## Facts

- Ralph F. Patten, Jr. worked for John Hancock Mutual Life Insurance Company and later held positions involving Hancock affiliates, including Signator Investors, Inc.
- In 1992, Patten and Hancock (and its affiliates) executed a mutual arbitration agreement requiring arbitration of claims and requiring written notice of any claim within one year of the event giving rise to it, or the claim would be waived.
- Patten later entered into a Management Agreement with Signator Investors that required arbitration of disputes arising from the agreement, contained a Massachusetts choice-of-law clause, and stated it superseded all prior agreements between the parties regarding its subject matter.
- The Management Agreement did not state any time limit or notice requirement for commencing arbitration.
- Patten’s relationship was terminated effective January 2, 2001.
- Patten sent respondents a letter on August 2, 2001 alleging wrongful termination and age discrimination.
- Patten demanded arbitration approximately 14 months after the termination date.
- The arbitrator dismissed Patten’s claims against Signator Investors as time-barred by implying a one-year limitations period into the Management Agreement, effectively mirroring the earlier mutual arbitration agreement’s one-year notice provision.
- The district court denied Patten’s motion to vacate and confirmed the award as to Signator Investors; Patten appealed that portion.

## Issues

1. Whether the arbitrator acted in manifest disregard of the law by imposing an implied one-year limitations period not contained in the Management Agreement, despite its supersession and Massachusetts choice-of-law provisions.
2. Whether the time-bar ruling was drawn from the essence of the Management Agreement or instead reflected a rewriting of the contract by importing terms from a superseded agreement.

## Decision

- The Fourth Circuit vacated the district court’s order insofar as it refused to vacate the award dismissing claims against Signator Investors and remanded.
- The court held the arbitrator manifestly disregarded governing law by importing a one-year contractual time limit from a superseded agreement into a contract that was silent on limitations and governed by Massachusetts law.
- The court further held the time-bar ruling was not drawn from the essence of the Management Agreement because it lacked support in the contract’s text and contradicted the supersession clause.

## Legal Principles

- Judicial review of arbitration awards is highly deferential, but an award may be vacated when an arbitrator knowingly disregards clearly controlling law.
- An award must be grounded in the parties’ agreement; an arbitrator exceeds authority by ignoring unambiguous contractual language or effectively rewriting the contract.
- Where a contract includes a supersession clause and is silent on a contractual limitations period, an arbitrator may not supply a limitations term by importing it from a prior, superseded agreement, particularly where the chosen state law generally looks to statutory limitation periods absent contractual specification.

## Conclusion

The Fourth Circuit set aside the arbitrator’s time-bar dismissal against Signator Investors because the arbitrator inserted a one-year limitations term not found in the controlling, superseding Massachusetts-governed agreement, amounting to manifest disregard of law and an award untethered to the contract.


Patten v. Signator Ins. Agency, Inc., 441 F.3d 230 (4th Cir. 2006)