Can parties orally modify notice requirements in arbitration agreements? Createrra v. Sundial Explained

The Utah Court of Appeals addressed an important question about the modification of arbitration agreements in Createrra v. Sundial, clarifying when written modifications are required and when oral agreements suffice.

Background and Facts

Createrra and Sundial formed an LLC with an operating agreement requiring written notice by hand delivery or certified mail with email copies. When disputes arose, they engaged in multiple arbitrations. During the first arbitration, the parties orally agreed to accept the arbitrator’s decision via email, as noted in the written decision. The arbitrator subsequently delivered all decisions by email without objection from either party. After losing the final arbitration that ordered LLC dissolution and $52,731 in attorney fees, Createrra moved to vacate the award 91 days after receiving the emailed notice, arguing the email service violated the operating agreement’s written notice requirements.

Key Legal Issues

The central issue was whether notice provisions in arbitration agreements can be orally modified, or whether such modifications must be in writing like modifications to the scope of arbitration. Createrra argued that Pacific Development v. Orton required all arbitration agreement modifications to be written, while Sundial contended that procedural changes like notice methods could be orally modified.

Court’s Analysis and Holding

The court distinguished between modifications to the scope of arbitration agreements and procedural modifications. While Pacific Development requires written modifications to arbitration scope because parties waive substantial judicial review rights, the same concerns don’t apply to notice procedures. The Utah Arbitration Act requires only that notice be provided “in ordinary course” using practical rather than technical standards. The court held that notice provisions in arbitration agreements are governed by ordinary contract modification principles, allowing oral modifications when the parties’ intent is clear.

Practice Implications

This decision provides important guidance for practitioners handling arbitration proceedings. While the core arbitration agreement and its scope must remain in writing, procedural aspects like notice methods can be modified orally through the parties’ conduct and agreement. However, practitioners should be cautious about relying on informal procedural modifications, as they may later be disputed. The 90-day deadline for motions to vacate under Utah Code § 78B-11-124(2) runs from actual notice receipt, regardless of the delivery method, making timely action crucial for preserving appellate rights.