Howerin Residential Sales v. Century Realty of Tidewater: Virginia Supreme Court Establishes Standard of Review of Arbitration Award

In Howerin Residential Sales Corp. v. Century Realty of Tidewater, Inc., the Supreme Court of Virginia addressed the validity of a REALTOR® board (the "Board") arbitration award. After noting the limited grounds upon which an arbitration award may be vacated, the state supreme court reversed the trial court's decision to vacate the award.

A dispute arose between Howerin and Century, both Board members, regarding the cooperating broker's portion of a commission. Both parties agreed to arbitrate, and the dispute was submitted to the Board arbitration panel. The panel voted unanimously in favor of Howerin, and it directed that Century pay Howerin the portion of the commission that had been disbursed to Century at the closing. Century refused to comply with the arbitration award.

Howerin filed a motion for judgment to enforce the award. Century responded with an answer that raised five affirmative defenses. The trial court, without explanation, set aside the arbitration award. Howerin appealed.

The Virginia Supreme Court noted that no arbitration award should be set aside, except for errors apparent on its face, unless it appeared to have been procured by corruption or other undue means, or that there was partiality or misbehavior in the arbitrators. The court noted that there was no claim that errors were apparent on the face of the award, and there was no claim that the award was procured by corruption or other undue means. The court also noted that the threats complained of by Century were aimed at causing Century to submit to arbitration. There was no contention that threats were made to affect the award.

The Supreme Court of Virginia noted that the claimed misconduct largely rested upon Century's contention that it was threatened that, if it did not submit to arbitration, it would be kicked off the Board of REALTORS®. The court noted that the requirement for arbitration was imposed upon each member of the Board as a condition of membership, and the "threat" was really just a statement of the conditions under which Century had already agreed to operate.

In making its final ruling, the Supreme Court of Virginia stated that the only reasons for setting aside an award were those prescribed in the statute. As a result, the supreme court reasoned that Century did not meet its burden under the statute, and held that the trial court erred in refusing to enforce the award. Therefore, the trial court's ruling was reversed and judgment was entered in favor of Howerin.

Howerin Residential Sales Corp. v. Century Realty of Tidewater, Inc., 235 Va. 174, 365 S.E.2d 767 (1988).