# Petition — Grace v. Santa Fe Pacific Railroad > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0241%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1982 - **Citation:** 459 U.S. 838 ## Text Office . Supreme Cor Peon US 81-2353 sg Pg Te JUN 23 1992 No, 81-2153 A ae Guthe Supreme Gourt of the United States Ocroper Term, 1981 MICHAEL P. GRACE, Petitioner, Vv. SANTA FE PACIFIC RAILROAD COMPANY, er At., Respondents. Petition for a Writ of Certiorari to the United States Court of Appeals For the Tenth Circuit PETITION FOR WRIT OF CERTIORARI a ae = WILLIAM B. ROGERS Ames, Daugherty, Black, Ashabranner, Rogers & Fowler 6440 Avondale Drive, Suite 200 Oklahoma City, Oklahoma 73116 (405) 840-2470 Counsel for Petitioner QUESTIONS PRESENTED 1, Whether the Court of Appeals has incorrectly in- terpreted and applied this Court's holding in Common- wealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968), that arbitrators must disclose to the parties any dealings that might create an impressic,: of possible bias to the facts of this case and in conflict with other in- terpretations and applications of the Commonwealth Coat- ings ruling by other Courts of Appeal and U.S. District Courts. 2. Whether Petitioner's right to due process of law has been violated by the refusal of the U.S. District Court and the Court of Appeals to grant Petitioner an eviden- tiary hearing on matters relating to the conduct of the arbitration proceeding, including the non-trivial relation- ships between the neutral arbitrator and one of the parties and its counsel, which were outside the arbitration record. 3. Whether the Court of Appeals erred in allowing the District Court to interfere in subsequent arbitration proceedings and with the right of Petitioner to seek ar- bitration. 4. Whether the Petitioner, and persons similarly sit- uated, should be prohibited from employing solution min- ing to recover uranium, rather than conventional uneco- nomical mining techniques, because of the failure of the arbitration panel, U. S. District Court and Court of Appeals to recognize solution mining as a method of commercial production, contrary to the public interest at this time of a depressed uranium industry. ~~ Michael P. Grace, Petitioner herein, Appellant before the Court of Appeals and Defendant-Cross Defendant be- fore the U.S. District Court. Corrine Grace, Appellant before the Court of Appeals and Defendant-Cross Defendant before the U.S. District Court. Santa Fe Pacific Railroad Company, Appellee before the Court of Appeols and Defendant-Cross Claimant before the U.S. District Court. TABLE OF AUTHORITIES ————— OPINIONS BELOW ..W.. JURISDICTION STATEMENT OF THE CASE . ARGUMENT FOR ALLOWANCE OF THE WRIT .... Overview I, The Court of Appeals Has Incorrectly Inter- pretei and Applied the Disclosure Rule De- veloped in Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968). II, Petitioner's Right to Due Process of Law Has Been Violated by the Refusal of the U.S. Dis- trict Court and the Court of Appeals to Grant Petitioner an Evidentiary Hearing on Matters Relating to the Conduct of the Arbitration Pro- ceeding and the Adequacy of Disclosure —.... Ill, The Court of Appeals Erred in Allowing the District Court to Interfere in the Arbitration Proceedings ; IV. Solution Mining Is a Viable Method of Pro- ducing Uranium-Bearing Ore in Commercial Quantities . _ CONCLUSION CERTIFICATE OF SERVICE follows Petition APPENDIX A— Opinion of U.S. Court of Appeals APPENDIX B— Denial of Petition for Rehearing APPENDIX C — Letter noting extension of time APPENDIX D— Opinions of U.S. District Court 10 12 15 17 —iv— TABLE OF AUTHORITIES Cases PAoa(s) Adolph Coors Co, v. Commissioners, 519 F.2d 1280 (10th Cir, 1975), cert. den, 423 U.S. 1087 (1976) .. 13 Campo Machinery Co., Inc. v. Local Lodge No, 1926, 536 "890 F.2d SBD (OC Cle, 10TB) cncceccccsccsccccecscsessesesscsneseee 10 Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 89 S.Ct. 848, 21 L.Ed.2d 612 (1968) ae i, 6,7, 9,10, 11 Cook Industries, Inc. v. C. Itoh & Co., 449 F.2d 106 (2d Cir, 1971) ll Fizer v. Safeway Stores, Inc., 586 F.2d 182 (10th Cir. 1978) ..... — Hanes Corp. v. Millard, 531 F.2d 585 (D.C. Cir, 1976). 14 National Bulk Carriers v. Princess Management, 597 F.2d 619 (2d Cir. 1979) 9 Overseas Motors, Inc. v. Import Motors, Ltd., Inc., 375 F.Supp 499 (D.C. Mich. 1974), aff'd, 519 F.2d 119 (6th Cir. 1975), cert. den, 423 U.S. 987 (1975) ......... 13-14 Overseas Private Investment Corp v. Anaconda Co., 418 F.Supp. 107 (D.D.C, 1976) ll Reconstruction Finance Corp. v. Harrisons and Cross- field, 204 F.2d 366 (2d Cir. 1953), cert. den., 346 U.S. 854 14 Rummell v, Bailey, 320 P.2d 653 (Utah, 1958) ... ‘16 Sanko 8.8. Co., Ltd. v. Cook Industries, Inc., 495 F.2d 1260 (2d Cir. 1973) 9,11 Stewart v. Amerada Hess Corp., 604 P.2d 854 (1979). 16 Tamari v. Bache Halsey Stuart, Inc., 619 F.2d 1196 (7th Cir. 1980) 9 Texaco, Inc. v. Fox, 618 P.2d 644 (Kan., 1980)... 16 Other Authorities Annotation, “Meaning of Paying Quantities in Oil and Gas Leases”, 43 A.L.R.3d 8 16 National Gas Policy Act of 1978, 18 C.F.R. §271.204(e) 16 William & Myers Manual of Oil and Gas Terms, An- notated (1980) - 16 No, 81-2153 In the Supreme Court of the United States Ocroper Term, 1981 MICHAEL P. GRACE, Petitioner, Vv. SANTA FE PACIFIC RAILROAD COMPANY, et At., Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT The Petitioner, Michael P. Grace respectfully prays that a Writ of Certiorari issue to review the judgment and opinion of the United States Court of Appeals for the Tenth Circuit, entered in this proceeding on January 4, 1982, and the Order Denying Petitioner's Motion for Re- hearing entered on February 23, 1982. The opinion of the Court of Appeals, reported at 668 F.2d 1140 (10th Cir, 1982) appears herein in Appendix A. The Order of the Court of Appeals denying rehearing dated February 23, 1982, appears in Appendix B. A letter from the Clerk of the U.S. Supreme Court relating the Order of Justice White, dated May 25, 1982, extending the time to file a Petition for a Writ of Certiorari to and including ~~ June 23, 1982, appears in Appendix C. The opinions of the District Court for the District of New Mexico, dated April 1, 1980, and May 15, 1980, appear in Appendix D. The decision of the U.S. Court of Appeals for the Tenth Circuit was entered on January 4, 1982, and a timely Petition for Rehearing was denied on February 23, 1982. On May 25, 1982, Justice White extended the time within which to petition for certiorari. This petition was filed within such extended time. This Court’s jurisdiction is invoked under 28 U.S.C. § 1254(1). STATEMENT OF THE CASE In June, 1968, Michael P. Grace, Petitioner, purchased six options from Santa Fe Pacific Railroad (Santa Fe) on property owned by Santa Fe believed to contain uranium- bearing ores in the Grants, New Mexico, area. Each option afforded Petitioner a three-year period within which ex- ploration could be conducted, after which Petitioner had the option to enter into a uranium mining lease with Santa Fe. | In 1971, Petitioner exercised his options and entered into several uranium leases with Santa Fe. Each lease pro- vided in part: “Lessor agrees that if during the term of this lease in commercial quantities from the lease premises, Lessor will, upon written request .. . re- otis ee ee . upon the same terms and conditions . Each lease also provided: “Any dispute between the parties under this agree- ment shall be referred to arbitration, each party se- lecting one arbitrator and the American Arbitration Association designating the third arbitrator. The word of the arbitrator shall be final and binding upon the parties hereto.” Petitioner discovered substantial uranium reserves lo- cated at a depth of approximately three thousand to five thousand feet underground. Because of the depth of the uranium reserves, it was determined that traditional min- ing techniques would be uneconomical for the recovery of the uranium, and Petitioner began to solution mine the uranium. Solution mining is a process by which chem- icals are injected into the ground, allowed to remain in uranium-bearing rock formations a short time, and then pumped to the surface with the hope of recovering U3;Os from the processing uranium suspended in the solution. By this process, Petitioner was able to recover a uranium- bearing solution, known as “yellow cake”, and to success- fully effect the sale of such uranium-bearing solution. On June 2, 1976, Ormsbee Development Company, a drilling subcontractor, filed suit against Petitioner and his wife, Corrine, as Lessees, and Santa Fe, as owner of the properties, seeking to foreclose on Mechanics’ Liens which it had filed after Petitioner had failed to pay it for drilling and exploration work. Other subcontractors intervened or filed companion cases, all of which were consolidated with paw the Ormsbee claims on diversity jurisdiction. These dis- putes were ultimately settled and the complaint dismissed. Santa Fe, however, filed an original, and on February 10, 1977, an Amended Cross-Claim against Petitioner seek- ing a determination that all of his rights and interests had terminated by reason of his failure to achieve production of uranium-bearing ore in commercial quantities as re- quired by the leases. Prior to Santa Fe filing its Amended Cross-Claim, Pe- titioner had, on July 19, 1976, filed a Demand for Arbi- tration with the Phoenix Regional Office of the American Arbitration Association seeking to declare his leases valid and in full effect. After Petitioner had filed a Motion for Stay of Proceedings with the District Court on Santa Fe's Cross-Claim pending arbitration, the District Court, on July 5, 1977, entered an Order directing that Petitioner would not be required to file an Answer to Santa Fe’s Cross- Claims pending arbitration. The arbitration process commenced with the Peti- tioner and Santa Fe each selecting an arbitrator and the American Association of Arbitrators (Association) select- ing a third, neutral arbitrator, one Dr. Jack T. Mommsen (Mommsen). An arbitration evidentiary hearing conducted under the auspices of the Association began on April 17, 1979, and ended some two and one-half weeks later on May 1, 1979. On June 27, 1979, the arbitrators, with one member dissenting, entered their award, holding that the leases had “expired under the terms and on the termina- tion dates defined in the leases”, that the “leases are not valid”, and that “all rights and interest of Grace in the leases are terminated.” ells On July 3, 1979, Santa Fe filed a Motion to confirm the award of the arbitrators. On September 25, 1979, Peti- tioner filed a Motion to vacate or set aside or modify the arbitration award. On April 1, 1980, the District Court entered its opin- ion confirming the arbitration award in favor of Santa Fe. Thereafter, Petitioner filed a Motion for reconsideration of the April 1, 1980 opinion, in part on grounds that there had been a failure by Mommsen and the law firm repre- senting Santa Fe to disclose non-trivial relationships with parties interested in the proceeding. It was pointed out to the court that among Mommsen’s active clients were General Atomic Company, which is a partnership between Gulf Oil and Scallop Nuclear, and that the Modrall firm which represented Santa Fe also represents Gulf Oil; that Mommsen worked for Texas Eastern Nuclear, a subsidiary of Texas Eastern Company, and that the Modrall firm rep- resents Trans-Western Pipeline Company, another subsidi- ary of Texas Eastern Company; that Mommsen was being considered as an arbitrator on a case with Homestake Min- ing Company, which was also represented by the Modrall firm; that Gulf Oil had attempted to purchase the Grace leases; that subsequent to the arbitration proceeding, Gulf Oil acquired leases for the property involved herein and that Mark Thompson, a partner in the Modrall law firm, had attended a lecture given by Mommsen for General Atomic and had met and talked with Mommsen. On May 15, 1980, the District Court entered a Memo- randum Opinion upholding its opinion of April 1, 1980. Petitioner had requested before the District Court that he be allowed to pursue discovery concerning the nondisclos- -™ ure and evident partiality of the neutral arbitrator and that a full evidentiary hearing be held on this matter. Such request was denied. On March 14, 1980, Petitioner filed a Demand for Ar- bitration with the American Arbitration Association in Los Angeles, California, directed to Santa Fe. Petitioner sought to have determined the amount due him for work per- formed and for damages not yet computed on the lease property; and a determination of the duties owed by Santa Fe and the neutral arbitrator to him; and whether the breach of duties occurred and the effect on prior arbitration. On January 30, 1981, the District Court entered an Order prohibiting Petitioner from proceeding with the Cali- fornia arbitration demand. The District Court further or- dered Petitioner to dismiss his arbitration demand within fifteen days. Petitioner filed timely appeals to the Orders entered by the District Court with the Court of Appeals. The Court of Appeals affirmed the decisions of the District Court. The case at bar affords this Court the opportunity to examine the per se disclosure rule announced in Common- wealth Coatings Corp. v. Continental Casualty Co., supra, thereby resolving apparent conflict among the circuits re- garding the interpretation of this rule. The case at bar also presents this Court with the opportunity to provide guidelines to the District Courts as to the circumstances under which an evidentiary hearing is required in review- adie ing the adequacy of an arbitrator’s compliance with the disclosure rule. The issues raised herein have enormous importance both to the nuclear industry and to the full range of commercial transactions which provide for arbi- tration of disputes. L The Court of Appeals Has Incorrectly Interpreted and Applied the Disclosure Rule Developed in Com- monwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968). In Commonwealth Coatings Corp. v. Continental Cas- ualty Co., 393 U.S. 145, 89 S.Ct. 848, 21 L.Ed.2d 812 (1968), this Court eld that an arbitration award would be set aside by reason of the failure of the arbitrator to disclose past financial dealings with a party, notwithstanding the absence of fraud or bias. Reasoning that the integrity of the arbitration process would be best served by full and frank disclosure of any dealings that might impugn the impartiality of a neutral arbitrator, the Court stated in its opinion: “It is true that arbitrators cannot sever all their’ ties to decide the law as well as the facts and are not = The very language of this opinion underscores the breadth of the disclosure requirement for “any” dealings that “might” create an “impression” of “possible” bias. Given the policy advanced by this requirement, it is clear that the court’s review of ar. arbitration decision on grounds of nondisclosure is subject to a standard far less stringent than that applied in cases of alleged bias where full dis- closure has occurred. In the present case, the neutral arbitrator, Dr. Momm- sen, failed to disclose at any point in the proceedings that the arbitrator's client, General Atomic Company, was a partnership between Gulf Oil and Scallop Nuclear. The operations of Gulf Oil on adjacent leases became a central point in assessing the commercial viability of the uranium extraction method utilized by Petitioner. A memorandum produced at the arbitration hearing itself stated: - “Gulf would be willing to sink the shaft at their sole cost and mine any ore at Mr. Grace’s section under a contract arrangement.” (Arb. Rec. p. 852) Subsequent to the arbitration proceeding, Gulf Oil ac- quired leases for the property in question. The law firm representing Respondent, Santa Fe, also represented Gulf Oil. A member of that law firm submitted an affidavit evincing knowledge of Mommsen’s work for Gulf. Momm- sen worked for several clients of Respondent’s law firm. Whether further nondisclosed dealings would have been discovered upon examination before the District Court can- not be known, for the court refused a request by Petitioner to hold an evidentiary hearing upon this matter. ~~ The Opinion of the Court of Appeals applies to the question of disclosure the same standard for review that would be applied in cases of fraud or bias. The Court of Appeals stated in its Opinion: “Arbitrators are, of course, obligated to disclose pos- sible bias. Sanko S.S. Co., Ltd. v. Cook Industries, Inc,, 495 F.2d 1260 (2d Cir. 1973), citing to Common- wealth Coatings v. Continental Casualty Co., supra. However, it is only clear evidence of impropriety which justifies denial of summary confirmation. Na- tional Bulk Carriers v. Princess Management, 597 F.2d 819 (2d Cir. 1979). For an award to be set aside, the evidence of bias or interest of an arbitrator must be direct, definite and capable of demonstration rather than remote, uncertain or speculative. Bamar~. . Bache Halsey Stuart, Inc., 619 F.2d 1196 (7th Cir. 1980), Cert. denied, US...” (668 F.2d at 1146) The decision of the Court of Appeals emasculates the disclosure rule announced in Commonwealth Coatings v. Continental Casualty Company, supra. No longer will it be sufficient to show failure to disclose dealings which might create an impression of possible bias. By the de- cision of the Court of Appeals, the party belatedly dis- covering the truth of the supposedly “neutral” arbitrator must now adhere to a standard heretofore reserved for an attack upon an award after full disclosure. Other circuits have applied a different standard to the question of non- disclosure. In Sanko S.S. Co., Ltd. v. Cook Industries, Inc., 495 F.2d 1260 (2dCir. 1973), the Court of Appeals re- manded a case for further hearing where an arbitrator had failed to disclose all dealings with a party and its counsel. The criterion for review of an arbitrator's dis- —10-—- closure of financia) dealings, according to the Second Cir- cult, is “whether the ties are so indirect or remote that they could not reasonably create an impression of bias.” Clearly, resolution of this conflict is a proper subject for action by this Court. ~.- 1g apparent conflict with the gecisions of other cjr-. cuits, the Court of Appeals upheld the trial court's denial of an evidentiary hearing upon the adequacy of disclosure. The Court of Appeals concluded: “We hold the District Court did nct err in refusing to grant an evidentiary hearing. As set forth, supra, we are not entitled to judge an arbitration award inde- pendently. Campo Machinery Co., Inc., supra, The finality of arbitration weighs heavily in its favor and and cannot be upset absent exceptional circumstances. Fizer v. Safeway Stores, Inc., supra. The Graces’ con- tention simply fails to establish exceptional circum- stances warranting the vacation of an award upon the refusal of the District Court to hold an evidentiary hearing.” 668 F.2d at 1152. The need for such a hearing became more compelling with the affidavit of a dissenting arbitrator that he had been excluded from the deliberative process. Substantial questions were raised as to the conduct of the hearing and —)]j]— the adequacy of the disclosure. The due process rights available to petitioner dictated the right to pursue the truth of the matter in an evidentiary hearing. In Sanko S.S. Co., Ltd. v. Cook Industries, Inc., 495 F.2d 1260 (2d Cir. 1973), the Second Circuit Court of Appeals held that a corporate ship owner which had contended that an arbi- trator had failed to make full disclosure with a party to the arbitration and the party's counsel was entitled to an evidentiary hearing to ascertain the full nature and extent of the relationships at issue. It is clear that the decision of the Second Circuit in permitting evidentiary hearings upon the allegation of nondisclosure is the better rule. Without evidentiary hearings as an enforcement tool, the -—- ~ —whethies “re denied the opporiynity.todetesmipe whether or not disclosure requisements have been met. The de- cision of the Second Circuit is a logical extension of the per se arbitration rule announced in Commonwealth Coat- ings Corp. v. Continental Casualty Co., supra. In Overseas Private Investment Corp. v. Anaconda Co., 418 F.Supp. 107 (D.D.C, 1976), the issues of disclosure and evident par- tiality were reached only following extensive discovery. In Cook Industries, Inc. v. C. Itoh & Co. (America), Inc., 449 F.2d 406 (2d Cir. 1971), the court refused to order an additional hearing only where it appeared from the record that the parties had adequate knowledge equivalent to dis- closure. Nevertheless, Circuit Judge Oakes dissented, con- tending that an unresolved question of fact should be re- solved by a trial court ugpn an evidentiary hearing. _~s > —12— IL. The Court of Appeals Erred in Allowing the District Court to Interfere in the Arbitration Proceeding». The Supreme Court should take action to restrict and prohibit the interference of the U. 8. District Court in arbi- tration proceedings and with the right of individuals to seek arbitration. The U.S. District Court for the District of New Mexico played an activist role in the initia) arbi- tration and prohibited a second arbitration from going for- ward. Such interference with an administrative body is contrary to the policy and purposes of Federal Courts. The U.S. District Court correctly determined that is- <—-.. Sues raised by Santa Fe in, its Cross-Claim filed in the initial action filed by the various subcontractors were sub- ject to arbitration. However, rather than dismissing the claims for lack of jurisdiction, the court merely stayed the proceedings before it, maintaining jurisdiction over the case while awaiting the outcome of the arbitration. Thereafter, the District Court entered Orders regard- ing discovery during the arbitration process and directed that the arbitration hearing proceed despite the illness of Petitioner at the commencement of the arbitration hear- ings. At one point in time, the court stated that, “You can tell the arbitrators that I want them to, and I've sent this thing to arbitration and that’s been forever. And I'm about to reconsider that decision. So my immediate re- action is just to abolish the stay order and say ‘Let's get moving’ (transcript of findings of fact and conclusions of law on February 1, 1979). Thus the arbitration proceeded under the shadow of the District Court. —13-— The District Court also issued an Order directing that the Petitioner dismiss a Demand for Arbitration filed in California with Santa Fe Pacific Railroad Company. The demand for arbitration had been accepted by the Ameri- can Arbitration Association. The District Court asserted that it had jurisdiction to issue the subject order “.. . aid of jurisdiction on the appeal of the judgment of this Court affirming the arbitration award previously entered in favor of Santa Fe Pacific and to preserve the status quo pending that appeal,.. .” One of the issues presented by Petitioner in his de- mand for arbitration with the American Arbitration Asso- ciation was the request for the Association to determine aman sian rei. the patel acieatee 10 the Claimant wuuld allow the Arbitration Association to make de- oro ei ag Pohnragserp vanenenmaesanyaeat by one of its arbitrators. However, rather than allowing the administrative body to proceed, the District Court directed the dismissal of the arbitration demand. The issues raised in the California arbitration proceed- ing were issues that had not been raised, litigated or ac- tually judged on the merits in the prior arbitration pro- ceeding. In order for the doctrine of collateral estoppel to apply, these matters must have occurred. See Adolph Coors Company v. Commissioner, 519 F.2d 1280 (10th Cir. 1975), cert, denied, 423 U.S. 1087 (1976). ! Basically the seme test is applicable to determination of res judicata of the issues presented in the second arbi- tration. See Overseas Motors, Inc. v. Import Motors, Ltd., —14— Inc., 375 F.Supp. 499 (D.C, Mich. 1974), aff'd, 519 F.2d 119 (6th Cir. 1975), cert. denied, 423 U.S. 987 (1975). Therefore, Grace submits that the District Court could not have barred the second proceeding on the grounds of res judicata or collateral estoppel. However, in any event, Petitioner submits that the District Court is requir d to defer to the judgment of the second arbitration panel on these issues. The role of the courts where an agreement by its own terms calls for arbitration of disputes arising thereunder is strictly limited. The court in Reconstruction Fnance Corp. v. Harrisons and Crossfield, 204 F.2d 368 (2d Cir. 1953), cert. denied, 346 U.S. 854 (1953), stated that: — -“The Federal Court’ in-e-oaleesising it to compel arbi- tration, should . . . deal with no issues except (1) the making of an agreement to arbitrate and (2) the failure, neglect or refusal of the other party to per- form that agreement.” 204 F.2d at 368. This principle of judicial deference to arbitration is also recognized in Hanes Corp. v. Millard, 531 F.2d 585 (D.C, Cir, 1976), where the court, holding that the Statute of Limitations issue was encompassed within the arbitra- tion clause, stated: “We start from an accepted premise that, after deter- mining the existence of a valid and enforceable agree- ment that extends to the dispute at hand, courts should not play a broad role in denying effect to agreements to arbitrate.” 531 F.2d at 598. In view of these principles and the recognized policy of the Federal Courts not to interfere with administrative = a bodies, it is submitted that the Supreme Court should take action to restrict and prohibit the interference of District Courts in arbitration proceedings. IV. Solution Mining Is « Viable Method of Producing Uranium-Bearing Ore in Commercial Quantities. In the public interest, the Court should recognize solu- tion mining as a viable method of achieving commercial production of uranium ore. The principal issue before the arbitration panel was whether or not Petitioner was entitled to 4 renewal of the subject leases under the term of the leases providing that “Lessor agrees that if during the term of this lease and agreement Lessee has found and, at the expiration of the term of this lease, is producing uranium-bearing ore in commercial quantities from the lease premises, Lessor will ... renew this lease and agreement for an additional three (3) year period. . .” Rather than use conventional mining techniques, Peti- tioner had achieved production of uranium by the use of solution mining. However, the arbitration panel and Dis- trict Court did not consider production by solution mining as a method of producing uranium-bearing ore in com- mercial quantities and thus ruled that Petitioner was not entitled to renewal of the leases. Substantial testimony on the solution mining technique and production in commer- cial quantities was presented to the arbitration panel. Apparently, there are no specific judicial interpretations of the term “commercial quantities” in a uranium lease —16— situation. However, the Utah Supreme Court has stated that a “prudent man” test would be used to determine if a commercial quantity of uranium ore has been discovered. In Rummell v. Bailey, 320 P.2d 653 (Utah, 1958), the court determined that the test would be whether the party would pursue the ore vein and expend further time, effort or money in attempting to develop the property as a mine. It is not necessary that production immediately pay min- ing expenses. Some oil and gas leases have used the term “commer- cial quantities.” The term has been defined as “a quantity of oil, gas or other minerals sufficient for production in paying quantities.” See William & Meyers Manual of Oil and Gas Terms, Annotated, p. 89 (1980), and Texaco, Inc. v. Fox, 618 P.2d 844 (Kan. 1980). Oil and gas cases have construed paying production to constitute revenue in ex- cess of lifting costs. The costs of drilling and equipping are excluded from this calculus. Annotation, “Meaning of Paying Quantities in Oil and Gas Leases”, 43 A.L.R.3d 8; Stewart v. Amerada Hess Corp., 604 P.2d 854 (Okla. 1979). The Federal Energy Regulatory Commission, in inter- preting its regulations developed under the Natural Gas Policy Act of 1978, in 18 C.F.R. § 271.204(e), concluded that production in commercial quantities has occurred if natural gas has been sold and delivered from such reservoir. It is undisputed that Petitioner made sales of uranium- bearing ore in the form of yellow cake, or uranium solu- tion. However, because of an apparent prejudice against or refusal to acknowledge solution mining as a method of production, the arbitration panel failed to find that Peti- tioner was entitled to renewal of the subject leases. = = This failure on the part of the lower courts and the arbitrators is contrary to the public interest. The energy needs of this country are profound, and freedom to de- velop all sources of energy is essential to the continued success of this country. However, the uranium industry is severely depressed today, resulting in lack of develop- ment of this energy source and widespread unemployment in the southwestern United States. Entrepeneurs such as the Petitioner should not be prohibited from developing the uranium industry by restricted court interpretations regarding commercial production. They should be given the freedom and opportunity to develop uranium as a na- tural resource. It is thus in the public’s best interest that this Court recognize solution mining as a viable method of achieving commercial production within the uranium industry. Fail- ure to do so will contribute to the continued depression of the uranium industry contrary to the public interest. For the reasons set forth herein, Petitioner prays that a Writ of Certiorari issue. I hereby certify that I served the foregoing Petition for Writ of Certiorari on other parties in this proceeding by causing on the 23rd day of June, 1982, three (3) true and correct copies thereof to be mailed first class, postage prepaid, to: Gary W. Davis William E. Dakan Martin, Pringle, Fair, Davis & Oliver 320 Page Court 220 West Douglas Wichita, Kansas 67202 William Snead Ortega and Snead, P.A. Two Hundred One Twelfth Street, N.W. P.O. Box 2226 Albuquerque, New Mexico 87103 John R. Cooney Ruth M. Schifani Peter J. Adang Modrall Sperling Roehl Harris & Sisk, P.A. 8th Floor, Public Service Bldg. P.O. Box 2168 Albuquerque, New Mexico 87103 William B. Rogers APPENDICES APPENDIX A PUBLISH UNITED STATES COURT OF APPEALS TENTH CIRCUIT [Filed January 14, 1982] a Wyoming corporation, ) Plaintiff, ) v. ) . ) Nos. 80-1750, CORRINE G..sCE and MICHAEL P. ) 80-1803 GRACE, ) and Defendants-Cross Defendants- ) 81-1161 Appellants, ) Vv. ) ) SANTA FE PACIFIC RAILROAD, ) Defendant-Cross Claimant- ) Appellee. ) Appeal From the United States District Court For the District of New Mexico (D.C. Nos. 76-326 HB, 77-148, 77-149 and 77-150) Gary W. Davis (William E. Dakan with him on the brief) of Martin, Pringle, Fair, Davis & Oliver, Wichita, Kansas (William E. Snead of Ortega and Snead, Albuquerque, New Mexico, with him on the brief), for Corrine Grace. Martha Mansell Eskin, Culver City, California, and F. Kim- ball Joyner, Jr. of Jones, Meilkejohn, Keh] & Lyons, Den- ver, Colorado (Walter L. Reardon, Jr., Albuquerque, New Mexico, with them on the brief), for Michael P. Grace. 2a (APPENDIX) — John R. Cooney and Ruth M. Schifani (Peter J. Adang with them on the brief) of Modrall Sperling Roehl Harris & Sisk, Albuquerque, New Mexico, for Santa Fe Pacific Railroad. Before BARRETT, DOYLE and SEYMOUR, Circuit Judges. BARRETT, Circuit Judge. These consolidated appeals challenge a final judgment of the District Court confirming an arbitration award and an order prohibiting proceeding on an arbitration demand. In June 1968, Michael P. Grace (Michael) purchased six options from Santa Fe Pacific Railroad (Santa Fe) on property owned by Santa Fe believed to contain uranium- bearing ores in the Grants, New Mexico, area. Each option afforded Michael a three year period within which explor- ation work could be conducted, after which Michael had the option to enter into a uranium mining lease with Santa Fe. In 1971 Michael exercised his options and entered into several uranium leases with Santa Fe. Each lease provided in part: Lessor agrees that if during the term of this lease and agreement Lessee has found and at the expiration of the term of this lease is producing uranium-bearing ore in commercial quantities from the leased premises, tions [App. at P. 131). Each lease also provided: Lessee shall not subject Lessor or the leased premises to any liability or lien for or on account of any work done . . . upon said premises, and if by reason of the failure of Lessee to pay bills or expenses incurred by Lessee, any lien or liens shall be filed against the 3a {APPENDIX} leased premises . . . Lessor may also at its election declare a forfeiture of this Lease and Agreement. [App. at pp. 127-128]. Each } vase further provided that: Any dispute between the parties under this agree- ment shall be referred to arbitration, each party se- lecting one arbitrator and the American Arbitration Association designating the third arbitrator. The award of the arbitrator shall be final and binding on the parties hereto. [App. at p. 132]. Michael thereafter embarked on an exploration and mining program in accordance with his leases. In conjunc- tion with his activities, substantial uranium reserves were discovered, albeit of a relatively low grade, located 3,000 to 5,000 feet underground. Subsequently, as the expiration date of the leases approached, Michael, in an effort to achieve production and retain the leases, turned to “solu- tion mining”. Solution mining is a process by which chem- icals are injected into the ground, allowed to remain in uranium-bearing rock formations a short time, and then pumped to the surface with the hope of recovering U3Os from the processing uranium suspended in the solution. By proceeding in such a manner, Michael, was, allegedly, “suc- cessful in producing significant quantities of uranium-bear- ing solution from his operations.” [Appellants’ Brief at p. 6]. On November 26, 1975, twelve days prior to the ex- piration date of the principal term of the leases, Michael’s operations were shut down when the Environmental Im- provement Agency of the State of New Mexico obtained an injunction against him for failure to obtain a permit. Michael subsequently became involved in the renewal of his leases and his solution mining operations were not resumed. 4a [APPENDIX) On June 2, 1976, Ormsbee Development Company, a drilling subcontractor, filed suit against Michael and his wife, Corrine, as lessees, and Santa Fe, as owner of the properties, seeking to foreclose on mechanics’ liens which it had filed after Michael had failed to pay it for drilling and exploration work. Other subcontractors intervened or filed companion cases, all of which were consolidated with the Ormsbee claims. These disputes were ultimately set- tled and the complaint dismissed. Santa Fe, however, filed an original, and, on February 10, 1977, an amended cross claim against Michael seeking a determination that all his rights and interests “and all rights and interests of anyone holding or claiming to hold any interest in the leasehold estates at one time existing in Michael P. Grace” had terminated by reason of his fail- ure to achieve production of uranium-bearing ore in com- mercial quantities as required by the leases. Santa Fe also alleged a breach of the leases amounting to a forfeiture by allowing the filing of the lien claims. Prior to Santa Fe filing its amended cross claim, Mi- chael, on July 19, 1976, filed a demand for arbitration with the Phoenix Regiot.al Office of the American Arbitration Association seeking to declare his leases valid and in full effect. In March of 1977, the law firm of Kantor and Car- mody entered its appearance for Michael and Corrine in federal district court, and thereafter, on April 11, 1977, filed a motion on behalf of Michael and Corrine for stay of pro- ceedings on Santa Fe’s cress claim pending arbitration. On July 5, 1977, the District Court herein entered an order directing that Michael and Corrine would not be re- quired to file an answer to Santa Fe’s cross claim pending arbitration. On the same day, the Court also entered an order, dismissing with prejudice, Santa Fe's motion request- ing an injunction enjoining Michael from proceeding with arbitration “for the reason that that question is now moot as a result of the Court's ruling, filed herein, granting De- 5a (APPENDIX) fendants', Michael P. Grace II and Corrine Grace's motion to stay proceeding pending arbitration.” [App. at p. 377]. This order bore the caption “Approved and Stipulated To Prior To Submission To The Court” and was executed by “Kantor and Carmody P.A.” as “Attorneys for Michael P. Grace II and Corrine Grace.” The arbitration process thus commenced with Michael and Santa Fe each selecting an arbitrator and the American Association of Arbitrators (Association) selecting a third neutral arbitrator, one Dr. Jack T. Mommsen (Mommsen). An arbitration evidentiary hearing conducted under the auspices of the Association began on April 17, 1979, and ended some two and one-half weeks later on May 1, 1979. On June 27, 1979, the arbitrators, with one member dissenting, entered their award, holding that the leases had “expired under the terms and on the termination dates de- fined in the leases”, that “the leases are not valid”, and that “all rights and interests of Grace in the leases are terminated.” On July 3, 1979, Santa Fe filed a motion to confirm the award of the arbitrators. On September 25 and 26, 1979, Michael and Corrine, respectively, filed separate motions to vacate or set aside or modify the arbitration award. Within her motion, Corrine alleged, inter alia, that: the leases were community property, and that she had a one-half interest in them and that she therefore should have been a named party to the arbitration; there was evi- dent partiality on the part of the neutral arbitrator; and that William Condren, her husband's attorney, had a con- flict of interest which should have prohibited his firm act- ing as counsel in the arbitration proceeding. Within his motion, Michael alleged, as had Corrine, the issue of the community property nature of the leasehold interests and the evident partiality of the neutral arbitrator. Michael also alleged that a substantial amount of relevant evidence was improperly excluded by the arbitrators, that the de- 6a (APPENDIX) cision making process of the arbitrators was not proper, and that a continuance on the hearing should have been granted due to his health. On April 1, 1980, the District Court entered its opinion confirming the arbitration award in favor of Santa Fe. In so doing the Court found/concluded, inter alia: for pur- poses of resolving the motions, the leases are assumed to be community property; Corrine’s attorney objected to Santa Fe’s request that Corrine be made a formal party to the arbitration proceeding because Corrine had not signed an arbitration agreement; at issue is whether a single spouse can participate in a proceeding affecting community real property, employ counsel and direct the litigation without the joinder of the other spouse— th.’ the question is a management question; under the law of New Mexico, Cor- rine is bound by the management actions of Michael; the claim of evident partiality arose from the alleged connec- tions between Mommsen and the Modrall law firm which represented Santa Fe; the alleged connections included the fact that Mommsen's active clients included General Atomic Company, which is a partnership between Gulf Oil and Scallop Nuclear, and that the Modrall firm which repre- sents Santa Fe also represents Gulf Oil; the alleged con- nections giving rise to evident partiality also included Mommsen's work for Texas Eastern Nuclear, a subsidiary of Texas Eastern Company and that the Modral) firm rep- resents Transwestern Pipeline Company, another subsidiary of Texas Eastern Company; Mommsen was being considered as an arbitrator in a case with Homestake Mining Com- pany, which was also represented by the Modrall firm; Mommsen sent Grace's attorney, Dinsmore Adams a copy of his resumé wherein he (Mommsen) related his connec- tions with General Atomic, Texas Eastern Nuclear, and Homestake Mining but did not mention Gulf Oil or the Modrall firm; under Commonwealth Coatings Corp. v. Cont- inental Casualty Co., 393 U.S. 145 (1968), an arbitrator's failure to disclose non-trivial relationships with parties is [APPENDIX) &3 é = ; z : es Fj . : ! actual bias, prejudice, or unfairness; Mommsen com- plied with his obligation under Commonwealth Coatings; the Modrall firm would be under the same obligation of disclosure except when, as here, there is no evidence that the Modrall firm was made aware of the relationship at issue and thus the occasion for its disclosure never arose; the alleged conflicts of interest of William Condren as Mi- chael’s attorney, even if true, would not be grounds for tration at a time when he was necovering from surgery and could not attend the entire arbitration hearing is com- pletely without merit when, as here, Grace did appear dur- ing the course of the hearings and was allowed to testify on his own behalf. The District Court concluded that none of the argu- Thereafter, Corrine filed a motion, adopted and joined in by Michael, for reconsideration of the April 1, 1980 opinion and order confirming the arbitration award. In support of this motion Corrine filed an affidavit executed by Mark Thompson, a partner in the Modrall law firm, (APPENDIX) On May 15, 1980, the District Court entered a memo- randum opinion upholding its opinion of April 1, 1980, not- ing that “The opinion . . . will not be amended, except as supplemented herein .. .” Within its second opinion not warrant reversing the Court's prior ruling on the with it was not in violation of Commonwealth Coatings, supra. On May 23, 1980, the District Court entered the judg- ment in favor of Santa Fe Pacific in accordance with its opinions of April 1 and May 15, 1980. Within its judgment the Court ordered that the Graces had no interest in the Santa Fe leases; the leases terminated as of the termination date set forth in each lease; Michael was obligated to per- form any outstanding leasehold obligations which survived the expiration of the leases; Michael was obligated to in- demnify Santa Fe against any judgments against it in favor of any lien claimants for work done for Michael on the leases; Michael was to pay Santa Fe $2,465.32 for costs of the arbitration proceeding; and that Santa Fe’s cross claims against the Graces were deemed merged with the judgment and to the extent such claims were not awarded by the arbitrators the same were dismissed with prejudice. On August 6, 1980, Corrine filed a motion with this Court for certification requesting that we certify to the 9a (APPENDIX) Supreme Court of New Mexico the question of whether a person's community property interest in New Mexico real property can be terminated in an arbitration or other legal proceeding to which such person was not made a party. Michael joined therein pursuant to his motion for a stay of proceedings and motion fer an extension of time to file a docketing statement. On September 18, 1980, we denied the motions for certification and stay but permitted the request for certification to be renewed and presented on appeal proper. On March 14, 1980, Michael filed a demand for arbi- tration with the American Arbitration Association in Los Angeles, California, directed to Santa Fe. Within this de- mand, Michael sought to have determined: the amount due him for work performed and for damages not yet com- puted; and a “determination of the duties owed by Santa Fe and neutral arbitrator” to him and “whether the breach of duties occurred”, and “[(the] affect on prior arbitration”. Michael also requested leave to amend to allege further damages when ascertained. . After the demand for arbitration was served on Santa Fe it filed a “Motion to Stay Arbitration and for Order to Show Cause” in the United States District Court for the District of New Mexico, the same court which had previ- ously confirmed the arbitration award in favor of Santa Fe. Within its motion, Santa Fe asserted that the issues involved in the arbitration in California were identical to those issues considered in the New Mexico arbitration proceedings. _ On January 30, 1981, the District Court entered an order prohibiting Michael from proceeding with the Cali- fornia arbitration demand. The District Court further or- dered Michael to dismiss his arbitration demand within fifteen (15) days. On appeal in No. 80-1803 Michael contends: (1) The question of whether a person’s community property inter- est in New Mexico real property may be terminated in an {APPENDIX} - arbitration proceeding to which such person was not made a party should be certified to the Supreme Court of New Mexico; (2) The arbitration award should be vacated in view of the arbitrator's refusal to hear evidence on the construction of the lease language “production of uranium- bearing ore in commercial q'iantities”; (3) The arbitration award should have been vacated because of the evident partiality of the neutral arbitrator; and (4) The trial court should have granted discovery and an evidentiary hearing on matters relating to the conduct of the arbitration pro- ceeding. On appeal in No. 80-1750 Corrine contends: (1) The issue of termination of her community property interest should be certified to the Supreme Court of New Mexico; (2) The District Court erroneously confirmed the arbitra- tion award in light of the failure of the neutral arbitrator and the law firm representing Santa Fe to disclose signifi- cant conflicts of interest; (3) The Court erred in denying discovery and an evidentiary hearing on the question of conflicts of interest; and (4) Whether the award should be vacated in view of the majority's failure to hear or con- sider the views of the arbitrator selected by Michael and the panel's exclusion of significant evidence. On appeal in No. 81-1161 Michael contends: (1) The District Court acted beyond its jurisdiction in entering the order prohibiting him from proveeding with the California arbitration request; (2) The issues to be arbitrated in the California arbitration proceeding are not barred by res judicata or collateral estoppel; and (3) The District Court should have deferred to the California arbitration demand. I At the outset we deem it important to set forth the parameters governing our review. Once it has been established that the parties had en- tered into a binding agreement to arbitrate, the entire con- lla (APPENDIX) troversy, including the validity [and essence] of the dis- puted contract must be referred to arbitration. Muh v. Newberger, Loeb & Co., Inc., 540 F.2d 970 (9th Cir. 1976). Parties who agree to submit matters to arbitration are pre- sumed to agree that everything, both as to law and fact, necessary to render an ultimate decision is included in the authority of the arbitrators. Continental Materials Corpo- ration v. Gaddis Mining Company, 306 F.2d 952 (10th Cir. 1962). Doubts are to be resolved in favor of arbitrability. Oil, Chemical & Atomic Workers v. American Oil Company, 528 F.2d 252 (10th Cir. 1976). Once an arbitration award is entered, the finality of arbitration weighs heavily in its favor end cannot be upset except under exceptional circum- stances. Fizer v. Safeway Stores, Inc., 586 F.2d 182 (10th Cir. 1978). A party attacking the legality of an arbitration award provided for within a contract has the burden of sustain- ing such an attack. Wright Lumber Company v. Herron, 199 F.2d 446 (10th Cir. 1952). Courts are, expectedly, justi- fied in exercising great caution when asked to set aside an arbitration award, which is the product of the theoretically informal, speedy and inexpensive process of arbitration, freely chosen by the parties. Andros Compania Martina v. Mare Rich & Co., A.G., 579 F.2d 691 (2d Cir. 1978). Fur- thermore, arbitration awards generally need not delineate reasons or reasoning, at least when the grounds for the award may be gleaned from the record. Farkar Co. v. R. A. Hanson DISC, Ltd., 604 F.2d 1 (2d Cir. 1979). ’ A court, therefore, is not entitled to judge an arbitra- tion award independently. Campo Machinery Co. Inc. v: Local Lodge No. 1926, 536 F.2d 330 (10th Cir. 1976). Arbi- trators are, of course, obligated to disclose possible bias. Sanko S.S. Co. Ltd. v. Cook Industries, Inc., 495 F.2d 1260 (2d Cir. 1973), citing to Commonwealth Coatings v. Conti- nental Cas. Co., supra. However, it is only clear evidence of impropriety which justifies the denial of summary con- firmation of an arbitration award. National Bulk Carriers 12a (APPENDIX) v. Princess Management, 597 F.2d 819 (2d Cir. 1979). For an award to be set aside, the evidence of bias or interest of an arbitrator must be direct, definite and capable of demonstration rather than remote, uncertain, or specula- tive. Tamari v. Bache Halsey Stuart, Inc., 619 F.2d 1196 (7th Cir. 1980), cert. denied, _.. U.S. __... Finally, we deem it important to observe that the right to arbitration, like any other contract right, can be waived. Reid Burton Construction Inc. v. Carpenters Dis- trict Council, Etc., 614 F.2d 698 (10th Cir. 1980), cert. de- nied, _ U.S. ___; Commercial Iron & Metal Co. v. Bache Halsey Stuart, Inc., 581 F.2d 246 (10th Cir. 1978), cert. denied, 440 U.S. 914 (1979). Within these general guidelines, we shall now proceed to consider and address the appellate contentions advanced by the Graces. Il. Michael and Corrine, individually, within their re- spective appellate briefs, contend that Corrine’s interest in New Mexico real property, i.e., the leases, was improperly terminated in the arbitration proceeding inasmuch as she was not made a party thereto. The Graces further contend that this Court should certify the question of whether a person’s community property interest in New Mexico real property may be terminated in an arbitration proceeding or other legal proceeding to which such person was not made a party. We hold that these contentions are without merit. A review of the pleadings filed herein establishes that Corrine, although not a formal, named party to the arbitration proceedings, was definitely in fact and in law a party thereto. As noted, supra, this action was commenced on June 2, 1976 when Ormsbee filed suit against Michael and Corrine and Santa Fe seeking to foreclose on certain mechanics’ liens for work performed on the subject leases. Thereafter, 13a (APPENDIX) on November 26, 1976, the firm of Lamb, Metzgar, Frank- lin & Lines entered an appearance as counsel for Michaei and Corrine. Subsequently, on March 9, 1977, the Lamb firm withdrew as the Graces’ attorneys and the firm of Kantor and Carmody entered its appearance as their at- torneys. Thereafter, the Kantor firm filed numerous pleadings on behalf of Michael and Corrine, including: An April 11, 1977 motion for a stay of proceedings on Santa Fe’s cross- claim alleging “that both federal and state law require a stay of proceedings until arbitration is completed”; a July 15, 1977 motion to stay proceedings in several cases related to the Ormsbee action, alleging, as grounds, that the court had already stayed Santa Fe’s crossclaim “pending arbi- tration of the issues between it [Santa Fe} and Michael P. Grace and Corrine Grace”; a January 31, 1979 motion for a protective order alleging, as grounds, “the pending arbi- tration of the issues between Santa Fe Pacific Railroad Company and Michael P. Grace II and Corrine Grace.” Notwithstanding these motions, in which Michael and Cor- rine requested relief pending arbitration between Santa Fe and Michael and Corrine, Corrine’s attorney objected to Santa Fe’s request that Corrine be made a formal party, inasmuch as she had not signed an arbitration agreement. The inherent inconsistency with which both Michael and Corrine utilized the pending arbitration proceedings “between it [Santa Fe] and Michael P. Grace and Corrine (APPENDIX) | i 15a {APPENDIX} that “[t}he award of the arbitrator shall be final and bind- ing on the parties hereto”; and that the arbitrators found that the leases “expired under the terms and on the termi- nation dates defined in the leases”. Under these uncon- was accorded them. Thus, we will not set aside the ar- ments made by either Corrine or Michael Grace are April 1, 1980 Memo Opinion at p. 14. In view of our holding that, although Corrine was not a formally named party to the arbitration proceeding, she was in law and fact a party thereto from its inception to 16a [APPENDIX) terminative of the issues before us on appeal. See N.M. Stat. Ann. § 34-2-8 (1978). Certification is, and must of state law. Lehman Brothers v. Schein, 416 U.S. 386 (1974); Imel v. United States, 523 F.2d 853 (10th Cir. 1975). It is to be utilized with restraint and distinction. State of Florida v. Exxon Corporation, 526 F.2d 266 (5th Cir. 1976), cert. denied, 429 U.S. 929 (1976), citing to Barnes v. At- lantic & P. Life Ins. Co., 514 F.2d 704 (5th Cir. 1975). In light of our holding that Corrine was not deprived of her community property interest in a proceeding to which she was not a party, the certification argument is not viable. IIL. The Graces contend the District Court erroneously con- (APPENDIX) In addressing this issue, the District Court observed the arbitration process is subject to the “simple re- quirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias.” Commonwealth Coatings Curp. v. Continental Casualty Co., 393 U.S. 145, 149 (1968). This has been 18a [APPENDIX) der Commonwealth Coatings, supra, and all rules of the AAA. April 1, 1980, Memo Opinion at pp. 7-8. The District Court reached a similar conclusion in its May 15, 1980 opinion after Mark Thompson, a partner in the Modrall firm submitted an affidavit, in which he acknow]l- edged, inter alia, that he had attended a lecture which Mommsen had given for General Atcmic and had become aware that Mommsen had been selected as the neutral ar- bitrator in the course of a conversation with an associate of the Modrall firm. We hold that the District Court prop- erly found that the Graces did not establish evident par- tiality. . As discussed, supra, only clear evidence of impropriety justifies the denial of summary confirmation of arbitration awards. National Bulk Carriers v. Princess Management, supra. In order to set an award aside, the evidence of bias or interest of an arbitrator must be direct and definite and capable of demonstration. Tamari v. Bache Halsey Stuart, Inc., supra. As the District Court observed, the Supreme Court in Commonwealth Coatings Corp. v. Continental Casualty Co., Supra, delineated the disclosure requirement of potential arbitrators: . .. Since in the case of courts this is a constitutional principle, we can see no basis for refusing to find the same concept in the broad statutory language that governs arbitration proceedings and provides that an award can be set aside on the basis of “evident par- tiality” or the use of “undue means.” See also Rogers v. Schering Corp., 165 F.Supp. 295, 301 (D.C. N. J. 1958). It is true that arbitrators cannot sever all their ties with the business world, since they are not expected to get all their income from their work de- ciding cases, but we should, if anything, be even more scrupulous to safeguard the impartiality of arbitrators 19a [APPENDIX} than judges, since the former have completely free rein to decide the law as well as the facts and are not subject to appellate review. We can perceive no way in which the effectiveness of the arbitration pro- cess will be hampered by the simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias. 393 U.S. at pp. 148-149. The nondisclosure complained of by the Graces does not fall within the impartiality commands of Common- wealth, supra. The core of their complaint is that Momm- sen and the Modrall firm had similar clients. The Graces would apparently request that potential neutral arbitrators “sever all their ties with the business world”. Such is not the law. As Justice White observed in concurring with the majority in Commonwealth, supra: While I am glad to join my Brother BLACK’s opin- ion in this case, I desire to make these additional remarks. The Court does not decide today that arbi- trators are to be held to the standards of judicial de- corum of Article III judges, or indeed of any judges. It is often because they are men of affairs, not apart from but of the marketplace, that they are effective in their adjudicatory function. Cf. United States Steel- workers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960). This does not mean the judiciary must overlook outright chicanery in giving effect to their awards; that would be an abdication of our responsi- bility. But it does mean that arbitrators are not auto- matically disqualified by a business relationship with the parties before them if both parties are informed of the relationship in advance, or if they are unaware of the facts but the relationship is trivial. I see no reason automatically to disqualify the best informed and most capable potential arbitrators. . > > *. 20a [APPENDIX) . .. This end is best served by establishing an atmos- phere of frankness at the outset, through disclosure by the arbitrator of any financial transactions which NRG Ee eg cara deg sages The judiciary should minimize its role in arbi- tration as judge of the arbitrator’s impartiality. That role is best consigned to the parties, who are the architects of their own arbitration process, and are far better informed of the prevailing ethical standards and reputations within their business. 393 U.S. at pp. 150-151. Mommsen was not financially involved with either the Graces or Santa Fe. The fact that he and the Modrall firm had similar clients is of no moment herein, particularly in view of his disclosures that he had engaged in consulting work for General Atomic. IV. _ The Graces contend the District Court should have granted an evidentiary hearing on matters relating to the conduct of the arbitration proceeding which were outside the arbitration record. This contention reiterates the al- leged potential prejudicial relationship between Mommsen and the Modrall firm vis-a-vis clients common to both and further incorporates the alleged exclusion of Michael's ar- bitrator, George Cutler, from the decision making process. In addressing this allegation, the District Court found: The second ground for vacating the arbitration - award urged by Michael Grace is his contention that the arbitrator chosen by him, Mr. George Cutler, was denied an opportunity to fully participate in the de- cision making process. In support of this claim, Mi- chael Grace has submitted the affidavit of Mr. Cutler which states that he was affectively [sic] denied a right to expect that all arbitrators would participate in the deter- 21a {APPENDIX} mination of the award as the arbitrator selected _ by the claimant was not given a sufficient op- portunity to express his views, argument and reasoning behind his opinion and beliefs with respect to the merits of the claimant's position. He claims that when he arrived at the final meeting of the arbitrators in San Francisco, Dr. Mommsen immediately stated his decision, which was favorable to the Santa Fe Pacific, and that this was then im- mediately concurred in by Mr. Jennings, the arbi- trator chosen by the railroad. At this point, Cutler states that he felt “the decision-making process was, for all intents and purposes, concluded” and that he did not have a chance to express his views. Though the Santa Fe Pacific has filed an affidavit from Mr. Jennings controverting these allegations, the Court will assume, for the purposes of resolving this issue, that Mr. Cutler’s affidavit is true. Even in this situ- ation the Court concludes however that there was no misconduct warranting vacating of the arbitration award. In the case of Artie Shaw Presents, Inc. v. Snyder, 362 N.Y.S.2d 158 (1974), a strikingly similar claim was made by the arbitrator chosen by the losing party. There it was alleged in a conclusory affidavit from the disgruntled arbitrator that he was “deprived of any meaningful opportunity to deliberate upon the issues with [his] co-arbitrators.” 362 N.Y.S.2d at 159. There was no evidence in that case, as there is none in this case, that any arbitrator was excluded from any pro- ceedings by the others or that all were not present for the taking of the evidence. The only exclusion of the complaining arbitrator in Artie Shaw, supra, was to his own refusal to discuss the case with the other two arbitrators on the telephone. The New York court concluded that 22a {APPENDIX} . . . although it is desirable to have all of the arbitrators meet, following final submission of the controversy and participate in the delibera- tions so that the parties to the dispute may have the benefit of the effect the views and arguments of each arbitrator might have upon the others, the presence of all is not required. 362 N.Y.S.2d at 159. There is no evidence in this case that any meetings or consultation were had in secret, intentionally ex- cluding Mr. Cutler, as was the situation in Jones v. Bishop, 218 Ill. App. 318 (1920), relied upon by Mi- chael Grace. Nor is there any misconduct such as in Blin v. Hay, 2 Tyler [Vt.] 304 (1803), where two of the arbitrators were not notified of the meeting, let alone present. The Court can find no grounds for setting aside the arbitration award on this issue. April 1, 1980 Memo Opinion at pp. 11-12. We hold the District Court did not err in refusing to grant an evidentiary hearing. As set forth, supra, we are not entitled to judge an arbitration award independently. Campo Machinery Co., Inc., supra. The finality of arbitra- tion weighs heavily in its favor and cannot be upset absent exceptional circumstances. Fizer v. Safeway Stores, Inc., supra. The Graces’ contention simply fails to establish ex- ceptional circumstances warranting the vacation of the award upon the refusal of the District Court to hold an evidentiary hearing. V. In No. 81-1161 Michael contends that the District Court erred in prohibiting him from proceeding with his Cali- fornia arbitration request. As set forth, supra, within his request Michael sought the amount due him for work performed and for damages 23a {APPENDIX} not yet computed, a determination of the duties owed by Santa Fe and the neutral arbitrator, and a determination of whether a breach of such duties occurred and their effect on the prior arbitration. Within its motion to stay Michael’s arbitration request, Santa Fe argued that an arbitration pro- ceeding on the same request had already been concluded, that the arbitration award entered was res judicata as to Michael’s California arbitration demand, and that the court had jurisdiction to stay the arbitration request in aid of the appeal of the judgment on the order affirming the arbi- tration award pending before this Court. In its order granting Santa Fe’s motion to stay Mi- chael’s California arbitration request, the District Court simply observed that it was staying the request in aid of jurisdiction on the appeal and to preserve the status quo pending that appeal. The District Court clearly had jurisdiction over Mi- chael to decide matters in aid of the appeal from its judg- ment. In Silverthorne v. Laird, 460 F.2d 1175 (5th Cir. 1972) the court held: In short, we subscribe to the following analysis of the rule against district court activity subsequent to the taking of an appeal: “In general, the district court should have full authority to take any steps during the pendency of the appeal that will assist the court of ap- peals in the determination of the appeal. Re- strictions on the power of the district court that are grounded in nothing more than the technical consideration that jurisdiction ‘passes’ from it upon the filing of the notice of appeal are im- practical and unwise. Dictum in Philadelphia Marine Trade Ass’n v. International Longshore- men’s Ass’n (CA3d, 1966) 365 F2d 295, rev’d on other grounds (1967); 389 US 64, 88 SCt 201, 19 Led2d 236, to the effect that the filing of a of fact and conclusions of law precluded the court from entering such findings is an ex- ample of a technical application of the general rule which serves no useful purpose.” 9 Moore’s Federal Practice 7203.11 n. 2. 460 F.2d at pp. 1178-1179. The same standard is applicable here. Even were we to assume, which we do not, that the District Court did, in fact, as Michael contends, lack juris- diction to enter the order, the general law of arbitration would, in and of itself, preclude Michael from going for- ward with the California arbitration request. As discussed, supra, the finality of arbitration weighs heavily in its favor. Fizer, supra. Courts are not empowered to judge an arbi- tration independently. Campo Machinery Co. Inc., supra. Perhaps more importantly, however, is the rule that the right to arbitration, like any other contract right, can be waived. Reid Burton Construction, Inc., supra. In Reid Burton we observed: However, the right to arbitration, like any other con- tract right, can be waived. Cornell & Copany v. Bar- ber & Ross Company, 123 U.S.App.D.C. 378, 360 F.2d 512, 513 (D.C. Cir.), aff’g. 242 F.Supp. 825 (D.D.C.). There is no set rule as to what constitutes a waiver or abandonment of the arbitration agreement; the question depends upon the facts of each case and usually calls for a finding by the trier of the facts. Burton-Dizie Corp. v. Timothy McCarthy Const. Co., 436 F.2d 405, 408 (5th Cir.). 614 F.2d at p. 702. Recognizing that there “is no set rule” as to what consti- tutes a waiver of one’s arbitration rights, we hold that 25a {APPENDIX} Michael’s right to arbitrate those requests set forth within his California arbitration demand, were waived to the ex- tent that they were not addressed in the course of the first arbitration proceeding, by virtue of Michael’s failure to advance such requests. In the final analysis, Michael’s Cali- fornia arbitration request eppears “to be yet one more attempt” to circumvent “the consequences of an arbitra- tion” upon which he so vigorously insisted. VL We have carefully considered the remaining allega- tions of error. We hold that they are, individually and collectively, without merit. WE AFFIRM. Seymour, Circuit Judge, concurs in the result. APPENDIX B NOVEMBER TERM — February 23, 1982 Before Honorable James E. Barrett, Honorable William E. Doyle, and Honorable Stephanie K. Seymour, Circuit Judges ORMSBEE DEVELOPMENT COMPANY, a Wyoming corporation, Plaintiff, Vv. CORRINE GRACE and MICHAEL P. GRACE, Nos. 80-1750 80-1803 Defendants-Cross-Defendants, 81-1161 Appellants, Vv. SANTA FE PACIFIC RAILROAD, Defendant-Cross-Claimant- Appellee. This matter comes on for consideration of appellant’s, Michael P. Grace, petition for rehearing filed in the cap- tioned cause. Upon consideration whereof, the petition for rehear- ing is denied. ee de ee ee ee ee APPENDIX C OFFICE OF THE CLERK SUPREME COURT OF THE UNITED STATES WASHINGTON D.C. 20543 May 25, 1982 Albert J. Beveridge, III, Esq. Beveridge and Diamond 1333 New Hampshire Avenue, NW Washington, DC 20036 Re: Michael P. Grace v. Ormsbee Development Company and Santa Fe Pacific Railroad A-1015 Dear Mr. Beveridge: Your application for an extension of time within which to file a petition for a writ of certiorari in the above-entitled case has been presented to Justice White who, on May 25, 1982, signed an order extending your time to and including June 23, 1982. A copy of the Justice’s order is enclosed. Very truly yours, ALEXANDER L. STEVAS, Clerk By Katherine Downs Assistant Clerk rwk encl. ce (letter only): counsel of record Howard K. Phillips, Esq., Clerk, US Court of Appeals for the Tenth Circuit (Your No. 80-1750, 80-1803, 81-1161) APPENDIX D IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO [Filed May 15, 1980] et al, Plaintiffs, vs. CIV NO. 76-326-HB 77-148 MICHAEL P. GRACE and 77-149 CORINNE GRACE, GRACE 77-150 NUCLEAR, et al., Defendants. the neutral arbitrator, in violation of both the New Mexico and federal arbitration statutes. It was argued that Dr. (APPENDIX) = Mommsen had done consulting work for General Atomic Company which is represented by the Modrall firm, and that the attorneys for Santa Fe Pacific, also from the Mod- rall firm, had not disclosed this relationship to opposing counsel. In denying the Motion to vacate on these grounds, the Court stated: . . . there is nothing in the record to indicate that this resumé [of Dr. Mommsen’s which disclosed his consulting work for General Atomic] was forwarded to the Modrall firm or that they otherwise had ac- cess to this information. Memorandum Opinion, p. 8. Subsequent to the filing of this Opinion, an affidavit was filed by a member of the Modrall firm stating that in connection with his represen- tation of General Atomic Company in litigation totally unrelated to that involving the Santa Fe Pacific and the Graces, . .. I attended a lecture on the nuclear fuel industry given by Dr. J. T. Mommsen on behalf of General Atomic Company. It was my understanding that Dr. Mommsen consulted with General Atomic Company on the market for the sale of U;Os, to utility com- panies using nuclear steam supply systems for the generation of electric power. To my knowledge, Dr. Mommsen has had no contact with the Modrall firm concerning the General Atomic litigation or the nu- clear industry in general. 4. Through a conversation with Ruth M. Schifani, an associate of this firm working on this matter, I became aware of the fact that Dr. Mommsen was the neutral arbitrator in this matter at some time after his appointment. I may have casually informed Mrs. Schifani that I knew of Dr. Mcmmsen because of my work on the General Atomic litigation. At no time prior-to the Memorandum Opinion of this Court is- sued on April 1, 1980, did I ever discuss in detail my 3d [APPENDIX) awareness of Dr. Mcmmsen’s relationship with Gen- eral Atomic with any members of the firm working on this matter. Affidavit of Mark B. Thompson III, filed April 7, 1980. The Motion for reconsideration filed by the Graces relies in part on this affidavit, but also raises several other claims, ali of which were before the Court at the time of its ruling on April 1, 1980. The Santa Fe Pacific has responded to the reconsideration request by claiming that the disclosures in the affidavit should not change the Court’s resolution of the evident partiality question and that the Court’s prior rulings on the other issues are correct. There is no need to restate the basis for the Court’s findings on those issues unrelated to the evident partiality question. The Court continues to conclude that what was at issue in the arbitration was a community real property management question, that joinder of both spouses 1s not required for such under the New Mexico community prop- erty law, and that Corinne Grace is bound by the arbitra- tion award. To the extent that the above conclusions rely in any way on statements made by Mr. Dinsmore Adams, the Court finds absolutely no merit in the claim that he did not represent Corinne Grace. The affidavit of Elvin Kantor, who was local counsel for Mr. Adams, does not change the situation. The file is replete with claims and representations by Mr. Kantor and Mr. Adams that they Court who his clients were for some 24 months or having filed a misleading affidavit. Neither position comports with the Code of Professional Responsibility. The Court is com- pletely satisfied that the statements attributed to Mr. Dins- more Adams, to the extent they are at all relevant, were made at the time that he represented Corinne Grace, and that the actions of Elvin Kantor, to the extent also that they 4d (APPENDIX) are at all relevant, were taken on behalf of both Michael and Corinne Grace. The Court is equally persuaded that the disclosures in the affidavit of Mark Thompson as to his knowledge of Dr. Mommsen’s activities for General Atomic do not mandate a reversal of the Court’s prior ruling on the evident par- tiality question, or even an evidentiary hearing. It is im- portant to note exactly what relationship was known to the affiant and is at issue here. Dr. Mommsen, who is in the business of consulting for the uranium industry, con- ducted a seminar on behalf of General Atomic on a topic completely unrelated to this case. General Atomic is rep- resented in litigation, again completely unrelated to this case, by the Modrall firm. The Modrall firm represented the Santa Fe Pacific in the arbitration in this case where Dr. Mcommsen was the neutral arbitrator. At the time of the Court’s Opinion confirming the arbitration award there was no evidence in the record that the Modrall firm had had any knowledge of the connection between Mommsen and General Atomic prior to their receipt of the Motion of the Graces to vacate the arbitration award. It now ap- pears from the affidavit of one member of the firm that he knew the nature of Mommsen’s work for General Atomic but was not involved in the Santa Fe Pacific - Grace arbi- tration and that one attorney in the firm who was involved in the latter knew that the other member of the firm had encountered Dr. Mommsen in some unrelated work for General Atomic. It also appears that Dr. Mcmmsen may have some continuing contact with General Atomic as a consultant. The attorneys for the Graces argue that this case is con- trolled by Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968). While this is clearly the leading Supreme Court case on the question, it is not all encompassing and did not present to the Court the situ- ation in the Grace arbitration. In Commonwealth Coatings, supra, the neutral arbitrator had been a consulting engi- 5d [APPENDIX) neer for the prime contractor who was a party to the arbi- tration, and had done work for the prime contractor on the very project out of which the arbitration arose. Clearly the relationship there should have been disclosed as it in- volved a direct link between the arbitrator and one of the parties and the project in dispute. Such is not the situation in this case. Nor is this case similar to the situation in Sanko S.S. Co., Ltd. v. Cook Industries, Inc., 495 F.2d 1260 (2nd Cir. 1973), where the neutral arbitrator was president of a com- pany which not only had been represented in an unrelated matter by the same attorneys who were representing one of the parties in the arbitration but additionally had deal- ings through his parent corporation with one of the parties. The contact in the present case is in no way comparable to Sanko. The present case involves consulting work for another client of the law firm representing the Santa Fe Pacific. There is nothing to indicate that Dr. Mommsen had any direct dealings with the attorneys or that he had any reason to not be completely fair and honest in his deliberations due to his consulting work on an unrelated topic for Gen- eral Atomic, which consulting work he had revealed to the Graces. The casual contact between the Modrall firm and Dr. Mommsen seems to be a classic case of what Justice White referred to in his concurring opinion in Common- wealth Coatings, supra, as a “trivial” relationship that need not be disclosed. Though the willingness of the Modrall firm to proceed with great caution in this matter is ad- mirable, this is not a kind of relationship the firm was required to disclose, and which would be grounds for set- ting aside the arbitration award. Accordingly, the Opinion of the Court entered on April 1, 1980 will not be amended,, :cept as supplemented herein, nor will there be any further proceedings in this matter. Counsel for the Santa Fe Pacific may prepare the judgment 6d [APPENDIX) and forward it to opposing counsel and the Court for sig- natures, within seven (7) days of this date. (s) Howard Bratton UNITED STATES DISTRICT JUDGE IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO [Filed April 1, 1980) ORMSBEE DEVELOPMENT COMPANY, et al., Plaintiffs, vs. CIV NO. 76-326-HB 77-148 MICHAEL P. GRACE and 77-149 CORINNE GRACE, GRACE 77-150 NUCLEAR, et al., Defendants. MEMORANDUM OPINION This matter comes on for consideration upon the Mo- tion of the Santa Fe Pacific Railroad Company (hereinafter Santa Fe Pacific) to confirm an arbitration award and the separate Motions of Michael and Corinne Grace to vacate, modify or set aside the same arbitration award. The Court has considered the numerous briefs filed by all sides, to- gether with the record of the arbitration proceeding, the oral arguments of counsel and the entire file in this cause, and concludes that the Motion of the Santa Fe Pacific to confirm the arbitration award should be granted and all other Motions denied. 7d {APPENDIX} The history of this case is one of the more tedious stories this Court has heard, though such is not to say that the issues being litigated are not important to all parties. The story can be said to have begun in 1971 when Michael Grace entered into several mineral leases with the Santa Fe Pacific. In carrying out his obligations under the leases, Grace employed various subcontractors. The subcontrac- tors filed suit in 1976 against Michael and Corinne Grace, as lessees and the Santa Fe Pacific as owner of the prop- erties, seeking to foreclose on mechanics’ liens which they had filed after Grace had allegedly failed to pay them for their drilling and exploration work. This dispute was ul- timately settled and the complaint dismissed. However, the Santa Fe Pacific had cross-claimed against the Graces seeking a declaration that these same mineral leases had expired in 1975 because there had been no pro- duction of uranium-bearing ore in commercial quantities, as required by their terms. To resolve this dispute, the Graces, both Michael and Corinne, requested a stay of these court proceedings pending submission of the dispute which was the subject of the cross-claim to arbitration. The Santa Fe Pacific objected strenuously, but the Court found that the parties had indeed agreed to arbitrate their disputes under the leases, including those raised in the cross-claim, and thus ordered that these proceedings be stayed pending the arbitration. This was in June 1977. The arbitration finally took place between April 17 and May 1, 1979 in Albuquerque, New Mexico. The delay of almost two years was occasioned in large part by the slow- ness in choosing a neutral arbitrator due to objections by the Graces, problems during discovery in deposing certain people because of objections by the Graces and the firing of the Grace attorneys only a month before the scheduled arbitration itself. The final award of the arbitrators was made on June 27, 1979 and held in favor of the Santa Fe Pacific finding that the subject leases expired in 1975 and ordering Grace to perform any outstanding obligations un- 8d [APPENDIX) der them. The Santa Fe Pacific filed a Motion to confirm the arbitration award on July 6, 1979 pursuant to §44-7-11, N.M. Stat. Ann. (1978). Within the 90 days allowed by the statute, both Mi- chael and Corinne Grace objected to the confirmation by filing Motions to vacate or set aside or modify the award, though each did so separately and for distinct reasons. The Court will consider each objection individually below, but would note that Corinne Grace objects to the award on the grounds that the leases were community property, that she had a one half interest in them and therefore that she should have been a named party to the arbitration. Addi- tionally, she claims that there was evident partiality on the part of the neutral arbitrator, Dr. Mommsen, and that the attorney for her husband, Mr. William Condren, had a conflict of interest which should have prohibited him from acting as counsel in the arbitration proceeding. Mi- chael Grace joins in the first two grounds for vacation urged by Corinne Grace and further asserts that a sub- stantial amount of relevant evidence was improperly ex- cluded by the arbitrators, that the decision making process of the arbitrators was not proper, and that a continuance on the hearing should have been granted due to his health. Corinne Grace’s Motion The first claim made by Corinne Grace is that the leases were community real property, that she had a one half interest in them and that therefore she was a neces- sary party to the arbitration. She claims that her absence from the proceeding requires either vacating the award entirely or modifying it so that it does not affect her com- munity property interest in the leases. It is undisputed that Corinne was not a named party to the arbitration and that she was not present at the arbitration proceeding. How- ever the Santa Fe Pacific claims that she is nonetheless bound by the award by virtue of her husband’s actions. 9d (APPENDIX) Two facts should be noted here. The first is that the arbitration agreement. The arbitrators then ruled that she The Community Property Act of 1973, Laws 1973, Chap. 320 was passed in order to bring New Mexico property laws Except for purchase-money mortgages and except as otherwise provided in “iis subsection, the spouses must join in all transfers, conveyances, or mortgages or contracts to transfer, convey or mortgage any in- terest in community real property . . . The spouses must join in all leases and in the management of community real property. (emphasis added). Laws 1973, Chap. 320, § 8. In 1975 the Legislature amended the above section, deleting that por- tion of the statute requiring joinder of spouses in the man- agement of community real property. § 40-3-13, N. M. Stat. Ann. (1978). Thus the current statute requires joinder as stated above, but is completely silent on the question of management. Corinne Grace claims that the arbitration involved a “transfer,” “conveyance” or “lease” of community real prop- 10d LAPPENDIX) erty, and that joinder was required under the statute. The Santa Fe Pacific on the other hand claims that the arbitra- tion was a “management” action, and that in the absence of any specific statutory provision, either spouse has the power to manage community real property. The Court concludes that what is at issue here is the power to man- age community real property. The question is not whether Michael Grace could transfer or convey the real property to anyone in the arbitration proceeding, for if any such transfer or conveyance resulted, it was automatic and pur- suant to the terms of the original lease. What is at issue is whether a single spouse can participate in a proceeding affecting community real property, employ counsel and direct the litigation without the joinder of the other spouse. That is the question in this case and it is a management question. Given this, the Court concludes that under New Mexico law both spouses have equal rights in the property giving either spouse the right to manage and deal with the com- munity real property, except in those instances where the statute requires joinder. This is the only possible conclu- sion that can be drawn from the amendment of the 1973 statute, the passage of the Equal Rights Amendment, and the abolition of sole control in the husband. The parties argue as to the significance of the case of Cocper v. Texas Gulf Industries, 513 S.W.2d 200 (Tex. 1974) which held that litigation involving one spouse was not binding on the other spouse in a subsequent action and that the doctrine of virtual representation had been abolished. The Court finds that case inapposite in that its holding was entirely controlled by the Texas family code which defined the sub- ject property as “joint management property,” 513 S.W.2d at 202. The reliance by the New Mexico Court of Appeals on the Cooper case, supra, in Amador v. Lara, 603 P.2d 310 (N.M. 1979) has no effect cn the present question as the latter involved community personal property and manage- ment of such property is explicitly governed by statute. lld {[APPENDIX) See § 40-3-14, N.M. Stat. Ann. (1978). The other case strenuously argued by both counsel, Mundy & Mundy, Inc. v. Adams, 602 P.2d 1021 (N.M. 1979), holds that settlement and compromise of a claim by one spouse will bar relitiga- tion of the underlying issue in a subsequent suit by the other spouse, and that the non-party spouse will be bound by the actions in the first suit. It is not clear that this case involving adverse possession is particularly relevant in light of the current New Mexico community property statute, but nothing in it dictates against the Court’s conclusion that Corinne Grace is bound by the management actions of Michael Grace. The Court having found that Corinne is bound by the arbitration award, the next question is whether the award should be set aside pursuant to § 44-7-12a(2), N.M. Stat. Ann. (1978), on the grounds of evident partiality on the part of the neutral arbitrator as urged by both Corinne and Michael Grace. It was Corinne Grace who raised this issue initially and briefed it, leading to its discussion at this point; but it was Michael Grace who pursued the ques- tion at the oral arguments in this case. As outlined in Corinne Grace’s briefs and as originally presented to the Court the argument was that Dr. Mommsen, the neutral ar- bitrator, had done consulting work for several firms whose parent or affiliated companies were allegedly represented by the law firm of Modrall, Sperling, Roehl, Harris and Sisk, which is the firm that represented Santa Fe Pacific in these arbitration proceedings. Corinne Grace originally argued that Dr. Mommsen should have disclosed these con- nections and that his failure to do so was grounds for vacating the arbitration award. At the hearing, Michael Grace, in adopting this argument, shifted his position and argued that it was the Modrall firm’s failure to disclose these connections with Dr. Mommsen that was fatal to the arbitration award. The undisputed facts appear to indicate that the actual appointment of arbitrators for this case began in July 1977. 12d [APPENDIX) The American Arbitration Association (AAA) requested that each party nominate an arbitrator. This was appar- ently accomplished by the end of October 1977, at which The claim of evident partiality arises from the alleged connections between Dr. Mommsen and the Modrall law firm, including the fact that Dr. Mommsen had done con- sulting work in the past and had as an active client at the time of his selection the General Atomic Company, which is a partnership between Gulf Oil and Scallop Nuclear, and that the Modrall firm represents Gulf Oil. Further it is claimed that Dr. Mommsen did work for Texas Eastern Nuclear, a subsidiary of Texas Eastern Company and that the Modrall firm represents Transwestern Pipeline Com- pany, another subsidiary of Texas Eastern Company. Fin- ally it is claimed that there was evident partiality in that Dr. Mommsen was being considered as an arbitrator in a case involving Homestake Mining Company, which com- pany is represented by the Modrall firm. It is undisputed that Dr. Mommsen sent Mr. Adams a copy of his resumé, which states all of the above con- 13d {APPENDIX} nections with General Atomic Company, Texas Eastern Nuclear and Homestake Mining Company. It is also true that it does not mention Gulf Oil or the Modrall firm at any point. However, there is nothing in the record to in- dicate that this resumé was forwarded to the Modrall firm or that they otherwise had access to this information. The United States Supreme Court has stated that the arbitration process is subject to the “simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias.” Common- wealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 149 (1968). This has been found to be a per se rule in that failure to disclose non-trivial relationships with parties will be grounds for vacating an arbitration award regardless of any actual bias, prejudice, unfairness or lack of the same in the hearing. In this case it is perfectly clear that Dr. Mommsen fully complied with his obligation under Commonwealth Coatings, supra, and all rules of the AAA. While this same obligation would apply to counsel in the arbitration proceedings, there is absolutely no evidence that the Modrall firm was ever made aware of the rela- tionships at issue, and thus the occasion for its disclosure never arose. For this reason the Court finds no basis in fact for setting aside the arbitration award on the grounds of evident partiality. The final argument raised by Corinne Grace in her motion, though not pursued at oral arguments, was that the attorney who actually represented Michael Grace in the arbitration proceeding, Mr. William Condren, had a conflict of interest in the proceeding in that he is a “dealer of U.S. railroad companies’ securities including Santa Fe Industries” and that he is “very close to Gulf Oil Com- pany” through his business dealings and that he “does busi- ness with Santa Fe Pacific Railroad Co.” These claims are presented in an affidavit from Corinne Grace and allegedly based on “information [I received] which was confirmed by a reputable lawyer in New York City.” 14d [LAPPENDIX) The Court assumes that this argument has been aban- doned as it was not presented in any manner at the oral arguments. However, even if counsel intended to pursue it and even if the alleged conflict were found to exist, the Court finds that it is not grounds for vacating the arbitra- tion award. The statute governing vacation of an arbitra- tion award provides for such in several enumerated situ- ations, none of which include the above claim. See § 44-7- 12A, N.M. Stat. Ann. (1978). Consistent with this, the Court finds that if any conflict existed, the remedy for Corinne Grace would lie in a direct action against the attorney. Accordingly, the Court finds that none of the grounds alleged by Corinne Grace for vacation of the arbitration award are well taken, and thus denies her motion. Michael Grace’s Motion Michael Grace has filed a separate Motion to vacate the arbitration award against him. The Motion first claims that the arbitrators refused to hear “significant amounts” hottest ety ie empeg Se eens eae of the Santa Fe Pacific. He claims the proffered evidence was relevant particularly on the question of interpretation of the terms of the leases he held. Specifically, the leases in question provided for auto- matic renewal upon application by the lessee to the Santa Fe Pacific within thirty days prior to the lease’s expiration, provided that the lease was producing “uranium-bearing ore in commercial quantities.” When Grace applied for renewal, his application was denied. At the arbitration he attempted to introduce any number of cther leases held by the Santa Fe Pacific in the same geographic area as his to show that he was treated differently from all other leaseholders in terms of how the Santa Fe Pacific inter- preted the term “commercial quantities.” The arbitrators ruled that they would consider any evidence of other leases 15d {APPENDIX} if Michael Grace could show that the leases were auto- matic renewal situations, as opposed to instances where the parties renegotiated the terms of the lease or entered into entirely new contracts. The Court has reviewed the transcript of the arbitra- tion proceeding filed by the parties and it reveals that the arbitrators were shown and did consider all the leases that Michael Grace and Mr. Condren wanted to tender, and that only lease that Michael Grace has tendered to the Court for consideration is what is known as the KSN lease, which was discussed at length by the arbitrators and reviewed by them during the hearing. There is nothing else specific- ally tendered as having been improperly excluded so the Court is unable to evaluate whether other items might have been relevant. The scope of review of a district court upon a Motion to confirm or vacate an arbitration award is extremely limited, Campo Machining Co. v. Local Lodge No. 1926, 536 F.2d 330 (10th Cir. 1976); Office of Supply, Government of the Republic of Korea v. New York Navigation Company, Inc., 469 F.2d 377 (2nd Cir. 1972), and the Court will not lightly set aside an arbitration award. There is nothing in the record to indicate that the distinction between renewal grounds is not well taken. 16d {APPENDIX} process. In support of this claim, Michael Grace has sub- mitted the affidavit of Mr. Cutler which states that he was affectively denied a right to expect that all arbitrators would participate in the determination of the award as the arbitrator selected by the claimant was not given a sufficient opportunity to express his views, argument and reasoning behind his opinion and be- liefs with respect to the merits cf the claimant’s po- sition. | He claims that when he arrived at the final meeting of the arbitrators in San Francisco, Dr. Mommsen immediately stated his decision, which was favorable to the Santa Fe Pacific, and that this was then immediately concurred in by Mr. Jennings, the arbitrator chosen by the railroad. At this point, Cutler states that he felt “the decision-making process was, for all intents and purposes, concluded” and that he did not have a chance to express his views. Though the Santa Fe Pacific has filed an affidavit from Mr. Jen- nings controverting these allegations, the Court will as- sume, for the purposes of resolving this issue, that Mr. Cutler’s affidavit is true. Even in this situation the Court concludes however that there was no misconduct warrant- ing vacation of the arbitration award. In the case of Artie Shaw Presents, Inc. v. Snyder, 362 N.Y.S.2d 158 (1974), a strikingly similar claim was made by the arbitrator chosen by the losing party. There it was alleged in a conclusory affidavit from the disgruntled ar- bitrator that he was “deprived of any meaningful oppor- tunity to deliberate upon the issues with [his] co-arbi- trators.” 362 N.Y.S.2d at 159. There was no evidence in that case, as there is none in this case, that any arbitrator was excluded from any procedings by the others or that all were not present for the taking of the evidence. The only exclusion of the complaining arbitrator in Artie Shaw, supra, was due to his own refusal to discuss the case with the other two arbitrators on the telephone. The New York Court concluded that 17d {APPENDIX} . . . although it is desirable io have all of the arbi- trators meet, following final submission of the con- troversy and participate in the deliberations so that the parties to the dispute may have the benefit of the effect the views and arguments of each arbitrator might have upon the others, the presence of all is not required. 362 N.Y.S.2d at 159. There is no evidence in this case that any meetings or consultation were had in secret, intentionally excluding Mr. Cutler, as was the situation in Jones v. Bishop, 218 Ill. App. 318 (1920), relied upon by Michael Grace. Nor is there any misconduct such as in Blin v. Hay, 2 Tyler [Vt.] 304 (1802), where two of the arbitrators were not notified of the meet- ing, let alone present. The Court can find no grounds for setting aside the arbitration award on this issue. The final argument against the arbitration award was made by counsel for Michael Grace for the first time at the oral arguments in this case. Michael Grace is now claim- ing that the arbitration award should be set aside on the grounds that he was forced to go to arbitration at a time when he was recovering from surgery and could not be present for the entire proceeding. The background to this claim is that when Michael Grace changed attorneys just prior to the arbitration, a continuance was granted in order for the new attorney to prepare the case, but only upon the promise of counsel for Michael Grace that no more continuances would be sought. The Court finds that demand by the arbitrators completely reasonable for there had been nearly a two year lapse since this Court had stayed proceedings pending arbitration and nearly three years since the first arbitration demand had been made. Subsequently, Michael Grace learned that he needed surg- ery. No demand for relief from his prior promise or for a continuance was made by counsel. The arbitration began as scheduled and though Michael Grace was not there for the 18d {APPENDIX} first five days of the hearing, which essentially amounted to the presentation of his own case, he did appear to testify on his own behalf and was present throughout the presen- tation of evidence by the Santa Fe Pacific. Michael Grace now claims however, that the arbitration should not have proceeded and that the arbitrators should have rescheduled the hearing at a time when he could assist his attorney more fully. The Court finds this argument to be completely with- out merit. The Court deals with scheduling problems on its own docket every day and can fully appreciate the need to hold dilatory counsel and parties to their agreements and to the calendars. This is particularly true where no demand for relief was ever presented to the arbitration panel. Despite the fact that it was the Graces, and not the Santa Fe Pacific, who wanted to go to arbitration, the Graces have fought any forward movement in this matter at all stages. It is understandable that the arbitrators would eventually tire of this, and demand that they proceed. In light of this, and the fact that there is nothing in the record that would indicate that Michael Grace was prejudiced in any way as a result of his absence for a few days from the hearing, the Court will deny the Motion to vacate on these In conclusion the Court finds that none of the argu- ments made by either Corinne or Michael Grace are well taken. They appear to be yet one more attempt to avoid the consequences of an arbitration upon which they in- sisted. Perhaps arbitration seems less attractive now, but that dees not entitle them to a second chance. The record discloses no grounds for vacating the award, and accord- ingly the Court will grant the Motion of the Santa Fe Pa- to confirm the arbitration award. A separate Order will be entered in accordance herewith. (s) Howard Bratton UNITED STATES DISTRICT JUDGE --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0241%3A1. Public record. Not legal advice.