Fred Haag v. Infrasource Corporate Services ( 2013 )

Case: 12-60259 Document: 00512148695 Page: 1 Date Filed: 02/20/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 20, 2013
No. 12-60259
Lyle W. Cayce
Clerk
FRED M. HAAG,
Plaintiff-Appellant
v.
INFRASOURCE SERVICES, INCORPORATED; DAVID R. HELWIG,
Individually; INFRASOURCE CORPORATE SERVICES L.L.C., also known as
Infrasource Corporate Services, Incorporated,
Defendants-Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:07-CV-387
Before KING, SOUTHWICK, and GRAVES, Circuit Judges.
PER CURIAM:*
Fred M. Haag sued his former employer, Infrasource Services, Inc., after
he was terminated for “gross misconduct.” Pursuant to the employment contract
Infrasource compelled arbitration under Pennsylvania law. The arbitrator found
that Haag had accepted reimbursements for housing and other expenses to
which he should have known he was not entitled. Haag’s claims were dismissed.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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No. 12-60259
The district court entered a judgment that denied Haag’s motion to vacate and
confirmed the arbitrator’s decision. We AFFIRM.
Review of arbitration decisions made under the Federal Arbitration Act is
“extraordinarily narrow” and “exceedingly deferential.” Rain CII Carbon, LLC
v. ConocoPhillips Co., 674 F.3d 469, 471-72 (5th Cir. 2012). Our review of the
district court’s denial of a motion for vacatur is de novo. Laws v. Morgan Stanley
Dean Witter, 452 F.3d 398, 399 (5th Cir. 2006).
There are limited grounds established by statute for vacating and
modifying an arbitration award. See 9 U.S.C. §§ 10 & 11. A modification is
permitted if “there was an evident material miscalculation of figures or an
evident material mistake in the description of any person, thing, or property
referred to in the award.” § 11(a). The statutory authority for vacating an
award refers only to such defects as fraud, partiality, and misconduct or misuse
of power by the arbitrator. § 10(a). Despite those limits, this court has held that
“a material mistake of fact” can also be grounds for vacatur. Valentine Sugars,
Inc. v. Donau Corp., 981 F.2d 210, 214 (5th Cir. 1993). The fact must be
unambiguous and undisputed: “We interpret the term ‘undisputed’ to mean we
should look to see whether there is any rational basis for disputing the truth of
the fact.” Id. That mistake must also be material: “‘the record must
demonstrate[ ] strong reliance on that mistake.’” Id. The parties disagree
whether Valentine remains good law. We need not decide Valentine’s vitality as
we conclude that Haag’s arguments for vacatur fail even if Valentine applies.
Haag contends that the relevant material mistake was the arbitrator’s
statement in his initial ruling that “[t]he facts are not in dispute that [Haag]
submitted improper requests for expense reimbursement.” That statement is
correct, but the statement does not apply to all of the relevant expenses. As to
the housing expenses, Haag did not need to submit claims. He was reimbursed
automatically with monthly deposits into his bank account. Haag’s misconduct
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Case: 12-60259 Document: 00512148695 Page: 3 Date Filed: 02/20/2013
No. 12-60259
on housing expenses was not taking steps to stop the deposits once he knew or
should have known he was still receiving them after they were supposed to end.
We agree that Haag did not “submit” claims for housing reimbursement,
but there is no indication that the arbitrator strongly relied on any distinction
between claims improperly “submitted” versus those that were not stopped. The
arbitrator found cause for termination based on Haag’s misstatement that he
was paying for “all of [his] personal expenses and housing now,” “improper
expense reimbursement” generally, including for travel, and a company audit
that disclosed Haag “misappropriated in excess of $80,000,” in addition to the
“improper” “funds [Haag] received” for housing. There was neither an
unambiguous factual mistake by the arbitrator about submission of claims, nor
strong or material reliance on any mistaken understanding of those facts.
This analysis is not changed by the arbitrator’s holding that Infrasource
was not entitled to prevail on its counterclaims. Each of the seven counterclaims
that Infrasource asserted required proof of discrete elements; the claim of
fraudulent misrepresentation, for example, requires proof of a representation,
that is material, made falsely, with knowledge or recklessness as to that falsity,
with the intent to mislead, with justifiable reliance on that representation, and
injury proximately caused by that reliance. Ira G. Steffy & Son, Inc. v. Citizens
Bank of Penn., 7 A.3d 278, 290 (Pa. Super. Ct. 2010). The arbitrator found a lack
of adequate proof as to the various counterclaims. The arbitrator’s finding is not
inconsistent with the determination of “cause,” which under the employment
agreement only required a finding of “willful engaging . . . in gross misconduct
materially and demonstrably injurious to the Company.”
AFFIRMED.
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