Martinique Properties, LLC v. Certain Underwriters at Lloyd's of London ( 2023 )

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 21-3561
___________________________
Martinique Properties, LLC
Plaintiff - Appellant
v.
Certain Underwriters at Lloyd’s of London, Subscribing to Policy Number
W1551E160301; Beazley Lloyd’s Syndicate 2623; Beazley Lloyd’s Syndicate 623
Defendants - Appellees
____________
Appeal from United States District Court
for the District of Nebraska - Omaha
____________
Submitted: November 16, 2022
Filed: March 1, 2023
____________
Before BENTON, KELLY, and ERICKSON, Circuit Judges.
____________
KELLY, Circuit Judge.
Martinique Properties, LLC filed a complaint against Certain Underwriters at
Lloyd’s, London (Underwriters) seeking to vacate an arbitration award. The district
court1 dismissed the complaint for failure to state a claim for vacatur. Martinique
Properties now appeals, and we affirm.
I.
Martinique Properties owned apartments in Omaha, Nebraska, for which it
had property insurance coverage through Underwriters. In May 2016, while the
policy was in effect, the apartments sustained hail and wind damage. Martinique
Properties submitted an insurance claim for reimbursement of its repair costs. But
Martinique Properties and Underwriters disputed the amount owed for the repairs.
The insurance policy included an appraisal provision, which governed the
process for resolving disagreements as to the amount of loss or the value of the
property. Under the provision, a panel of appraisers was to evaluate the property
damage and determine the amount of loss. If the panel came to a decision, its agreed-
upon appraisal award would be binding on the parties.
In September 2019, Martinique Properties invoked the appraisal provision. A
panel of appraisers agreed on a binding appraisal award in June 2020. The panel
explained that the appraisal award had been calculated, in part, based on figures
provided by a third-party repair company.
In May 2021, Martinique Properties filed suit in Nebraska state court against
Underwriters, seeking a declaration that the appraisal process and award were
invalid. According to Martinique Properties, the award incorporated incorrect
figures and measurements. Underwriters removed the action to federal district court
1
The Honorable Brian C. Buescher, United States District Judge for the
District of Nebraska.
-2-
and filed a motion to dismiss, arguing that Martinique Properties failed to adequately
plead a ground for vacatur under the Federal Arbitration Act (FAA). 2
The district court granted Underwriters’ motion to dismiss, finding that none
of Martinique Properties’ allegations presented appropriate grounds for vacatur.
Martinique Properties appeals. We review de novo a district court’s grant of a
motion to dismiss for failure to state a claim, “accepting as true all factual allegations
in the light most favorable to the nonmoving party.” Glick v. W. Power Sports, Inc.,
944 F.3d 714, 717 (8th Cir. 2019).
II.
The FAA “is a congressional declaration of a liberal federal policy favoring
arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983). A court’s review of an arbitration award is “very limited.”
Gas Aggregation Servs., Inc. v. Howard Avista Energy, LLC, 319 F.3d 1060, 1064
(8th Cir. 2003). We afford “‘an extraordinary level of deference’ to the underlying
arbitration award” and have “no authority to reconsider [its] merits.” Med. Shoppe
Int’l, Inc. v. Turner Invs., Inc., 614 F.3d 485, 488 (8th Cir. 2010) (quoting Schoch
v. InfoUSA, Inc., 341 F.3d 785, 788 (8th Cir. 2003)). Under the FAA, a court may
only “vacate an arbitration award in four limited circumstances, and in the absence
of one of these grounds, the award must be confirmed.” Id.Martinique Properties argues that the appraisal award must be vacated
because the appraisers “used figures and measurements which are contrary to the
actual conditions of the Property” and failed to “consider certain buildings” and
2
Underwriters also invoked the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (Convention) in its motion to dismiss, but
because Martinique Properties does not challenge the district court’s application of
the Convention, we do not address it here. Similarly, neither party contests the
district court’s conclusion that the appraisal process here qualifies as an arbitration
for purposes of the FAA.
-3-
certain portions of a damaged roof when determining the appraisal award. These
alleged errors, Martinique Properties argues, show that the appraisers were either
“guilty of misconduct,” 9 U.S.C. § 10(a)(3), or “so imperfectly executed” their
powers that “a mutual, final, and definite award . . . was not made,” id. §10(a)(4)—
two of the four grounds for vacating an award under the FAA.
However, Martinique Properties has alleged only factual errors that challenge
the merits of the appraisal award, and we “have no authority to reconsider the merits
of an arbitration award, even when the parties allege that the award rests on factual
errors.” Med. Shoppe Int’l, 614 F.3d at 488. “An arbitrator does not ‘exceed his
powers’ by making an error of . . . fact, even a serious one.” Beumer Corp. v.
ProEnergy Servs., LLC, 899 F.3d 564, 565 (8th Cir. 2018). Accordingly, the
appraisers’ use of certain figures and measurements in calculating the amount of loss
here, and their alleged failure to consider particular buildings and portions of roof
damage, even if incorrect, are not sufficient for vacatur under the FAA. See Stroh
Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 751 (8th Cir. 1986) (“We may
not set an award aside simply because we might have interpreted the agreement
differently or because the arbitrators erred in . . . determining the facts”); Beumer
Corp., 899 F.3d at 566 (“The parties bargained for the arbitrator’s decision; if the
arbitrator got it wrong, then that was part of the bargain.”).
Because Martinique Properties’ complaint fails to allege any permissible
grounds for vacating the appraisal award, we affirm the judgment of the district
court.
_____________________________
-4-