no action to conceal that he was not licensed in Arizona, and his status was readily available on the State Bar’s website.  The Court, therefore, held that the use of non-Arizona counsel did not qualify as “intentional misconduct” and was “discoverable upon the exercise of due diligence.”  Thus, the superior court correctly confirmed the award because it was not obtained through “undue means.”

The Court also affirmed the denial of Kenner’s request to modify the award to remove the attorney’s fee portion.  Under A.R.S. § 12-1513(A), a court may only modify an award in limited circumstances and the bar-membership issue is not among them.  At most, the bar-membership issue implicated the arbitrator’s “decision on matters of fact and law,” decisions which are not reviewable.

Judge Kessler authored the opinion; Judges Johnsen and Weisenberg concurred.