Damrow v. Murdoch
| Citation | 739 N.W.2d 229,15 Neb. App. 920 |
| Decision Date | 04 September 2007 |
| Docket Number | No. A-05-1200.,A-05-1200. |
| Parties | Dennis DAMROW, appellant, v. Marlin MURDOCH et al., appellees. |
| Court | Court of Appeals of Nebraska |
Michael J. Synek for appellant.
Jeanelle R. Lust, Lincoln and Carly J. Beusch, of Knudsen, Berkheimer, Richardson & Endacott, L.L.P., for appellees.
Marlin Murdoch, Duane Murdoch, Clyde Lueking, Jerry Lueking, Robert Lueking, and Dr. Thomas Smith (the Appellees) filed a motion in the district court for Buffalo County, seeking confirmation of an arbitration award under Nebraska's Uniform Arbitration Act. The arbitration action was initiated by Dennis Damrow (Damrow) against the Appellees and Martin Damrow. Damrow opposed the Appellees' motion in the district court. The court granted the motion to confirm the arbitration award and entered judgment against Damrow. Damrow appeals. For the reasons set forth herein, we affirm.
Damrow served as manager for a cattle feedlot near Holdrege, Nebraska. Shareholders of the feedlot corporation (CFI) included Damrow, the Appellees, and Martin Damrow.
On October 11, 1999, the shareholders of CFI executed a shareholder repayment agreement. The agreement stated that the shareholders entered into the agreement to provide for a procedure to be used to determine what, if any, amounts were owed by the individual shareholders to CFI and to provide for repayment of such amounts to CFI. The agreement included the following provision regarding arbitration: "If no agreement can be reached by the parties concerning any individual shareholder's liability, such issue shall be submitted to binding arbitration subject to the Rules of the American Arbitration Association using up to three arbitrators." The agreement also provided:
The Shareholders hereby promise and agree to not plead the statute of limitations as a defense to repayment to [CFI] of any amount determined due hereunder and hereby waive the statute of limitations, estoppel and laches, as to any and all claims for repayment to [CFI] determined due hereunder for a period of two years from the date of this Agreement.
Because the shareholders did not reach an agreement concerning individual shareholder liability, Damrow, who was then represented by counsel, initiated an arbitration proceeding with the American Arbitration Association (AAA), naming the other shareholders as respondents. That demand for arbitration is dated July 21, 2000. Damrow sought a determination of amounts which might be owed to CFI by its shareholders and provision for the repayment of sums determined due. Damrow estimated for purposes of the demand that the amount in controversy was likely in excess of $900,000. Damrow requested that the arbitration hearing be held in Kearney, Nebraska.
Damrow retained new counsel in approximately May 2001, and in a letter dated May 4, 2001, Damrow's newly retained attorney notified the AAA and the Appellees' attorney of his retention by Damrow and requested that they send correspondence involving Damrow to his office. The letter also stated, "It is with great regret that ... Damrow finds himself in the financial position not to be able to continue with the arbitration."
On June 4, 2001, attorneys for the Appellees and CFI met in Omaha, Nebraska, at the offices of the law firm representing the Appellees. The transcription from this proceeding includes opening remarks from the Appellees' attorney indicating that June 4 was the first day set for a scheduled arbitration hearing, that the AAA had asked the parties to notify it of a mutually agreeable location for the hearing, that the law firm had received no instructions from the AAA as to where the hearing was to convene, and that the firm had notified the AAA of the availability of its offices as a possible location. The attorney stated her presumption that absent an order from the AAA, the hearing was to proceed. Damrow was not present at this hearing or proceeding; nor were any arbitrators present. The participating attorneys proceeded to question witnesses under oath, and testimony was recorded by a court reporter. Exhibits referenced during the course of the proceeding, including an order scheduling the June 4 hearing, are not included in the record before us.
The AAA notified the parties, including Damrow, of a hearing to occur in Kansas City, Missouri, on February 1, 2002. The notice of this hearing is not included in the record before us, but the parties agree that the statutory notice was given for the scheduled February 2002 hearing. On the date of the scheduled hearing, the Appellees' attorney called the AAA by telephone to indicate that she could not attend because of weather conditions. The hearing was rescheduled to March 8 in Kansas City. The record contains a letter dated March 6, 2002, from the AAA case manager to the parties. The body of the letter states, "This will serve as a reminder the hearing in the [arbitration] matter is scheduled to commence on March 8, 2002, per the enclosed Notice of Hearing." The upper and lower portions of the letter contain printed notations indicating that the letter was transmitted to Damrow and Martin Damrow via first class mail and United Parcel Service next day air delivery and to the Appellees' attorney and the arbitrators via telecopy only. The attached notice of hearing states the time, date, and location of the hearing; lists the names of the arbitrators; and also contains a notice stating in part, "The arbitrators have arranged their schedule and reserved the above date(s) based on the advice of the parties." Further information regarding the rescheduling of the hearing from February to March is set forth in the analysis section below.
Damrow did not attend the March 8, 2002, arbitration hearing. The Appellees participated in the March 8 hearing, were represented by counsel, and offered evidence in support of their positions, including the transcription of the testimony taken at the office of their attorney in June 2001.
Counsel for the Appellees sent a letter to the AAA dated March 29, 2002, which, among other things, included a demand that the arbitration panel's decision be released "no later than April 7, 2002, as previously ordered by you." The letter also stated that if the AAA failed to release the decision by that date, the Appellees would bring suit against the AAA "for its breach of its duty to administer this arbitration in accordance with its own rules and its representations to [the Appellees] that it would do so." The letter does not contain any notations indicating that a copy was sent to Damrow.
On April 3, 2002, the AAA received a letter from Damrow which described his efforts to obtain access to certain records of CFI and stated, "With the total lack of access to any and all the records it has become impossible for me to proceed with the Arbitration." Damrow's letter also stated, "As I have informed you by phone[,] I do not have the financial resources to proceed in the Arbitration and the fact remains that the `STOCKHOLDER REPAYMENT AGREEMENT' has expired as of October 11, 2001."
On May 7, 2002, the AAA sent a telecopy of the arbitration award, signed by the arbitrators on May 3, to Damrow and the Appellees' attorney; Martin Damrow was sent a copy by first class and certified mail. In the award, the arbitrators denied "the claim of ... Damrow" and, on the Appellees' "counterclaim," awarded the Appellees as representatives of CFI the sum of $8,619,566.39 for the benefit of CFI. Subsequently, on July 8, the AAA mailed a letter by first class and certified mail to Damrow, the Appellees' attorney, and Martin Damrow with an enclosed copy of the award.
On May 28, 2002, the Appellees filed a motion in the district court under Neb. Rev.Stat. § 25-2612 (Reissue 1995), seeking to confirm the arbitration award. The Appellees sought confirmation of the May 3 arbitration award and an order directing entry of judgment against Damrow for the sum of $8,628.146.37.
On July 1, 2002, Damrow filed a responsive answer and resistance to the motion to confirm the arbitration award. Damrow admitted the execution of the shareholder repayment agreement attached to the Appellees' motion, but generally denied the substantive allegations of the motion to confirm. As an affirmative defense, Damrow alleged that the repayment agreement expired as of October 11, 2001, and was no longer in effect or valid at the time the arbitration award was entered. In objecting to the Appellees' motion, Damrow alleged certain defects in the arbitration proceedings, including lack of notice of the arbitration hearing and incorrect service of the arbitration award upon him. Damrow also alleged a statute of limitations defense to the arbitration proceedings. Damrow did not specifically ask the court to vacate the arbitration award, but he requested denial of the Appellees' motion.
The Appellees filed a motion for summary judgment, which was heard by the district court on November 7, 2002. The court entered an order on January 2, 2003, denying the motion for summary judgment. After reciting the general history of the dispute between the parties, the court analyzed the issues raised by Damrow in response to the Appellees' motion to confirm the arbitration reward. The court stated in part:
In his answer [Damrow] has raised an affirmative defense to the arbitration award, alleging that the shareholder repayment agreement under which the award was granted had expired as of October 11, 2001, and was no longer in effect or valid at the time of the entry of the arbitration award. The Court notes first, however, that it was [Damrow] himself who initiated the arbitration procedure and the procedure was initiated within the time frame set forth in the agreement. More importantly, the agreement does not actually set forth a time frame or limitation. Rather, the shareholder repayment...
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