 1      IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

 2 Opinion Number: ___________

 3 Filing Date: DECEMBER 1, 2016

 4 NO. 34,253

 5 L.D. MILLER CONSTRUCTION, INC.,

 6       Plaintiff-Appellee,

 7 v.

 8 STEPHEN KIRSCHENBAUM
 9 and BARBRO KIRSCHENBAUM,

10       Defendants-Appellants.

11 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
12 Francis J. Mathew, District Judge

13 Thomas E. Chism
14 Albuquerque, NM

15 for Appellee

16 Coberly & Martinez, LLLP
17 Todd A. Coberly
18 Santa Fe, NM

19 for Appellants
 1                                       OPINION

 2 ZAMORA, Judge.

 3   {1}   In this case, we are presented with the question—can an arbitrator designated

 4 by the parties to conduct an arbitration be disqualified by the American Arbitration

 5 Association (AAA) for cause if the parties do not also explicitly agree in writing that

 6 the arbitrator shall function as a non-neutral arbitrator? The district court ruled that

 7 he could be disqualified. We affirm.

 8 I.      PROCEDURAL AND FACTUAL BACKGROUND

 9   {2}   In the fall of 2011, Stephen and Barbro Kirschenbaum hired L.D. Miller

10 Construction Company (Miller) to do concrete and framing work for a garage and

11 run-in shed on the Kirschenbaums’ property in Santa Fe, New Mexico. Miller

12 contends the construction project was finished in late fall. However, the

13 Kirschenbaums were apparently unsatisfied with the work and hired other contractors

14 to correct Miller’s work.

15   {3}   On December 2, 2011, Miller presented the Kirschenbaums with an invoice for

16 $28,576.46, for its work on their property. The Kirschenbaums paid Miller $15,000

17 toward the balance owed, leaving an outstanding balance of $13,576.46, which the

18 Kirschenbaums refused to pay. There is an allegation that the Kirschenbaums also
 1 kept possession of a table saw, tools, and other building materials belonging to Miller

 2 valued at approximately $800.

 3   {4}   On December 20, 2011, Miller and the Kirschenbaums entered into a written

 4 Arbitration Agreement. The full text of the Agreement is:

 5         Contractor and Owner agree to binding arbitration under AAA
 6         (American Arbitration Association) for any dispute (claim, work,
 7         material, etc.) between Contractor and Owner at the following location:

 8         Hacienda del Cerezo
 9         100 Camino del Cerezo
10         Santa Fe, New Mexico 87506

11         (And including or for: Hacienda del Cerezo, Ltd., Stephen/Barbro
12         Kirschenbaum)

13         Contractor and Owner agree that the designated arbitrator shall be Roger
14         Lengyel [(Lengyel)].

15   {5}   In April 2013 Miller filed a complaint in the First Judicial District Court

16 against the Kirschenbaums for debt and money due concerning its work on the

17 Kirschenbaums’ property. The Kirschenbaums were served with a summons by

18 certified mail. Though the Kirschenbaums responded informally to Miller’s counsel,

19 they did not enter a timely appearance or file a timely answer or other responsive

20 pleading with the district court. In June 2013 Miller filed a motion for default

21 judgment. No response to the motion was filed by the Kirschenbaums and as a result,




                                              2
 1 the district court issued an order granting Miller’s motion for default judgment,

 2 finding the Kirschenbaums liable for $16,153.98.

 3   {6}   Represented by counsel, the Kirschenbaums promptly filed an answer to

 4 Miller’s original complaint alleging as an affirmative defense that Miller’s court

 5 action was barred by the Arbitration Agreement. The Kirschenbaums also moved to

 6 compel arbitration and to vacate the default judgment. In November 2013, the court

 7 issued an order granting the Kirschenbaums’ motion to vacate the default judgment

 8 and granting their motion to compel arbitration. In particular, the order stated:

 9         [T]he [o]rder of [d]efault [j]udgment entered on July 2, 2013[,] is
10         vacated, these proceedings are stayed, and that the parties are compelled
11         to arbitrate this matter pursuant to the terms of the December [20,]
12         2011[, A]rbitration [A]greement, requiring binding arbitration under the
13         [AAA] with . . . Lengyel as the designated arbitrator.

14   {7}   Apparently the arbitration did not progress smoothly. On January 22, 2014,

15 Miller sent a letter to AAA requesting disqualification and removal of Lengyel as

16 arbitrator “pursuant to [AAA] Rule []20” for refusing to perform his duties pursuant

17 to required procedures, as well as for lack of independence, i.e., non-neutrality, which

18 was not part of the parties’ agreement. In particular, Miller alleged that “ground

19 rules” set by Lengyel to govern the arbitration were mere “recitals” of the

20 Kirschenbaums’ desire to delay the arbitration process, exclude AAA intervention,

21 and limit communication between the parties and Lengyel. Miller also asserted that



                                              3
 1 it had become apparent that Lengyel was having ex parte communications with the

 2 Kirschenbaums.

 3   {8}   In response, the Kirschenbaums sent a letter to the AAA contending that

 4 Lengyel could not be disqualified pursuant to the district court’s order compelling

 5 arbitration and designation of Lengyel as the parties’ arbitrator. In addition, the

 6 Kirschenbaums argued that the parties intended to appoint a non-neutral arbitrator not

 7 subject to AAA Rule 20.

 8   {9}   AAA responded to Miller’s complaint stating: “[i]n light of the [c]ourt [o]rder

 9 requiring binding arbitration under the [AAA] with . . . Lengyel as the designated

10 arbitrator, [Miller] may seek clarification from the [c]ourt as to AAA’s authority to

11 address this request for removal.” Miller filed a motion with the district court seeking

12 clarification of its order, arguing that all AAA rules had been incorporated into the

13 Arbitration Agreement. At the hearing on Miller’s motion to clarify, the court

14 observed:

15         When I look at the contract that the parties entered into for the purpose
16         of arbitration, I note that Mr. [Lengyel] is designated but not required [to
17         serve as arbitrator]. What is required is that the parties arbitrate under
18         the rules of AAA. . . .

19                 If it were the other way around then potentially the AAA rules
20         would have no meaning. If the arbitrator could as a designated arbitrator
21         . . . ignore or avoid those rules at his discretion then that would put at
22         issue the AAA rules and their requirement of the AAA rules under the
23         parties’ agreement.


                                                4
 1   {10}   The court issued an order on June 4, 2014,1 concluding that “it was the parties’

 2 intent that the arbitration between them would be subject to all the rules and

 3 procedures of the [AAA], including the rule regarding disqualification of an

 4 arbitrator[,]” and ordered that AAA “has the authority to disqualify designated

 5 arbitrator . . . Lengyel, if the AAA determines that such a disqualification is warranted

 6 under its rules and procedures.”

 7   {11}   On July 17, 2014, the Kirschenbaums moved, pro se, for reconsideration of the

 8 June 4 order. In pertinent part, the Kirschenbaums argued, “[n]ot disclosed by prior

 9 counsel was that both parties specifically discussed and agreed to use . . . Lengyel,

10 an architect very well known to them both—which was paramount to anything else.

11 Using the procedures of the AAA was merely an adjunct to their desire to have Mr.

12 Lengyel decide any dispute.” The Kirschenbaums requested an order finding the

13 AAA rule providing for the removal and substitution of an arbitrator did not apply to

14 the parties’ arbitration and order the parties to arbitrate with Lengyel serving as

15 arbitrator. In September 2014 AAA decided to remove Lengyel from the parties’ case.

16   {12}   Two months later, in November 2014, the court denied the Kirschenbaums’

17 motion for reconsideration. The Kirschenbaums filed their notice of appeal on

18 November 14, 2014.

         1
19         On June 2, 2014, the court issued an order permitting counsel for the
20 Kirschenbaums to withdraw from the case for professional reasons.

                                               5
 1 II.      DISCUSSION

 2 A.       The Kirschenbaums’ Appeal of the District Court’s Order Denying Their
 3          Motion for Reconsideration Was Timely Filed

 4   {13}   The Kirschenbaums themselves note a potential problem with the timeliness

 5 of their appeal and the related issue of the scope of our review. The Kirschenbaums’

 6 motion for reconsideration was filed more than thirty days after the order it addressed.

 7 As such, the motion was filed after the deadline for filing an appeal to this Court from

 8 the district court’s order. See Rule 12-201(A)(2) NMRA. Our case law is clear that

 9 Rule 1-060(B) NMRA motions brought “to correct an error of law by the district

10 court must be filed before the expiration of the time for appeal.” Deerman v. Bd. of

11 Cty. Commr’s, 1993-NMCA-123, ¶ 16, 116 N.M. 501, 864 P.2d 317; see Resolution

12 Tr. Corp. v. Ferri, 1995-NMSC-055, ¶ 9, 120 N.M. 320, 901 P.2d 738. Deerman held

13 that district courts lack authority to grant relief pursuant to a “belated” Rule 1-060(B)

14 motion, absent extraordinary circumstances. Deerman, 1993-NMCA-123, ¶¶ 21, 23-

15 24. Given the holding of Deerman, Miller argues that the Kirschenbaums’ notice of

16 appeal is too late to capture the order entered in June 2014 and the appeal should thus

17 be dismissed as untimely. We disagree.

18   {14}   As we noted in Wells Fargo Bank, N.A. v. City of Gallup, 2011-NMCA-106,

19 ¶ 8, 150 N.M. 706, 265 P.3d 1279, the rule stated in Deerman is not absolute. In

20 Wells Fargo Bank, we made clear that the rule in Deerman should be applied “only


                                               6
 1 when the [Rule 1-060(B)(1)] motion is used as a substitute for a direct appeal or as

 2 a means of circumventing the time period allowed for a direct appeal.” Wells Fargo

 3 Bank, 2011-NMCA-106, ¶ 8.

 4   {15}   The timeliness of the Kirschenbaums’ motion for reconsideration was not

 5 litigated below. We are left with the real-world circumstance that the district court

 6 considered the motion and denied it on its merits. Part of the Kirschenbaums’ motion

 7 for reconsideration detailed the breakdown of their relationship with the attorney who

 8 represented them at the hearing on Miller’s motion, and their unsuccessful efforts to

 9 hire new counsel before they filed their pro se motion. Given their unrebutted

10 circumstance, the district court would have been within its discretion to determine

11 that the late motion was not simply an attempt to evade the time for appeal. Applying

12 our presumption in the correctness of district court actions, we will not engage an

13 independent assessment of the Kirschenbaums’ motives. Cf. Farmers, Inc. v. Dal

14 Mach. & Fabricating, Inc., 1990-NMSC-100, ¶ 8, 111 N.M. 6, 800 P.2d 1063 (“The

15 presumption upon review favors the correctness of the [district] court’s actions.”).

16 This approach also furthers our policy of construing our appellate rules liberally so

17 as to determine appeals on their merits. See Wakeland v. N.M. Dep’t of Workforce

18 Solutions, 2012-NMCA-021, ¶ 7, 274 P.3d 766 (noting that this Court has adopted

19 a “liberal approach” to the interpretation of the Rules of Appellate Procedure “in



                                             7
 1 order to further a policy of hearing appeals on their merits rather than dismissing

 2 them on technical grounds”).

 3   {16}   “Appellate courts will not interfere with the action of the [district] court in

 4 vacating a judgment [under Rule 1-060(B)]” or with an appeal from the denial of a

 5 Rule 1-060(B) motion, except upon a showing of abuse of discretion by the district

 6 court. Phelps Dodge Corp. v. Guerra, 1978-NMSC-053, ¶ 20, 92 N.M. 47, 582 P.2d

 7 819; James v. Brumlop, 1980-NMCA-043, ¶ 9, 94 N.M. 291, 609 P.2d 1247. The

 8 district court did not abuse its discretion in ruling on the Kirschenbaums’ motion to

 9 reconsider under Rule 1-060(B). For the foregoing reasons, we hold the

10 Kirschenbaums timely appealed the district court’s denial of their motion to

11 reconsider.

12 B.       The District Court Did Not Abuse Its Discretion in Denying the
13          Kirschenbaums’ Motion to Reconsider

14 1.       Standard of Review

15   {17}   Generally, we review a district court’s ruling under Rule 1-060(B) for abuse

16 of discretion. Edens v. Edens, 2005-NMCA-033, ¶ 13, 137 N.M. 207, 109 P.3d 295

17 (holding that to reverse the district court under an abuse of discretion standard “it

18 must be shown that the court’s ruling exceeds the bounds of all reason or that the

19 judicial action taken is arbitrary, fanciful, or unreasonable” (omission, internal

20 quotation marks, and citation omitted)). However, insofar as determining whether the


                                               8
 1 district court abused its discretion in denying the Kirschenbaums’ Rule 1-060(B)

 2 motion requires construction of the Arbitration Agreement, we proceed de novo. See

 3 Rivera v. Am. Gen. Fin. Servs., Inc., 2011-NMSC-033, ¶ 27, 150 N.M. 398, 259 P.3d

 4 803 (noting that the interpretation of an arbitration agreement is an issue the appellate

 5 courts review is de novo); W. Farm Bureau Ins. Co. v. Carter, 1999-NMSC-012, ¶ 4,

 6 127 N.M. 186, 979 P.2d 231 (recognizing that the contract interpretation is a matter

 7 of law reviewed de novo).

 8   {18}   Arbitration agreements are a species of contract, subject to the principles of

 9 New Mexico contract law. Horne v. Los Alamos Nat’l Sec., L.L.C., 2013-NMSC-004,

10 ¶ 16, 296 P.3d 478. Accordingly, we apply New Mexico contract law in interpretation

11 and construction of the Arbitration Agreement. We note that the parties do not argue

12 that the Arbitration Agreement is ambiguous. Neither of them provided any testimony

13 as to their intent or thoughts with regard to the wording of the Agreement. As such,

14 our job is a pure legal question of interpretation and construction: what do the words

15 of the Agreement mean and what is their legal effect? See Fashion Fabrics of Iowa,

16 Inc. v. Retail Inv’rs Corp., 266 N.W.2d 22, 25 (Iowa 1978) (noting that the

17 “[i]terpretation involves ascertaining the meaning of contractual words; construction

18 refers to deciding their legal effect”).




                                               9
 1 2.       Rivera Does Not Control

 2   {19}   The Kirschenbaums contend that pursuant to the Rivera “integral[-]ancillary”

 3 test, the second clause of the Arbitration Agreement, designating Lengyel “shall”

 4 serve as the parties’ arbitrator, is integral, while the first clause, providing the parties

 5 agree to arbitrate “under AAA” unmodified by mandatory contractual language like

 6 “must” or “shall,” is ancillary. We disagree.

 7   {20}   The Supreme Court’s application of the “integral[-]ancillary” test in Rivera was

 8 limited to the fact-specific issue of the unavailability of a designated institutional

 9 arbitration provider that the parties clearly intended to use exclusively in resolving

10 disputes between them. Rivera addressed a consumer dispute arbitration agreement

11 involving the National Arbitration Forum (NAF) in the wake of the dissolution of its

12 consumer dispute division. 2011-NMSC-033, ¶ 20. The language of the parties’

13 agreement demonstrated an intent to designate NAF as the arbitration provider and

14 to arbitrate exclusively under NAF’s rules and procedures. Id. ¶¶ 3, 29 (noting that

15 the agreement provided the parties “shall” agree they arbitrate under NAF rules and

16 procedures). The NAF rules and procedures included a rule providing that only an

17 NAF arbitrator could administer the NAF rules and procedures. Id. ¶ 35. The Court

18 reasoned that the parties’ intent and the fact that only an NAF arbitrator could

19 administer the NAF rules demonstrated that arbitration under NAF was integral to the



                                                10
 1 parties’ agreement. Id. ¶ 38. However, because of NAF’s consumer dispute division’s

 2 dissolution, it was impossible for the parties to arbitrate under NAF’s rules and

 3 procedures. Id. ¶ 35. As a result, the Court determined it would violate an integral

 4 term of the parties’ agreement to compel them to arbitrate disputes under an

 5 arbitration provider other than NAF and the NAF rules and procedures. Id. ¶¶ 55-56

 6 (striking the parties’ arbitration provisions in their entirety).

 7   {21}   Rivera did not consider the fact-specific issues presented in this case:

 8 interpretation of arbitration agreement terms naming an individual arbitrator to

 9 resolve the parties’ disputes “under AAA,” an existing institutional arbitration

10 provider with a set of rules controlling proceedings held under its auspices. In

11 contrast, only one material provision was at issue in Rivera—NAF “shall” serve as

12 the parties’ arbitration provider. A particular arbitrator was not named in the

13 agreement to serve as the parties’ designated arbitrator, and so the Court did not

14 consider this variable in Rivera. Here, AAA is available to administer the parties’

15 arbitration, unlike Rivera. Also, the AAA rules provide that in certain circumstances,

16 a designated arbitrator may be disqualified and replaced. Interpretation of the

17 Arbitration Agreement in this case goes beyond the scope of the Court’s analysis in

18 Rivera. See State v. Sanchez, 2015-NMSC-018, ¶ 26, 350 P.3d 1169 (holding that

19 “cases are not authority for propositions not considered” (internal quotation marks



                                              11
 1 and citation omitted)). Accordingly, we decline to adopt the Kirschenbaums’

 2 interpretation of the Arbitration Agreement under Rivera. To do so would

 3 unreasonably treat as equivalent an unavailable arbitration provider and a

 4 disqualifiable arbitrator. State ex rel. Udall v. Colonial Penn Ins. Co.,

 5 1991-NMSC-048, ¶ 30, 112 N.M. 123, 812 P.2d 777 (“In construing a contract, the

 6 law favors a reasonable rather than unreasonable interpretation.”).

 7   {22}   In addition, Rivera did not use the integral-ancillary test in Brown v. ITT

 8 Consumer Financial Corp., 211 F.3d 1217, 1222 (11th Cir. 2000), to gauge the

 9 relative importance of two contract provisions; rather, it used it to determine whether

10 a contract condition was so central to the parties’ intent in contracting that to arbitrate

11 without it would be to “eviscerate the core of the parties’ agreement.” Rivera, 2011-

12 NMSC-033, ¶ 38 (internal quotation marks and citation omitted). Interpretations of

13 the meaning and relative value of contract provisions is best left to established

14 contract interpretation and construction doctrines, with their overarching goal of

15 enforcing contracts according to their terms, and eschewing the nullification of

16 provisions.

17 C.       The District Court Correctly Interpreted the Terms of the Arbitration
18          Agreement

19   {23}   The district court found in its June 4, 2014, order “[t]hat it was the parties’

20 intent that the arbitration between them would be subject to all the rules and


                                               12
 1 procedures of the [AAA], including the rule regarding disqualification of an

 2 arbitrator.” We agree with the district court that this is the legal effect of the parties’

 3 chosen language.

 4   {24}   The first clause of the Arbitration Agreement provides: “Contractor and Owner

 5 agree to binding arbitration under AAA.” The most reasonable construction of this

 6 language is that “under AAA” incorporates all of the AAA rules normally applicable

 7 to proceedings held under AAA’s auspices. See ConocoPhillips Co. v. Lyons,

 8 2013-NMSC-009, ¶ 67, 299 P.3d 844 (holding that a court may “impl[y] a reasonable

 9 term to cover” an omitted logistical issue if the implied term is consistent with the

10 language of the agreement (internal quotation marks and citation omitted)); Am. Arb.

11 Ass’n, Rule 2 (2009) (providing when parties agree to arbitrate under the AAA

12 “[r]ules, or when they provide for arbitration by the AAA and an arbitration is

13 initiated under th[e AAA r]ules, they thereby authorize AAA to administer the

14 arbitration”). Additionally, there is no language of limitation in the Arbitration

15 Agreement demonstrating intent to limit the scope of the AAA rules’ application to

16 the parties’ arbitration. Cf. Centex/Worthgroup, LLC v. Worthgroup Architects, L.P.,

17 2016-NMCA-013, ¶ 18, 365 P.3d 37 (holding that “where a subcontract contains

18 words of definite limitation, those words are given effect and the incorporation of the

19 prime contract is limited accordingly” (internal quotation marks and citation



                                               13
 1 omitted)). As a result, the language of the Arbitration Agreement reasonably

 2 demonstrates an intent to arbitrate under all of the AAA rules.

 3   {25}   The second clause of the Arbitration Agreement provides: “Contractor and

 4 Owner agree that the designated arbitrator shall be . . . Lengyel.” Employment of the

 5 language that the parties agree they shall designate Lengyel as their arbitrator is

 6 strong evidence of intent to appoint the specified person. See Rivera,

 7 2011-NMSC-033, ¶ 31; Am. Arb. Ass’n, Rule 15(a) (2009) (providing that “[i]f the

 8 agreement of the parties names an arbitrator or specifies a method of appointing an

 9 arbitrator, that designation or method shall be followed”). However, there is no

10 indication in the language of the Arbitration Agreement that the parties intended that

11 Lengyel would serve as a non-neutral arbitrator contrary to American Arbitration

12 Association, Rule 20 (2009). See ConocoPhillips, 2013-NMSC-009, ¶ 67

13 (recognizing that the “[c]ourts cannot create a new agreement for the parties”

14 (internal quotation marks and citation omitted)). Under the AAA rules, arbitrators are

15 required to adhere to all of the AAA rules generally. Am. Arb. Ass’n, Rule 8 (2009).

16 Arbitrators, including arbitrators specifically designated by the parties, are presumed

17 and expected to function as neutral arbitrators, unless the parties specifically agree

18 in “writing” that a specifically designated arbitrator shall function as a non-neutral

19 arbitrator. Am. Arb. Ass’n, Rule 20(a) (2009). In all other circumstances, an



                                             14
 1 arbitrator, including an arbitrator specifically designated by parties in an agreement,

 2 may be disqualified under the AAA rules for non-neutrality. Am. Arb. Ass’n, Rule

 3 20 (2009). As recognized by the district court, “[i]f the arbitrator could . . . ignore or

 4 avoid [the] rules at his discretion then that would put at issue the AAA rules” and

 5 potentially cause them to have no meaning. Lengyel should thus be treated as a

 6 neutral arbitrator based on the absence of an explicit agreement to appoint him as a

 7 non-neutral arbitrator.

 8   {26}   The Kirschenbaums argue the parties intended to designate Lengyel as a

 9 non-neutral arbitrator based on both parties’ long relationships with him, his

10 background as an architect, and his lack of legal or mediation training. However,

11 there is simply no evidence in the record and no indication in the Arbitration

12 Agreement that such a proposition made it into the final agreement. Accordingly,

13 Lengyel will be treated as a neutral arbitrator. Lengyel was not explicitly

14 denominated as a non-neutral arbitrator, and the Kirschenbaums failed to demonstrate

15 by clear and convincing evidence he was intended to serve as a non-neutral arbitrator.

16 See Borst v. Allstate Ins. Co., 2006 WI 70, ¶ 43, 717 N.W.2d 42 (holding that the

17 arbitrators—whether designated by the parties or not—are presumed to be neutral and

18 impartial in the absence of clear and convincing evidence in the parties’ agreement

19 to the contrary).



                                               15
 1 D.       The District Court’s Denial of the Kirschenbaums’ Motion for
 2          Reconsideration Was Not Unreasonable, Arbitrary, or Fanciful

 3   {27}   The most natural construction of the Arbitration Agreement is that the parties

 4 intended to arbitrate disputes between them concerning Miller’s construction work

 5 under all of the AAA rules, with Lengyel serving as a neutral arbitrator. To interpret

 6 the Arbitration Agreement designating Lengyel to trump the AAA rule permitting

 7 replacement of a neutral arbitrator in certain circumstances would risk rendering the

 8 AAA Rules meaningless. Accordingly, we hold that the district court did not act

 9 unreasonably, arbitrarily, or fanciful in denying the Kirschenbaums’ motion for

10 reconsideration. See Edens, 2005-NMCA-033, ¶ 13.

11 III.     CONCLUSION

12   {28}   For the foregoing reasons, we affirm.

13   {29}   IT IS SO ORDERED.


14
15                                          M. MONICA ZAMORA, Judge

16 WE CONCUR:


17 __________________________________
18 JONATHAN B. SUTIN, Judge


19 __________________________________
20 LINDA M. VANZI, Judge

                                              16
