XPress Natural Gas, LLC v. Woodland Pulp, LLC

2017 ME 106, 162 A.3d 832, 2017 WL 2333181, 2017 Me. LEXIS 109

Opinion

MAINE SUPREME JUDICIAL COURT Reporter of Decisions Decision: 2017 ME 106 Docket: BCD-16-466 Argued: May 12, 2017 Decided: May 30, 2017

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

XPRESS NATURAL GAS, LLC, et al.

v.

WOODLAND PULP, LLC

PER CURIAM

[¶1] Xpress Natural Gas, LLC, and XNG Maine, LLC, (Xpress) appeal

from a judgment entered in the Business and Consumer Docket (Cumberland

County, Murphy, J.) denying their application to vacate several arbitration

awards pursuant to 14 M.R.S. § 5938(1)(C) (2016) and granting the

application of Woodland Pulp, LLC, to confirm the same awards pursuant to

14 M.R.S. § 5937 (2016). We affirm the judgment.

[¶2] This dispute concerns the rights and obligations of Xpress

pursuant to a pipeline capacity agreement it has with Woodland. The parties

participated in arbitration pursuant to that agreement. After a hearing, the

arbitrator found that the failure to include a balancing provision in the

agreement had created “a significant ambiguity as to the parameters of 2

Xpress’[s] rights and obligations” and concluded that “[i]mplicit in the

[agreement] is an obligation for [Xpress] to reasonably balance its

nominations and consumption of gas.” He then gave the parties the

opportunity to articulate the terms of their existing but undelineated

balancing agreement and, when they again could not agree, he provided the

opportunity to propose the language of the balancing agreement he would set.

Based on the parties’ proposals and testimony, the arbitrator set out the terms

of the balancing agreement in a supplemental arbitration award.

[¶3] The standard for showing that an arbitrator exceeded his powers

is “an extremely narrow one” in large part because the parties have bargained

for the arbitrator’s construction of the contract at issue. Xpress Nat. Gas, LLC v.

Cate St. Capital, Inc., 2016 ME 111, ¶ 9, 144 A.3d 583 (quotation marks

omitted). We generally resolve any doubts in favor of the arbitrator’s

authority and will uphold the arbitration award—even if it contains errors of

law or fact—“if any rational construction of the agreement could support [the

arbitrator’s] interpretation.” Id. (quotation marks omitted); see Caribou Bd. of

Educ. v. Caribou Teachers Ass’n, 404 A.2d 212, 215 (Me. 1979) (“If this

[arbitration] award can in any rational way be derived from the agreement, 3

viewed in the light of its language, its context and any other indicia of the

parties’ intention, it will be upheld.” (emphasis added)).

[¶4] Contrary to Xpress’s contention on appeal, the arbitrator did not

exceed his authority pursuant to 14 M.R.S. § 5938(1)(C). Considering that the

parties themselves could not determine Xpress’s rights pursuant to the

agreement, the arbitrator found that the agreement was ambiguous, examined

the intent of the parties in entering the agreement, and implied a balancing

obligation to remedy the ambiguity. See Coastal Ventures v. Alsham Plaza, LLC,

2010 ME 63, ¶ 26, 1 A.3d 416 (“A contractual provision is considered

ambiguous if it is reasonably possible to give that provision at least two

different meanings.” (alteration omitted) (quotation marks omitted)).

[¶5] In issuing the supplemental award, the arbitrator did expand upon

Xpress’s implied obligation to “reasonably balance” its nominations and

consumption of natural gas by adding terms including remedies for any future

imbalances. The arbitrator did so, however, only after finding that the parties

had understood in entering the agreement that Xpress would “adjust its use

[of the pipeline] to accommodate Woodland’s [balancing obligations],” that

the balancing terms proposed by Woodland were appropriate “for the

foreseeable future” but could be revisited if Xpress’s business grew, and that 4

the remedies for future imbalances proposed by Woodland were “appropriate

and consistent with reasonable industry standards . . . .” Given these findings,

the arbitration awards did not “directly contradict[] the language of the

agreement,” Am. Fed’n of State, Cty., & Mun. Emps., Council 93 v. City of

Portland, 675 A.2d 100, 102 (Me. 1996), and did not constitute a “manifest

disregard” for the terms of the agreement, Me. State Emps. Ass’n v. Me. Dep’t of

Def. & Veterans’ Servs., 436 A.2d 394, 397 (Me. 1981) (“[I]n light of the

reservations contained in [the agreement] and the lack of any clear or express

language addressing the instant issue . . . we cannot conclude that the

arbitrator’s decision exhibits a ‘manifest disregard’ for the terms of the

agreement.”).

[¶6] Xpress’s remaining contentions on appeal are not persuasive and

we do not address them further.

The entry is:

Judgment affirmed.

Jennifer A. Archer, Esq., and Timothy H. Norton, Esq. (orally), Kelly Remmel & Zimmerman, Portland, for appellants Xpress Natural Gas, LLC, and XNG Maine, LLC

William S. Harwood, Esq. (orally), Martha C. Gaythwaite, Esq., and Brian T. Marshall, Esq., Verrill Dana, LLP, Portland, for appellee Woodland Pulp, LLC

Business and Consumer Docket docket number CV-2016-12 FOR CLERK REFERENCE ONLY