Peak Billing v. Mountain Sleep Diagnostics , 2020 COA 155 ( 2020 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
November 5, 2020
2020COA155
No. 19CA0608, Peak Billing v. Mountain Sleep Diagnostics —
ADR – Arbitration – Colorado Uniform Arbitration Act –
Vacating Award
A division of the court of appeals considers when an
arbitration award should be vacated because it was procured by
fraud, corruption, or undue means, per section 13–22–223(1)(a),
C.R.S. 2020, of the Colorado Revised Uniform Arbitration Act. The
division adopts a three-part test widely used in federal and other
state courts to determine when such an award should be vacated
and holds that in this case the award should stand.
COLORADO COURT OF APPEALS 2020COA155
Court of Appeals No. 19CA0608
Adams County District Court No. 18CV30091
Honorable Edward C. Moss, Judge
Tara Price, d/b/a Peak Billing,
Plaintiff-Appellee,
v.
Mountain Sleep Diagnostics, Inc.,
Defendant-Appellant.
JUDGMENT AFFIRMED
Division III
Opinion by JUDGE GROVE
Furman and Berger, JJ., concur
Announced November 5, 2020
Messner Reeves LLP, Kendra Beckwith, Darren D. Alberti, Denver, Colorado,
for Plaintiff-Appellee
Fairfield and Woods, P.C., Cecil E. Morris Jr., Denver, Colorado, for Defendant-
Appellant
¶1 Mountain Sleep Diagnostics, Inc. (MSD), appeals the trial
court’s judgment confirming an arbitration award against it and in
favor of Tara Price doing business as Peak Billing (Price). Applying
section 13–22–223(1)(a), C.R.S. 2020, of the Colorado Revised
Uniform Arbitration Act (CRUAA), which allows a court to vacate an
arbitration award procured by fraud, corruption, or undue means,
we adopt the test developed by federal courts under an analogous
provision of the Federal Arbitration Act (FAA) and conclude that
MSD’s motion failed to make an adequate showing that MSD was
entitled to relief. Because the district court correctly denied MSD’s
motion without holding a hearing, we affirm its judgment.
I. Background
¶2 Price contracted with MSD to provide billing services for MSD
and its patients. The contract automatically renewed every year
unless one party notified the other of its intent to terminate at least
ninety days before the renewal date. Disputes under the contract
— including any involving inadequate notice of the contract’s
termination — were subject to binding arbitration. The arbitration
clause also provided that the prevailing party in any arbitrated
dispute was entitled to an award of attorney fees.
1
¶3 After MSD terminated the contract less than ninety days
before the renewal date, Price, asserting that the untimely notice
was a breach, filed a motion to compel arbitration in the district
court. The court granted the motion, and the parties reached a
stipulation and agreement to arbitrate.
¶4 After a two-day arbitration hearing, the arbitrator awarded
Price $124,224 for MSD’s breach of the contract plus $24,600 in
attorney fees. Price then filed a motion in district court to confirm
the award. MSD moved to vacate the award, alleging that, while
performing billing services for MSD, Price had committed fraud by
misappropriating more than $60,000 in payments meant for MSD.
The trial court issued an order denying MSD’s motion to vacate and
granting Price’s motion to confirm.
¶5 MSD now appeals that order, arguing that the arbitrator’s
award should be vacated because discoveries it made after the
arbitration was complete establish by clear and convincing evidence
that Price procured the arbitration award through fraud.1
1MSD first argues that the trial court erred by denying its motion to
vacate as untimely. But the trial court denied MSD’s motion on the
merits; it did not question its timeliness. We therefore do not
address this argument.
2
II. Analysis
A. Standard of Review
¶6 We review de novo a district court’s legal conclusions on a
motion to confirm or vacate an arbitration award. Pacitto v.
Prignano, 2017 COA 101, ¶ 7. In the absence of statutory grounds
to vacate an arbitration award, we must affirm the award without
reviewing its merits. PFW, Inc. v. Residences at Little Nell Dev., LLC,
2012 COA 137, ¶ 37.
B. Applicable Law
¶7 Under the CRUAA, courts can reject arbitration awards “only
in limited circumstances.” Barrett v. Inv. Mgmt. Consultants, Ltd.,
190 P.3d 800, 802 (Colo. App. 2008). These limited circumstances,
listed in section 13–22–223(1), involve “specific instances of
outrageous [arbitral] conduct” and “egregious departures from the
parties’ agreed-upon arbitration.” Treadwell v. Vill. Homes of Colo.,
Inc., 222 P.3d 398, 401 (Colo. App. 2009) (quoting Hall St. Assocs.,
L.L.C. v. Mattel, Inc., 552 U.S. 576, 586 (2008)).
¶8 Though the merits of an arbitration award are generally
unreviewable, a court “shall” vacate an arbitration award if, as
relevant here, it was “procured by corruption, fraud, or other undue
3
means.” § 13–22–223(1)(a). What exactly constitutes corruption,
fraud, or undue means, however, is largely unsettled in Colorado.
C. MSD’s Motion to Vacate
¶9 Affidavits attached to MSD’s motion to vacate the arbitration
award alleged that after the arbitration was complete, MSD’s Chief
Operating Officer discovered suspicious activity in MSD’s billing
software system, and that further examination of that system
revealed more than $60,000 in misappropriated payments. MSD
argues that by “concealing and failing to disclose that she had been
misappropriating funds” — and “by testifying falsely on several
related issues” — Price procured the arbitration award by fraud.2
¶ 10 The district court did not decide whether Price in fact
misappropriated the funds in question. Instead, it ruled that MSD’s
motion failed to establish that MSD could not have discovered the
alleged misappropriation sooner. The undisputed facts showed that
MSD had “locked out” Price’s access to the billing software system
on the same day that it terminated the contract, and that a full
fourteen months elapsed between that termination and the date of
2MSD did not allege any impropriety on the part of the arbitrator or
corruption in the arbitration process.
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the arbitration award. Yet, despite having ample time to review its
books, MSD never raised the issue in the arbitration even though it
had asserted the defense of unclean hands. Because “[w]rongful
conduct by [Price] was part of [MSD’s] case,” and because
“[i]nformation concerning [Price’s] wrongful conduct was in [MSD’s]
possession prior to the arbitration hearing,” the district court ruled
that it was too late for MSD to assert Price’s alleged
misappropriation as a basis for vacating the award.
D. Colorado Appellate Decisions
¶ 11 Only a handful of Colorado appellate cases have considered
motions to vacate arbitration awards due to fraud under the
CRUAA, and none has addressed the specific situation here. In the
absence of binding precedent, the district court looked in large part
to cases interpreting the FAA. While analogous federal law can be
persuasive, see Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d
116, 120 (Colo. 2007), we first discuss the potentially relevant
Colorado cases to determine if they provide us with a useful
decisional framework.
¶ 12 In Nasca v. State Farm Mutual Automobile Insurance Co., 12
P.3d 346, 348 (Colo. App. 2000), the plaintiff, Nasca, moved to
5
vacate an arbitration award after discovering that one of the three
assigned arbitrators had been on State Farm’s payroll as an expert
in an unrelated matter while his arbitration was pending, and that
the arbitrator’s law partner had been a paid expert witness for State
Farm on at least ten other occasions. Because it did not disclose
this relationship, Nasca argued, State Farm procured the outcome
of the arbitration by undue means. A division of this court agreed
that the phrase “undue means” was broad enough to encompass
the “type of impropriety in the arbitration process” that Nasca
alleged, and that, as a consequence, State Farm should have
disclosed the nature of its relationship with the arbitrator. Id. at
350. But the division nonetheless affirmed the district court’s order
denying the motion to vacate because Nasca failed to carry his
burden of establishing “a causal relation between the improper
conduct and the arbitration award.” Id. at 349.
¶ 13 Superior Construction Company, Inc. v. Bentley, 104 P.3d 331(Colo. App. 2004), involved a dispute between a homeowner and a
remodeling contractor. After prevailing in the arbitration, the
contractor moved for confirmation of the arbitration award in the
district court. Id. at 332. In response, the homeowner filed a
6
motion to vacate the award, alleging that the contractor “had
submitted fraudulently altered evidence in the arbitration.” Id. The
trial court conducted an evidentiary hearing and, after finding that
the arbitration award had been procured in part through the use of
fraudulent evidence, reduced it. Id. A division of this court,
however, concluding that “no discrete part of the award can be
identified and severed,” vacated the arbitrator’s award in its
entirety. Id. at 333.
¶ 14 The parties raised similar arguments in BFN-Greeley, LLC v.
Adair Group, Inc., 141 P.3d 937 (Colo. App. 2006). There, in
another construction dispute, Adair’s owner falsely testified that his
company had never been terminated from a contract, when in fact
that precise issue was being litigated in a separate arbitration. Id.
at 941. Adair prevailed, but BFN argued that the award should
have been overturned because the owner’s testimony was
fraudulent. Id. A division of this court affirmed the district court’s
conclusion that the fraudulent testimony did not procure the award
“because the fact of Adair’s termination on the other project was
brought to the attention of the arbitrators well before they issued”
the award. Id. Though the timing of the revelation was at issue in
7
BFN, the holding suggests that the fraudulent nature of the
testimony could have, in line with the holding in Bentley, served as
a basis for vacating the award.
¶ 15 The most recent Colorado case addressing “corruption, fraud,
or other undue means” in the arbitration context is PFW, 2012 COA
137, ¶ 38. In that case, a real estate purchaser arbitrated a
contract dispute with a developer, resulting in an award in the
developer’s favor. Id. at ¶ 5. The purchaser moved to vacate the
award, arguing that the developer had fraudulently concealed its
failure to register with the Colorado Division of Real Estate when it
executed the agreement containing the arbitration provision (which
could have made the purchase contract voidable by the purchaser
and unenforceable by the developer). Id. at ¶ 40. Noting the public
availability of the information the buyer claimed was fraudulently
concealed, a division of this court held that it was “incumbent upon
[the buyer] to raise in the arbitration proceeding any claims to void
the purchase agreement based on [the developer’s] registration
status.” Id. at ¶ 42.
¶ 16 As relevant to the issue central to this appeal, we glean three
concepts from these cases. First, there must be a nexus between
8
the improper conduct and the arbitration award. Nasca, 12 P.3d at
349; see also § 13–22–223(1)(a) (contemplating vacatur of an award
“procured by” fraud). Second, “fraud” as a ground for vacating an
arbitration award under section 13–22–223(1)(a) is not limited to
process fouls (such as State Farm’s failure, in Nasca, to disclose
that it had selected an arbitrator who was on its payroll), but can
also — so long as it relates to a material issue in the case —
encompass perjury or the presentation of false evidence by a party
during the arbitration itself. BFN, 141 P.3d at 941; Bentley, 104
P.3d at 332. And third, when it comes to unearthing and alleging
fraud, both timing and diligence matter. A party who knows or
should know of fraudulent conduct should promptly bring it to the
arbitrator’s attention, rather than trying to unwind the award by
raising the issue for the first time via a motion to vacate filed in the
district court. PFW, ¶ 42.
E. Other Federal and State Court Decisions
¶ 17 Like section 13–22–223(1)(a) of the CRUAA, the FAA permits a
reviewing court to vacate an arbitration award “where the award
was procured by corruption, fraud, or undue means.” 9 U.S.C.
§ 10(a)(1). When considering a motion to vacate an arbitration
9
award under this provision, most federal circuit courts require the
movant to
 establish the fraud;
 show that the fraud was not discoverable by exercising
due diligence prior to or during the arbitration; and
 demonstrate that the fraud had a material effect on a
dispositive issue in the arbitration.
See, e.g., MCI Constructors, LLC v. City of Greensboro, 610 F.3d 849,
858 (4th Cir. 2010); Int’l Brotherhood of Teamsters, Local 519 v.
United Parcel Serv., Inc., 335 F.3d 497, 503 (6th Cir. 2003).
Likening an arbitration award to a judgment or order of a district
court, which can only be vacated by a party’s motion for relief under
Fed. R. Civ. P. 60(b), federal courts require a party moving to vacate
an award under 9 U.S.C. § 10(a)(1) to establish the fraud by clear
and convincing evidence. See, e.g., MCI Constructors, 610 F.3d at
858.
¶ 18 States that have adopted the Uniform Arbitration Act generally
apply the same three-part test and evidentiary standard. See Low
v. Minichino, 267 P.3d 683, 690–91, 691 n.5 (Haw. Ct. App. 2011)
(collecting cases); Health Plan of Nev., Inc. v. Rainbow Med., LLC,
10
100 P.3d 172, 176 n.4 (Nev. 2004) (collecting cases). “In the
absence of a prima facie showing with respect to these factors, the
court is not empowered to assess evidence, much less new evidence
that was not timely submitted to the arbitrators, in responding to a
request for vacatur.” Seattle Packaging Corp. v. Barnard, 972 P.2d
577, 579 (Wash. Ct. App. 1999).
F. The Federal Test
¶ 19 While none of the Colorado cases that we have discussed
explicitly adopted the federal approach, they have, collectively,
either explicitly or implicitly applied each of its elements to motions
filed under section 13–22–223(1)(a). See Nasca, 12 P.3d at 349(requiring moving party to establish the improper conduct and show
nexus); PFW, ¶ 42 (requiring moving party to have exercised
diligence).3 Thus, the federal test is entirely consistent with existing
Colorado case law.
3 Similarly, the district court focused on whether “failing to disclose
adverse facts” was enough to vacate the award, and whether it
could vacate the award when “the information was available prior to
the arbitration proceeding.” This language tracks closely with each
of the federal test’s elements.
11
¶ 20 Likewise, the evidentiary standard that courts apply under the
FAA — clear and convincing evidence — finds its roots in the
standard applicable to motions for relief under Fed. R. Civ. P. 60(b).
MCI Constructors, 610 F.3d at 858. Given the similarities between
the federal and state versions of Rule 60, and taking into
consideration the fact that a motion to confirm an arbitration award
triggers a special statutory proceeding, and is not a “civil action”
within the meaning of section 13–25–127(1), C.R.S. 2020, see
Estate of Guido v. Exempla, Inc., 2012 COA 48, ¶ 12, we conclude
that a party seeking to vacate an arbitration award must satisfy the
evidentiary standard that applies to a motion for a new trial under
C.R.C.P. 60(b)(2), see Sharma v. Vigil, 967 P.2d 197, 199 (Colo. App.
1998) (holding, under C.R.C.P. 60(b)(2), that moving party carries
the burden of “clear, strong, and satisfactory proof” that it is
entitled to relief).
¶ 21 MSD urges us to reject the federal test, arguing that, due to
differences between the CRUAA and the FAA with respect to the
limitations period for filing a motion to vacate, “federal decisions do
not provide guidance.” In particular, MSD maintains that there is
no due diligence requirement under the CRUAA, and that the only
12
reason the FAA requires a showing that the fraud was not
discoverable by exercising due diligence prior to or during the
arbitration is because it “does not separately address the time for
motions to vacate” predicated on that ground. Under section 13–
22–223(2), on the other hand, a party in MSD’s position must seek
relief
within ninety-one days after the movant
receives notice of the award . . . unless the
movant alleges that the award was procured
by corruption, fraud, or undue means, in
which case the motion must be made within
ninety-one days after either the ground is
known or by the exercise of reasonable care
should have been known by the movant.
¶ 22 As we understand the argument, MSD maintains that this
provision of the CRUAA relieved it from having to bring Price’s
alleged fraud to the arbitrator’s attention during the proceedings.
Rather, MSD’s theory is that, so long as it filed its motion to vacate
within ninety-days after it received notice of the award, it does not
matter when it discovered (or should have discovered) the alleged
fraud that led to that award.
¶ 23 This position runs headlong into the division’s holding in PFW,
which held unequivocally that it was “incumbent upon” a party who
13
knew or should have known of corruption, fraud, or undue means
during the arbitration process to raise those concerns with the
arbitrator. PFW, ¶ 42. We agree with PFW on this point, and we
consequently are not persuaded that the limitation on the time to
challenge an arbitration award on the grounds of corruption, fraud,
or undue means in section 13–22–223(2) meaningfully
distinguishes the CRUAA from the FAA.
¶ 24 Accordingly, we agree with Price that the federal cases
addressing claims of corruption, fraud, or undue means under the
FAA, as well as similar state cases arising under the Uniform
Arbitration Act, provide appropriate guidelines for resolving similar
arguments under section 13–22–223(1)(a). The three-part test laid
out above engages the court in the appropriate inquiries to resolve
this issue, and we therefore apply it here.
III. Application
A. Standard for Hearing
¶ 25 At the threshold, to the extent that MSD contends that the
district court was required to hold a hearing on its motion to vacate,
we disagree.
14
¶ 26 According to section 13–22–205(1), C.R.S. 2020, “an
application for judicial relief” from an arbitration award “must be
made by motion to the court and heard in the manner provided by
law or court rule for making and hearing motions.” Thus, a motion
to vacate an arbitration award should be treated by the district
court like a motion in a typical civil case.4
¶ 27 C.R.C.P. 121, section 1–15(4) governs trial court motions
practice. The rule encourages the disposition of motions “upon the
written motion and briefs submitted.” BFN, 141 P.3d at 942. And
because written motions practice generally affords parties adequate
notice and a reasonable opportunity to be heard, see Blood v. Qwest
Servs. Corp., 224 P.3d 301, 318 (Colo. App. 2009), aff’d, 252 P.3d
1071 (Colo. 2011), hearings need not be granted as a matter of
course. That is particularly true in the arbitration context because
“[i]t would defeat the purpose of arbitration if a reviewing court were
obligated to give the parties all the due process owed under the
4 Similarly, a motion to vacate an arbitration award under the FAA,
9 U.S.C. § 6, is treated procedurally in the manner of motions. See
Health Servs. Mgmt. Corp. v. Hughes, 975 F.2d 1253, 1258 (7th Cir.
1992); BFN-Greeley, LLC v. Adair Grp., Inc., 141 P.3d 937, 942
(Colo. App. 2006).
15
rules of civil procedure.” BFN, 141 P.3d at 942; see also Karppinen
v. Karl Kiefer Mach. Co., 187 F.2d 32, 35 (2d Cir. 1951) (“It is
unnecessary for us to lay down any general rule as to when or how
far oral hearings on questions of alleged perjured testimony before
arbitrators should be allowed. It is enough to say that even if
perjury be ‘fraud’ within the meaning of the Arbitration Act, such
hearings should only be granted with reluctance . . . .”); In re
Marriage of Eggert, 53 P.3d 794, 796 (Colo. App. 2002).
¶ 28 Here, because MSD’s motion and supporting affidavits did not
make a threshold showing that it acted with due diligence to
discover the misappropriation before the arbitration was over, the
district court did not deem it necessary to hold a hearing on the
issues presented. Because, as we discuss in detail below, MSD’s
submission did not demonstrate due diligence, and because
motions to confirm and vacate arbitration awards should, if
possible, be decided only on the written materials submitted, we
agree that no hearing was required. See Seattle Packaging, 972
P.2d at 579. We therefore turn next to the merits of the district
court’s order.
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B. Merits
¶ 29 The test that we apply today is framed in the conjunctive,
meaning that the party seeking to vacate an award on the grounds
that it was procured by corruption, fraud, or undue means must
show by clear and convincing evidence that (1) fraud occurred; (2)
the fraud was not discoverable by exercising due diligence prior to
or during the arbitration; and (3) the fraud had a material effect on
a dispositive issue in the arbitration. A failure to establish any of
these elements at this stage of the proceedings will doom the effort.
See id. We therefore only briefly consider the first and third prongs
of the test before turning to the dispositive issue — whether MSD
made an adequate showing that it could not have discovered the
fraud earlier by exercising due diligence.
1. Whether the Fraud Occurred
¶ 30 The affidavits that MSD submitted with its motion to vacate
the arbitration award made out a case of fraud in the form of
perjured testimony from Price concerning, among other things, the
income that she had realized from her contract with MSD. And as
we have already noted, “fraud” under section 13–22–223(1)(a) can
17
encompass a witness’s perjury during the arbitration proceeding.
BFN, 141 P.3d at 941; Bentley, 104 P.3d at 332.
2. Nexus
¶ 31 The third prong of the test, which requires the movant to
establish “a causal relation between the improper conduct and the
arbitration award,” Nasca, 12 P.3d at 349, presents a closer
question, but because we reject MSD’s contentions on another
ground, it is one that we need not reach. On one hand, federal
courts recognize that “[t]he requisite nexus may exist where fraud
prevents the [arbitrator] from considering a significant issue to
which it does not otherwise enjoy access.” Forsythe Int’l, S.A. v.
Gibbs Oil Co. of Tex., 915 F.2d 1017, 1022 (5th Cir. 1990). And
Price’s alleged misdeeds, if proven, could have directly related to the
potentially dispositive question of which party breached the
contract first. See Coors v. Sec. Life of Denver Ins. Co., 112 P.3d 59,
64 (Colo. 2005) (“Under contract law, a party to a contract cannot
claim its benefit where he is the first to violate its terms.”). That is,
if Price committed fraud, then she breached the contract first. And
if she breached the contract first and then lied about it on the
18
stand, then the fact that she did so would likely have been a
significant issue in the arbitration.
¶ 32 On the other hand, courts have typically been reluctant to
vacate arbitration awards in cases where the perjured testimony
does not bear directly on the issues in the case. See, e.g., Int’l
Brotherhood of Teamsters, Local 519, 335 F.3d at 503–04
(considering whether the alleged fraud was “clearly connected to an
issue material to the arbitration”); Newark Stereotypers’ Union No.
18 v. Newark Morning Ledger Co., 397 F.2d 594, 600 (3d Cir. 1968)
(“[E]ven if perjury is proven and constitutes fraud under § 10(a) of
the [FAA], it will not justify the vacation of an award if it concerns
an issue remote from the question to be decided.”); Karppinen, 187
F.2d at 35 (same). In this case, the arbitration was about whether
MSD timely terminated its contract with Price. No one claimed that
Price’s alleged misappropriations prompted MSD to terminate the
contract — or, for that matter, that MSD was even aware of any
irregularities when it did so. Price’s alleged misconduct, and any
concealment of that alleged misconduct, were therefore unrelated to
the disagreement that led to the arbitration.
19
¶ 33 Whether there is a sufficient nexus between the arbitration
award and any perjury on Price’s part is thus a thorny question,
but because the test that we adopt today is framed in the
conjunctive, we ultimately need not decide it. Instead, as we
explain next, we affirm the district court’s ruling because it is clear
from the record that MSD did not exercise due diligence with
respect to Price’s alleged fraud.
3. Due Diligence
¶ 34 Requiring due diligence prevents the movant from taking a
“second bite at the apple” if the fraud could have been discovered
before the arbitration was over. A.G. Edwards & Sons, Inc. v.
McCollough, 967 F.2d 1401, 1404 (9th Cir. 1992). If the movant
could have rebutted the adversary’s claims or evidence before the
arbitrator, the scales will tip in favor of preserving the award’s
finality. Karppinen, 187 F.2d at 35.
¶ 35 MSD contends that it “could not reasonably have discovered”
Price’s misappropriations before the end of the arbitration
proceedings due to
the size and complexity of its practice,
including the large number of patients,
multiple locations, and sources of payment,
20
including various insurers; the elaborate
scheme used by Price/Peak Billing to conceal
her misappropriations; and her efforts to
prevent MSD from gaining access to its
practice management software system, called
Kareo.
¶ 36 Price responds that these hardships are insufficient to prove
that MSD could not have discovered the alleged fraud earlier. The
district court likewise ruled that MSD’s argument was conclusory
and that there was “no evidence to conclude that the
misappropriation could not have been discovered” before the award
was entered.
¶ 37 To be sure, MSD offered some explanation, both in the district
court and in its briefing before us, as to why it was not easy to
discover the alleged misappropriations. But what it did not do is
describe what actions it took, if any, to promptly investigate its
suspicions about Price’s conduct. We assume that MSD asserted
its unclean hands defense in good faith, and it seems probable that
it would have made efforts to bolster that defense by thoroughly
reviewing Price’s performance under the contract during the
fourteen months that the two parties were engaged in arbitration
against one another. Yet despite the fact that MSD gained control
21
over the billing system shortly after it terminated Price’s contract,
an affidavit from MSD’s Chief Operations Officer avers that she
discovered Price’s alleged misconduct after the arbitration hearing
was over, when she noticed an “anomaly in one of the patient
records” while performing back billing. This discovery triggered a
substantial inquiry into Price’s billing practices, but the entire effort
came after the arbitrator had issued the award.
¶ 38 To satisfy the due diligence prong, MSD had to do more than
simply allege that it was difficult to discover Price’s alleged
misappropriations. MSD also needed to show that it had “follow[ed]
up on possessed or reasonably available information or resources,”
Owens v. Tergeson, 2015 COA 164, ¶ 45, such as the billing system
that it assumed control of when it terminated the contract. But
MSD did not describe what investigative steps it took, if any, before
or during the arbitration, or how any efforts to investigate Price’s
alleged misconduct were thwarted. Thus, as the district court
concluded, the briefing and affidavits that MSD submitted did not
show that Price’s alleged scheme was not reasonably discoverable
before the arbitration ended, nor did they demonstrate that MSD
22
acted with due diligence to uncover fraud on Price’s part while the
arbitration proceedings were ongoing.
¶ 39 Because MSD did not make an adequate showing that it acted
with due diligence to discover Price’s alleged misconduct, we
conclude that the district court appropriately denied its motion to
vacate the arbitration award.
IV. Conclusion
¶ 40 The district court’s judgment is affirmed.
JUDGE FURMAN and JUDGE BERGER concur.
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