Imputed Corporate Knowledge and Waiver of Arbitrator-Partiality Challenges under the FAA

Restore with Apex, Inc., d/b/a Apex Restoration DKI v. Zachary Rocca (Supreme Court of Alabama, Oct. 17, 2025)

Introduction

This decision from the Supreme Court of Alabama addresses three recurrent post-award challenges in arbitration practice: (1) whether a party may vacate an arbitration award for “evident partiality” where an arbitrator did not disclose his law firm’s prior representation of a party and a related fee dispute; (2) whether refusing a continuance constitutes “misconduct” under the Federal Arbitration Act (FAA) sufficient to vacate an award; and (3) whether an arbitrator’s alleged misapplication of state law is grounds for vacatur as misconduct or excess of powers.

The case arises out of a storm-repair contract between Restore with Apex, Inc. (Apex) and homeowner Zachary Rocca. After disputes over workmanship and payment, an AAA arbitration concluded with an award in favor of Rocca, including punitive damages for conversion based on Apex’s control over a related “pack-out” vendor. Apex sought to vacate, alleging undisclosed arbitrator conflicts, unfair denial of a continuance, and serious legal error on conversion and damages. The Jefferson Circuit Court allowed the post-judgment motions to be denied by operation of law, and Apex appealed.

The Alabama Supreme Court affirmed. The Court’s principal contribution is a clear, practice-shaping rule: a corporation’s knowledge of facts bearing on arbitrator conflicts is imputed to the entity, and failing to timely object before an award constitutes a waiver of evident-partiality challenges. The Court also reaffirms that denial of a continuance supports vacatur only upon a showing of prejudice and lack of reasonable basis, and that mere legal error by an arbitrator is neither “misconduct” nor an excess of powers under the FAA.

Summary of the Opinion

The Court affirmed the circuit court’s confirmation of the AAA award for Rocca and the denial (by operation of law) of Apex’s motion to vacate. It held:

• Waiver of evident partiality: Apex waived its “evident partiality” challenge by not objecting to the arbitrator before the award. The corporation could not avoid waiver by claiming that its COO (who handled the arbitration) lacked knowledge, because the CEO’s prior knowledge of the arbitrator’s firm’s representation and a fee dispute is imputed to the corporation.
• Continuance: The arbitrator’s refusal to continue the hearing was supported by a reasonable basis (strict enforcement of scheduling orders and Apex’s late substitution of counsel) and Apex failed to show prejudice; therefore, no “misconduct” under 9 U.S.C. § 10(a)(3).
• Legal error is not vacatur: Even if the arbitrator misapplied Alabama law on conversion and damages, such alleged errors do not amount to “misconduct” or “exceeding powers” under 9 U.S.C. § 10(a)(3)–(4), per Cavalier Manufacturing.

The Court also underscored the procedural prerequisite under Ala. R. Civ. P. 71B(f): the circuit clerk must first enter the arbitration award as the final judgment before a circuit court may act on a motion to vacate, and premature appeals will be dismissed for lack of jurisdiction.

Factual and Procedural Background

After storm damage in 2021, Rocca retained Apex through his insurer to perform repairs, including a separate “pack-out” for household contents by Pack2Normal. Rocca observed shared offices and management between Apex and Pack2Normal. Following disputes over workmanship, the parties met on October 15, 2021, terminated the construction contract, and signed a letter agreement addressing reissuance of certain insurance checks to Apex and other post-termination obligations. The arbitrator later noted that one referenced check was for pack-out/storage/pack-back, not reconstruction.

When Pack2Normal failed to return contents on schedule, Rocca was told by Apex’s regional manager, Korby Holcomb, that the contents would not be returned until Apex was “paid in full,” a condition not disclosed in the letter agreement. Evidence indicated Holcomb directed Pack2Normal’s cashier’s check to be made payable to Apex and personally delivered to Apex.

Apex initiated AAA arbitration, alleging breach by Rocca for depositing reissued insurance checks. Proceeding pro se, Rocca counterclaimed for breach, fraud, extortion, and conversion. The AAA’s arbitrator-selection process resulted in the appointment of attorney Walter J. Sears III after Rocca ranked him first and Apex indicated “no preference.” The arbitrator’s disclosure stated no conflicts or connections that would cast doubt on partiality; neither party objected, and the AAA confirmed the appointment.

The arbitrator denied Apex’s last-minute continuance request following the substitution of counsel, emphasized strict scheduling, conducted the hearing, and issued a final award finding that Rocca had overpaid, Apex breached the letter agreement (by failing to purchase replacement barn metal), and Apex—through control of Pack2Normal—converted Rocca’s property. The award granted Rocca $160,928.35, including punitive damages for “willful and unlawful retention” of household goods, and taxed 100% of the AAA administrative and arbitrator fees to Apex, with reimbursement of $12,510 to Rocca.

In circuit court, procedural missteps occurred: a premature first appeal was dismissed because the clerk had not entered the award as judgment under Rule 71B(f). Later, the clerk did so, the parties’ motions to vacate were denied by operation of law, and the Supreme Court of Alabama took this appeal (Apex) while dismissing Rocca’s cross-appeal as moot after clerical corrections on remand.

Analysis

Precedents and Authorities Cited

• FAA vacatur grounds are “limited”: 9 U.S.C. § 10(a)(2)–(4); Taylor v. Methodist Home for the Aging, 387 So. 3d 1080 (Ala. 2023).
• Waiver of arbitrator-bias objections when not timely raised: J. Don Gordon Constr., Inc. v. Brown, 196 So. 3d 228 (Ala. 2015); Tucker v. Ernst & Young, LLP, 159 So. 3d 1263 (Ala. 2014); Técnicas Reunidas de Talara S.A.C. v. SSK Ingenería, 40 F.4th 1339 (11th Cir. 2022), with additional federal and state authorities on waiver by silence despite knowledge or constructive knowledge.
• Corporate knowledge imputation: Birmingham Boys’ Club, Inc. v. Transamerica Ins. Co., 295 Ala. 177, 325 So. 2d 167 (1976); Central of Georgia Ry. v. Joseph, 125 Ala. 313, 28 So. 35 (1900).
• Continuance-denial as “misconduct” under § 10(a)(3) requires prejudice and lack of reasonable basis: CM S.E. Texas Houston, LLC v. CareMinders Home Care, Inc., 662 F. App’x 701 (11th Cir. 2016); Johnson v. Directory Assistants, Inc., 797 F.3d 1294 (11th Cir. 2015); Schmidt v. Finberg, 942 F.2d 1571 (11th Cir. 1991); Robbins v. Day, 954 F.2d 679 (11th Cir. 1992); Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16 (2d Cir. 1997).
• Arbitrator legal error is not “misconduct” or “exceeding powers”: Cavalier Mfg., Inc. v. Gant, 143 So. 3d 762 (Ala. 2013).
• Rule 71B prerequisites and “quickening” of motions to vacate: Alabama Psychiatric Servs., P.C. v. Lazenby, 292 So. 3d 295 (Ala. 2019); Wynlake Residential Ass’n v. Hulsey, 358 So. 3d 387 (Ala. 2021).
• Standard of review on confirmation of awards: Escapes! To the Shores Condo. Ass’n v. Hoar Constr., LLC, 381 So. 3d 424, 428 (Ala. 2023).
• Brief mention of Alabama Arbitration Act left undeveloped, thus not addressed: Dykes v. Lane Trucking, Inc., 652 So. 2d 248 (Ala. 1994).

Legal Reasoning

1) Waiver of “evident partiality” challenges through imputed corporate knowledge

Apex argued that the arbitrator failed to disclose his law firm’s prior representation of Apex and an associated fee dispute, creating a “reasonable impression of partiality” under § 10(a)(2). The Court did not reach the substance of “evident partiality” because it found waiver. Two pillars support this result:

• Waiver by silence despite knowledge or access to knowledge: Parties cannot hold objections in reserve and then spring them after an unfavorable award. Alabama’s cases (J. Don Gordon; Tucker) and persuasive federal authorities (e.g., Técnicas Reunidas) treat silence as waiver where the party knew or should have known reasons to object before the award.
• Imputation of corporate knowledge: The CEO’s knowledge of the law firm’s prior representation and fee dispute is imputed to the corporation. A corporate litigant cannot avoid waiver by assigning the arbitration to a different officer and then asserting that officer’s lack of personal knowledge. Applying classic Alabama agency principles (Birmingham Boys’ Club; Central of Georgia Ry.), the entity is “bound by” knowledge acquired by agents acting within the scope of their duties.

Because the CEO had the relevant knowledge when arbitrator selection occurred and Apex indicated “no preference” despite the arbitrator’s resume listing his long employment at the firm, Apex’s post-award objection was untimely and thus waived.

2) Denial of continuance: no misconduct absent prejudice and unreasonable refusal

Apex sought a “brief continuance” after substituting counsel about a month before the hearing. The arbitrator denied the request, citing a strictly enforced scheduling order and the length of time Rocca’s family had waited for resolution. Under § 10(a)(3), vacatur for refusal to postpone requires a showing that:

• the denial lacked any reasonable basis; and
• the party suffered prejudice—typically, the inability to present material, noncumulative evidence or a critical witness.

The Court found both elements lacking. The arbitrator expressly relied on a strict scheduling order and Apex’s own timing in changing counsel. Apex did not identify any specific evidence or witnesses it could not present, nor any concrete prejudice beyond conclusory assertions about preparation time. Accordingly, there was no “misconduct” within the meaning of § 10(a)(3).

3) Alleged misapplication of Alabama conversion law and damages is not vacatur

Apex’s third argument—that the arbitrator “blatantly disregarded” Alabama conversion law by finding conversion without Apex’s possession or control, and miscalculated compensatory and punitive damages—was rejected under Cavalier Manufacturing. In Alabama, mere legal error (even serious error) by an arbitrator is not “misconduct” under § 10(a)(3) and does not mean the arbitrator “exceeded [his] powers” under § 10(a)(4). The FAA’s narrow vacatur grounds do not include a free-standing “manifest disregard of the law” doctrine in Alabama state court review of arbitral awards.

4) Procedural rigor under Ala. R. Civ. P. 71B(f)

The Court re-emphasized a critical procedural step: the circuit clerk must enter the arbitration award “as the final judgment of the court” before a circuit court can rule on a motion to vacate. An early appeal was dismissed as premature for lack of jurisdiction. The Court also reiterated that a prematurely filed motion to vacate “quickens” once the award is entered as judgment, at which point it becomes ripe for decision. These reminders are potent practice points for preserving jurisdiction and timing appellate review.

Impact and Practical Implications

• Corporate litigants in arbitration must consolidate institutional knowledge when vetting arbitrators. Knowledge held by any officer or agent acting within the scope of duties is imputed to the entity. If there are past representations, business relationships, or fee disputes involving an arbitrator’s firm, parties should investigate and, if necessary, object before the arbitrator is confirmed. “No preference” positions carry risk when red flags are discoverable.
• Post-award “evident partiality” attacks are disfavored without earlier, timely objections. The decision fortifies a robust waiver doctrine consistent with federal jurisprudence and should discourage strategic silence during arbitrator selection.
• Requests to continue an arbitration hearing due to late changes in counsel will rarely support vacatur unless the record shows concrete prejudice and an absence of any reasonable basis for proceeding as scheduled. Arbitrators’ interest in expeditious resolution, especially when memorialized in strict scheduling orders, will be respected on review.
• Legal error by arbitrators, even in core tort issues like conversion or damages, will not justify vacatur in Alabama under § 10(a)(3)–(4). Parties who want appellate-level legal correction should not expect it in FAA review; the price of arbitration’s speed and finality is limited judicial scrutiny.
• Rule 71B is jurisdictional in practice. Parties must ensure the clerk’s entry of the award as the court’s judgment precedes any substantive ruling on vacatur and any appeal. Premature appeals waste time and resources and risk dismissal.
• Operationally, the case spotlights the legal risks when a restoration contractor appears to control a “separate” pack-out vendor. Evidence of shared management, co-location, and directing payments can support findings of control for tort claims like conversion—even though the Supreme Court here did not revisit the merits due to the FAA’s narrow review.

Complex Concepts Simplified

• Evident partiality: Under the FAA, an award may be vacated if an arbitrator’s partiality is “evident” (e.g., undisclosed significant relationships). But parties must timely object when they know or should know of facts suggesting bias; silence before the award is waiver.
• Imputed corporate knowledge: A corporation “knows” what its officers or agents know in the course of their duties. One officer’s lack of personal knowledge does not negate another officer’s knowledge for the entity.
• Misconduct under § 10(a)(3): Includes refusing to postpone a hearing “upon sufficient cause shown,” but vacatur requires showing no reasonable basis for the refusal and that the refusal prejudiced the party’s ability to present its case.
• Exceeding powers under § 10(a)(4): Focuses on whether the arbitrator acted outside the scope of the parties’ agreement or authority, not whether the arbitrator made legal mistakes. In Alabama, mere legal error is not grounds for vacatur.
• “Denied by operation of law”: In Alabama, certain post-judgment motions are deemed denied if not ruled upon within a prescribed time, preserving finality and appellate timelines even without an express order.
• Rule 71B(f), Ala. R. Civ. P.: After an award, the circuit clerk—not the judge—must enter the award as the court’s judgment. Only then can the court entertain motions to vacate, modify, or correct the award; appeals lie from that judgment.

Conclusion

The Alabama Supreme Court’s decision in Apex v. Rocca delivers three clear messages to arbitration practitioners and corporate litigants:

1. Timely vet and object to arbitrator conflicts—or forever hold your peace. Corporate knowledge will be imputed, and tactical silence is waiver.
2. Continuance denials will not upend awards absent a concrete showing of prejudice and an absence of a reasonable scheduling basis. Substituting counsel close to a hearing is not, without more, “sufficient cause.”
3. Alleged legal errors by arbitrators do not equate to “misconduct” or “exceeding powers” under the FAA. Arbitration’s finality is preserved against backdoor merits review.

Procedurally, the case also reinforces strict compliance with Rule 71B(f): ensure the clerk’s entry of the award as the judgment before seeking vacatur or appealing. Substantively, the opinion cements Alabama’s alignment with federal waiver and limited-review principles under the FAA, and breaks new ground in expressly applying imputed corporate knowledge to the waiver of arbitrator-partiality objections. The result promotes diligence in arbitrator selection, adherence to arbitral schedules, and the finality of arbitral decisions.

Key Takeaways for Practitioners

• Conduct and document conflict checks across the whole organization during arbitrator selection; coordinate between legal, executive, and claims teams.
• Object promptly to potential arbitrator conflicts—before the arbitrator is confirmed or, at latest, before the hearing.
• When seeking a continuance, articulate specific prejudice (e.g., identified missing witnesses, unavailable evidence, why delay is indispensable) and address the arbitrator’s scheduling constraints.
• Draft termination or transition agreements (like letter agreements) to capture all conditions explicitly; undisclosed conditions (e.g., conditioning return of property on payment) may incubate tort exposure.
• Don’t file appeals or vacatur motions before the clerk enters the award as judgment; confirm Rule 71B(f) compliance to preserve jurisdiction and timing.