Arbitration Mistake of Law or Fact In New Mexico

In Fernandez v. Farmers Ins. Co., 115 N.M. 622, 625, 857 P.2d 22, 25 (1993) the Supreme Court recognized that "under appropriate circumstances the district court may find an arbitration panel's mistake of fact or law so gross as to imply misconduct, fraud, or lack of fair and impartial judgment, each of which is a valid ground for vacating an award." Id. at 626, 857 P.2d at 26. NMSA 1978, § 44-7-12(A) provides as follows:

A. Upon the application of a party, the court shall vacate an award where:

(1) the award was procured by corruption, fraud or other undue means;

(2) there was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;

(3) the arbitrators exceeded their powers.

Accordingly, Section 44-7-12 provides for review of an award upon the motion of a party. Medina v. Found. Reserve Ins. Co., 1997 NMSC 27, P12, 123 N.M. 380, 940 P.2d 1175 (stating that "in evaluating the propriety of an arbitration award, the reviewing court will conduct an evidentiary hearing and enter findings of fact and conclusions of law upon any issue presented in the motion to vacate the award.").

Moreover, when punitive damages awards are "grossly excessive" in relation to the legitimate interests of the state in imposing punitive damages, such an award enters the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568, 134 L. Ed. 2d 809, 116 S. Ct. 1589 (1996) (cited in Allsup's Convenience Stores, Inc. v. N. River Ins. Co., 1999 NMSC 6, P47, 127 N.M. 1, 976 P.2d 1).

Under such circumstances, an arbitration award would be reviewable under Section 44-7-12 as demonstrating a lack of fair and impartial judgment that implicates the Fourteenth Amendment.