IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2016 Term
__________ FILED
March 15, 2016
No. 11-1613 released at 3:00 p.m.
RORY L. PERRY, II CLERK
__________ SUPREME COURT OF APPEALS
OF WEST VIRGINIA
RYAN CUNNINGHAM,
Petitioner,
v.
RONALD F. LEGRAND and MOUNTAIN COUNTRY PARTNERS, LLC,
Respondents.
______________________________________________________
Appeal from the Circuit Court of Kanawha County
Honorable James C. Stucky
Civil Action No. 10-C-1269
AFFIRMED
________________________________________________________
Submitted: February 24, 2016
Filed: March 15, 2016
Richard Neely, Esq. William F. Dobbs, Jr., Esq.
Neely & Callaghan William C. Ballard, Esq.
Charleston, West Virginia Elizabeth A. Amandus, Esq.
Counsel for Petitioner Jackson Kelly PLLC
Charleston, West Virginia
Counsel for Chapter 11 Trustee of
The Bankruptcy Estate of Mountain
Country Partners, LLC
JUSTICE LOUGHRY delivered the Opinion of the Court.
SYLLABUS
Manifest disregard of the law is not recognized as a valid statutory basis for
challenging an arbitration award made pursuant to the provisions of the Federal Arbitration
Act, 9 U.S.C. §§ 1-16 (2012).
LOUGHRY, Justice:
The petitioner, Ryan Cunningham, appeals from the November 2, 2011, order
of the Circuit Court of Kanawha County confirming an arbitration award and entering
judgment on that award.1 Seeking to obtain a vacatur of the arbitration award, the petitioner
argues that: the arbitrator manifestly disregarded the law of West Virginia; the arbitrator
considered hearsay evidence; and the arbitrator refused to reopen the proceedings for
rebuttal evidence.2 In response to these assignments of error, the bankruptcy trustee3 for
respondent Mountain Country Partners, LLC (“Mountain Country”) argues that the
petitioner has failed to identify any valid basis for setting aside the arbitration award. We
concur and accordingly affirm the lower court’s ruling in this matter. Our decision is
compelled both by the constricted scope of review for an arbitral award and the petitioner’s
failure to raise even a colorable basis for vacating the award.
1
This appeal was subject to an automatic stay pursuant to the provisions of 11 U.S.C.
§ 362(a) (2012) by virtue of an involuntary bankruptcy petition filed against respondent
Mountain Country Partners, LLC in the United States Bankruptcy Court for the Southern
District of West Virginia. By order entered on May 12, 2015, this Court directed that the
automatic stay be lifted.
2
Petitioner was represented by counsel when the subject appeal was filed. This Court
granted his attorney’s motion to withdraw as counsel by order entered on May 12, 2015. Mr.
Cunningham was not represented by counsel at oral argument.
3
See supra note 1.
1
I. Factual and Procedural Background
Mountain Country, a West Virginia limited liability company, was formed for
the purpose of acquiring land and mineral rights to develop oil and gas properties in West
Virginia and Kentucky.4 On October 10, 2006, Mr. Cunningham, Ronald F. LeGrand, and
four additional individuals signed the Operating Agreement of Mountain Country
(“Operating Agreement”). While the petitioner managed the day-to-day operations of
Mountain Country for a salary,5 Mr. LeGrand was the actual manager due to his controlling
voting percentage. Dissatisfied with the venture’s lack of profit and fearful that Mr.
LeGrand was wrongfully disposing of assets and/or committing fraud,6 the petitioner
instituted a civil action in the Circuit Court of Kanawha County on July 14, 2010. He
sought injunctive relief for the purpose of gaining “access to all corporate records including
all investor contact information . . . and [requested] that he be given operating control of
4
The subject properties were purchased at a public auction from the bankruptcy estate
of Buffalo Properties for $7.1 million. Ronald F. LeGrand organized investors to purchase
the properties after learning of their availability from a friend of the petitioner’s while giving
seminars on real estate investing. Mr. LeGrand is not a party to this appeal.
5
His managerial duties included the purchasing of equipment, the maintenance of
equipment, and the supervision of employees. Additionally, Mr. Cunningham obtained
permits, procured bonds, and oversaw matters involving compliance.
6
Mr. LeGrand was investigated by the Securities and Exchange Commission for civil
fraud. In connection with charges that he and another person induced investors to purchase
land and other assets from a bankrupt oil and gas company headquartered in West Virginia
while misrepresenting the degree of risk and the amount of expected return, Mr. LeGrand
agreed to a $150,000 fine by a consent decree.
2
Mountain Country Partners, LLC.”7 Because the petitioner had not submitted his claims to
arbitration, as required by the Operating Agreement,8 the respondents sought to dismiss the
complaint.
Before the matter proceeded to arbitration pursuant to the mandatory
arbitration clause contained in the Operating Agreement,9 a ruling was obtained with regard
to the petitioner’s attempt to gain access to the company records. Judge John Hrko, sitting
in for Judge Stucky, ruled by order entered on November 5, 2010, that “West Virginia Code
31B-4-408 gives a member of a West Virginia LLC the absolute right to review all of the
books and records of the LLC . . . .” Pursuant to that order, Mountain Country was directed
to give the petitioner reasonable access to “all books and records.”10 The underlying case
was stayed by the circuit court pending arbitration.
7
The petitioner sought access to the company’s books pursuant to West Virginia Code
§ 31B-4-408 (2015) (providing authority for members of limited liability company to access
company’s records).
8
Pursuant to the terms of the Operating Agreement, the petitioner, along with the
other signatories, had agreed that either party to a grievance could initiate arbitration
proceedings, that the arbitration would be governed by the Federal Arbitration Act [9 U.S.C.
§§ 1-16], that the arbitration would transpire in Duval County, Florida, that damages were
limited to compensatory damages, and “that the decision of the arbitrator shall be final and
binding and enforceable in a court of law.”
9
There was no dispute in this case with regard to the requirement that the matter be
resolved through arbitration; there was also no dispute as to the selection of the arbitrator.
10
When Mr. LeGrand sought a protective order with regard to document production,
Judge Stucky referred the issue to the arbitrator.
3
During the arbitration proceeding, a dispute arose when the petitioner sought
to discover the identity of Mountain Country’s investors. He argued that the provisions of
West Virginia Code § 31B-4-408 (2015) entitled him to gain access to the investor list in
addition to the company’s books and records he had already been permitted to review.
Citing to the provision of the statute that excepts disclosure of business records “to the
extent the demand or the information demanded is unreasonable or otherwise improper
under the circumstances,” the arbitrator denied the petitioner access to the investor list. Id.
at § 31B-4-408(b)(2). In furtherance of the ruling, the arbitrator found that the “identities
of the additional investors in MCP [Mountain Country] are irrelevant to the claims and
counterclaims advanced in this arbitration.”
A three-day arbitration hearing commenced on April 18, 2011. At issue were
the petitioner’s singular claim predicated on seeking control of Mountain Country11 as well
as five counterclaims filed by Mr. LeGrand and Mountain Country against the petitioner.12
11
Specifically, the petitioner sought to have the Operating Agreement reformed to
remove Mr. LeGrand from having control of Mountain Country. The petitioner sought to
have a new manager elected by majority vote of the members, the appointment of a receiver,
or his appointment as manager subject to confirmation or rejection by a majority of the
members. The arbitrator denied this relief, finding no legal basis for the petitioner’s request.
12
Those counterclaims asserted that the petitioner had (1) converted 855 barrels of
Mountain Country oil for use by one of his unrelated ventures, Cunningham Energy; (2)
converted $29,700 of Mountain Country equipment to use for his other ventures,
Cunningham Energy and Raven Ridge; (3) converted Mountain Country funds to pay his
personal debts and expenses, including $17,400 in personal air travel, $7,150 in personal
reimbursements to himself for excessive and inappropriate website design fees, and $14,000
4
The evidence presented at the hearing included witness testimony, deposition testimony, and
documentary evidence. The arbitrator advised the parties that he would take all evidence
“for what it’s worth and discard it if it’s not relevant.” By agreement of the parties, all
documents were introduced into evidence as authentic and admissible. The arbitrator found
all the witness testimony to be credible.
On the third day of the arbitration hearing, the petitioner did not attend the
proceedings; his counsel failed to seek either a postponement or a continuance.13 Through
a decision issued on July 5, 2011, the arbitrator denied the petitioner’s claim but awarded
relief against him based on the respondents’ counterclaims. Mr. Cunningham was ordered
by the arbitrator to pay Mountain Country $113,717.50 in damages and $162,442.00 in
attorney’s fees and costs.14 The petitioner did not offer any testimony or defense in response
to the counterclaims advanced by the respondents.15 Only when the award was issued did
in legal fees related to a separate, failed venture known as ASHRO; (4) falsified Mountain
Country asset values for his personal benefit; and (5) spoliated evidence of his and his
agents’ malfeasance in regard to Mountain Country.
13
Purportedly, his failure to attend the final day of the hearing was due to a relapse
of a prior case of sunstroke, brought on by the 93 degree heat of Jacksonville, Florida, where
the hearing was taking place.
14
The arbitrator ruled in favor of Mr. LeGrand and Mountain Country on three of the
five counterclaims pertaining to conversion of company property and company funds.
15
His counsel’s explanation was strategy driven: viewing the evidence against his
client as unreliable, he assumed it would be disregarded by the arbitrator.
5
the petitioner seek to reopen the proceedings for the purpose of submitting rebuttal evidence.
This request was denied by the arbitrator.
When the respondents sought to confirm the arbitration award in the circuit
court, the petitioner filed a motion to vacate. The circuit court denied that motion and this
appeal followed.
II. Standard of Review
As this Court recently acknowledged, “‘the scope of judicial review for an
arbitrator’s decision is among the narrowest known at law.’” CDS Family Trust, LLC v.
ICG, Inc., No. 13-0375, 2014 WL 184441, at *3 (W.Va. Jan. 15, 2014) (memorandum
dec’n) (citing MCI Constructors, LLC V. City of Greensobro, 610 F.3d 849, 857 (4th Cir.
2010)). “‘Awards by arbitration are to be favored and liberally construed and are not to be
set aside unless they appear to be founded on grounds clearly illegal.’” Board of Educ. v.
W. Harley Miller, Inc. (“Harley Miller II”), 160 W.Va. 473, 494 n.7, 236 S.E.2d 439, 451
n.7 (1977) (quoting Syl. Pt. 3, Hughes v. Nat’l Fuel Co., 121 W.Va. 392, 3 S.E.2d 621
(1939)). Because the full panoply of evidentiary and other procedural rules that govern
cases at law do not apply to arbitration matters, even greater deference is given to decisions
made by arbitrators which pertain to matters of procedure. See Harley Miller II, 160 W.Va.
at 485, 236 S.E.2d at 446. Bearing these standards in mind, we proceed to consider whether
6
the circuit court committed error by its decision to confirm and enter the award of the
arbitrator.
III. Discussion
The petitioner acknowledges the limited grounds upon which vacatur of an
arbitral award may be sought under the governing Federal Arbitration Act (“FAA”).16 See
9 U.S.C. §§ 1-16 (2012). Under section ten of the FAA, an arbitration award may be
vacated for the following four grounds:
(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.
Id. at § 10. Seeking to expand those statutory grounds, the petitioner suggests that the
United States Supreme Court has sanctioned an additional basis for obtaining review of an
arbitral award: “manifest disregard for the law.”17 See Wilko v. Swan, 346 U.S. 427, 436
16
See supra note 8.
17
By asserting “manifest disregard of the law” as a basis for review of the arbitral
award, the petitioner maintained that the arbitrator, in ruling on a preliminary matter,
ignored the provisions of West Virginia Code § 31B-4-408 that govern a member’s access
7
(1953), overruled on other grounds, Rodriguez de Quijas v. Shearson/American Express,
Inc., 490 U.S. 477 (1989) (recognizing distinction between arbitrator’s interpretation of law
and manifest disregard of law for purposes of judicial review).
In Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), the
United States Supreme Court was asked to determine whether the FAA precludes a federal
court from enforcing a clearly expressed agreement that provided for more expansive
judicial review of an arbitration award than the much narrower standard of review set forth
in the FAA. The arbitration agreement at issue in Hall Street contained a provision that
permitted the parties to seek judicial review for plain legal errors–a provision that does not
exist as a stated ground for review under the FAA. In resolving whether a private agreement
could effectively expand the grounds for judicial review under the FAA, the high court was
clear that sections 10 and 1118 of the FAA “provide exclusives regimes for the review
provided by the statute.” Id. at 590. As part of its ruling in Hall Street, the high court
commented on the theoretical existence of authority independent of the FAA–provided by
state statutory or common law– for review of arbitration awards. See id. Significantly,
to the records of a limited liability company.
18
Section 11 provides for a modification or correction of the arbitral 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; (b) where the
arbitrators have awarded upon a matter not submitted to them; and (c) where the award is
imperfect in matter of form not affecting the merits of the controversy. See 9 U.S.C. § 11.
8
however, this brief recognition of hypothetical non-FAA grounds for reviewing arbitration
awards has, to date, not been acted upon by the Supreme Court.
As a result, the petitioner’s suggestion to this Court that the United States
Supreme Court has sanctioned the assertion of a particular non-FAA ground for seeking to
vacate an arbitration award lacks both candor and legal support.19 Because the high court
has declined to revisit the issue of whether “manifest disregard of the law” has any
continued viability after Hall Street as an independent ground for review,20 the lower federal
courts have concluded that the grounds set forth in the FAA remain the only mechanism for
challenging arbitration awards. See PNGI Charles Town Gaming, L.L.C. v. Mawing, 2015
WL 898559 at *1, n.1 (4th Cir. 2015) (“In the wake of the Supreme Court’s decision in Hall
Street, this court has recognized that considerable uncertainly exists ‘as to the continuing
viability of extra-statutory grounds for vacating arbitration awards.’”) (internal citations
omitted); see Sheet Metal Worker’s Int’l Ass’n v. Beckley Mechanical, Inc., 803 F.Supp.2d
19
The grounds for vacatur in this case are limited to the grounds provided in the FAA
under the terms of the Operating Agreement. Consequently, the petitioner’s attempt to rely
on Hall Street fails on both procedural and substantive grounds. Not only was there no
attempted expansion within the subject arbitration clause of the scope of judicial review
beyond that expressly provided by the FAA, but further lacking is reference to any state
statute or common law as a basis for the assertion of the “manifest disregard” challenge.
20
See Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 672 n.3 (2010)
(“We do not decide whether ‘“manifest disregard”’ survives our decision in Hall Street as
an independent ground for review or as a judicial gloss on the enumerated grounds for
vacatur set forth at 9 U.S.C. §10.”) (internal citation omitted).
9
511, 516 (S.D. W.Va. 2011) (“‘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 [9 U.S.C. §§ 10-11]. . . .’”) (quoting Hall Street, 552 U.S. at 587) (internal
citations omitted).
In considering this issue, the circuit court correctly ruled that “[m]anifest
disregard for the law is not among the enumerated bases to vacate an award” under the FAA.
See Ramos-Santiago v. U.P.S., 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
Federal Arbitration Act . . . .”). Proceeding as though such a basis for review did exist for
argument purposes only, the circuit court opined that the facts of this case fail to evidence
any disregard of the law by the arbitrator. The specific legal concern raised by the petitioner
was his contention that the arbitrator misapplied the provisions of West Virginia Code §
31B-4-408 when it decided that the petitioner’s “request for information was unreasonable
and improper under the circumstances.” Upon its review of this matter, the circuit court
ruled that it “s[aw] no factual or legal basis for overturning that finding.” We concur.
While the petitioner took the view that he had a right to all of the company
records, including the identity of its investors, the statute is not written in absolute terms.
10
Notwithstanding the initial directive of Judge Hrko that “all” records be disclosed, the
statute clearly contemplates situations such as that presented in this case where a particular
document request may be determined to be either unreasonable or improper under the
circumstances. The statute describes two scenarios. A limited liability company is mandated
to provide “[w]ithout demand, information concerning the company’s business or affairs
reasonably required for the proper exercise of the member’s rights and performance of the
member’s duties under the operating agreement or this chapter.” W.Va. Code § 31B-4
408(b)(1). In contrast to that obligation, a limited liability company, upon demand, shall
provide “other information concerning the company’s business or affairs, except to the
extent the demand or the information demanded is unreasonable or otherwise improper
under the circumstances.” Id. at § 31B-4-408(b)(2) (emphasis supplied).
In making its ruling with regard to the petitioner’s request for disclosure of the
investors in Mountain Country, the arbitrator first considered why Mr. Cunningham was
seeking the investor list. His stated reason was so that he could “explore whether investors
received payouts of MCP income.” The arbitrator found that “this information is readily
ascertainable from the financial books and records of MCP, all of which have already been
provided to Cunningham.” Further addressing the legitimacy of the request, the arbitrator
determined that the “identities of the additional investors in MCP are irrelevant to the claims
and counterclaims advanced in this arbitration.” Finding the request “unreasonable and
11
improper under the circumstances,” the arbitrator concluded that the request was “not
appropriate, as it will not further the needs of the parties and will not make discovery in this
matter expeditious and cost effective.” 21
As part of its review of the arbitral award for “manifest disregard,” the circuit
court addressed the constrained nature of its review: “A court ‘is limited to determining
whether the arbitrators did the job they were told to do–not whether they did it well, or
correctly, or reasonably, but simply whether they did it.’” (citing Remney v. PaineWebber,
Inc., 32 F.3d 143, 146 (4th Cir. 1994), emphasis supplied by circuit court); accord Oxford
Health Plans LLC v. Sutter, 133 S.Ct. 2064, 2070-71 (2013) (recognizing that court may not
correct even “grave error” of arbitrator and stating that arbitrator’s construction of contract
“holds, however good, bad, or ugly”); Wilko, 346 U.S. at 438 (“Congress has afforded
participants in transactions subject to its legislative power an opportunity generally to secure
prompt, economical and adequate solution of controversies through arbitration if the parties
are willing to accept less certainty of legally correct adjustment.”). The circuit court
correctly recognized that the petitioner’s lack of allegations of fraud or other illegal conduct
effectively rendered the merits of the arbitrator’s decision beyond review. See Barber v.
21
This finding was made pursuant to Rule 11 of the CPR [Conflict Prevention &
Resolution] Non-Administered Arbitration rules, which authorizes an arbitrator to “facilitate
such discovery as it shall determine is appropriate in the circumstances, taking into account
the needs of the parties and the desirability of making discovery expeditious and cost-
effective.”
12
Union Carbide Corp., 172 W.Va. 199, 203, 304 S.E.2d 353, 357 (1983) (stating that “courts
of this State will not review an arbitration award rendered pursuant to the terms of a
commercial contract except for actual fraud”); Clinton Water Ass’n v. Farmers Constr. Co.,
163 W.Va. 85, 87, 254 S.E.2d 692, 694 (1979) (“It has long been the rule in this State that
where parties have undertaken arbitration, their award is binding and may only be attacked
in the courts on the basis of fraud or on those grounds set out in W. Va. Code, 55-10-4.”);
see also W.Va. Code § 55-10-25 (Supp. 2015) (permitting vacation of arbitral awards on
grounds of corruption, fraud, undue means, evident partiality, and corruption or misconduct
of arbitrator). As this Court stated in Barber, “[i]f arbitration awards can be challenged in
court on any theory other than actual fraud or failure to follow the procedures that were
bargained for in the arbitration clause, then the goals of speed, parsimony, and flexibility are
all entirely defeated. . . .” 172 W.Va. at 203, 304 S.E.2d at 356.
The petitioner, as the circuit court noted, “cannot claim, as an end-run around
the limited bases for vacatur, that an arbitrator shows ‘evident partiality’ or ‘manifestly
disregarded the law’ simply because he disagrees with the decisions rendered.”22 As the
circuit court sagely observed, “[s]uch a broad interpretation of ‘evident partiality’ or
‘manifest disregard’ would allow courts in every instance to review the merits of the
22
The petitioner’s argument with regard to “evident partiality” was that, absent
partiality, the arbitrator could not have ruled against him.
13
arbitrator’s decision and thereby destroy the three goals of effective arbitration.” See id.
(discussing arbitral goals of speed, parsimony, and flexibility). Recognizing the petitioner’s
attempt to relitigate an issue in court that was already resolved through arbitration, the circuit
court properly denied the motion to vacate on grounds of manifest disregard for the law.
See Harley Miller II, 160 W.Va. at 485, 236 S.E.2d at 446. Based on the foregoing, we hold
that manifest disregard of the law is not recognized as a valid statutory basis for challenging
an arbitration award made pursuant to the provisions of the Federal Arbitration Act.23 See
9 U.S.C. §§ 9-10.
As a secondary basis for his challenge of the arbitral award, the petitioner
argues that the arbitrator wrongly relied on hearsay evidence and failed to reopen the
proceedings to permit him to submit additional evidence. Turning first to the assignment
grounded in hearsay evidence, we recognize that under the rules applicable to the arbitration
proceeding, the rules of evidence were not required to be followed.24 Juxtaposed against a
23
We note additionally that manifest disregard of the law is similarly not a ground for
challenging an arbitration award under the Revised Uniform Arbitration Act that took effect
in this state on July 1, 2015. See W.Va. Code § 55-10-25.
24
Pursuant to § 12.2 of the CPR Rules for Non-Administered Arbitration:
Testimony may be presented in written and/or oral form as the
Tribunal may determine is appropriate. The Tribunal is not
required to apply the rules of evidence used in judicial
proceedings, provided, however, that the Tribunal shall apply
the lawyer-client privilege and the work product immunity. The
Tribunal shall determine the applicability of any privilege or
14
professed acknowledgment that the evidentiary rules were inapplicable is the petitioner’s
discordant, hyperbolic complaint that “flagrant disregard for those rules leads to fabulously
unjust results.” Contending that the monetary award of $113,717.50 levied against him was
based upon the “rankest hearsay,” the petitioner frames a test to govern the consideration of
hearsay evidence during arbitration. Seeking to secure the introduction of only reliable
hearsay, he suggests that we sanction hearsay evidence dependent on the status of the
original speaker. By way of illustration, he theorizes that when a public official explains his
actions as being consistent with what the governor instructed, then that testimony should
necessarily be viewed as reliable. In other instances involving non-elected individuals who
are recounting the words of mere lay people, that testimony would presumably be unreliable
under the petitioner’s conjectural litmus test.
Not only is the petitioner’s hearsay “test” patently self-serving but it wholly
conflicts with the more informal nature of arbitration proceedings. By design, an arbitration
proceeding addresses a legal dispute in a fashion aimed at resolving the matter more
expeditiously and less expensively than might occur in the court system. Dispensation with
the formal rules of evidence and procedure is part of what enables arbitrations to advance
immunity and the admissibility, relevance, materiality and
weight of the evidence offered.
15
in an alacritous manner by comparison to judicial proceedings. Articulating the salutary
effect of the procedural shortcuts inherent to arbitrations, this Court previously observed:
‘The parties contract for an arbitrator, not a procedure. Due
process does not necessarily mean Anglo-American rules of
evidence, nor winner-take-all substantive rules. . . . The system
of review of arbitration awards should be set up to avoid delay
caused by the losing party in arbitration challenging the award
of the arbitrators, especially on mere procedural grounds! The
strict rules governing an action at law have never been
applicable to an arbitration proceeding. The parties should
know this when they agree to arbitrate, and they should not be
heard later to complain on an issue of procedure. Arbitration
can, and almost inevitably does, decide the substance of the
controversy with substantial justice regardless of procedure.’
Harley Miller II, 160 W.Va. at 485, 236 S.E.2d at 446 (emphasis partially supplied and
internal citation omitted) (quoting Board of Educ. v. W. Harley Miller [Harley Miller I], 159
W.Va. 120, 134, 221 S.E.2d 882, 889 (1975) (Neely, J., concurring).
While the petitioner cursorily references testimony of specific witnesses that
the respondents offered at arbitration to which he now objects, the record reveals that he did
not challenge that testimony in the arbitral proceeding. Neither did he introduce his own
witnesses or evidence to refute the testimony about which he complains. In explanation, the
petitioner characterizes those decisions as tactical.25 His prognostication that the arbitrator
would reject the respondents’ evidence was a gamble that he lost.
25
See supra note 15.
16
The petitioner specifically linked his need to reopen the arbitration proceeding
to the arbitrator’s reliance on hearsay evidence. The post-award request to introduce rebuttal
evidence is expressly tied to his belief that the arbitrator would “disregard[] rampant hearsay
testimony.” Rather than avowing to discredit hearsay evidence, the arbitrator iterated: “As
I said the very first day, I will take it for what it’s worth and discard it if it’s not relevant.”
The circuit court found that “the Arbitrator never stated that he would not accept or would
ignore relevant hearsay testimony; ‘relevance’ was the only touchstone.” See ARMA,
S.R.O. v. BAE Sys. Overseas, Inc., 961 F.Supp.2d 245, 263 (D.D.C. 2013) (“An arbitrator
has substantial leeway to admit any evidence that it finds useful–even hearsay evidence.”).
Given its decision that the arbitrator’s consideration of hearsay evidence was
not improper, the circuit court found it unnecessary to address the petitioner’s related request
to reopen the hearing. Solely to address the alleged error, however, the circuit court
proceeded to rule that the arbitrator had the necessary discretion to refuse the petitioner’s
request to reopen the proceedings. The circuit court concluded that the petitioner “was not
deprived of the ability to present evidence . . . .” And “[t]o the extent Cunningham now
points to his alleged illness at the final day of the hearing as a potential issue preventing
17
further testimony, he could have, but did not, seek an extension or continuance before the
hearing was closed.”26
In seeking to vacate the arbitral award by asserting such a patently procedural
complaint as the need to reopen the proceeding to respond to hearsay evidence, the petitioner
has relied upon improper grounds for relief.27 That a court may vacate an arbitrator’s
decision issued pursuant to the FAA “only in very unusual circumstances” is clear. First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995). Further evident is our
appreciation that the procedural grounds asserted by the petitioner in this case do not
constitute the requisite “unusual circumstances.” Id.
IV. Conclusion
Based on the foregoing, the decision of the Circuit Court of Kanawha County
to confirm the arbitration award and enter judgment on that award is affirmed.
Affirmed.
26
The circuit court included as part of its findings: “Cunningham has acknowledged
that the decision to not seek a postponement was a ‘tactical mistake’ and that ‘counsel would
have been more astute’ to do so.”
27
As the circuit court recognized, the procedural issue not to reopen the hearing after
the arbitral award had been issued “is beyond the ken of this Court on review.”
18