The Utah Court of Appeals today threw out an appeal based on attorney error. Why’rd is an internet service provider in Utah County. Why’rd was represented by local Utah County attorney Justin Heideman. Cambia is a 302 unit homeowners association in North Utah County. Cambria was represented by Salt Lake Attorney Cole Cannon.
The dispute arose over a contract between Why’rd and Cambria. Under the contract, Why’rd installed infrastructure, at it’s own cost, to provide internet and T.V. to the homeowners in Cambria. In exchange for installing the infrastructure, Cambria gave Why’rd a 7 year exclusive contract to sell internet and T.V. to the homeowners. This exclusive relationship was designed to help Why’rd recoup the costs of installing the infrastructure.
Unfortunately, Cambria became dissatisfied with the service and asked Why’rd to cancel the contract only 3 years in. Why’rd refused so Cambria sued.
The case went to arbitration. Salt Lake Attorney Craig Metcalf acted as the arbitrator. After a 2 day arbitration, Why’d lost. The arbitrator held that Why’rd was in breach. The 7 year contract was cancelled. Why’rd was allowed to remove it’s infrastructure but was also required to pay Cambria $14,000.
Cambria offered to walk away from the $14,000 if Why’rd didn’t appeal. Why’rd rejected that offer and decided to appeal.
Why’rd lost it’s appeal because the arbitration award had never been recognized by the District Court as valid. In other words, no judgment had been formally entered.
After losing it’s appeal, Why’rd went to the District Court and asked the District Court to confirm the award. Why’rd then filed a second appeal.
The second time around, the Court of Appeals again found Why’rd wanting. The Court of Appeals essentially told Why’rd, look, you asked the District Judge to confirm the award. You got what you wanted, what are you complaining about? The Court of Appeals said, “To the extent that Why’rd contends that the district court’s order confirming the arbitration award was merely a jurisdictional prerequisite to an appeal that could then be taken directly from the arbitration award, the contention is without merit and was rejected by this court in its earlier decision.”
So what should Why’rd have done differently. After losing the appeal the first time, Why’rd should not have moved to confirm the award. Instead, Why’rd should have asked the District Court to vacate the award. The District Judge would have then made a decision and then Why’rd would have gotten the appeal it so desperately desired.
Now, I know this is a lot of technical legal mumbo jumbo. Let me put it more simply. Why’rd made a procedural error. Why’rd moved to confirm the award rather than moving to vacate the award. I know, it doesn’t sound like a big deal. But it was. The error was so significant that Why’rd lost it’s appeal. Now, Why’rd is going to have to pay the $14,000.
The next issue I want to discuss is whether arbitration is truly cheaper. It’s very popular to say that arbitration is cheaper than litigation. This case obviously calls that into question. In my opinion, arbitration can be cheaper than litigation but arbitration is not always cheaper than litigation. It just depends on the details of each case.