Buzas Baseball, Inc. v. Salt Lake Trappers, Inc
In Buzas Baseball, Inc. v. Salt Lake Trappers, Inc., 925 P.2d 941, 947-48 (Utah 1996), the Court described both the standard to be applied by the district court and that to be used by an appellate court to review the district court's proceedings.
The standard of review for a trial court "is an extremely narrow one" giving "'considerable leeway to the arbitrator,'" and setting aside the arbitrator's decision "'only in certain narrow circumstances.'" Id. at 947. The trial court "may not substitute its judgment for that of the arbitrator, nor may it modify or vacate an award because it disagrees with the arbitrator's assessment." Id.
When the award is challenged on the ground that the arbitrator exceeded his or her authority, the trial court applies a two-pronged test.
First, "to find that an arbitrator has exceeded his authority, a court must review the submission agreement and determine whether the arbitrator's award covers areas not contemplated by the agreement." Id. at 949.
If not, there is one additional limited circumstance under which the arbitrator's award may have exceeded his authority. The second prong to be applied by the trial court is to determine whether an award is "'without foundation in reason or fact.'" Id. at 950.
This second prong is referred to as the "irrationality principle" and is based on the "assumption . . . that the parties, by their agreement to arbitrate, have given the arbitrator the authority to decide their dispute on a rational basis." Id.
The Court stated that "the fact that the Utah Arbitration Act explicitly provides for an award of attorney fees suggests that our policies favor the enforceability of arbitration awards and discourage relitigation of valid awards." Id. at 953.
The Court was careful to state, however, that our determination that attorney fees were recoverable in Utah arbitration proceedings should not be interpreted to mean that we were reading a prevailing party standard into the fee provisions of the Utah Arbitration Act that was not otherwise contained in its text. Id. at 953-54.
The Court noted that "the grant of authority to award attorney fees is unlike most other grants of such authority by statute in Utah. This is because the Utah Arbitration Act provides no guidance to the court in determining when to award attorney fees, which most Utah statutes do." Id. at 953 .
The Court determined that by selecting the word "may" to describe the authority of the trial court, the legislature clearly signaled an intention to yield discretion to courts over whether to award attorney fees for matters covered by the statute. Id.
Accordingly, the Court attempted to offer cautious direction regarding the exercise of discretion to trial courts.
The Court observed that the policies underlying the Utah Arbitration Act serve as useful guideposts for the exercise of discretion. The Court limited the guidance, however, to circumstances in which an award of attorney fees would not be proper, leaving unaddressed possible scenarios in which a trial court would abuse its discretion by failing to award attorney fees.