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U.S. Energy Corp. v. Nukem, Inc.

Issue Discussed: Functus Officio

Submitted by Linsey M. Routledge, Kyley Knoerzer

Date Promulgated: February 24, 2005

 

U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822 (2005)

Case Number: 03-1444, 03-1451

Filed: October 9, 2003

Court: U.S. Court of Appeals, Tenth Circuit

U.S. Energy Corp., Crested Corporation, and Nukem, Inc. entered into a transaction for the purpose of mining and selling uranium; however, Nukem sold the uranium to third party buyers using contracts jointly owned by the parties.  U.S. Energy and Crested Corp. then brought an action against Nukem, Inc. in 1991 alleging that it had misappropriated partnership assets for its own benefit and to the detriment of the partnership.  Plaintiffs also claimed that Nukem had violated marketing and partnership agreements and had improperly used the jointly owned contracts to avoid importation tariffs.

In 1994, the parties stipulated to binding arbitration.  The Panel held in 1996 that, since the rights to purchase the uranium were obtained through the use of partnership assets, “those purchase rights, the uranium acquired pursuant to those rights, and the profits therefrom are impressed with a constructive trust in favor of” the partnership.  In November 1996, the district court confirmed the arbitration award.  Litigation ensued concerning enforcement of the arbitration award.  The district court entered judgment in favor of plaintiffs in the amount of $15,677,535 plus interest, which was affirmed by the Court of Appeals.  The district court subsequently entered another judgment in favor of plaintiffs in the amount of $20,044,183.

On appeal, the parties argued that the district court erred in denying their respective post-judgment motions to alter or amend the $20,044,183 judgment.  At the center of the controversy was the arbitration panel’s description of “purchase rights,” which Nukem argued was too vague to permit any valuation of “purchase rights.”  The Court of Appeals vacated and remanded to the district court for further remand to the arbitration panel for clarification of the arbitration award.

The Court of Appeals held that remand to the arbitration panel for clarification is appropriate when an arbitration award is subject to more than one reasonable interpretation.  Upon review of the district court’s legal conclusions de novo, the Court of Appeals found that the panel acted within its authority but that the award had more than one reasonable interpretation.  The Court noted that neither the passage of time nor the fact that one of the three panel members had since passed away precluded remand because the three-member panel had issued an award, and the only question remaining concerned the amount of damages.  The Court declined to define “purchase rights” or the value of the “profits therefrom,” stating that those tasks are better left to the panel on remand.

 

 

[1] Linsey Routledge is Senior Counsel and Kyley Knoerzer is an associate at Clyde & Co US LLP.