FORT LAUDERDALE BUSINESS LITIGATION: COURTS MAY NOT INTERFERE WITH ARBITRATOR’S FACTUAL FINDINGS

Businesses often include provisions in their contracts which require any disputes to be resolved in arbitration. Under Florida law, there are very narrow circumstances where a court may interfere with the arbitrator’s decision. Common arbitration errors that occur in business litigation include due process errors, errors in application of a legal standard, fraud, partiality of the arbitrator, and arbitrator acting in excess of the scope of the arbitrator’s authority. A court, however, may not review the Arbitrator’s decision making for errors in its factual findings. Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.

When a party files a motion to vacate or set aside an arbitration award, it is not the prerogative of the Court to retry the issues and determine whether the arbitrator came to the correct decision. “Courts do not review findings of fact contained in an arbitration award or attempt to substitute their judgment for that of the arbitrator.” Deen v. Oster, 814 So.2d 1065 (Fla. 4th DCA 2001). The importance of this standard in business litigation is to preserve the integrity of the arbitration process. Otherwise, the party who is unhappy with the arbitrator’s decision may seek an evidentiary hearing, i.e. a second trial, before the trial court. For parties to be entitled to an evidentiary hearing on a motion to set aside an arbitration award, their motion on its face must set forth a basis for relief. Davenport v. Dimitrijevic, 857 So. 2d 957, 963 (Fla. 4^th DCA 2003). In Davenport, the moving party claimed that arbitration award was obtained through fraud in the arbitration proceeding. Davenport, however, affirmed the trial court’s denial of the motion because the motion on its face failed to “set out a case for fraud” under Section 682.13(1)(a) of the Florida Statutes.

In the case of Regalado v. Cabezas, 959 So. 2d 282 (Fla. 3d DCA 2007), the defendant agreed to arbitrate, lost in the arbitration, then filed a motion with the trial court to vacate, change or modify the arbitration award. The defendant contended that the award was procured by fraud and the arbitrator had exceeded his authority and jurisdiction. The trial court refused to conduct an evidentiary hearing and denied the motion. The defendant immediately appealed.

The defendant contended that the trial court erred in denying the motion to set aside the arbitration award without an evidentiary hearing, because their motion to vacate was based on allegations of fraud. The appellate court rejected this argument. Regalado v. Cabezas, held that defendant’s motion to vacate contained “allegations” that were “an attack on the sufficiency of proof and the weight of the evidence at the arbitration proceeding, rather than allegations constituting fraud within the meaning of section 682.13(1)(a).” The appellate court held that, “[c]ontrary to the Defendants’ contention, the trial court was actually prohibited from combing through the record of the proceeding to determine whether the arbitrator committed errors of fact or law in making the decision.” Regalado v. Cabezas, supra.

Parties that merely attack the sufficiency of proof and the weight of the evidence considered by the arbitrator in business litigation, may fail to set aside the arbitration award because courts are prohibited from reviewing the Arbitrator’s findings of fact and conclusions of law. For a court to grant a parties’ request for an evidentiary hearing involving a review of the arbitrator’s decision making would result in the trial court “combing through the record of the proceeding to determine whether the arbitrator committed errors of fact or law in making the decision.” Regalado v. Cabezas, supra. This is not permitted as a matter of law.

Businesses who succeed in their arbitration proceeding of their business litigation may avoid an unnecessary “second trial” in the form of an evidentiary hearing by challenging the basis of the motion to set aside the award. A business litigator that is well-versed in the requirements of the Florida Arbitration Act can avoid these unwanted consequences by presenting the court with the correct legal standard. Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami-Dade, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.