[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 08-15188 ELEVENTH CIRCUIT
________________________ APR 30, 2010
JOHN LEY
D. C. Docket No. 08-01056-CV-RDP CLERK
PATRICIA FRAZIER,
Plaintiff-Appellant,
versus
CITIFINANCIAL CORPORATION, LLC,
Defendant-Appellee.
________________________
No. 08-15709
________________________
D. C. Docket No. 07-00271-CV-2-IPJ
JOHN FRAZIER,
Plaintiff,
PATRICIA FRAZIER,
Plaintiff-Appellant,
versus
CITIFINANCIAL CORPORATION LLC,
Defendant-Appellee.
________________________
Appeals from the United States District Court
for the Northern District of Alabama
_________________________
(April 30, 2010)
Before DUBINA, Chief Judge, BIRCH and SILER,* Circuit Judges.
BIRCH, Circuit Judge:
Patricia Frazier appeals from the district court’s 11 September 2008 order
confirming an arbitration award in favor of CitiFinancial Corporation, LLC
(“CitiFinancial”) and its 18 September 2008 order denying her motion to vacate
the award.1 Because none of the statutory bases for vacatur or modification of
arbitration awards set forth in the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1,
et seq., applies in this case, and because the judicially-created grounds for vacatur
we have recognized in our prior precedent are no longer valid after the Supreme
Court’s decision in Hall Street Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S.
Ct. 1396 (2008), we AFFIRM.
*
Honorable Eugene E. Siler, United States Circuit Judge for the Sixth Circuit, sitting by
designation.
1
We dismissed Mr. Frazier’s appeal for want of prosecution on 19 March 2009.
2
I. BACKGROUND
In April 2000, Frazier’s husband, John Frazier, obtained a loan in the
amount of $33,570 from HomeSense Financial Corporation of Alabama
(“HomeSense”). Mr. Frazier signed a promissory note, a mortgage, and an
arbitration agreement in connection with the loan transaction. Mrs. Frazier’s
signature also appears on the mortgage, although it was later determined by the
arbitrator during the arbitration proceedings that her signature was forged by Mr.
Frazier. The arbitration agreement provided, in pertinent part:
ARBITRATION AGREEMENT
READ THIS ARBITRATION AGREEMENT CAREFULLY, IT
WILL HAVE A SUBSTANTIAL IMPACT ON YOUR LEGAL
RIGHTS
In consideration of HomeSense Financial Corp. of Alabama’s
extension of credit, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by both
parties, the parties, intending to be legally bound hereby, knowingly and
voluntarily enter into this Arbitration Agreement (“Agreement”), which
sets forth the circumstances and procedures under which Claims (as
defined below) may be arbitrated instead of litigated in court.
Definitions. As used solely in this Arbitration Agreement, the
following definitions will apply:
“You” or “Your” mean any and all Borrower(s) who execute
this Agreement, and their heirs, executors, predecessors,
successors and assigns.
3
“We” or “Us” mean HomeSense Financial Corp. of Alabama[,]
all of its parents, wholly or majority owned subsidiaries,
affiliates, predecessors, successors, and assigns; and all of the
agents, employees, directors and representatives of such entities.
In addition, “we” or “us” mean any third party providing any
product or service in connection with the Credit Transaction
(including but not limited to investors or potential investors, real
estate brokers, mortgage brokers, credit bureaus, appraisers,
mortgage life insurance companies, private mortgage insurance
companies, closing agents, escrow agents, title insurance
companies, loan originators, rating agencies and loan servicers)
or any assignee of the Credit Transaction if, and only if, such
third party is named as a co-defendant with us in a Claim
asserted by you.
“Credit Transaction” means the loan obligation identified by
the above referenced Loan Number and any prior loan obligation
which was originated, owned and/or serviced by us; the notes,
mortgages, deeds of trust, deeds to secure debt, security
agreements, applications, disclosures and other documents
related to or evidencing said obligation(s); any modification,
extension or forbearance of said obligation(s); any insurance,
service or product offered or made available by us in connection
with the Credit Transaction and any associated fees or charges;
and any documents, instruments or advertising or promotional
materials that contain information about the Credit Transaction
or any associated insurance, service or product.
“Claim” means any claim, dispute or controversy between you
and us (except for Excluded Claims, as defined below) arising
from or relating to the Credit Transaction or the relationships
resulting from the Credit Transaction, including the validity,
enforceability or scope of this Arbitration Agreement, or the
Credit Transaction. “Claim” includes claims of every kind and
nature, including but not limited to initial claims, counterclaims,
cross-claims and third-party claims and claims based upon
4
contract, tort, fraud and other intentional torts, statute, common
law and equity. The term “Claim” is to be given the broadest
possible meaning and includes, by way of example and without
limitation, any claim, dispute or controversy that arises under or
relates to the Truth in Lending Act and Regulation Z; the Equal
Credit Opportunity Act and Regulation B; the Real Estate
Settlement Procedures Act and Regulation X; state insurance,
usury and lending laws; fraud or misrepresentation, including
claims for failing to disclose material facts; other federal or state
consumer protection statues or regulations; any party’s
execution of the Agreement and/or willingness to be bound by
the terms of this Agreement or any dispute about soliciting,
originating, making, closing, servicing, collecting or enforcing
the Credit Transaction.
“Excluded Claims” means (a) any action to effect a judicial or
nonjudicial foreclosure or to establish a deficiency judgment; (b)
any action arising out of unlawful detainer; (c) eviction or other
summary proceeding to secure possession of real property
securing the Credit Transaction; (d) any action to assert, collect,
protect, realize upon or obtain possession of the collateral for the
Credit Transaction in any bankruptcy proceeding; (e) any action
to quiet title; (f) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off and
peaceful possession of personal property; (g) obtaining a deed
in lieu of foreclosure; and (h) obtaining provisional or ancillary
remedies in connection with the foregoing.
Resolution of Claims. Any Claim shall be resolved, upon the
election of you or us, by binding arbitration pursuant to this Arbitration
Agreement and the applicable rules of either the American Arbitration
Association (“AAA”), J.A.M.S[.]/Endispute (“J.A.M.S.”) or National
Arbitration Forum (“NAF”) in effect at the time the Claim is filed. You
may select which of these arbitration administrators to use. The address,
telephone number, web site and the applicable rules for each of these
arbitration administrators is set forth at the end of this Agreement. If
you fail to select an arbitration administrator within twenty (20) days
5
from the date you or we demand arbitration, we will choose one. The
arbitrator (or in the case of an appeal to a panel of three arbitrators, as
described below) shall be a lawyer with more than ten (10) years of
experience or a retired judge.
....
Federal Arbitration Act and Appeals. This Arbitration
Agreement is made pursuant to a transaction involving interstate
commerce, and, notwithstanding any choice of law clause which may be
contained in any other documents which are part of the Credit
Transaction, shall be government by the Federal Arbitration Act
(“FAA”) 9 U.S.C. Sections 1 et seq. The arbitrator shall apply
applicable substantive law consistent with the FAA and applicable
statutes of limitations and shall honor claims of privilege recognized at
law and, at the timely request of either party, shall provide a brief
written explanation of the basis for the award. In conducting the
arbitration proceeding, the arbitrator shall not apply the Federal or any
state rules of civil procedure or rules of evidence. Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction. The arbitrator’s decision will be final and binding, except
for any right of appeal provided by the FAA and except that, if the
amount in controversy exceeds $100,000, any party can appeal the
award to a three-arbitrator panel administered by the same arbitration
administrator which shall reconsider de novo any aspect of the initial
award requested by the appealing party. The decision of the panel shall
be by majority vote. The costs of such an appeal will be borne by the
appealing party regardless of the outcome of the appeal.
....
Important Additional Disclosures. IF ARBITRATION IS
CHOSEN BY ANY PARTY WITH RESPECT TO A CLAIM,
NEITHER YOU NOR WE WILL HAVE THE RIGHT TO LITIGATE
THAT CLAIM IN COURT OR HAVE A JURY TRIAL ON THAT
CLAIM, OR TO ENGAGE IN PRE-ARBITRATION DISCOVERY
EXCEPT AS PROVIDED FOR IN THE RULES OF THE
6
ARBITRATION ADMINISTRATOR. FURTHERMORE, YOU WILL
NOT HAVE THE RIGHT TO PARTICIPATE AS A
REPRESENTATIVE OR MEMBER OF ANY CLASS OF
CLAIMANTS PERTAINING TO ANY CLAIM SUBJECT TO
ARBITRATION, EXCEPT AS SET FORTH ABOVE, THE
ARBITRATOR’S DECISION WILL BE FINAL AND BINDING.
NOTE THAT OTHER RIGHTS THAT YOU WOULD HAVE IF YOU
WENT TO COURT MAY ALSO NOT BE AVAILABLE IN
ARBITRATION.
Acknowledgement. By signing below, you acknowledge that
you understand and agree that if arbitration of any Claim is elected,
you will be giving up your right to a court or jury trial and the right
to be part of a class action, and that you give up those rights
knowingly and voluntarily. You further understand and agree that
other rights that you would have if you went to court will also not
be available in arbitration. By signing below, you also acknowledge
that you have read this Agreement carefully, that you are entering
into it voluntarily and not in reliance on any promises or
representations other than those contained in this Agreement itself
and that you have had an opportunity to fully discuss and review
the terms of this Arbitration Agreement with your attorney.
Case No. 2:07-cv-00271, Doc. 47, Exh. 2.
In August 2002, HomeSense assigned its rights in the mortgage and home
loan to Associates Financial Services Company of Alabama, Inc. (“Associates”).
Associates subsequently assigned the loan between Mr. Frazier and HomeSense to
CitiFinancial, its successor in interest. Mr. Frazier used a portion of the loan
proceeds he received to pay on his credit card balances and other debts. Although
he received over $17,000 in cash from the loan transaction, he did not tell Mrs.
7
Frazier about the loan, and had his mortgage statements sent to a post office box
rather than to his and Mrs. Frazier’s home address.
In November 2006, Mr. Frazier stopped making payments on the loan,
claiming it was fraudulent. He and Mrs. Frazier filed a complaint against
CitiFinancial in state court on 6 December 2006 asserting claims for breach of
contract, fraud, and misrepresentation, and seeking rescission of the mortgage.
Specifically, they alleged that CitiFinancial and its agents and/or assigns
misrepresented that the loan was unsecured, that Mr. Frazier was unaware that the
mortgage was secured by their home, and that the mortgage was executed under
false pretense and in violation of state statutes.
CitiFinancial removed the case to federal court and filed a motion to compel
arbitration of the Fraziers’ claims. On 14 March 2007, the Fraziers amended their
complaint to allege violations of the Truth-in-Lending Act (“TILA”), 15 U.S.C.
§§ 1601 et seq., claiming that CitiFinancial knew Mrs. Frazier’s signature on the
mortgage had been forged, yet reported the loan to credit agencies. Along with
their amended complaint, the Fraziers filed a “Motion for Summary Judgment in
Response to CitiFinancial Corporation, LLC’s Motion to Compel Arbitration and
Stay Proceedings and Memorandum in Support Thereof” asserting, inter alia, that
8
the mortgage was invalid under Alabama Code § 6-10-3,1 thus entitling Mrs.
Frazier to rescission of the mortgage, and that Mr. Frazier lacked capacity to
execute the loan documents, including the arbitration agreement. The Fraziers
argued additionally that Mrs. Frazier was not a third-party beneficiary of the loan
transaction because she neither received nor benefitted from the proceeds from the
loan, which “were spent under the sole discretion and authority of Mr. Frazier.”
Case No. 2:07-cv-00271, Doc. 12 at 2. The Fraziers amended their complaint
once more on 2 June 2007 to assert a claim for slander to title.
On 15 June 2007, a magistrate judge issued a report recommending that
CitiFinancial’s motion to compel arbitration be granted. The magistrate judge first
found that because Mr. Frazier formally signed the arbitration agreement as part of
the loan transaction, there was “little question” that he agreed to arbitrate his
claims. Case No. 2:07-cv-00271, Doc. 24 at 8. Mrs. Frazier’s claims were also
subject to arbitration, the magistrate judge found, because although she did not
sign any of the transactional documents associated with the mortgage,1 much less
1
Alabama Code § 6-10-3 (2005) provides that “[n]o mortgage, deed or other conveyance
of the homestead by a married person shall be valid without the voluntary signature and assent of
the husband or wife.”
1
The magistrate judge noted that although Mrs. Frazier’s signature purports to appear on
the mortgage, she had submitted an affidavit, unchallenged by Mr. Frazier, stating that the
signature was not hers, but was forged without her permission by Mr. Frazier. Mrs. Frazier’s
signature does not appear on any of the other loan transaction documents.
9
the arbitration agreement, her claims were inseparable from Mr. Frazier’s, and her
interest in the home was encumbered by the mortgage Mr. Frazier executed.
U.S. District Judge Inge Prytz Johnson adopted the report and
recommendation on 6 November 2007, noting, inter alia, that because Mrs. Frazier
benefitted from the loan proceeds and her claims arose directly out of the loan
transaction, it would be “plainly inequitable” to allow her to disavow the terms of
the transaction, including the arbitration agreement. Case No. 2:07-cv-00271,
Doc. 37 at 3. Judge Johnson dismissed the Fraziers’ complaint with prejudice,
ordered the case to arbitration, and denied the Fraziers’ subsequent motion to
reconsider. The Fraziers did not timely appeal.
On 9 May 2008, Mrs. Frazier, proceeding alone, filed an action to quiet title
in Alabama state court. In her complaint, she also sought a declaratory judgment
that CitiFinancial’s lien against the Fraziers’ home was invalid, an injunction
prohibiting CitiFinancial from foreclosing on the lien, and damages for slander to
title. CitiFinancial removed the case to federal court, seeking to dismiss her quiet
title action and to compel to arbitration her declaratory judgment, injunctive relief,
and slander to title claims. On 13 August 2008, U.S. District Judge R. David
Proctor dismissed without prejudice Mrs. Frazier’s quiet title action, finding that it
10
was barred under Alabama Code § 6-6-5602 because the pending arbitration
proceeding was an “action” that tested her title to the subject property. In so
concluding, Judge Proctor reasoned that the Alabama Supreme Court’s
determination in Lee L. Saad Constr. Co., Inc. v. DFP Architects, P.C., 851 So. 2d
507, 516 (Ala. 2002), that arbitration proceedings and judicial actions stand on
equal footing for purposes of res judicata and collateral estoppel, “leads
inexorably to the conclusion that an arbitration proceeding would be considered an
‘action’ for purposes of the quiet title statute. To treat arbitration proceedings
otherwise would not give them the same effect as Alabama courts do.” R1-12 at
4-5. Judge Proctor then found that Mrs. Frazier’s declaratory judgment and
slander to title claims were subject to arbitration for the reasons set forth in Judge
2
Ala. Code § 6-6-560 provides:
When any person, natural or artificial, claims, either in his own right or in
any representative capacity whatsoever, to own any lands or any interest
therein, and is in the actual, peaceable possession of the land, . . . and has
held, color of title to the lands, or interest so claimed, for a period of 10 or
more consecutive years next preceding and has paid taxes on the lands or
interest during the whole of such period, . . . he may, if no action is pending
to test his title to, interest in or his right to the possession of such lands, file
a verified complaint in the circuit court of the county in which such lands lie
against said lands and any and all persons claiming, or reputed to claim, any
title to, interest in, lien, or encumbrance on said lands, or any part thereof, to
establish the right or title to such lands or interest and to clear up all doubts
or disputes concerning the same.
Ala. Code § 6-6-560 (2009) (emphasis added).
11
Johnson’s 6 November 2007 opinion and ordered them to arbitration. Mrs. Frazier
timely appealed.
After a two-day hearing, the arbitrator issued a decision and award finding
that Mrs. Frazier’s signature on the mortgage had been forged, but that Mr. Frazier
voluntarily entered into the secured loan transaction and therefore owed all sums
specified in the note.3 The arbitrator further found that the Fraziers’ TILA, fraud,
slander to title, and rescission claims were unavailing because the Fraziers failed
to prove by a preponderance of the evidence that HomeSense, or the lawyer who
conducted the closing, were agents or associates of CitiFinancial. Insofar as the
evidence showed that Associates and CitiFinancial underwrote the loan and had
no right to control the activities of HomeSense or its agents, CitiFinancial could
not be vicariously liable for any misconduct by HomeSense or the lawyer who
performed the closing. With respect to Mrs. Frazier’s TILA claim based on
CitiFinancial’s having reported to credit agencies that the mortgage was in arrears,
the arbitrator found that there was no evidence that CitiFinancial had any actual or
constructive knowledge that Mrs. Frazier was not in fact responsible for the
mortgage as it was not until the case went into arbitration that CitiFinancial
3
In making this determination, the arbitrator noted that Mr. Frazier was shown the
mortgage in a June 2001 meeting and thus knew it was secured by his and Mrs. Frazier’s home.
12
learned that Mrs. Frazier’s signature on the mortgage had been forged. Prior to the
arbitration, CitiFinancial did not know and had no reason to know of the forgery
since all of the loan documents in its possession appeared to have been properly
notarized and authenticated. Mrs. Frazier’s slander to title claim likewise failed
because CitiFinancial’s lack of knowledge that her signature had been forged
precluded her from proving the malice necessary to prevail on such a claim.
Finally, the arbitrator found that Mrs. Frazier had no right to rescission of the
mortgage because there was no evidence she intended to repay CitiFinancial for
the loan proceeds received by her husband.
The arbitrator then awarded CitiFinancial $38,706.93 in damages for breach
of the promissory note, $9,250.19 in attorneys’ fees, and an equitable lien against
the Fraziers’ home in the amount of $47,957.12. The arbitrator expressly stated,
however, that he “ha[d] no authority to allow Citi[F]inancial to proceed to
foreclose on the Frazier property” and that such relief must instead be obtained in
a separate action for judicial or non-judicial foreclosure. Case No. 2:07-cv-00271,
Doc. 47, Exh. 1 at 5. The arbitrator further noted that, despite CitiFinancial’s
equitable lien, Mrs. Frazier was entitled to retain her homestead exemption under
Ala. Code § 6-10-3, which prohibits conveyance of a homestead by a married
person without the voluntary signature and consent of the other spouse.
13
The district court confirmed the arbitration award on 11 September 2008,
finding first that the Fraziers had no right to a de novo appeal to a three-arbitrator
panel because, under the terms of the arbitration agreement, the right to appeal
was available only where the amount in controversy exceeded $100,000. Since
the amount of the award was only $47,957.12, the appeal provision was not
triggered. The district court further found that the Fraziers had raised no grounds
justifying vacatur and/or modification of the arbitration award under the FAA, 9
U.S.C. §§ 10-11.4
4
9 U.S.C. § 10(a) (2009) provides that the district court may, upon application of any
party to the arbitration, issue an order vacating the arbitrator’s award:
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of
them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the
hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior by which the rights of any
party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them
that a mutual, final, and definite award upon the subject matter submitted was not
made.
9 U.S.C. § 11 (2009) provides that the district court may, upon application of any party to
the arbitration, issue an order modifying or correcting the arbitrator’s award:
(a) Where there was an evident material miscalculation of figures or an evident
material mistake in the description of any person, thing, or property referred to in
the award.
14
The Fraziers moved the court to reconsider and/or to vacate, modify, or
correct the award, arguing that: (1) the award was subject to vacatur under
§ 10(a)(4) because the arbitrator exceeded his authority in granting CitiFinancial
an equitable lien because CitiFinancial did not request such relief; (2) the award
was subject to modification and/or correction under § 11(b) because in granting
CitiFinancial an equitable lien, the arbitrator decided a matter not submitted to
him; (3) the award was subject to modification and/or correction under § 11(c)
because the arbitrator’s decision, insofar as it granted CitiFinancial an equitable
lien while simultaneously finding that Mrs. Frazier was entitled to retain her
homestead exemption, was “subject to multiple interpretations” and thus
“imperfect”; (4) the award was arbitrary and capricious, against public policy, and
made in manifest disregard for the law; (5) the Fraziers were entitled to a de novo
appeal before a three-arbitrator panel; and (6) Mrs. Frazier was not bound by the
arbitration agreement and could not be compelled to arbitrate her claims. Case
(b) Where the arbitrators have awarded upon a matter not submitted to them,
unless it is a matter not affecting the merits of the decision upon the matter
submitted.
(c) Where the award is imperfect in matter of form not affecting the merits of the
controversy.
The order may modify and correct the award, so as to effect the intent thereof and
promote justice between the parties.
15
No. 2:07-cv-00271, Doc. 50 at 2.
The district court denied the Fraziers’ motion on 18 September 2008. The
court first found that the award was not subject to vacatur under § 10(a)(4)
because, contrary to the Fraziers’ assertion, CitiFinancial expressly asked that an
equitable lien be granted in its favor in its pre-hearing brief, and such relief was
permitted by Alabama law. Sections 11(b) and (c) were also inapplicable, the
court found, because CitiFinancial did submit its request for an equitable lien to
the arbitrator and because the correction the Fraziers were seeking, to wit,
nullification of the equitable lien, would directly affect the merits of the dispute in
this case. With respect to the non-statutory bases for vacatur upon which the
Fraziers relied, the district court found that the award was not arbitrary and
capricious, against public policy, or made in manifest disregard for the law
because nothing in the record indicated that the arbitrator was aware of, but
consciously and deliberately disregarded, applicable law in fashioning his award.
Having previously determined that the Fraziers had no right to a de novo appeal,
and that Mrs. Frazier was bound by the arbitration agreement, the court found
meritless the Fraziers’ remaining arguments.
Mr. and Mrs. Frazier filed separate notices of appeal from the district
court’s 11 and 18 September 2008 orders confirming the arbitration award and
16
denying their motion to vacate and/or modify the award, respectively. We
consolidated the appeals on 29 December 2008, but subsequently dismissed Mr.
Frazier’s appeal for want of prosecution.
II. DISCUSSION
On appeal, Mrs. Frazier contends that the district court erred in confirming
the arbitrator’s award and denying her motion to vacate the award because: (1) in
granting CitiFinancial an equitable lien, the arbitrator exceeded his authority under
§ 10(a)(4), decided a matter not submitted to him under § 11(b), and issued an
imperfect award under § 11(c); (2) the arbitrator exceeded his authority in
deciding matters related to foreclosure and possession of the home that were not
submitted to arbitration; (3) the award failed to address Mrs. Frazier’s TILA and
rescission claims, rendering it arbitrary and capricious; and (4) the arbitrator’s
decision was contrary to public policy and made in manifest disregard of the law.
Mrs. Frazier further argues that the district court improperly calculated the amount
in controversy for purposes of determining that she was not entitled to an appeal,
erroneously enforced the arbitration award against her, and erred in dismissing her
action to quiet title.
As an initial matter, and for the reasons set forth in Judge Johnson’s 6
November 2007 and 11 September 2008 orders, we find meritless Mrs. Frazier’s
17
claims that she was not bound by the arbitration agreement and was entitled to
appeal the arbitrator’s award to a three-arbitrator panel, respectively. We likewise
discern no error in Judge Proctor’s 13 August 2008 memorandum opinion
concluding as a matter of law that Mrs. Frazier’s action to quiet title was barred
under Ala. Code § 6-6-560.
We review confirmations of arbitration awards and denials of motions to
vacate arbitration awards under the same standard, reviewing the district court’s
findings of fact for clear error and its legal conclusions de novo. See Peebles v.
Merrill Lynch, Pierce, Fenner & Smith Inc., 431 F.3d 1320, 1324 (11th Cir. 2005);
Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1221 (11th Cir. 2000).
Section 9 of the FAA provides that, upon application of any party to the
arbitration, the court must confirm the arbitrator’s award unless it is vacated,
modified, or corrected in accordance with sections 10 and 11 of the statute. 9
U.S.C. § 9. As described supra, section 10 permits vacatur of arbitration awards
only in four narrow circumstances:
(1) where the award was procured by corruption, fraud, or undue
means;
(2) where there was evident partiality or corruption in the arbitrators,
or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; or of any
18
other misbehavior by which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the
subject matter submitted was not made.
9 U.S.C. § 10(a). Under section 11, arbitration awards may be corrected and/or
modified in three situations, only two of which are alleged to exist in this case:
“[w]here the arbitrators have awarded upon a matter not submitted to them, unless
it is a matter not affecting the merits of the decision upon the matter submitted,”
and “[w]here the award is imperfect in matter of form not affecting the merits of
the controversy.” 9 U.S.C. § 11(b), (c). There is a presumption under the FAA
that arbitration awards will be confirmed, and “federal courts should defer to an
arbitrator’s decision whenever possible. B.L. Harbert Int’l, LLC v. Hercules Steel
Co., 441 F.3d 905, 909 (11th Cir. 2006)
We think it clear that none of the statutory bases for vacating an arbitrator’s
award under the FAA applies in this case. Contrary to Mrs. Frazier’s assertions,
the arbitrator did not exceed his authority or award upon a matter not submitted to
him in granting CitiFinancial an equitable lien against the subject property. As the
district court found and the record substantiates, CitiFinancial expressly requested
such relief in its pre-hearing submissions to the arbitrator. Given the arbitrator’s
explicit statement that he had no authority to authorize foreclosure and that
19
CitiFinancial must obtain such relief in a separate action for judicial or non-
judicial foreclosure, Mrs. Frazier’s contention that the arbitrator exceeded his
powers in awarding CitiFinancial a right to foreclose is likewise without merit.
Finally, we agree with the district court that § 11(c) is plainly inapplicable, as the
arbitrator’s grant of an equitable lien, even assuming it was error, did not render
the award “imperfect in matter of form not affecting the merits of the controversy.”
9 U.S.C. § 11(c) (emphasis added).
Having determined that the award was not subject to vacatur and/or
modification under sections 10 or 11, we turn to Mrs. Frazier’s additional
arguments that the award was arbitrary and capricious, in violation of public
policy, and made in manifest disregard for the law. Although our prior precedents
have recognized these three non-statutory grounds for vacatur, see B.L. Harbert
Int’l, 441 F.3d at 910,5 Hall Street casts serious doubt on their legitimacy.
5
“[T]he arbitrary and capricious ground permits courts to vacate arbitration
awards . . . . when the award exhibits a wholesale departure from the law” or “when the award is
not grounded in the contract which provides for the arbitration.” Brown v. Rauscher Pierce
Refsnes, Inc., 994 F.2d 775, 781 (11th Cir. 1993). The public policy exception permits district
courts to “refuse to enforce arbitration awards where enforcement would violate some explicit
public policy that is well defined and dominant, and is to be ascertained by reference to the laws
and legal precedents and not from general considerations of supposed public interests.” Id. at
782 (quotation marks and citation omitted). Finally, the “manifest disregard of the law” ground
permits district courts to vacate an award where there is “clear evidence that the arbitrator was
conscious of the law and deliberately ignored it.” B.L. Harbert Int’l, LLC, 441 F.3d at 910
(quotation marks, alteration, and citation omitted).
20
In Hall Street, the parties executed an agreement to arbitrate in which they
also agreed that the district court could vacate any award if the arbitrator’s factual
findings lacked evidentiary support or if the arbitrator’s legal conclusions were
erroneous. See 552 U.S. at 579, 128 S. Ct. at 1400-01. The precise issue before
the Court was whether the statutory bases for vacatur of an arbitrator’s award set
forth in § 10 may be supplemented by contract. Id. at 578, 128 S. Ct. at 1400.
Answering this question in the negative, the Court held that “§§ 10 and 11
respectively provide the FAA’s exclusive grounds for expedited vacatur and
modification,” reasoning that the provision for judicial confirmation of an
arbitrator’s award contained in § 9
carries no hint of flexibility. On application for an order confirming
the arbitration award, the court ‘must grant’ the order ‘unless the
award is vacated, modified, or corrected as prescribed in sections 10
and 11 of this title.’ There is nothing malleable about ‘must grant,’
which unequivocally tells courts to grant confirmation in all cases,
except when one of the ‘prescribed’ exceptions applies.
Id. at 584, 587, 128 S. Ct. at 1403, 1405. Read together, sections 9-11
“substantiat[e] a national policy favoring arbitration with just the limited review
needed to maintain arbitration’s essential virtue of resolving disputes
straightaway.” Id. at 588, 128 S. Ct. at 1405. Expanding the statutory grounds
would, the Court warned, “open[] the door to the full-bore legal and evidentiary
21
appeals that can render informal arbitration merely a prelude to a more
cumbersome and time-consuming judicial review process.” Id. (quotation marks,
alteration, and citation omitted).6
Although the Court does not explicitly extend its holding in Hall Street to
judicial expansions of §§ 10 and 11, at least some circuits have read Hall Street as
prohibiting all extra-statutory grounds for vacatur, whether judicially-created or
contractually agreed-upon. For example, the Fifth Circuit, relying on Hall Street’s
“unequivocal[]” holding that the statutory grounds listed in section 10 are the
exclusive means for vacatur, has held that “manifest disregard of the law is no
longer an independent ground for vacating arbitration awards under the FAA.”
6
In concluding that the statutory grounds for vacatur under the FAA are exclusive, the
Court rejected Hall Street’s contention that Wilko v. Swan, 346 U.S. 427, 74 S. Ct. 182 (1953),
overruled on other grounds by Rodriguez de Quijas v. Shearson/American Express, Inc., 490
U.S. 477, 109 S. Ct. 1917 (1989), had recognized “manifest disregard of the law” as an
independent, judicially-created ground for vacatur beyond those enumerated in § 10. Hall Street,
552 U.S. at 584-85, 128 S. Ct. at 1403-04. In Wilko, the Supreme Court stated that “the
interpretations of the law by the arbitrators in contrast to manifest disregard are not subject, in the
federal courts, to judicial review for error in interpretation.” 346 U.S. at 436-37, 74 S. Ct. at
187-88. The Hall Street court acknowledged that some circuits had interpreted this language as
recognizing “manifest disregard of the law” as an additional ground for vacatur, but, noting the
“vagueness of Wilko’s phrasing,” suggested that this was too broad a reading of Wilko:
Maybe the term ‘manifest disregard’ was meant to name a new ground for review,
but maybe it merely referred to the § 10 grounds collectively, rather than adding to
them. . . . Or, as some courts have thought, ‘manifest disregard’ may have been
shorthand for § 10(a)(3) or § 10(a)(4), the subsections authorizing vacatur when
the arbitrators were ‘guilty of misconduct’ or ‘exceeded their powers.’
Id. at 585, 128 S. Ct. at 1404. In rejecting Hall Street’s reading of Wilko, the Court appears to
express disapproval of both contractual and judicial expansions of section 10.
22
Citigroup Global Markets Inc. v. Bacon, 562 F.3d 349, 350, 355 (5th Cir. 2009).
The court reasoned that “[i]n the light of Hall Street’s repeated statements that
‘We hold that the statutory grounds are exclusive,’” it could not be interpreted as
applying only to contractual expansions of §§ 10 and 11. Id. at 356. See also
Ramos-Santiago v. United Parcel Service, 524 F.3d 120, 124 n.3 (1st Cir. 2008)
(“We acknowledge the Supreme Court’s recent holding in [Hall Street] that
manifest disregard of the law is not a valid ground for vacating or modifying an
arbitral award in cases brought under the [FAA].”).
The Second and Ninth Circuits have taken a different approach, treating
manifest disregard of the law not as an additional, independent non-statutory
ground for vacatur, but instead as a judicial interpretation of the district court’s
power under § 10(a)(4) to vacate an award where the arbitrator “exceeded [his]
powers” or “so imperfectly executed them that a mutual, final, and definite
award . . . was not made.” 9 U.S.C. § 10(a)(4). See Comedy Club, Inc. v. Improv
West Assoc., 553 F.3d 1277, 1290 (9th Cir.), cert. denied, Improv West Assoc. v.
Comedy Club, Inc., ___ U.S. ___, 130 S. Ct. 145 (2009) (concluding that “after
Hall Street Associates, manifest disregard of the law remains a valid ground for
vacatur” because it is “shorthand for a statutory ground under the FAA,
specifically 9 U.S.C. § 10(a)(4)”); Stolt-Nielsen v. AnimalFeeds Int’l Corp., 548
23
F.3d 85, 94 (2d Cir. 2008), cert. granted, Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., ___ U.S. ___, 129 S. Ct. 2793 (2009) (holding that “‘manifest disregard,’
reconceptualized as a judicial gloss on the specific grounds for vacatur enumerated
in section 10 of the FAA, remains a valid ground for vacating arbitration awards”).
Finally, the Sixth Circuit has concluded in an unpublished opinion that
while Hall Street “significantly reduced the ability of federal courts to vacate
arbitration awards for reasons other than those specified in 9 U.S.C. § 10, . . . it did
not foreclose federal courts’ review for an arbitrator’s manifest disregard of the
law” because it held only that the FAA prohibits private parties from
supplementing by contract the FAA’s statutory grounds for vacatur, without
expressly addressing whether those grounds may be supplemented judicially.
Coffee Beanery, Ltd. v. WW, L.L.C., 300 Fed. Appx. 415, 418-19 (6th Cir. 2008),
cert. denied, Coffee Beanery, Ltd. v. WW, LLC, ___ U.S. ___, 130 S. Ct. 81
(2009).7
7
In AIG Baker Sterling Heights, LLC v. American Multi-Cinema, Inc., 579 F.3d 1268,
1271 (11th Cir. 2009), we stated in dicta that Hall Street “confirmed [that] sections 10 and 11 of
the FAA offer the exclusive grounds for expedited vacatur or modification of an award under the
statute,” but had no occasion to decide whether our judicially-created grounds for vacating
arbitration awards survive in the wake of Hall Street. In AIG Baker Sterling Heights, we
addressed whether the district court violated the FAA when, for a reason not set forth in §§ 10 or
11, it granted American relief under Federal Rule of Civil Procedure 60(b)(5) from its judgment
confirming an arbitration award. Id. at 1270. We observed that while §§ 10 and 11 “severely
limit[] judicial vacatur and modification of an arbitration award,” these sections did not control
the circumstances of the appeal because the district court neither vacated nor modified the
24
We hold that our judicially-created bases for vacatur are no longer valid in
light of Hall Street. In so holding, we agree with the Fifth Circuit that the
categorical language of Hall Street compels such a conclusion. See Hall Street,
552 U.S. at 586, 128 S. Ct. at 1404 (“the text compels a reading of the §§ 10 and
11 categories as exclusive”); id. at 589, 128 S. Ct. at 1406 (“the statutory text
gives us no business to expand the statutory grounds”); id. at 590, 128 S. Ct. at
1406 (“§§ 10 and 11 provide exclusive regimes for the review provided by the
statute”). As Mrs. Frazier has failed to demonstrate the existence of any of the
statutory grounds for vacating or modifying the arbitrator’s award, the district
court was bound by § 9 to confirm the award.
III. CONCLUSION
Frazier appeals the district court’s orders confirming the arbitration award
in favor of CitiFinancial and denying her motion to vacate or modify the award.
For the foregoing reasons, we AFFIRM.
AFFIRMED.
arbitration award but, rather, entered a judgment confirming the award and then subsequently
granted relief from that judgment under Rule 60(b)(5). Id. at 1271. We then held that § 13 of the
FAA, which treats a judgment confirming an arbitration award just like any other federal civil
judgment, permitted the district court to grant relief under Rule 60(b)(5). Id. at 1273-74.
25