(dissenting).
I do not agree with the basis upon which the majority has proposed to dispose of this appeal, or the manner of its disposition.
In Daniels Insurance Agency v. Jordan, 99 N.M. 297, 657 P.2d 624 (1982), this Court directed the district court to do one of three things: to confirm the award of the first arbitration of this dispute, to modify that award, or to vacate that award and order a new arbitration. The hearing of May 20, 1983, was meant to obtain a ruling of the district court on which option was appropriate. Jordan failed to appear at that hearing.
The majority characterizes Jordan’s failure to appear and the court’s subsequent decision as a default judgment. They then conclude that because the motion “for default judgment” was made orally during the May 20th hearing, and without the three-day notice required by NMSA 1978, Civ.P.R. 55(b), it was an improper default judgment requiring reversal.
I do not agree that the procedure was in any way a default judgment procedure. The action taken by the district court on May 20th, although referred to at the hearing as a “default” by the trial court and by Daniel’s counsel, did not function as a default judgment. To operate as a default judgment, which is a final judgment disposing of the case, there must be failure of the party to plead or defend as provided by the Rules of Civil Procedure. See NMSA 1978, Civ.P.R. 55(a) (Repl.Pamp.1980). Our rules do not require that a responsive pleading to notice of hearing be filed, nor is there anything to be “defended.” Here the trial court merely set the matter for hearing following entry of this Court’s mandate on the prior appeal. Had the court’s decision at that hearing been a decision to confirm the first arbitration award, it then would have been a final judgment in the case. But, in that event, the judgment would have been in favor of the “defaulting” party, who could not complain of favorable action taken in his absence. Thus, since none of the options available to the trial court at the May 20th hearing could have been a final decision against appellant, appellant’s failure to appear could not and did not result in a default judgment being entered against him.
The proceedings could be termed, more properly, a waiver by appellant of his right to argue at that hearing for one of the three options accorded to the trial court under our mandate. By failing to appear, after notice and upon confirmation by the court prior to its ruling that counsel had received notice and had made arrangements for new counsel to appear, appellant waived any right to object to the trial court’s decision to order a second arbitration.
What I perceive to be meritorious in this appeal is that at the May 20th hearing, the district court appointed a new arbitrator and set the time and place for the second arbitration. The court had no authority to do so. The provision for arbitration contained in the Jordan-Daniels contract required that all arbitration proceedings be governed by the American Arbitration Association Commercial Arbitration Rules (AAA Rules). The mandate from this Court on the earlier appeal, which allowed the district court to set a new arbitration “consistent with the requirement of §§ 44-7-11 through 44-7-14” (Daniels Insurance Agency Inc. v. Jordan, 99 N.M. at 300, 657 P.2d at 627 (1982)), did not empower the trial court to disregard the terms of the parties’ agreement to arbitrate.
NMSA 1978, Section 44-7-12C, provides that when the court vacates an arbitration award because the arbitrator exhibited partiality (see Daniels, 99 N.M. at 299, 657 P.2d at 626), it may set the matter for a new arbitration “before new arbitrators chosen as provided in the agreement5” (emphasis added). In this case the agreement required the arbitrator to be a member of the AAA’s panel of arbitrators. The record discloses that the arbitrator chosed by the trial court was not. The agreement also provided a procedure for mutual agreement on the arbitrator selected, but the trial court ignored that provision and instead named the second arbitrator. Further, both NMSA 1978, Section 44-7-5, and the AAA Rules require the arbitrator to set the time and place for the arbitration. The trial court did so here. Finally, the agreement to arbitrate specified the procedures to be followed at an arbitration hearing. The arbitrator in the court-ordered proceeding was not familiar with those procedures and was unaware that he was required to follow them.
Those violations of the provisions of the agreement are sufficient grounds for vacating the proceedings and decision of the second arbitration. NMSA 1978, § 44-7-12A.
Daniels claims, however, that Jordan waived all procedural errors by (1) not appearing at the May 20th hearing at which the alleged judicial error of ordering the second arbitration was made; (2) not raising objections to the claimed errors in the trial court’s order regarding the naming of the arbitrator and the manner in which the second arbitration was to be conducted in his motion to vacate the order or at the hearing on that motion to vacate, and (3) not seeking to obtain a stay of arbitration.
Although Jordan took none of those actions, he did attempt to preserve his objections. He filed an appeal before the date of the second arbitration and he requested a postponement. Further, he appeared at the second arbitration, even though for the sole purpose of registering his objections to proceeding thereunder. On the advice of his counsel, he refrained from participating in that arbitration because he and his counsel interpreted the AAA Rules to provide that by proceeding with the arbitration he would waive any objections thereto.
Whether the Rules actually required Jordan to refrain from participating is a matter of interpretation which the Rules specifically reserve to the AAA. According to the agreement, Jordan should have registered his objection with the AAA and requested a ruling from that body. But since the new arbitration proceedings were not arranged in accordance either with AAA provisions or the terms of the contract between the parties, Jordan cannot be faulted for failing to follow through on the agreement’s provisions for making such objections.
Although Jordan could have taken other, clearer actions to preserve his protests, I am unwilling to say that, in the circumstances of this case, his conduct amounted to a waiver of his objections to the selection of the second arbitrator and to the manner of proceedings ordered by the trial court.
I would uphold the trial court’s decision to vacate the first arbitration and to set the matter for a second arbitration, but I would order that the proceedings had on that second arbitration be vacated and that a new arbitration be conducted in accordance with the terms of the contract between the parties and with the AAA Rules.