In denying a motion to vacate and granting a motion to confirm an arbitration award, a federal district court in Michigan held that a party's motion to vacate was time-barred under the Federal Arbitration Act's three-month deadline for challenging an arbitration award. The requirements needed to invoke the doctrine of equitable tolling in order to extend the three-month period were not met.

In Ford Dealer Computer Services, Inc. v. Highland Lincoln Mercury, Inc., No. 06-X-50344, 2008 WL 895990 (E.D. Mich. Mar. 31, 2008), a dispute between Dealer Computer Services (DCS) and Highland was arbitrated pursuant to an arbitration agreement, and DCS was awarded its full measure of damages plus attorney fees. About three and a half months later, Highland discovered facts that allegedly proved that DCS perpetrated fraud on the arbitrator in order to obtain the award.

About three months after the discovery of the alleged fraud and two months after DCS filed a motion to confirm the award, Highland filed a motion to vacate the award, asserting that its motion was not time-barred because of the "discovery rule" exception, which, if applicable, would toll the three-month FAA deadline until Highland discovered the alleged fraud.

The Court rejected Highland's argument, holding that the discovery rule "only applies to statutes of limitations governing when a plaintiff may file a cause of action," and Highland's discovery of the alleged fraud did not give it a cause of action against DCS.

Alternatively, Highland argued that the doctrine of equitable tolling should apply. Under the doctrine of equitable tolling, a party "may be able to file an action even after the statute of limitations has expired, if, through no fault or lack of diligence on his or her part, he or she was prevented from filing suit in a timely manner due to inequitable circumstances."

Applying the four factors used to determine whether equitable tolling should apply, the Court found against Highland on all four of the factors. Importantly, the Court found that Highland was not diligent in pursuing its rights because it waited three months after the discovery of the alleged fraud to file its motion to vacate instead of filing the motion immediately.

Emphasizing Highland's knowledge of the three-month statute of limitations and lack of diligence in pursuing its rights after discovery of the alleged fraud, the Court held that equitable tolling should not apply.