XPress Natural Gas, LLC v. Woodland Pulp, LLC

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2017 ME 106Docket: BCD-16-466
Argued: May 12, 2017
Decided: May 30, 2017
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
XPRESS NATURAL GAS, LLC, et al.
v.
WOODLAND PULP, LLC
PER CURIAM
[¶1] Xpress Natural Gas, LLC, and XNG Maine, LLC, (Xpress) appeal
from a judgment entered in the Business and Consumer Docket (Cumberland
County, Murphy, J.) denying their application to vacate several arbitration
awards pursuant to 14 M.R.S. § 5938(1)(C) (2016) and granting the
application of Woodland Pulp, LLC, to confirm the same awards pursuant to
14 M.R.S. § 5937 (2016). We affirm the judgment.
[¶2] This dispute concerns the rights and obligations of Xpress
pursuant to a pipeline capacity agreement it has with Woodland. The parties
participated in arbitration pursuant to that agreement. After a hearing, the
arbitrator found that the failure to include a balancing provision in the
agreement had created “a significant ambiguity as to the parameters of
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Xpress’[s] rights and obligations” and concluded that “[i]mplicit in the
[agreement] is an obligation for [Xpress] to reasonably balance its
nominations and consumption of gas.” He then gave the parties the
opportunity to articulate the terms of their existing but undelineated
balancing agreement and, when they again could not agree, he provided the
opportunity to propose the language of the balancing agreement he would set.
Based on the parties’ proposals and testimony, the arbitrator set out the terms
of the balancing agreement in a supplemental arbitration award.
[¶3] The standard for showing that an arbitrator exceeded his powers
is “an extremely narrow one” in large part because the parties have bargained
for the arbitrator’s construction of the contract at issue. Xpress Nat. Gas, LLC v.
Cate St. Capital, Inc., 2016 ME 111, ¶ 9, 144 A.3d 583 (quotation marks
omitted). We generally resolve any doubts in favor of the arbitrator’s
authority and will uphold the arbitration award—even if it contains errors of
law or fact—“if any rational construction of the agreement could support [the
arbitrator’s] interpretation.” Id. (quotation marks omitted); see Caribou Bd. of
Educ. v. Caribou Teachers Ass’n, 404 A.2d 212, 215 (Me. 1979) (“If this
[arbitration] award can in any rational way be derived from the agreement,
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viewed in the light of its language, its context and any other indicia of the
parties’ intention, it will be upheld.” (emphasis added)).
[¶4] Contrary to Xpress’s contention on appeal, the arbitrator did not
exceed his authority pursuant to 14 M.R.S. § 5938(1)(C). Considering that the
parties themselves could not determine Xpress’s rights pursuant to the
agreement, the arbitrator found that the agreement was ambiguous, examined
the intent of the parties in entering the agreement, and implied a balancing
obligation to remedy the ambiguity. See Coastal Ventures v. Alsham Plaza, LLC,
2010 ME 63, ¶ 26, 1 A.3d 416 (“A contractual provision is considered
ambiguous if it is reasonably possible to give that provision at least two
different meanings.” (alteration omitted) (quotation marks omitted)).
[¶5] In issuing the supplemental award, the arbitrator did expand upon
Xpress’s implied obligation to “reasonably balance” its nominations and
consumption of natural gas by adding terms including remedies for any future
imbalances. The arbitrator did so, however, only after finding that the parties
had understood in entering the agreement that Xpress would “adjust its use
[of the pipeline] to accommodate Woodland’s [balancing obligations],” that
the balancing terms proposed by Woodland were appropriate “for the
foreseeable future” but could be revisited if Xpress’s business grew, and that
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the remedies for future imbalances proposed by Woodland were “appropriate
and consistent with reasonable industry standards . . . .” Given these findings,
the arbitration awards did not “directly contradict[] the language of the
agreement,” Am. Fed’n of State, Cty., & Mun. Emps., Council 93 v. City of
Portland, 675 A.2d 100, 102 (Me. 1996), and did not constitute a “manifest
disregard” for the terms of the agreement, Me. State Emps. Ass’n v. Me. Dep’t of
Def. & Veterans’ Servs., 436 A.2d 394, 397 (Me. 1981) (“[I]n light of the
reservations contained in [the agreement] and the lack of any clear or express
language addressing the instant issue . . . we cannot conclude that the
arbitrator’s decision exhibits a ‘manifest disregard’ for the terms of the
agreement.”).
[¶6] Xpress’s remaining contentions on appeal are not persuasive and
we do not address them further.
The entry is:
Judgment affirmed.
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Jennifer A. Archer, Esq., and Timothy H. Norton, Esq. (orally), Kelly Remmel &
Zimmerman, Portland, for appellants Xpress Natural Gas, LLC, and XNG Maine,
LLC
William S. Harwood, Esq. (orally), Martha C. Gaythwaite, Esq., and Brian T.
Marshall, Esq., Verrill Dana, LLP, Portland, for appellee Woodland Pulp, LLC
Business and Consumer Docket docket number CV-2016-12
FOR CLERK REFERENCE ONLY