Cinatl v. Prososki ( 2020 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
01/08/2021 08:07 AM CST
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
Robert H. Cinatl, appellant, v. Karen R. Prososki,
Personal Representative of the Estate of Robert
R. Prososki, deceased, and Karen R. Prososki,
individually and as beneficiary of the Estate
of Robert R. Prososki, deceased, appellee.
___ N.W.2d ___
Filed October 16, 2020. No. S-19-972.
1. Appeal and Error. An alleged error must be both specifically assigned
and specifically argued in the brief of the party asserting the error to be
considered by an appellate court.
2. Jurisdiction: Appeal and Error. A jurisdictional question which does
not involve a factual dispute is determined by an appellate court as a
matter of law.
3. Arbitration and Award: Appeal and Error. In reviewing a decision
to vacate, modify, or confirm an arbitration award, an appellate court is
obligated to reach a conclusion independent of the trial court’s ruling as
to questions of law. However, the trial court’s factual findings will not
be set aside on appeal unless clearly erroneous.
4. Jurisdiction: Appeal and Error. Before reaching the legal issues
presented for review, it is the duty of an appellate court to determine
whether it has jurisdiction over the matter before it.
5. Jurisdiction: Final Orders: Appeal and Error. For an appellate court
to acquire jurisdiction of an appeal, the party must be appealing from a
final order or a judgment.
6. Judgments: Final Orders: Words and Phrases. A judgment is the
final determination of the rights of the parties in an action.
7. Judgments: Words and Phrases. Every direction of the court made or
entered in writing and not included in a judgment is an order.
8. Judgments: Final Orders: Statutes: Appeal and Error. While all
judgments not incorrectly designated as such are appealable, an order
may be appealed only if a statute expressly makes the order appealable
or the order falls within the statutory definition of a final order.
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
9. Arbitration and Award: Final Orders: Appeal and Error. When
Neb. Rev. Stat. § 25-2620 (Reissue 2016) is silent regarding the appeal-
ability of an arbitration-related order, an appellate court looks to the
general final order statute to determine whether the order is final and
appealable.
10. Final Orders: Appeal and Error. To be a final order subject to appel-
late review, the lower court’s order must (1) affect a substantial right
and determine the action and prevent a judgment, (2) affect a substantial
right and be made during a special proceeding, (3) affect a substantial
right and be made on summary application in an action after a judg-
ment is rendered, or (4) deny a motion for summary judgment which
was based on the assertion of sovereign immunity or the immunity of a
government official.
11. Final Orders. Whether an order affects a substantial right depends on
whether it affects with finality the rights of the parties in the subject
matter.
12. Arbitration and Award: Motions to Vacate. When arbitration has
already occurred and a party seeks to vacate, modify, or confirm an
award, an extraordinary level of deference is given to the underlying
award itself.
13. Contracts: Rescission: Parties. The purpose of rescission is to place
the parties in a status quo, that is, return the parties to their position
which existed before the rescinded contract; hence, rescission may be
unavailable unless the parties can be placed substantially in the sta-
tus quo.
14. Arbitration and Award. The Uniform Arbitration Act does not allow
for the exercise of discretion by a court when a request for confirmation
is made and there is no pending application for vacation, modification,
or correction.
15. Statutes: Words and Phrases. As a general rule, the word “shall” in
a statute is considered mandatory and is inconsistent with the idea of
discretion.
16. Trial: Evidence: Appeal and Error. In a civil case, the admission or
exclusion of evidence is not reversible error unless it unfairly prejudiced
a substantial right of the complaining party.
Appeal from the District Court for Buffalo County: John H.
Marsh, Judge. Affirmed.
Michael J. Synek for appellant.
Patrick J. Nelson, of Law Office of Patrick J. Nelson, for
appellee.
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Cassel, J.
INTRODUCTION
An arbitration award rejected Robert H. Cinatl’s fraud-in-
the-inducement claim seeking to rescind his contract to pur-
chase an orthodontics practice. After the district court declined
to vacate the arbitrator’s award, the court confirmed it. Cinatl
appeals. Because the refusal to vacate the award remained
interlocutory until the award was confirmed, we consider
but reject Cinatl’s challenge to the first order. We conclude
the court properly confirmed the award. Finding no merit to
Cinatl’s other arguments, we affirm the court’s judgment.
BACKGROUND
In 1989, Robert R. Prososki (Dr. Prososki) began an ortho-
dontics practice in Kearney, Nebraska. He ceased practicing
in July 2013, upon being diagnosed with cancer. Dr. Prososki
hired an agent to broker a sale of the practice. The broker
prepared an investor prospectus for the practice and provided
a copy to Cinatl, an orthodontist. Relying on representations
in the prospectus, Cinatl entered into a written contract in
October with Dr. Prososki for the purchase of the practice
and entered into a lease with Dr. Prososki and his wife for the
office building.
On October 29, 2013, Cinatl began operating the practice.
Shortly thereafter, he discovered what he considered to be
misrepresentations in the investor prospectus. In December,
Cinatl notified Dr. Prososki and his wife, via their attorney,
that Cinatl wanted to set aside the contract. He received no
response.
In August 2015, Dr. Prososki died. At the end of October,
Cinatl ceased operating at the practice’s location, though he
rented space elsewhere for the next 14 months to “complete
[his] patients.”
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
Pleadings
In 2016, Cinatl sued Karen R. Prososki (Prososki), both as
the personal representative of the estate of Dr. Prososki and
individually. He sought rescission of the “Contract of Purchase
and Sale of Dental Practice” and lease. Cinatl alleged that
fraudulent misrepresentations were made, that he relied upon
them, and that he suffered damages as a result of the false
representations. Prososki’s answers (filed separately in her
respective capacities) alleged that the complaint failed to state
a claim upon which relief can be granted.
Arbitration
Because the contract contained a paragraph specifying man-
datory arbitration “pursuant to the applicable arbitration laws
of Nebraska,” Cinatl moved for appointment of an arbitrator.
The district court found that the action was subject to arbitra-
tion and sustained a motion to compel arbitration.
The arbitrator conducted a hearing and received extensive
evidence. Cinatl testified that by the first week of November
2013, he “knew there was something very wrong, but [he]
couldn’t put [his] finger on it.” He later discovered that many
files which had been represented to him as active files had
“been finished.” Cinatl called the broker in early November
and stated that something was “very, very wrong.” Cinatl testi-
fied a review of files conducted in December showed that the
number of active patients would have been 345 but that the
prospectus estimated 700 such patients. In December, Cinatl
met with the attorney for Dr. Prososki and his wife to discuss
perceived misrepresentations in the prospectus. Cinatl asked
that Dr. Prososki and his wife “take the practice back, find
somebody else.”
In September 2015, Cinatl engaged a forensic accounting
firm to review the practice’s records. Justin Frauendorfer, one
of the owners of the accounting firm, reviewed the investor
prospectus to verify its accuracy for Cinatl.
Frauendorfer discovered that there were 311 active patient
files on August 5, 2013, but that the prospectus represented
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307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
that there were approximately 700 active files. According to
Frauendorfer, “[f]or this to be over 50 percent off is why in
my professional opinion I would say that it was potentially
intentional or reckless.” Frauendorfer could not say that the
number of active patients was intentionally misrepresented—
partly because he had not spoken with the person who made
the representation—but he could say it was reckless.
Frauendorfer discovered other discrepancies. The pro-
spectus showed 200 patients in recall on August 5, 2013,
but Frauendorfer found the number to be 228. The prospec-
tus showed 1,400 total files, but Frauendorfer came up with
“approximately, 600 plus files.” He believed the statement that
1,400 total files existed showed a reckless disregard for the
truth. The investor prospectus indicated that the number of new
patients per month was 10, but Frauendorfer found that it was
2. Frauendorfer opined that “this practice summary sheet was
materially misstated.”
Frauendorfer testified that there were 72 active Medicaid
patients on August 5, 2013, representing $73,225 in Medicaid
patient liability. He found there were 239 private pay patients
on August 5, of which 39 had paid for services in advance,
amounting to $34,654.50. According to Frauendorfer, the
amount of contracts receivable on August 5 was $322,948.24,
which changed to $269,672.64 on the October 28 date of clos-
ing, a difference of $53,275.60. Based on Frauendorfer’s expe-
rience, he would have expected that adjustment of the amount
to be credited to Cinatl as the purchaser.
Cinatl testified that “[a]t a minimum,” he was seeking to
have the contract to purchase and the lease rescinded. He
asked to be put back in the position that he occupied before
entering the contract and lease and for Prososki to be restored
back to the extent possible.
On August 3, 2018, the arbitrator found in favor of Prososki
on the issues pertaining to the sale of the practice and the
lease. The arbitrator determined that Prososki had no role in
the marketing and sale of the practice and made none of the
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307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
representations about which Cinatl complained. The arbitrator
found that at all times between October 28, 2013, and the end
of October 2015, Cinatl operated the orthodontic practice and
retained the benefits of all he had acquired under the contract.
The arbitrator concluded it was unnecessary to determine
whether Prososki committed fraud in inducing Cinatl to enter
into the contract. The arbitrator reasoned that Cinatl “did not
rescind the contract but elected instead to receive the benefits
of it for almost two years after he discovered the facts leading
him to believe that he was defrauded.” Paragraph 13 of the
arbitrator’s decision stated:
During the time he operated the practice, Cinatl’s abil-
ity to return Prososki to presale status quo diminished
with each passing day. “The princip[al] relief effected
by rescission is to place the parties in the same condi-
tion as they were in before the making of the contract
sought to be rescinded.” Kracl v. Loseke, 236 Neb. 291,
303, 461 N.W.2d 67, 76 (1990). “[T]he remedy of rescis-
sion involves more than cancellation of a contract, and
includes a judicial effort to place the contractual parties
in, as nearly as possible, substantially the same condition
which existed when the contract was entered. ‘[One] who
seeks equity must do equity.’” Id.
The arbitrator noted that while Cinatl expressed dissatisfaction
in late 2013 with what he considered to be misrepresentations
by Dr. Prososki, he did not pursue rescission until January
2016—“over a year and ten months later”—when he filed a
statement of claim in the estate of Dr. Prososki. By that time,
the status quo at the time of closing of the contract could not
be restored, particularly because Dr. Prososki had died and
Cinatl had left patients without an orthodontist. The arbitrator
determined that “[b]y continuing to operate his orthodontic
practice at the office for over a year and ten months after the
December 7, 2013, meeting, Cinatl ratified the contract and
waived any cause of action he might have had arising from his
purchase of the practice.”
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
District Court Proceedings
Within 90 days of the arbitrator’s decision, Cinatl filed an
application to vacate the award. He alleged that “[t]he arbitra-
tor exceeded his authority by rendering a decision based upon
issues and defenses which the parties had not raised in the
pleadings, including but not limited to: estoppel, laches, statute
of limitations, and waiver.”
On January 28, 2019, the court entered an order denying
the application to vacate. The court noted that it did not have
the bill of exceptions from the arbitrator’s hearing or the writ-
ten arguments submitted by the parties to the arbitrator. But
in reviewing the arbitrator’s decision, the court did not “find
a substantial, if any, reliance by the arbitrator on the equitable
defenses alleged.” The court reasoned:
Essentially, the arbitrator found that he did not need to
address the issues of fraud or misrepresentation because
it was impossible, given the passage of time, and circum-
stances to provide the remedy of rescission in that both
parties could not be placed back in the status quo exist-
ing at the time the contracts were entered. This Court
specifically refers to paragraph 13 of the arbitrator’s
decision.
Ten days later, Cinatl filed two motions. One motion, seek-
ing a new trial, requested that the court “vacate the judgment
and decision set forth in the Court’s Order, filed January 28,
2019.” Cinatl identified four grounds for a new trial under Neb.
Rev. Stat. § 25-1142 (Reissue 2016). The other motion, which
was later sustained, requested an order for preparation of the
record from the arbitration hearing. The next day, Prososki
filed a motion to confirm the arbitrator’s award.
During a hearing on the motion for new trial, Cinatl’s
counsel argued that while the January 2019 order noted the
absence of a bill of exceptions from the arbitrator’s hearing,
counsel did not believe a transcription was necessary, because
he was making a legal argument. Counsel then had the record
prepared, but he maintained that the court should not need
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CINATL v. PROSOSKI
Cite as 307 Neb. 477
the record to rule on the arguments made during the applica-
tion to vacate.
On August 12, 2019, the court entered an order overruling
the motion for new trial. The court reasoned that the arbitra-
tor’s decision was “not necessarily grounded in laches or estop-
pel, but rather cite[d] an equitable principle that the parties
cannot be placed in the same condition as they were before
making the contract.”
On August 16, 2019, Prososki filed an amended motion to
confirm the arbitrator’s award. On September 10, the court
entered an order doing so. In confirming the award, the court
took judicial notice that no motion to modify or correct the
arbitration award was pending.
Thirty days later, Cinatl filed a notice of appeal. We moved
this case to our docket. 1
ASSIGNMENTS OF ERROR
Cinatl assigns, consolidated, restated, and reordered, that
the district court erred by (1) failing to vacate the arbitrator’s
award and order a rehearing, (2) confirming the arbitrator’s
award, (3) depriving Cinatl of his right to procedural due
process at the hearing by refusing to review the arbitra-
tion record, and (4) failing to rule upon the admissibility of
an exhibit.
[1] Cinatl also assigns but fails to argue that the court erred
by improperly suggesting with regard to Cinatl’s application
to vacate that the court needed to review a bill of exceptions
from the arbitration hearing in order to consider the legal argu-
ments presented by that application. An alleged error must be
both specifically assigned and specifically argued in the brief
of the party asserting the error to be considered by an appellate
court. 2 Because his brief did not argue this assignment, we do
not consider it.
1
See Neb. Rev. Stat. § 24-1106(3) (Cum. Supp. 2018).
2
TNT Cattle Co. v. Fife, 304 Neb. 890, 937 N.W.2d 811 (2020).
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Nebraska Supreme Court Advance Sheets
307 Nebraska Reports
CINATL v. PROSOSKI
Cite as 307 Neb. 477
STANDARD OF REVIEW
[2] A jurisdictional question which does not involve a factual
dispute is determined by an appellate court as a matter of law. 3
[3] In reviewing a decision to vacate, modify, or confirm
an arbitration award, an appellate court is obligated to reach
a conclusion independent of the trial court’s ruling as to ques-
tions of law. However, the trial court’s factual findings will not
be set aside on appeal unless clearly erroneous. 4
ANALYSIS
Jurisdiction
[4-8] Before reaching the legal issues presented for review,
it is the duty of an appellate court to determine whether it
has jurisdiction over the matter before it. 5 For an appellate
court to acquire jurisdiction of an appeal, the party must be
appealing from a final order or a judgment. 6 A judgment is the
final determination of the rights of the parties in an action. 7
Every direction of the court made or entered in writing and
not included in a judgment is an order. 8 While all judgments 9
not incorrectly designated as such 10 are appealable, an order
may be appealed only if a statute expressly makes the order
appealable or the order falls within the statutory definition of
a final order. 11
Cinatl’s October 10, 2019, notice of appeal purported to
appeal from three orders. He sought to appeal the January 28
3
Picard v. P & C Group 1, 306 Neb. 292, 945 N.W.2d 183 (2020).
4
Garlock v. 3DS Properties, 303 Neb. 521, 930 N.W.2d 503 (2019).
5
Cullinane v. Beverly Enters. - Neb., 300 Neb. 210, 912 N.W.2d 774
(2018).
6
State v. Fredrickson, 306 Neb. 81, 943 N.W.2d 701 (2020).
7
Neb. Rev. Stat. § 25-1301(1) (Cum. Supp. 2018).
8
State v. Fredrickson, supra note 6.
9
See § 25-1301(1) (defining judgment).
10
See Neb. Rev. Stat. § 25-1315(1) (Reissue 2016).
11
See State v. Fredrickson, supra note 6.
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CINATL v. PROSOSKI
Cite as 307 Neb. 477
order denying his application to vacate the arbitrator’s award,
the August 12 order overruling his motion for new trial (in con-
nection with the denial of the application to vacate), and the
September 10 order confirming the arbitration award. Prososki
challenges our jurisdiction of the first two of those orders.
To determine whether the orders are appealable, we first
consider whether they are appealable orders under the Uniform
Arbitration Act (UAA) 12 and, if not, whether they are final
orders under Neb. Rev. Stat. § 25-1902 (Reissue 2016 & Supp.
2019). 13 Both parties base their arguments on the UAA, seem-
ingly treating the contract as having agreed to arbitration based
upon that law. We see no reason to do otherwise.
The UAA contains a statute addressing appeals. Under
§ 25-2620(a), an appeal may be taken from the following:
(1) An order denying an application to compel arbitra-
tion made under section 25-2603;
(2) An order granting an application to stay arbitration
made under subsection (b) of section 25-2603;
(3) An order confirming or denying confirmation of
an award;
(4) An order modifying or correcting an award;
(5) An order vacating an award without directing a
rehearing; or
(6) A judgment or decree entered pursuant to the provi-
sions of the [UAA].
Section 25-2620(a)(3) identifies an order confirming an
award as an appealable order. Cinatl filed an appeal within 30
days of the September 2019 order confirming the arbitration
award, and there is no dispute we have jurisdiction to consider
that order.
[9] Whether the January 2019 order denying Cinatl’s appli-
cation to vacate is appealable is not as clear cut. While the
12
Neb. Rev. Stat. §§ 25-2601 to 25-2622 (Reissue 2016 & Cum. Supp.
2018).
13
See Pearce v. Mutual of Omaha Ins. Co., 293 Neb. 277, 876 N.W.2d 899
(2016).
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CINATL v. PROSOSKI
Cite as 307 Neb. 477
UAA explicitly allows an appeal from an order vacating an
arbitration award, 14 it is silent as to whether a party may appeal
an order denying an application to vacate. We have stated that
when § 25-2620 is silent regarding the appealability of an
arbitration-related order, we look to the general final order
statute to determine whether the order is final and appealable. 15
[10] Under our final order statute, 16 to be a final order sub-
ject to appellate review, the lower court’s order must (1) affect
a substantial right and determine the action and prevent a judg-
ment, (2) affect a substantial right and be made during a special
proceeding, (3) affect a substantial right and be made on sum-
mary application in an action after a judgment is rendered, or
(4) deny a motion for summary judgment which was based on
the assertion of sovereign immunity or the immunity of a gov-
ernment official. 17 Because this appeal clearly does not involve
the last category, we first determine whether the order affected
a substantial right of one or more parties. 18
[11] The inquiry of whether a substantial right is affected
focuses on whether the right at issue is substantial and whether
the court’s order has a substantial impact on that right. 19
Whether an order affects a substantial right depends on whether
it affects with finality the rights of the parties in the subject
matter. 20 It also depends on whether the right could otherwise
effectively be vindicated. 21 An order affects a substantial right
when the right would be significantly undermined or irrevoca-
bly lost by postponing appellate review. 22
14
§ 25-2620(a)(5).
15
See Kremer v. Rural Community Ins. Co., 280 Neb. 591, 788 N.W.2d 538
(2010).
16
See § 25-1902.
17
See State v. Fredrickson, supra note 6.
18
See id.
19
See id.
20
Id.
21
Id.
22
Id.
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CINATL v. PROSOSKI
Cite as 307 Neb. 477
Prososki contends that Cinatl needed to file an appeal from
the order denying the application to vacate the arbitrator’s
award. According to Prososki, the right to challenge the valid-
ity of an award through an application to vacate is an essen-
tial legal right, because without a possible modification or
correction, the only right to challenge an award is to apply
for an order vacating the award. But this argument overlooks
the unquestionable appealability of an order confirming the
award 23 and the intent behind limiting the types of appealable
arbitration orders. Appellate review of an arbitrator’s award
is necessarily limited, because to allow full scrutiny of such
awards would frustrate the purpose of having arbitration at
all—the quick resolution of disputes and the avoidance of the
expense and delay associated with litigation. Strong deference
is due an arbitrative tribunal; when parties agree to arbitration,
they agree to accept whatever reasonable uncertainties might
arise from the process. 24
Other state courts have determined that no appeal can be
taken from an order denying an application to vacate and that
such an order may be reviewed upon an appeal from an order
confirming the award. 25 The Hawaii Supreme Court instructed
that upon the denial of a motion to vacate, the unsuccess-
ful movant’s recourse would then be a motion to confirm the
award. 26 It explained that because the trial court has already
reviewed the award and decided no grounds exist for vacat-
ing it, a confirmation should follow. 27 The movant could then
23
See § 25-2620(a)(3).
24
Hartman v. City of Grand Island, 265 Neb. 433, 657 N.W.2d 641 (2003).
25
See, e.g., Mid-Wilshire Associates v. O’Leary, 7 Cal. App. 4th 1450, 9 Cal.
Rptr. 2d 862 (1992); Salud v. Financial Sec. Ins. Co., Ltd., 69 Haw. 427,
745 P.2d 290 (1987); Nelson Paving Co., Inc. v. Hjelle, 207 N.W.2d 225
(N.D. 1973). See, also, Ayers v. R.A. Murphy Co., 163 Ohio App. 3d 497,
839 N.E.2d 80 (2005).
26
See Salud v. Financial Sec. Ins. Co., Ltd., supra note 25.
27
See id.
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Cite as 307 Neb. 477
perfect an appeal and obtain appellate review of the order con-
firming the award. 28
The purpose of confirming an arbitration award is to provide
a judgment that can then be enforced through court proceed-
ings. 29 “Upon the granting of an order confirming, modifying,
or correcting an award, a judgment or decree shall be entered
in conformity therewith and be enforced as any other judg-
ment or decree.” 30 Ideally, confirmation should occur swiftly,
although the court has 60 days from a party’s application to do
so. 31 Thus, though not immediately appealable, an unsuccess-
ful movant for judicial vacatur should not have to wait long to
obtain appellate review.
We conclude the January 2019 order denying the application
to vacate the arbitrator’s award did not affect a substantial right
of Cinatl. For the same reasons, we conclude the August order
overruling the motion for new trial (which asked the court to
vacate the January 2019 order and which, because there was
no trial in the district court, we treat as a motion to reconsider)
did not affect a substantial right and was not a final order.
The rights at issue in an interlocutory determination denying
judicial vacatur of an arbitration award can be adequately vin-
dicated through an appeal of the order confirming the award.
Because these prior orders were interlocutory, Cinatl properly
waited until entry of an appealable order—the order confirm-
ing the arbitration award—to challenge them.
Failing to Vacate Award
and Order Rehearing
[12] Having determined that we have jurisdiction over
the order denying Cinatl’s application to vacate, we consider
28
Id.
29
Drummond v. State Farm Mut. Auto. Ins. Co., 280 Neb. 258, 785 N.W.2d
829 (2010), citing Stewart Title Guar. Co. v. Tilden, 64 P.3d 739 (Wyo.
2003).
30
§ 25-2615.
31
See § 25-2612.
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Cinatl’s arguments that the district court erred by failing to
vacate the award and order a rehearing. When arbitration has
already occurred and a party seeks to vacate, modify, or con-
firm an award, an extraordinary level of deference is given to
the underlying award itself. 32
The UAA sets forth grounds for vacating an award. Section
25-2613 provides in relevant part:
(a) Upon application of a party, the court shall vacate
an award when:
(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 arbitra-
tors or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing
upon sufficient cause being shown therefor, refused to
hear evidence material to the controversy, or otherwise
so conducted the hearing, contrary to the provisions of
section 25-2606, as to prejudice substantially the rights
of a party;
(5) There was no arbitration agreement and the issue
was not adversely determined in proceedings under sec-
tion 25-2603, and the party did not participate in the arbi-
tration hearing without raising the objection; or
(6) An arbitrator was subject to disqualification pur-
suant to section 25-2604.01 and failed, upon receipt of
timely demand, to disqualify himself or herself as required
by such section.
The fact that the relief was such that it could not or
would not be granted by a court of law or equity is not
ground for vacating or refusing to confirm the award.
Of these enumerated grounds, Cinatl asserted only that the
arbitrator exceeded his or her powers. He argues on appeal that
32
Seldin v. Estate of Silverman, 305 Neb. 185, 939 N.W.2d 768 (2020).
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Cite as 307 Neb. 477
the arbitrator’s decision should be vacated due to the absence
of a finding on fraud, but that does not fit under his asserted
ground for judicial vacatur.
Cinatl contends that the arbitrator exceeded his author-
ity by rendering a decision based upon defenses not raised
in the pleadings. Cinatl argues that because Prososki never
asserted any affirmative defenses, the arbitrator should have
rejected suggestions that Cinatl’s cause of action may be time
barred or barred by estoppel. Cinatl points to references in
the arbitrator’s conclusions of law concerning delay, estoppel,
and waiver.
[13] The arbitrator’s decision determined that rescission was
unavailable due to the nature of the relief requested and the
changed circumstances. The purpose of rescission is to place
the parties in a status quo, that is, return the parties to their
position which existed before the rescinded contract; hence,
rescission may be unavailable unless the parties can be placed
substantially in the status quo. 33 The arbitrator remarked on
the inability to return the parties to the status quo. Its deci-
sion stated that “[d]uring the time he operated the practice,
Cinatl’s ability to return [Dr.] Prososki to pre-sale status quo
diminished with each passing day.” It further stated that Cinatl
“took what was a going concern orthodontic practice and ren-
dered it difficult if not impossible to return [Dr.] Prososki or
his estate to status quo.” The arbitrator observed that “[t]he
practice closed, leaving patients without their orthodontist and
having to find another—in effect, vanishing the practice” and
that Dr. Prososki had passed away. The arbitrator determined
that “Cinatl simply cannot restore the status quo at the time of
closing of the contract.” We find no merit to Cinatl’s argument
that the arbitrator decided the matter based on unpled defenses.
Accordingly, even if we were to assume that the arbitrator
would have exceeded his power by deciding the matter based
on unpled defenses, the court did not err in overruling Cinatl’s
application to vacate and not ordering a rehearing.
33
Kracl v. Loseke, 236 Neb. 290, 461 N.W.2d 67 (1990).
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Confirmation of Award
As mentioned, Cinatl appealed the court’s confirmation of
the award. He contends that the court approved the arbitrator’s
errors in failing to properly analyze or consider his fraud claim,
failing to grant rescission, and failing to issue a just award.
[14,15] But under the circumstances, the district court had
no option other than to confirm the award. The UAA does not
allow for the exercise of discretion by the court when a request
for confirmation is made and there is no pending application
for vacation, modification, or correction. 34 Under § 25-2612,
“the court shall confirm an award, unless within the time limits
hereinafter imposed grounds are urged for vacating or modify-
ing or correcting the award, in which case the court shall pro-
ceed as provided in sections 25-2613 [vacating an award] and
25-2614 [modifying or correcting an award].” (Emphasis sup-
plied.) Here, Cinatl sought to vacate the award, but the court
denied his request. “If the application to vacate is denied and
no motion to modify or correct the award is pending, the court
shall confirm the award.” 35 As a general rule, the word “shall”
in a statute is considered mandatory and is inconsistent with
the idea of discretion. 36 Under the circumstances, the court
properly confirmed the award.
Failing to Review Record From
Arbitration Hearing
Cinatl argues that the court erred and violated his right to
procedural due process by failing to review the record from the
arbitration hearing, which he first offered during the hearing
on Prososki’s motion to confirm the arbitrator’s award. But as
discussed above, the court was obligated to confirm the award,
because the court had already denied Cinatl’s application to
vacate and there was no pending motion to modify or correct
34
See Garlock v. 3DS Properties, supra note 4.
35
§ 25-2613(d) (emphasis supplied).
36
Glasson v. Board of Equal. of City of Omaha, 302 Neb. 869, 925 N.W.2d
672 (2019).
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the award. We find no error or due process violation by the
district court.
Failing to Rule Upon Admissibility
of Exhibit 101
Finally, Cinatl argues that the court erred by failing to rule
upon the admissibility of an exhibit. During a hearing on the
application to vacate, Cinatl offered exhibit 101, his affidavit,
in which he swore that the statements in the application to
vacate were true to the best of his knowledge. He represented
during the hearing that his affidavit was “merely intended to be
a verification of the allegations set forth in his application to
vacate award.” Cinatl attached two documents to the affidavit:
(1) a copy of his application to vacate the arbitrator’s award
and (2) a copy of the arbitrator’s decision. Prososki objected
to the exhibit.
The court took the offer of exhibit 101 under advisement.
The record contains no ruling on its admissibility. During a
later hearing on the motion for new trial, Cinatl argued that
the record was incomplete because it did not show whether the
court received exhibit 101.
[16] We find no reversible error by the court in failing to
rule on the admissibility of the exhibit. In a civil case, the
admission or exclusion of evidence is not reversible error
unless it unfairly prejudiced a substantial right of the complain-
ing party. 37 Before the court took the offer of the exhibit under
advisement, it observed that the court file contained both the
arbitrator’s decision and the application to vacate. At one time,
every pleading of fact in a civil action had to be verified by the
affidavit of the party, his or her agent, or attorney. 38 But such
verification has not been required for half a century. 39 Because
37
In re Interest of Vladimir G., 306 Neb. 127, 944 N.W.2d 309 (2020).
38
See, Neb. Rev. Stat. § 25-824 (1943); AVG Partners I v. Genesis Health
Clubs, ante p. 47, 948 N.W.2d 212 (2020).
39
See AVG Partners I v. Genesis Health Clubs, supra note 38, citing 1969
Neb. Laws, L.B. 375.
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the court’s record contained the documents attached to Cinatl’s
affidavit and his verification of the statements in his applica-
tion to vacate was unnecessary, he suffered no prejudice by the
court’s failure to rule on the exhibit’s admissibility.
CONCLUSION
We have jurisdiction to consider Cinatl’s challenge to the
denial of his application to vacate, but his challenge lacks
merit. Because the district court did not err in confirming the
arbitration award, we affirm its judgment.
Affirmed.