The Minnesota Court of Appeals held that an arbitration order vacating an award and directing a rehearing is not appealable, whether framed as an order vacating an award or denying confirmation, and dismissed the appeal.

What happened

The facts of the case, in plain language.

The district court's November 6, 1995 order denied Kowler's motion to confirm the arbitrator's $10,000 award, granted Ross's motion to vacate, and remanded for rehearing before a successor arbitrator.

Minn.Stat. § 572.26, subd. 1(5) permits appeal only from an order vacating an award without directing a rehearing, so the November 6, 1995 order directing a rehearing was not appealable under that subdivision.

Because respondent timely moved to vacate the award, the court applied the statutory vacation procedure, making the denial of confirmation dependent on the resolution of the application to vacate rather than independently appealable.

The district court vacated the second award on the grounds that the arbitrator exceeded his authority and was evidently partial.

In the first arbitration, the arbitrator awarded Kowler Associates $5,000 and allocated half the arbitration costs to Ross, and the district court vacated that award after finding the arbitrator exceeded his authority under the agreement.

What the court decided

After two arbitrations of their contract dispute—the first award having been vacated because the arbitrator exceeded his authority—Kowler Associates obtained a second award of $10,000 against Teri Ross. The district court denied Kowler's motion to confirm, granted Ross's motion to vacate based on the arbitrator's excess of authority and evident partiality, and ordered rehearing before a successor arbitrator. The court of appeals dismissed Kowler's appeal, reasoning that under Minn.Stat. § 572.26, subd. 1(5), an order vacating an award is appealable only when no rehearing is directed, and that treating a vacate-and-rehearing order as a denial of confirmation would render that provision ineffective. Because the arbitration process was incomplete, appellate review was premature, and discretionary review was unwarranted absent a compelling reason.

1. An order vacating an arbitration award and directing a rehearing is not appealable, because Minn. Stat. § 572.26, subd. 1(5) permits appeal only from an order vacating an award without directing a rehearing. (*801)
2. An order denying confirmation of an arbitration award is not independently appealable where the denial rests on a timely application to vacate; such an order is appealable only if the prerequisite order vacating the award is itself appealable. (*801)
3. An order that both vacates an arbitration award and directs a rehearing may not be construed as an order denying confirmation of the award, because that construction would render Minn. Stat. § 572.26, subd. 1(5) ineffective and make every vacatur order appealable. (*801)
4. When a rehearing is directed after vacatur of an arbitration award, appellate review is premature because the arbitration process has not been completed. (*802)
5. Discretionary review of a nonfinal arbitration order will not be extended absent a compelling reason for immediate appeal. (*802)

How the court reached its decision

The court's reasoning, step by step.

Whether the November 6, 1995 order vacating the arbitration award and directing a rehearing is appealable under Minn. Stat. § 572.26. The district court's November 6, 1995 order granted respondent's motion to vacate the second award and remanded for rehearing before a successor arbitrator; because the order directed a rehearing, it fell outside subdivision 1(5), consistent with Metropolitan Airports Commission. The order vacating the award and directing a rehearing is not appealable under Minn. Stat. § 572.26, subd. 1(5).

Whether the same order is appealable as an order denying confirmation of the award under Minn. Stat. § 572.26, subd. 1(3). Because respondent timely moved to vacate, the proceeding became one to vacate the award, and the decision whether to confirm depended on resolution of the vacatur application; construing the resulting order as a denial of confirmation would render subdivision 1(5) ineffective and conflict with the presumption in Minn. Stat. § 645.17(2) that the legislature intends the entire statute to be effective. The order denying confirmation is not appealable unless the prerequisite order vacating the award is appealable, and because the vacatur order directs a rehearing, no basis for appeal exists.

Whether the order is appealable as a declaratory judgment under Eckblad v. Farm Bureau Mut. Ins. The district court vacated the award on the statutory grounds that the arbitrator exceeded his authority and was evidently partial under Minn. Stat. § 572.19, subd. 1(2), (3), and appellant made no showing that the matter was treated and decided as a declaratory judgment action. Eckblad does not authorize the appeal.

Whether the court should extend discretionary review to the nonfinal November 6, 1995 order. Appellant identified no compelling reason for immediate appeal of the order directing a rehearing before a successor arbitrator. Discretionary review was unwarranted, and the appeal was dismissed.

Key quotes from the opinion

Notable passages from the opinion, in the court's own words.

Cases the court relied on

Earlier decisions the court cited as authority for its ruling.

• Metropolitan Airports Comm'n v. Metropolitan Airports Police Fed'n (443 N.W.2d 519) — The Minnesota Supreme Court held that a judgment that vacated an arbitrator's award but also ordered a rehearing was not appealable, the direct precedent supporting dismissal of this appeal.
• Miyoi v. Gold Bond Stamp Co. Employees Retirement Trust (293 Minn. 376, 196 N.W.2d 309) — Established that appealable orders in arbitration proceedings are limited to those enumerated in Minn. Stat. § 572.26 and that discretionary review is unavailable where a nonfinal order exposes no party to irreparable damage.
• Eckblad v. Farm Bureau Mut. Ins. (371 N.W.2d 78) — Accepted jurisdiction where the trial court interpreted insurance policies and decided the matter as a declaratory judgment action, but the court found the exception inapplicable because the district court here merely applied the arbitration vacation statutes.
• AFSCME Council 14 v. St. Paul Ramsey Hosp. (425 N.W.2d 318) — Confirmed that nonfinal arbitration orders are not appealable, supporting the conclusion that review is premature while a rehearing remains pending.
• Emme v. C.O.M.B., Inc. (418 N.W.2d 176) — Limited discretionary review to the rare case presenting a compelling reason for immediate appeal, which appellant failed to demonstrate.