Will a Nebraska court compel arbitration under this clause?
Yes if the contract involves interstate commerce, because the Federal Arbitration Act governs and sweeps Nebraska's restrictions aside. If the deal is purely intrastate, only if the contract carries an exact capitalised and underlined notice next to the signature block. And for insurance, no, either way. Nebraska's own statute is Neb. Rev. Stat. § 25-2602.01(b): a pre-dispute clause “is valid, enforceable, and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract, if the provision is entered into voluntarily and willingly.” Subsection (e) excludes workers' compensation and subsection (f) removes from subsection (b), pre-dispute clauses only, personal-injury tort claims, Nebraska Fair Employment Practice Act claims, Motor Vehicle Industry Regulation Act agreements and insurance-policy agreements. Neb. Rev. Stat. § 25-2602.02 adds the form requirement: the statutory sentence “shall appear in capitalized, underlined type adjoining the signature block of any standardized agreement in which binding arbitration is the sole remedy for dispute resolution”, and the sentence itself is “THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.” Kramer v. Eagle Eye Home Inspections, Inc. holds that “when a contract which attempts to establish binding arbitration as the sole remedy fails to strictly comply with § 25-2602.02, the arbitration clause is voidable and unenforceable”, and Aramark Uniform & Career Apparel, Inc. v. Hunan, Inc. states it flatly: “The failure to include this statement renders the arbitration agreement unenforceable under Nebraska law.” The FAA is what usually rescues it. Aramark: “Arbitration in Nebraska is governed by the UAA as enacted in Nebraska. But if arbitration arises from a contract involving interstate commerce, it is governed by the FAA”, and “Thus, when a contract is governed by the FAA, the state notice requirements are preempted by the FAA.” Cornhusker International Trucks, Inc. v. Thomas Built Buses, Inc. applies the same answer to one of the subsection (f) carve-outs: “We conclude that the FAA applies to the Agreement before us and that the FAA preempts Nebraska law which conflicts with the FAA.” Insurance is the exception that holds. Citizens of Humanity v. Applied Underwriters concludes “state law regulating the business of insur- ance is not preempted by the FAA”, and § 25-2602.01(f)(4) “invalidates the parties’ delegation provision in the RPA and operates here to reserve issues of arbitrability for the court to decide.” Finally, the Act reaches back only so far: Neb. Rev. Stat. § 25-2621, “The Uniform Arbitration Act applies only to agreements made subsequent to August 30, 1987”, and Millennium Solutions, Inc. v. Davis holds “the public policy of the State of Nebraska did not change until” § 25-2602.01 took effect on June 11, 1997.
The trap
The trap is that a purely intrastate Nebraska contract needs magic words, and the magic words are defined by typography. Drafters never meet the requirement because the FAA preempts it, until the deal is local, and Garlock v. 3DS Properties, L.L.C. is the sting: “we hold that a simple contract for the sale of residential real estate is an inherently intrastate activity”, so the Uniform Arbitration Act governed. The district court in Garlock held that a notice printed in BOLD instead of UNDERLINED was fatal; the Supreme Court reversed on waiver and never reached the point, so whether bold-without-underline complies is still open. Kramer is the only Nebraska decision that has actually killed a clause for want of the notice, and it did. Three sub-traps follow. A sentence that is nearly the statutory one is not the statutory one: in Heard v. Silvus the signature block read “This con- tract contains an arbitration provision unless waived in Section 31 which may be enforced by the parties”, and the court sidestepped validity and decided on scope instead, “Because the Disclosure Statement was separate from the Purchase Agreement, the Buyers’ claim that Silvus vio- lated § 76-2,120 was not subject to the arbitration provision in the Purchase Agreement.” Any pre-dispute clause in a contract entered before June 11, 1997 is void under Millennium Solutions. And Neb. Rev. Stat. § 25-2618.01 lets the counterparty walk around the clause entirely: whenever the amount of a controversy subject to the terms of an otherwise valid arbitration agreement is within the jurisdiction of the Small Claims Court, a party may submit it there for ultimate resolution, and the controversy cannot then be transferred back to the regular docket of the county court. THE SECOND TRAP RUNS THE OTHER WAY: for insurance, the FAA does not save you. Speece v. Allied Professionals Ins. Co. holds that the FAA does not preempt the insurance carve-out, because McCarran-Ferguson reverse-preempts a federal act that does not specifically relate to insurance, and in the same breath that the Liability Risk Retention Act DOES preempt it as to foreign risk retention groups, so the clause there was compelled after all. Citizens of Humanity confirms it and extends it to the delegation clause, so a Nebraska insurance arbitration clause does not even get to send arbitrability to the arbitrator. The escapes shown in the authorities read here are narrow: a different insurance-specific federal statute (the Liability Risk Retention Act, for foreign risk retention groups, in Speece) or Neb. Rev. Stat. § 44-811. Last, waiver cuts both ways: Garlock states it as the rule “these courts hold” in other jurisdictions: “voluntary participation in an arbitration proceeding on the merits of a dispute will result in a waiver or forfeiture of the right to later challenge arbitrability”, and then applies it: “In the instant case, the conduct of the Garlocks resulted in a waiver of the right to challenge arbitrability.” So a party who arbitrates first and objects later loses an otherwise winning invalidity argument.
38 authorities
- statuteNeb. Rev. Stat. § 25-2602.01enactment date not established
The words that state the rule
(b) A provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable, and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract, if the provision is entered into voluntarily and willingly.
- statuteNeb. Rev. Stat. § 25-2602.01enactment date not established
The words that state the rule
Subsections (a) and (b) of this section do not apply to a claim for workers' compensation.
- statuteNeb. Rev. Stat. § 25-2602.01enactment date not established
The words that state the rule
Subsection (b) of this section does not apply to: (1) A claim arising out of personal injury based on tort; (2) A claim under the Nebraska Fair Employment Practice Act; (3) Any agreement between parties covered by the Motor Vehicle Industry Regulation Act; and
- statuteNeb. Rev. Stat. § 25-2602.01enactment date not established
The words that state the rule
(4) Except as provided in section 44-811 , any agreement concerning or relating to an insurance policy other than a contract between insurance companies including a reinsurance contract.
- statuteNeb. Rev. Stat. § 25-2602.02enactment date not established
The words that state the rule
The following statement shall appear in capitalized, underlined type adjoining the signature block of any standardized agreement in which binding arbitration is the sole remedy for dispute resolution: THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
- statuteNeb. Rev. Stat. § 25-2621enactment date not established
The words that state the rule
The Uniform Arbitration Act applies only to agreements made subsequent to August 30, 1987.
- statuteNeb. Rev. Stat. § 25-2603enactment date not established
The words that state the rule
On application of a party showing an agreement described in section 25-2602.01 and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order for the moving party, otherwise, the application shall be denied.
- case716 N.W.2d 749Kramer v. Eagle Eye Home Inspections, Inc.Neb. Ct. App.decided 2006read it at the source ↗
The words that state the rule
especially in light of the fact that the Legislature used the term “shall” in reference to such language in § 25-2602.02. Therefore, when a contract which attempts to establish binding arbitration as the sole remedy fails to strictly comply with § 25-2602.02, the arbitration clause is voidable and unenforceable
- case757 N.W.2d 205Aramark Uniform & Career Apparel, Inc. v. Hunan, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
Nebraska law, in contrast, requires that when arbitration is the sole remedy for dispute resolution of a contract, the following statement "shall appear in capitalized, underlined type adjoining the signature block[:] THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." [7] The failure to include this statement renders the arbitration agreement unenforceable under Nebraska law.
- case757 N.W.2d 205Aramark Uniform & Career Apparel, Inc. v. Hunan, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
Arbitration in Nebraska is governed by the UAA as enacted in Nebraska. But if arbitration arises from a contract involving interstate commerce, it is governed by the FAA.
- case757 N.W.2d 205Aramark Uniform & Career Apparel, Inc. v. Hunan, Inc.Neb.decided 2008read it at the source ↗
The words that state the rule
Thus, when a contract is governed by the FAA, the state notice requirements are preempted by the FAA.
- case637 N.W.2d 876Cornhusker International Trucks, Inc. v. Thomas Built Buses, Inc.Neb.decided 2002read it at the source ↗
The words that state the rule
We conclude that the FAA applies to the Agreement before us and that the FAA preempts Nebraska law which conflicts with the FAA.
- case637 N.W.2d 876Cornhusker International Trucks, Inc. v. Thomas Built Buses, Inc.Neb.decided 2002read it at the source ↗
The words that state the rule
By this act, the Legislature made clear that an arbitration clause is not valid in any motor vehicle franchise agreement.
The words that state the rule
The U.S. Supreme Court has directly addressed situations similar to the case at bar and has held that state law, even when incorporated by a choice-of-law provision, cannot prevent the enforcement of an arbitration clause otherwise valid under the FAA.
The words that state the rule
Arbitration is purely a matter of contract, and a party cannot be required to submit a dispute to arbitration unless he or she has agreed to do so.
The words that state the rule
And, while more complex transactions may impli- cate interstate commerce, we hold that a simple contract for the sale of residential real estate is an inherently intrastate activity.20 On the facts of this case, the UAA governs the purchase agreement.
The words that state the rule
As a general rule, these courts hold that voluntary participation in an arbitration proceeding on the merits of a dispute will result in a waiver or forfeiture of the right to later challenge arbitrability
The words that state the rule
And we are focused on Charter’s program or activity of residential real estate lending, which included the sale to the Wilczewskis.
The words that state the rule
We conclude that although the FAA does not preempt § 25-2602.01(f)(4), the LRRA does preempt the application of this Nebraska stat- ute to foreign risk retention groups, and that as a result, the arbitration clause in the policy APIC issued to Speece was not prohibited by § 25-2602.01(f)(4).
The words that state the rule
Giving full effect to the parties’ choice of Nebraska law, we harmonize the FAA in conjunc- tion with the McCarran-Ferguson Act and § 25-2602.01(f)(4) and conclude that state law regulating the business of insur- ance is not preempted by the FAA.
The words that state the rule
Section 25-2602.01(f)(4) invalidates the parties’ delegation provision in the RPA and operates here to reserve issues of arbitrability for the court to decide.
The words that state the rule
Therefore, prior to the 1996 amendment to article I, § 13, the public policy of this state prohibited predispute binding arbitration clauses.
The words that state the rule
We therefore conclude that the public policy of the State of Nebraska did not change until § 25-2602.01 became effective on June 11,1997. Any contract clause allowing for predispute bind *300 ing arbitration entered into before that date is void as against public policy.
The words that state the rule
Because the Disclosure Statement was separate from the Purchase Agreement, the Buyers’ claim that Silvus vio- lated § 76-2,120 was not subject to the arbitration provision in the Purchase Agreement.
- case912 N.W.2d 751Heineman v. Evangelical Lutheran Good Samaritan Soc'yNeb.decided 2018read it at the source ↗
The words that state the rule
Because the FAA, at 9 U.S.C. § 2 , preempts inconsistent state laws that apply solely to the enforceability of arbitration provisions in contracts evidencing a transaction involving commerce, 16 the arbitration agreement did not need to strictly comply with the language of the UAA
The words that state the rule
(b) Court Decides Enforceability of ADR Agreement [16-18] A party has a constitutional right to adjudication of a justiciable dispute, and the law will not find a waiver of that right absent direct and explicit evidence of actual intent of a party’s agreement to do so.
The words that state the rule
Disputes about arbitrability for a court to decide include threshold questions such as whether the parties are bound by a given arbitration clause
- caseHeard v. Silvus (Neb. Ct. App., decided 25 June 2024)Heard v. SilvusNeb. Ct. App.decided 2024
The words that state the rule
Above the buyers’ signature line in the Purchase Agreement appeared a sentence that read: “This con- tract contains an arbitration provision unless waived in Section 31 which may be enforced by the parties.”
- statuteNeb. Rev. Stat. § 25-2618.01enactment date not established
The words that state the rule
Whenever the amount of a controversy subject to the terms of an otherwise valid arbitration agreement is within the jurisdiction of the Small Claims Court under section 25-2802 , a party may submit the controversy to the Small Claims Court for ultimate resolution under sections 25-2801 to 25-2807 .
- statuteNeb. Rev. Stat. § 25-2618.01enactment date not established
The words that state the rule
A controversy submitted to the Small Claims Court under this section shall not be transferred to the regular docket of the county court under section 25-2805 .
- case716 N.W.2d 749Kramer v. Eagle Eye Home Inspections, Inc.Neb. Ct. App.decided 2006read it at the source ↗
The words that state the rule
V. CONCLUSION For the reasons stated above, we find that Kramer did not produce evidence showing the existence of a material issue of fact that prevents judgment as a matter of law with respect to the Sellers, and therefore, the grant of summary judgment in favor of the Sellers is affirmed. The grant of summary judgment in favor of Eagle Eye is reversed, because the arbitration clause of the inspection agreement is unenforceable due to the absence of the statutorily required notice language and because there is evidence that Eagle Eye has admitted that it should have found the termite damage during its inspection. Accordingly, there are genuine issues of material fact for trial; the judgment in favor of Eagle Eye is hereby reversed, and the cause as to Eagle Eye is remanded for further proceedings. Affirmed in part, and in part reversed and REMANDED FOR FURTHER PROCEEDINGS.
The words that state the rule
The principle that a party may waive arbitrability by not timely objecting has been effectively codified under the UAA, which authorizes judicial vacatur of an arbitration award when “[t]here was no arbitration agreement and the issue was not adversely determined in proceedings under section 25-2603, and the party did not participate in the arbitration hearing without raising the objection[.]”28 In the instant case, the conduct of the Garlocks resulted in a waiver of the right to challenge arbitrability.
The words that state the rule
[T]he language “This contract contains [an] arbitration provision which may be enforced by the parties” was not underlined as required by Statute. Although the language was set forth in bold face type, this does not comply with - 528 - Nebraska Supreme Court A dvance Sheets 303 Nebraska R eports GARLOCK v. 3DS PROPERTIES Cite as 303 Neb. 521 [§ 25-2602.02] and our Court has required strict compli- ance with this Statute in order to enforce [an] arbitration clause. [Citation omitted.] This failure is fatal to the enforcement of the arbitration clause.
The words that state the rule
Above the signature line in the purchase agreement appeared a sentence which read: “This contract contains an arbitration provision which may be enforced by the parties.” (Emphasis omitted.) This sentence appeared in font which was bolded and capitalized, but was not underlined.
The words that state the rule
The federal laws that are relevant to this argument are: (1) the FAA, which generally provides that arbitration provisions in written contracts are valid and enforceable; (2) the McCarran-Ferguson Act (MFA), 15 U.S.C. §§ 1011 through 1015 (2012), which provides in relevant part at § 1012(b) that a federal statute does not preempt a state statute “regulating the business of insurance” unless the federal statute “specifically relates to the business of insurance”; and (3) the LRRA, which provides in relevant part at § 3902(a)(1) that a foreign risk retention group is exempt from any state law that would “regulate, directly or indirectly, the operation of a risk retention group.”
- statuteNeb. Rev. Stat. § 25-2602.01enactment date not established
The words that state the rule
(d) Contract provisions agreed to by the parties to a contract control over contrary provisions of the act other than subsections (e) and (f) of this section.
- statuteNeb. Rev. Stat. § 44-811enactment date not established
The words that state the rule
Any such association may provide in its bylaws for arbitrating any claim for loss or damage, where a member and the association fail to agree thereon.
The words that state the rule
Our conclusion that the county court lacks jurisdiction is bolstered by § 25-2618.01(a), which empowers a party to submit a controversy, which controversy is subject to the terms of an otherwise valid arbitration agreement, to the small claims court when the amount of the controversy is within the small claims court's jurisdictional limit. It further provides that a controversy submitted to the small claims court under this section shall not be transferred to the regular docket of the county court under Neb.Rev.Stat. § 25-2805 (Cum.Supp.2006). See § 25-2618.01(b). Thus, while the Legislature allowed for very small claims to be adjudicated in the small claims court rather than through arbitration, it is significant to the issue before us that such claims could not be removed to the regular docket of the county court.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.