Allen D. DeArmond v. E. Jacob Construction, Inc. ( 2022 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
DOCKET NUMBER
2021 CA 0981
ALLEN D. DEARMOND
VERSUS
E. JACOB CONSTRUCTION, INC.
Decision Rendered: APR 0 8 2022
APPEALED FROM THE
19th JUDICIAL DISTRICT COURT, SECTION 24
EAST BATON ROUGE PARISH, LOUISIANA
DOCKET NUMBER 689, 599
HONORABLE DONALD R. JOHNSON, JUDGE
John Dale Powers Attorneys for Plaintiff/ Appellant
Andrew P. Sellers, Jr. Allen D. DeArmond
Baton Rouge, Louisiana
Nancy A. Richeaux Attorneys for Defendant/ Appellee
Sharon B. Kyle E. Jacob Construction, Inc.
Steven K. Schilling
Baton Rouge, Louisiana
BEFORE: McDONALD, LANIER, and WOLFE, JJ.
McDONALD, J.
Allen D. DeArmond appeals a judgment confirming an arbitration award in favor of
E. Jacob Construction, Inc. ( EJC). After review, we reverse the trial court judgment, modify
the May 25, 2020 arbitration award, and render judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In April 2018, Mr. DeArmond and EJC entered a contract whereby EJC agreed to
repair flood -related damages to a house Mr. DeArmond owned in Baton Rouge, Louisiana.
The original contract price was $ 56, 758. 20, to be paid in five installments based on
completion progress. Mr. DeArmond paid EJC two installments of at least $ 27, 210. 00. After
EJC allegedly refused to complete punch list items, Mr. DeArmond did not pay the remaining
three installments, leaving an unpaid balance of $ 29, 548. 20. EJC then filed a lien against
the project.
After EJC refused to remove the lien, Mr. DeArmond filed this breach of contract suit
against EJC. EJC answered the petition and filed a reconventional demand against Mr.
DeArmond for the remaining $ 29, 548. 20. In May 2020, the parties signed a Settlement
Agreement agreeing to retain Jerry Householder, an engineer ( the Arbitrator), to arbitrate
their dispute. The Settlement Agreement pertinently provided:
1) In order to avoid the inherent risks and uncertainties of litigation the Parties hereby
settle all of their respective claims and irrevocably bind themselves to the following ... :
Jerry L. Householder, P. E.[,] shall be retained at the parties' mutual and equal cost to inspect
the Property, the contract between the parties, contract accounting, and the inspection report
prepared by William H. Cress, Jr., A. I. A. (" Cress Report"). After said inspection( s), Dr.
Householder shall determine:
A. Whether the alleged defects or deficiencies identified in the Cress Report
Items") comply with industry standards and/ or whether same were included in [ EJC' s]
scope of work;
B. For any item not in compliance with industry standards, whether same is
included in EJC' s scope of work and should therefore result in a credit to [ DeArmond]
and if so, the value of that credit;
C. Whether [DeArmond] is due any credit for work not performed and the value of
same; and
D. Given all of the above, the amount of the payment, if any, [ DeArmond] shall
pay to [ EJC] for the value of work performed. Or, if applicable, the amount of any
payment [EJC] shall make to [ DeArmond] to correct or complete items in [ EJC' s] scope
of work.
Said independent determination by Dr. Householder shall be binding on both parties.
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According to the parties, the Arbitrator conducted an on- site arbitration hearing at
the house that was the subject of the dispute. On May 25, 2020, the Arbitrator wrote a
letter to counsel for both parties setting forth his decision. He noted that the undisputed
unpaid balance was $ 29, 548. 20, before adjustments for deficiencies or incomplete work.
He addressed eight punch list items identified by Mr. DeArmond. He found in EJC' s favor
on all but two of the items. The Arbitrator reduced the $ 29, 548. 20 unpaid balance by
860. 00 for those two items, awarded EJC $ 10, 000. 00 in attorney fees, and $ 1, 830. 00 in
interest on unpaid invoices, resulting in a final award in EJC' s favor, and against Mr.
DeArmond, of $40, 598. 20. 1
On June 9, 2020, pursuant to the Louisiana Arbitration Law, La. R. S. 9: 4210, etseq.,
Mr. DeArmond filed a Motion to Vacate, Modify, or Correct Arbitration Award, claiming the
Arbitrator was evidently partial or had so imperfectly executed his powers that a mutual,
final, and definite award was not made. EJC responded with a Motion to Confirm Arbitration
Award, contending none of the exclusive statutory grounds for vacating, modifying, or
correcting the award existed. The trial court held a hearing on the motions, and at the
hearing' s conclusion, directed the parties to submit proposed findings of fact and conclusions
of law. After those submissions, the trial court signed a judgment on June 7, 2021, denying
Mr. DeArmond' s motion, granting EJC' s motion, and confirming the Arbitrator' s May 25, 2020
arbitration award.
Mr. DeArmond appealed from the adverse judgment. After the appeal was lodged,
this court issued an interim order instructing the trial court to sign an amended judgment
and to attach the arbitration award. The trial court complied; thus, this court supplemented
the appellate record with the amended judgment, and maintained the appeal.
On appeal, Mr. DeArmond contends the trial court erred in confirming the arbitration
award. He claims the Arbitrator's award should be vacated because: ( 1) the award shows
evident partiality; ( 2) the Arbitrator exceeded his powers in awarding EJC attorney fees
under the Louisiana Open Account Statute and in awarding ECJ interest on unpaid invoices;
and, ( 3) the award shows a material mathematical miscalculation.
1 We address a mathematical error in the award later in this opinion.
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LOUSIANA ARBITRATION LAW
As a matter of public policy, Louisiana strongly favors arbitration; thus, arbitration
awards are presumed valid. Crescent Prop. Ptrs, LLC v. American Mfrs Mut. Ins Co., 14-
0969 ( La. 1/ 28/ 15), 158 So. 3d 798, 803. A court may vacate, modify, or correct an
arbitration award based only on the exclusive grounds specified in La. R. S. 9: 4210 and 4211,
which do not include errors of law or fact. Id, at 803- 04. Of relevance here, under La. R. S.
9: 4210B and D, the trial court shall vacate an arbitration award where the arbitrator was
evidently partial or corrupt, or where the arbitrator exceeded his powers or so imperfectly
executed them that he did not make a mutual, final, and definite award upon the subject
matter.2 And, under La. R. S. 9: 4211A, a trial court shall modify or correct an arbitration
award where the award contains an evident material miscalculation of figures. A court,
however, is not entitled to substitute its judgment for that of the arbitrator chosen by the
parties. Crescent Prop. Ptrs, LLC, 158 So. 3d at 803. Rather, a court's determination is
limited to whether the party challenging the award has proven one or more of the specific
statutory grounds for invalidation. Id, at 804; St. George Fire Prot. Dist. No. 2 v. J. Reed
Constr., Inc., 17- 1006 ( La. App. 1 Cir. 2/ 20/ 18), 243 So. 3d 145, 148. An appellate court
conducts a de novo review of a trial court judgment confirming or vacating an arbitration
award. Goodrich Petroleum Co., LLC v. MRC Energy Co., 13- 1435 ( La. App. 4 Cir. 4/ 16/ 14),
137 So. 3d 200, 207.
Evident Partiality
Mr. DeArmond first contends we should vacate and/ or modify the arbitration award
because the Arbitrator's adverse decision regarding several items on the punch list shows
he was evidently partial. Specifically, Mr. DeArmond challenges the Arbitrator's decision in
favor of ECJ regarding the installation of cabinet doors, alleged uninstalled hardware and
switch plates, and a missing microwave hood/ vent.
To constitute evident partiality, it must clearly appear that the arbitrator was biased,
prejudiced, or personally interested in the dispute. Firmin v. Garber, 353 So. 2d 975, 978
2 While other circuit courts have adopted a " manifest disregard for the law" as an additional basis for vacating
an arbitration award, this court has adhered to the statutory standard established by La. R. S. 9: 4210. Bergeron
v. Patel, 16- 0600 ( La. App. 1 Cir. 5/ 17/ 17), 2017 WL 2170142, * 4, n. 3, and cases cited therein.
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La. 1977). Proof of evident partiality requires more than an appearance of bias. A
challenging party must show that a reasonable person would have to conclude that an
arbitrator was partial to the other party to the arbitration. In re Arbitration Between U.5.
Turnkey Expl., Inc. & PSI, Inc., 577 So. 2d 1131, 1135 ( La. App. 1 Cir. 1991). After our de
novo review of the record, we conclude Mr. DeArmond has failed to produce evidence
showing that a reasonable person would have to conclude that the Arbitrator was evidently
partial to ECJ. The fact that the Arbitrator ruled against Mr. DeArmond on the punch list
items is not evidence that he was partial to ECJ. See Bell Aerospace Co, Div, of Textron,
Inc. v. Local 516, Intern. Union, 500 F. 2d 921, 923 ( 2nd Cir. 1974) and DeVore v, IHC
Hospitals, Inc., 884 P. 2d 1246, 1257 ( Utah 1994) ( both cases noting that an arbitrator' s
conclusions in the winning party's favor do not establish partiality); also see Crescent Prop.
Ptrs, LLC, 158 So. 3d at 808 ( explaining that an arbitrator is not guilty of misconduct merely
because he could have rendered a different award). And, even if the Arbitrator's decision
included legal or factual errors as to the punch list items, such grounds do not merit vacating
his award. Id., 158 So. 3d at 804; also see Mack Energy Co. v. Expert Oil and Gas, LLC, 14-
1127 ( La. 1/ 28/ 15), 159 So. 3d 437, 442. The parties agreed to be bound by the Arbitrator's
decision regarding their dispute, and this court may not substitute its judgment for the
Arbitrator' s judgment. Crescent Prop. Ptrs, LLC, 158 So. 3d at 803. This assignment of
error is without merit.
Attorney Fees and Interest
Mr. DeArmond also contends the Arbitrator exceeded his powers by awarding ECJ
attorney fees and interest on unpaid invoices.
Regarding attorney fees, it is undisputed that neither the parties' contract nor their
Settlement Agreement provided for the recovery of attorney fees by a prevailing party.
However, attorney fees may be awarded if allowed by statute. In his award, the Arbitrator
awarded $ 10, 000. 00 in attorney fees to ECJ under the Louisiana Open Account Statute, La.
R. S. 9: 2781, et seq.
Louisiana Revised Statutes 9: 2781D defines an open account as " any account for
which a part or all of the balance is past due, whether or not the account reflects one or
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more transactions and whether or not at the time of contracting the parties expected future
transactions." If a debtor fails to pay an open account within 30 days after the claimant
sends written demand therefor correctly setting forth the amount owed, the debtor " shall
be liable to the claimant for reasonable attorney fees ... when judgment on the claim is
rendered in favor of the claimant." La. R. S. 9: 2781A. Citation and service of a petition
shall be deemed written demand for the purpose of La. R. S. 9: 2781A.
Under the plain reading of La. R. S. 9: 27811), there is no requirement that there must
be more than one transaction between the parties, nor is there any requirement that the
parties anticipate future transactions. Frey Plumbing Co., Inc. v. Foster, 07- 1091 ( La.
2/ 26/ 08), 996 So. 2d 969, 972 ( per cunam). Under Frey, which directs us to apply the
language of La. R. S. 9: 2781D as written, an open account includes " any account" and
nowhere in the statute are construction accounts or contracts specifically excluded.
Advanced Leveling & Concrete Solutions v. Lathan Co., Inc., 20- 0040 ( La. App. 1 Cir.
12/ 10/ 20), 316 So -3d 509, 513- 14; SBL Constr., LLC v. Eymard, 18- 1691 ( La. App. 1 Cir.
11/ 12/ 19), 289 So. 3d 1079, 1083; R.L. Drywall, Inc. v. B& CElec., Inc., 13- 1592 ( La. App.
1 Cir. 5/ 2/ 14), 2014 WL 3559390, * 5- 6.
In this case, ECJ filed a reconventional demand ( deemed a " written demand" under
La. R. S. 9: 2781A) against Mr. DeArmond alleging he owed ECJ a past due contractual
balance of $ 29, 548. 20, and Mr. DeArmond did not pay ECJ within 30 days of that written
demand. The Arbitrator reduced the amount demanded by $ 860. 00, due to defective or
incomplete work involving painting and a cabinet door, resulting in an award to ECJ for
28, 688. 20. Under a plain reading of La. R. S. 9: 2781, as interpreted by Frey and its
progeny, when the Arbitrator rendered that judgment in ECJ' s favor, Mr. DeArmond became
liable to ECJ for reasonable attorney fees under La. R. S. 9: 2781A. Accordingly, the
Arbitrator did not exceed his powers by awarding ECJ reasonable attorney fees under the
Louisiana Open Account Statute.
Regarding the interest award, the Arbitrator's decision states, " I calculate that the
interest on the unpaid invoices [ is] $ 1, 830. 00." Mr. DeArmond contends the Arbitrator
exceeded his powers in awarding interest, because the parties' contract did not provide for
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such, the Arbitrator gave no statutory authority for the interest award, nor did he give
authority for his reliance on " unpaid invoices" to calculate interest when the agreed upon
price was based on a contract, not invoices.
As earlier noted, a court may vacate, modify, or correct an arbitration award based
only on the exclusive grounds specified in La. R. S. 9: 4210 and 4211, and those grounds do
not include errors of law or fact. Crescent Prop. Ptrs, LLC, 158 So. 3d at 803- 04. In their
Settlement Agreement, the parties agreed that the Arbitrator would evaluate their respective
claims and determine the amount Mr. DeArmond owed EJC " for the value of the work
performed" or, conversely, the amount EJC owed Mr. DeArmond "' to correct or complete
items in [ EJC' s] scope of work." In fulfilling his duty, the Arbitrator found Mr. DeArmond
owed EJC and apparently determined that the " value of the work EJC performed" included
interest on unpaid invoices. Even in the absence of a contractual or statutory provision
authorizing such, and even if an error of law or fact, the Arbitrator's interest award does not
meet one of the exclusive grounds for vacating, modifying, or correcting an arbitration award
specified in La. R. S. 4210 and 4211. See St. Tammany Manor, Inc. v. Spartan Bldg. Corp.,
509 So. 2d 424, 427 ( La. 1987) ( even if arbitrator incorrectly applied law as to when interest
should accrue, such is insufficient to invalidate an award fairly and honestly made); X
Developments, LLC v. Amtek ofta., Inc,, 07- 1825 ( La. App. 1 Cir. 3/ 26/ 08), 985 So. 2d 199,
203- 04 ( affirming judgment that declined to vacate arbitrator's interest award). To hold
otherwise would expand the remedy available by statute and defeat the purpose of
arbitration. X Developments, LLC, 985 So. 2d at 204. This assignment of error is without
merit.
Material Mathematical Miscalculation
Mr. DeArmond next argues that the arbitration award contains a material
miscalculation in the amount awarded to ECJ. Under La. R. S. 9: 4211A, a court is required
to modify or correct an arbitration award containing an evident material miscalculation of
figures. As earlier stated, the Arbitrator reduced the $ 29, 548. 20 unpaid balance by $ 860. 00
for two items, awarded EJC $ 10, 000. 00 in attorney fees, and $ 1, 830. 00 in interest on unpaid
invoices, and then awarded EJC $ 40, 598. 20. At the hearing on this matter, EJC' s counsel
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conceded that the above amounts total $ 40, 518. 20, not $ 40, 598. 20, which is a difference
of $80. 00.
When a court confirms, modifies, or corrects an arbitration award, it may enter
judgment in conformity therewith. See La. R. S. 9: 4212. Accordingly, we modify the
arbitration award to correct the evident mathematical error and to render judgment
accordingly, under La. R. S. 9: 4212, for the correct amount of $40, 518. 20 ($ 29, 548. 20, less
860. 00, plus $ 10, 000. 00, plus $ 1, 830. 00). See King Co., Ltd. P'ship v. MBD Const. Co.,
Inc., 10- 0902 ( La. App. 1 Cir. 10/ 29/ 10), 2010 WL 4273003, * 7.
CONCLUSION
For the above reasons, we reverse the trial court judgment. We modify the
Arbitrator's May 25, 2020 award to correct a mathematical error. We render judgment in
favor of ECJ, and against Allen D. DeArmond, for $40, 518. 20. We assess costs of the appeal
to Allen D. DeArmond.
TRIAL COURT JUDGMENT REVERSED; ARBITRATOR' S MAY 25, 2020
AWARD MODIFIED; JUDGMENT RENDERED.
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