Carlson v. Farmers Ins. Group of Companies-Farmers Ins. Exchange

Citations: 492 N.W.2d 579; 1992 N.D. LEXIS 237; 1992 WL 340856Docket: Civ. No. 920126

Court: North Dakota Supreme Court; November 24, 1992; North Dakota; State Supreme Court

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Wayne Arthur Carlson, as personal representative of the estate of Antoinette Carlson and trustee for the heirs of Evald and Antoinette Carlson, appealed a district court order confirming an arbitration award against Farmers Insurance Group. The appeal arose after Evald and Antoinette were killed in a car accident caused by Raymond Gregerson in Minnesota. The Carlsons, holding an insurance policy from Farmers in North Dakota, sought underinsured motorist benefits, which were submitted to arbitration per the policy terms. The arbitrator applied Minnesota law and awarded the Carlsons $215,047.47, deducting 10% for Evald's negligence.

The district court confirmed the arbitrator's award, prompting the Carlsons to appeal, arguing the award should be vacated due to the application of Minnesota law instead of North Dakota law. Farmers countered that the Carlsons waived their objections by moving for confirmation of the award. The court agreed, stating that once a party requests confirmation of an award under North Dakota's Uniform Arbitration Act, they cannot later contest it. The Carlsons' attorney acknowledged the difficulty in vacating the award under the applicable statute, leading to their confirmation request. The court emphasized that issues not raised in the lower court cannot be introduced on appeal, thus affirming the district court’s order.

The rule aims to prevent defendants from creating errors in trial courts and later benefiting from those errors on appeal. In this case, the Carlsons, who requested the district court to confirm an arbitration award, cannot later contest it on appeal. Although it has not been established that a party cannot seek confirmation and then appeal under Section 32-29.2-19, N.D.C.C., the court briefly reviews the Carlsons' objections regarding the arbitrator's use of Minnesota law for damages assessment. The only relevant ground for vacating an arbitration award under Section 32-29.2-12(1)(c) is if the arbitrator "exceeded [his] powers," which requires a finding of "complete irrationality." The court emphasizes that arbitrators are afforded wide latitude and that a mere mistake in fact or law is insufficient to overturn an award. The choice of Minnesota law by the arbitrator was not completely irrational given the significant contacts with both jurisdictions. Therefore, the decision to apply Minnesota law does not warrant vacating the award, leading to the affirmation of the order confirming the arbitration award.

A court must vacate an arbitration award upon a party's application under several circumstances: if the award was obtained through corruption, fraud, or undue means; if there was evident partiality or misconduct by an arbitrator; if the arbitrators exceeded their authority; if they refused to postpone the hearing despite valid reasons or failed to hear pertinent evidence, thereby prejudicing a party's rights; or if there was no valid arbitration agreement and the party did not raise an objection during the hearing. Furthermore, the nature of the relief granted, even if it would not be available in a court of law or equity, does not constitute grounds for vacating or denying confirmation of the award. The "completely irrational" standard from Scherbenske Excavating v. North Dakota State Highway Department remains unchanged by the Uniform Arbitration Act, with various jurisdictions interpreting "clearly irrational" inconsistently. The precise criteria for a completely irrational award cannot be generalized but must be developed on a case-by-case basis.