Chrobak v. Edward D. Jones & Co.

878 S.W.2d 760, 46 Ark. App. 105, 1994 Ark. App. LEXIS 314
CourtCourt of Appeals of Arkansas
DecidedJune 15, 1994
DocketCA 93-664
StatusPublished
Cited by8 cases

This text of 878 S.W.2d 760 (Chrobak v. Edward D. Jones & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chrobak v. Edward D. Jones & Co., 878 S.W.2d 760, 46 Ark. App. 105, 1994 Ark. App. LEXIS 314 (Ark. Ct. App. 1994).

Opinion

James R. Cooper, Judge.

The appellant filed a complaint seeking to vacate an unfavorable award granted by an arbitration panel. The trial judge declined to vacate the arbitration award, finding that the appellant failed to raise a substantive issue sufficient to avoid the arbitration procedure and the finality of the award. From that decision, comes this appeal.

For reversal, the appellant contends that the court erred in dismissing his motion to vacate the arbitration award without first allowing him to engage in discovery proceedings or giving him an evidentiary hearing. We find no error and affirm.

In 1982, the appellant made an investment with the appellees. The appellant’s investment was eventually lost, and he sought damages through arbitration in the amount of $75,655.00, contending wrongful conduct on the part of the appellees. An arbitration panel comprised of Harvey Bell, Garland Binns, and Mr. Harkins (hereinafter referred to as “Panel 1”) was formed to decide the appellant’s claim, and Binns was elected chairman. At Panel l’s hearing of the claim, the appellant appeared pro se and was allowed to present testimony and to introduce documentary evidence. After the hearing was concluded, but before a decision was handed down, arbitrator Harvey Bell questioned the role of the National Association of Security Dealers (NASD) in the selection of Panel 1. He contended that Chairman Binns, who had been appointed as a public arbitrator, should have been classified as a securities industry arbitrator. Mr. Bell also alleged that Binns had made evidentiary decisions without a two-thirds vote of the panel. Because of Mr. Bell’s allegations, which could have resulted in questions being raised after a decision by Panel 1, the arbitrators of Panel 1 resigned without making an award and decided the matter should be referred to a newly-constituted panel (hereinafter referred to as “Panel 2.”) By a letter dated August 10, 1989, NASD attorney John Barlow informed the parties of the alleged problems with Panel 1 and the need for the appellant’s claim to be reheard by a second panel. Among other things, his letter advised the parties that Harvey Bell had questioned Mr. Binns’ status as a public arbitrator and that Mr. Bell felt that the entire panel did not participate in the evidentiary decisions as required by the Code of Arbitration Procedure.

In response to this letter, the appellant wrote to Mr. Barlow and suggested that the second panel review the exhibits and taped recordings from the first hearing held before Panel 1 rather than hold another hearing. Mr. Barlow then sent the parties a second letter which advised them of the appellant’s suggestion.

The parties were later advised of the names of the arbitrators who were to comprise Panel 2. There being no objection, Panel 2 met and reviewed the tapes and exhibits from the first hearing, determined they were adequate for a decision, and that there was no reason to see the parties in person or request further testimony. Panel 2 then rendered its decision dismissing the appellant’s claim.

The appellant filed a complaint in the Boone County Circuit Court, seeking to vacate Panel 2’s award, obtain a full evi-dentiary hearing with regard to the conduct of the arbitration proceedings in Cause No. 88-00359, and after such hearing, for his cause to be remanded for arbitration in a fair, just, and impartial manner. The appellant alleged that he had proceeded with arbitration in front of Panel 1 with the true bias, prejudice, and the background of the panel members hidden and camouflaged from him; that such bias and prejudice had impacted the conduct of the entire proceedings, including but not limited to the introduction and rejection of evidence as well as the deliberations of the panel; that Harvey Bell had informed the NASD that the appellant had not received a fair and impartial hearing but that such information was not divulged to the appellant; and that he was merely informed that there had been procedural irregularities in the formation of Panel 1 and they had therefore resigned without rendering an award.

The appellant also filed an affidavit which was considered by the court in making its determination. The affidavit repeats the allegations in the appellant’s complaint to vacate and adds that, since the rendition of his award, he, along with Harvey Bell, had been interviewed for the ABC program “20/20,” and, in the course of that interview, he learned that Bell had filed a dissent in connection with the hearing held by Panel 1 and had made a statement to the “20/20” interviewer that the appellant had not received a fair hearing.’

In his affidavit, the appellant also states that the “20/20” video program was shown in June 1990. It is clear from the video that Harvey Bell was not aware that the appellant had been given a second hearing at the time he was interviewed. On March 11, 1993, the trial court entered its order denying the appellant’s motion for an evidentiary hearing and confirming the arbitration award.

On appeal, the appellant asserts that the trial court erred in dismissing his motion to vacate without allowing him to engage in discovery or giving him an evidentiary hearing. Judicial review of an arbitration award is more limited than appellate review of a trial court’s decision; whenever possible, a court must construe an award so as to uphold its validity. Arkansas Dep’t of Parks and Tourism v. Resort Managers, Inc., 294 Ark. 255, 260, 743 S.W.2d 389 (1988).

The fact that parties agree to submit their disputes to arbitration implies an agreement to be bound by the arbitration board’s decision, and every reasonable intendment and presumption is in favor of the award; it should not be vacated unless it clearly appears that it was made without authority, or was the result of fraud or mistake, or misfeasance or malfeasance. Unless the illegality of the decision appears on the face of the award, courts will not interfere merely because the arbitrators have mistaken the law, or decided contrary to the rule of established practice as observed by courts of law and equity, Alexander v, Fletcher, 206 Ark. 906, 175 S.W.2d 196 (1943); Kirsten v. Spears, 44 Ark. 166 (1884).

McLeroy v. Waller, 21 Ark. App. 292, 294, 731 S.W.2d 789 (1987). Generally, Arkansas follows other states’ courts in discouraging setting aside arbitration awards. See Department of Parks v. Resort Managers, 294 Ark. at 260. Arkansas Code Annotated § 16-108-212(a) (1987) provides in part:

(a) Upon application of a party, the court shall vacate an award where:
(1) The award was procured by corruption, fraud, or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;. . .

In Arkansas Department of Parks & Tourism v. Resort Managers, supra, the Court explained “undue means”:

[U]ndue means . . . means something akin to fraud and corruption.

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Bluebook (online)
878 S.W.2d 760, 46 Ark. App. 105, 1994 Ark. App. LEXIS 314, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chrobak-v-edward-d-jones-co-arkctapp-1994.