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A state court in Minnesota held that a lower court's extension of a closing deadline in an arbitration award regarding the sale of a home is not an impermissible modification of the award because courts have authority to construe arbitration awards to make them enforceable.
In Johnson v. Newbold, No. A06-760, 2007 WL 583332 (Minn. Ct. App. Feb. 27, 2007), Johnson and Newbold jointly purchased a house in Hawaii. When Johnson decided to sell, Newbold decided to exercise a written option and buy out Johnson's interest. When disagreements arose over financing and personal property, the parties entered into arbitration.
The arbitrator issued an interim award that set a purchase price, the terms of finance, and a closing date deadline for the sale. After the closing date passed, both parties brought motions to confirm the arbitration award. The court granted the motions to confirm, but extended the closing date.
Johnson then argued that the district court's extension of the closing date should be reversed because it was an impermissible modification of an arbitration award. However, this Court and affirmed the lower court's extension of the closing the deadline.
The Court noted that because a court has the authority to construe an arbitration award so to make it enforceable, "it necessarily has the power to make determinations that will prevent the award from becoming a nullity."
Since the closing date in the award had already passed, the award would be a nullity unless the court extended the closing deadline. Ultimately, this Court interpreted the extension of the deadline as a construction of the award, not a modification.
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