Arizona Procedure for Setting Award Aside

HEADNOTE

SECURITIES

The Arizona Court of Appeals ruled that the state statute does not impose a 90-day deadline to file a motion to vacate or set aside arbitration awards.

The plaintiffs filed a variety of claims

against the defendants with the National Association of Securities Dealers arising out of the defendants' sale of a limited partnership investment to the plaintiffs' mother. The NASD ruled in the defendants' favor in May 2001. More than a year later, the plaintiffs filed an application with the trial court to have the award set aside and remanded to the NASD. The defendants moved to dismiss the application on the ground that it was untimely.

The trial court agreed with the defendants that the plaintiffs' application was too late. It rejected the plaintiffs' argument that their application was really a motion to decline to confirm the NASD award pursuant to A.R.S. 12-1512 ("Opposition to an Award"), which does not have a 90-day filing deadline.

The Arizona Court of Appeals reversed the trial court after analyzing the text of and legislative intent behind the A.R.S. 12-1513(A). The court noted that the title and text of this provision expressly state that the statute covers modifications or corrections of arbitration awards. Likewise, 12-1513(C) permits a party to join in the alternative motions to modify or correct with applications to vacate awards. This language, the court said, shows that pleadings to vacate are deemed to be distinctly different from those to correct or modify, particularly in light of the fact that this is the only mention of applications to vacate in the statute.

The court emphasized that 12-1512(A) specifies the procedure for opposing an arbitration award, stating that a party may file "a pleading in opposition to an award." The court ruled that an application to set aside an arbitration award falls squarely under this statutory language. Moreover, it noted that 12-1512(B) authorizes a court to "order a rehearing"-and this authority could be invoked only if a party sought to set aside or vacate an award. Unlike 12-1513, 12-1512 has no 90-day deadline. The court pointed out that had the Arizona legislature wanted to enact or reference a limitation period in 12-1512, it would have done so.

The appeals court also disagreed with a prior ruling that applied the 90-day limitation period to a "Petition in Opposition to Arbitration Award" without explaining the panel's rationale.

Finally, the court rejected the defendants' argument that a decision not to apply the 90-day deadline would impede the goal of obtaining finality of judgments within a reasonable period of time. The court found that the legislature's decision not to enact a 90-day deadline overrode this policy concern.

Morgan v. Carillon Investments, 88 P.3d 1159 (Ariz. Ct. App. 2004).