Before Justices Hardesty, Parraguirre, and Cherry. Opinion by Justice Parraguirre.
In this appeal, the Court announced a standard for determining if an arbitration award was obtained through undue means, and addressed whether an arbitrator manifestly disregarded the law by refusing to void a loan transaction. Respondent bank obtained an arbitration award against appellant borrower. In obtaining the award, Respondent used deposition testimony for a key witness whom Respondent represented was unavailable to appear at the arbitration hearing. Both parties examined the witness at a deposition. When Respondent filed a motion in district court to confirm the arbitration award, Appellant offered evidence that Respondent had misrepresented the unavailability of the witness, who actually would have been available and willing to appear at the arbitration hearing. The district court confirmed the award. Appellant challenged the award on appeal, arguing that the award had been obtained using undue means. The Court interpreted the meaning of “undue means” in NRS 38.241 to comport with the federal standard providing that the challenging party faces the burden of establishing by clear and convincing evidence that the other party obtained the award by engaging in intentional misconduct that could not have been discovered with the exercise of due diligence. The Court held that (1) Respondent’s representation about the witness, even if incorrect, did not rise to the level of corruption or fraud required to establish undue mean; (2) the witness’s availability was discoverable through due diligence; and (3) appellant showed no causal connection between the award and the alleged misrepresentation. The second issue on appeal was whether the arbitrator manifestly disregarded the law in refusing to void one of the subject loans, on the grounds that Respondent had never sought a certificate of exemption before engaging in mortgage banking, as required by NRS 645E.910. The arbitrator had noted the failure to obtain a certificate, but recognizing that no civil remedy existed for this statutory violation, held that the unintentional violation had no materiality to the parties’ dispute. On appeal, the court noted that the “manifest disregard” standard does not inquire whether the arbitrator incorrectly interpreted the law, but whether the arbitrator, knowing the law required a particular result, simply disregarded it. Appellant did not meet this “very high hurdle.” The court declined to address the issue of whether the failure to comply with a licensing requirement renders a contract unenforceable, because the operative standard of review in the case did not entail plenary judiciary review. Affirmed. (Mark W. Dunagan, Associate in the Reno office of McDonald Carano Wilson.)
