Americrete, Inc. v. West Alabama Lime Co., Inc.

IN THE SUPREME COURT OF MISSISSIPPI
NO. 1998-CA-01284-SCT
AMERICRETE, INC.,
JOHN P. GREEN
AND JOSEPH GREEN
v.
WEST ALABAMA LIME CO., INC.,
C. A. BOYD, PIERCE BOYD
AND SMITH BOYD
DATE OF JUDGMENT: 12/31/1997
TRIAL JUDGE: HON. JERRY G. MASON
COURT FROM WHICH APPEALED: LAUDERDALE COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANTS: MARK D. HERBERT
TODD INMAN WOODS
VINCENT J. BODIN
ATTORNEYS FOR APPELLEES: HENRY P. PATE, III
WILLIAM E. READY
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: VACATED AND REMANDED - 04/06/2000
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 4/27/2000
EN BANC.
WALLER, JUSTICE, FOR THE COURT:
¶1. In June of 1993, Americrete, Inc., a Mississippi corporation, was formed by two brothers, John and
Joseph Green (collectively referred to as "Americrete"). Americrete was a ready mix concrete business,
with locations in both Meridian and Flowood. The Greens formed Americrete for the sole purpose of
purchasing West Alabama Lime Company, a corporation owned by C. A. Boyd, Pierce Boyd and Smith
Boyd (collectively referred to as "West"). West is a foreign corporation authorized to do business in
Mississippi, with its principal place of business in Sumter County, Alabama.
¶2. On August 2, 1993, Americrete and West entered into an agreement for the sale and purchase of
West's operations in Mississippi. In this agreement, West agreed to sell its Mississippi concrete business
and assets to Americrete, with an option to purchase West's Alabama assets and operations.
¶3. On November 5, 1993, the parties entered into an agreement for the sale and purchase of West's
operations, which memorialized and completed the August 2, 1993, agreement. In this agreement, the
parties also agreed to include the Alabama assets and operations in the purchase. A formal closing of the
business, however, was not scheduled until February 19, 1996. The parties had numerous disagreements
over the interpretation of these agreements, and the disputes have yet to be fully resolved. From August 2,
1993, to the present, Americrete has retained actual control of the concrete business, its assets, operations,
fiscal matters, records and information.
¶4. On April 26, 1996, West filed suit against Americrete in the Chancery Court of Lauderdale County.
West requested an accounting of the Americrete's management of the business since August of 1993, a
prohibitory injunction, a mandatory injunction, and a declaratory judgment. Americrete filed its answer and
counterclaim, asserting that West had breached the November 5, 1993, agreement in several ways,
specifically contending that West failed to convey title to any of the personal or real property. The
counterclaim also sought declaratory relief.
¶5. The November 5, 1993, agreement provided for arbitration of any disputes. The chancery court,
however, found the agreement to arbitrate to be unenforceable in Mississippi and declined to send the
matter to arbitration. Americrete and West then reached an agreement that called for a limited hearing of
their dispute by arbitration. On June 10, 1997, the chancery court entered an Agreed Order for Arbitration,
in which the chancery court maintained strict control over the arbitration. The agreed order provided for
subsequent review and confirmation or rejection of the arbitrators' decision by the chancery court.
¶6. The arbitrators considered the issues between September 30, 1997, and December 18, 1997. On
December 18, 1997, the arbitration panel issued, and filed with the court, a document entitled, "Report,
Finding and Award of Arbitrators." On December 31, 1997, the chancery court entered an order which
affirmed the holdings and findings of the arbitrators. Americrete contends that since the June 10, 1997,
order limited the scope of the arbitrators' considerations to only those issues raised by the parties in their
first submissions, that this order was violated when oral presentations were later considered by the
arbitrators in making their decision. Americrete further asserts that the arbitrators violated the June 10,
1997, order by not submitting a listing of the documents they reviewed in making their decision.
¶7. On January 7, 1998, Americrete filed a Motion for New Trial and/or Amendment of Judgment and
Entry of Findings and Conclusions of Law. This motion challenged the assessment of attorneys' fees as
being outside the scope of the arbitrators' authority, challenged the weight of the evidence, and asked that
the chancery court enter specific findings of fact and conclusions of law regarding its decision. On April 8,
1998, the chancery court denied Americrete's motion. On January 29, 1998, the arbitrators entered a
unilateral order in the chancery court setting the award of attorney's fees and "expenses" at a total of $37,
262.28. The chancery court never reviewed nor approved this order.
¶8. Americrete further contends that the record before the Court does not contain any of the documents
considered by the arbitrators, does not include the initial submission of the parties, or any of the transcripts
or stenographic records of presentations to the arbitrators. Americrete asserts that the chancery court's
judgment adopting the arbitrators' award as its own has greatly prejudiced Americrete's right to a full
appeal even though the Agreed Order expressly reserved all rights to appeal.
STATEMENT OF LAW
I. WHETHER THE CHANCERY COURT ERRED IN NOT GRANTING
AMERICRETE'S MOTION FOR FINDINGS OF FACT AND CONCLUSIONS OF LAW.
¶9. Subsequent to the chancery court's approving the arbitrators' award, Americrete timely filed a motion
for entry of findings of fact and conclusions of law. The chancery court refused Americrete's request, stating
in its Memorandum Opinion of April 8, 1998, that, "this Court is not required to render a finding of fact and
conclusions of law after the arbitration panel has rendered its decision." This Court disagrees and finds the
chancellor erred by not entering findings of fact and conclusions of law.
¶10. This Court has consistently held that arbitrators have no obligation to issue any findings of fact or
conclusions of law. Craig v. Barber, 524 So. 2d 974, 976-77 (Miss. 1988). "Absent contractual
agreement to the contrary, arbitrators have no legal obligation to give the basis or reasons for the award."
Herrin v. Milton M. Stewart, Inc., 558 So. 2d 863, 864 (Miss. 1990). However, Americrete is not
seeking the findings of the arbitrators, but rather is seeking the findings of fact and conclusions of law upon
which the chancellor affirmed the decision of the arbitrators.
¶11. The issue of whether a chancellor, upon timely request, must render findings of fact and conclusions of
law when affirming or denying an arbitration award, based upon an agreed order for arbitration, is one of
first impression in Mississippi. Rule 4.01 of the Uniform Chancery Court Rules states in relevant part as
follows:
In all actions where it is required or requested, pursuant to M.R.C.P. 52, the Chancellor shall find the
facts specifically and state separately his conclusions of law thereon. The request must be made either
in writing, filed among the papers in the action, or dictated to the Court Reporter for record and
called to the attention of the Chancellor.
(emphasis added). This rule clearly states a chancery court is obligated to make findings of fact and
conclusions of law upon request by a party. There is no case law nor any rules which suggest an exception
to Rule 4.01 when the chancellor is affirming or denying an arbitration award.
¶12. In Tricon Metals & Servs., Inc. v. Topp, 516 So. 2d 236, 239 (Miss. 1987), this Court concluded,
"in cases of any complexity, tried upon the facts without a jury, the Court generally should find the facts
specifically and state its conclusions of law thereon." "Where . . . a case is hotly contested and the facts
greatly in dispute and where there is any complexity involved therein, failure to make findings of ultimate fact
and conclusions of law will generally be regarded as an abuse of discretion." Tricon at 239.
¶13. The Hawaii Supreme Court has addressed this same issue. In Clawson & Habitlitat, Inc., 783 P.2d
1230 (Haw. 1989), a homeowner filed a motion to vacate an arbitration award involving a dispute with a
contractor. The circuit court subsequently affirmed the arbitrator's award. The Hawaii Supreme Court,
however, vacated the circuit court's decision and held as follows:
Here, without proper findings of fact and conclusions of law, we are unable to determine whether the
circuit court erred in denying appellant's motion to vacate the arbitration award. We hold that
whenever material facts are in dispute in determining whether an arbitration award should
be vacated, the circuit court should conduct an evidentiary hearing and render findings of
fact and conclusions of law in support of granting or denying the motion to vacate the
arbitration award.
Clawson at 1232 (emphasis added).
¶14. In the present case, Americrete asserts throughout its brief that the arbitrators failed to abide by the
limitations set forth in the agreed order. Although Americrete and West agreed not to utilize Mississippi
statutory law on arbitration, they did "reserve all rights of appeal" in the agreed order. Furthermore, the
chancery court agreed to review the award and adopt the arbitrator's decision as its own absent any
violation of the agreed order or Mississippi law. However, neither this Court nor Americrete are able to
determine if the order was, in fact, violated without the chancery court's findings of fact and conclusions of
law. The chancery court clearly retained control over this case and had a duty to issue its reasoning in
affirming the arbitrators' decision.(1)
¶15. Likewise, this Court is unable to determine if the arbitrators erred in awarding attorneys' fees in the
amount of $37,262.28. Without the chancellor's findings, conclusions, and order, this Court has no means
by which to review the arbitrators' award of attorneys' fees. Therefore, this Court vacates the order
affirming the arbitrators' award and remands this case to the Chancery Court of Lauderdale County for
entry of findings of fact and conclusions of law. Because the chancery court erred by not entering findings of
fact and conclusions of law, we need not reach any other issues raised on this appeal.
CONCLUSION
¶16. This chancery court erred by not entering findings of fact and conclusions of law for its decision to
affirm the arbitrators' award. Therefore, this Court vacates the order affirming the arbitration award and
remands this case to the Chancery Court of Lauderdale County for entry of findings of fact and conclusions
of law as to whether the arbitrators' decision was in compliance with the agreed order and the laws of the
State of Mississippi, and for a ruling with findings and conclusions on the arbitrators' award of attorneys'
fees.
¶17. VACATED AND REMANDED.
PRATHER, C.J., PITTMAN AND BANKS, P.JJ., McRAE AND DIAZ, JJ., CONCUR.
SMITH, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY MILLS
AND COBB, JJ.
SMITH, JUSTICE, DISSENTING:
¶18. The initial agreement between plaintiff West Alabama and defendant Americrete provided for
arbitration of any disputes which might arise from the sale of the Alabama properties owned by West
Alabama. The chancellor however initially rejected arbitration because, in his view, it was unenforceable in
Mississippi. Whereupon, the parties reached an additional understanding and agreement that called for a
limited hearing by arbitration and provided for judicial review by the chancery court and confirmation or
rejection of the arbitration panel's findings and opinion. Accordingly, an Agreed Order for Arbitration,
wherein the chancellor maintained control over the arbitration was entered by the parties and signed by the
chancellor on June 10, 1997. The arbitration panel's decision was rendered in favor of West Alabama. The
chancellor conducted judicial review of that decision and confirmed and accepted the arbitration panel's
finding and opinion in accordance with the terms of the Agreed Order for Arbitration of June 10, 1997.
¶19. The majority opinion is rather broad and appears at first glance to be concerned only with supposed
procedural violations of the arbitrators which were contrary to the agreed order of arbitration. However,
upon closer scrutiny, the majority likewise seems concerned with the merits. Regardless of which view is
applicable, the majority in fact requires a full hearing by the chancellor with written findings of fact and
conclusions of law.
¶20. Considering first the supposed procedural violations committed by the arbitration panel, we note that
Americrete now claims that had the chancellor conducted a hearing and entered written findings of fact and
conclusions of law he would have "surely discovered the many procedural flaws" of the arbitration panel in
arriving at their decision. Americrete did not raise these flaws before the chancellor nor does it indicate now
how the chancellor's decision would have been changed. Even now, Americrete merely suggests broad,
general and vague allegations of supposed flaws or irregularities committed by the arbitrators, but
Americrete is short on providing specifics. An example would be the allegation that unsworn testimony was
allowed by the arbitrators, but Americrete does not tell us who gave such testimony. Examination of the
record possibly indicates that Americrete is referring to the invitation extended to the lawyers to address the
arbitration panel, argue, and answer questions posed by the panel. Surely Americrete is not now suggesting
that this constituted the supposed unsworn testimony! Because that is all that can even be remotely
considered from the record supplied by Americrete. Americrete has simply not supported these general
allegations sufficiently for this Court to agree that procedural violations were committed by the arbitration
panel. This issue is demonstrates that providing procedural guidelines for arbitration is an area now ripe for
consideration by the Mississippi Legislature. The problem, however, is not solved by this Court's merely
requiring what amounts to a new hearing conducted by the chancellor. The majority only further muddies the
water.
¶21. Next we turn to the merits of the issue. For the majority to now require what amounts to a new full-
blown hearing by the chancellor defeats the very purpose of arbitration, which is to avoid lengthy, expensive
and formal litigation in court. The majority in effect discourages settlement of disputes by arbitration, which
has long constituted a sound, reasonable substitute for courtroom litigation. This Court, in IP Timberlands
Operating Co. v. Denmiss Corp., 726 So. 2d 96, 103 (Miss. 1998), stated:
This state, as a matter of public policy, has long allowed parties to arbitrate their differences and to
give effect to an arbitration award. Scottish Union & Nat'l Ins. Co. v. Skaggs, 114 Miss. 618, 75
So. 437, 438 (1917). "That policy has even greater force in our present era of overcrowded judicial
dockets. If there be any type of arbitration award we should be loathe to disturb, it should be that
between private contracting parties respecting a matter of interest only to themselves and their
respective pocketbooks." Craig v. Barber, 524 So. 2d 974, 977 (Miss. 1988). In Hutto v.
Jordon, 204 Miss 30, 36 So. 2d 809, 812 (1948), this Court stated:
Articles of agreement to arbitrate, and awards thereon are to be liberally construed so as to
encourage the settlement of disputes and the prevention of litigation, and every reasonable
presumption will be indulges in favor of the validity of arbitration proceedings. See also Horne v.
State Bldg. Comm'n, 222 Miss 520, 76 So. 2d 356, 358 (1954); Stout v. W. M. Garrard & Co.,
128 Miss. 418, 91 So. 33 (1922).
¶22. Americrete argues that the chancery court should be required to enter specific findings of fact and
conclusions of law in support of its decision. Americrete also likens this problem to Rule 53 concerning the
appointment of special masters in chancery court. However, the business of arbitrators has nothing
whatsoever to do with Rule 53. Arbitrators are not special masters. Since the arbitrators here were not
required to enter specific findings of fact and conclusions of law in support of their opinion, the only way the
chancellor could do so would be by a conducting what amounts to a rehearing of this case. Such procedure
is not judicial review. It may be that we should now make an exception to Rule 4.01 referring to M.R.C.P.
52 which requires chancellors to always make specific findings of fact and conclusions of law.
¶23. In my view, this Rule contemplates the chancellor who has actually tried the case or adopted the
findings of a special master as necessitating the filing of specific findings of fact and conclusions of law. I do
not believe that this Court remotely considered arbitration proceedings when this Rule was adopted
because, in fact, arbitration has only in recent years come to the forefront in Mississippi for utilization by the
bench and bar. The action of the majority here renders arbitration useless. Therefore, I respectfully dissent
to the majority's holding that the chancery court erred by not entering the court's findings of fact and
conclusions of law to support its' confirmation of the arbitrator's finding and opinion.
¶24. The general rule regarding arbitration is that absent contractual agreement to the contrary, the
arbitrators have no obligation to issue findings of fact or conclusions of law. Herrin v. Milton M. Stewart,
Inc., 558 So. 2d 863, 864 (Miss. 1990); see also Craig v. Barber, 524 So. 2d 974, 976-77 (Miss.
1988). That is exactly the premise that the parties here were operating under in this agreed arbitration.
¶25. A chancery court is not required to render findings of fact and conclusions of law when affording
judicial review to the parties' agreed arbitration order by either affirming or denying an arbitration award.
The chancellor's acceptance and confirmation of the arbitrator's decision is not the result of a trial, but rather
is merely a judicial review of the arbitrator's conclusions which upon adoption by the chancellor became the
judgment of the court. The majority relies upon an opinion by the Hawaii Supreme Court which requires
that, in such an instance, the trial court must conduct an evidentiary hearing and render findings of fact and
conclusions of law. Clawson v. Habitlitat, Inc., 783 P.2d 1230, 1232 (Haw. 1989). In my opinion, the
better view is expressed by the Washington Supreme Court in Thorgaard Plumbing & Heating Co. v.
County of King, 426 P.2d 828 (Wash. 1967). In that case, the county filed a motion to vacate an
arbitration award involving a dispute with a contractor. The trial court affirmed the arbitrator's award. The
county argued that the trial court erred by failing to enter findings of fact in support of the judgment
rendered. The Washington Supreme Court rejected the county's assignment of error. The court stated that
its rule of procedure which requires findings of fact in cases tried before the court without a jury is not
applicable when the court is reviewing the award of an arbitrator. The court explained: "[A]rbitration is a
substitute for, rather than a mere prelude to, litigation . . . . The object is to avoid, what some feel to be the
formalities, the delay, the expense and vexation of litigation. [T]he confirmation of an arbitration award . . .
is not a trial. Findings of fact would have been superfluous." Id. at 833, 836.
¶26. Likewise, in the case at hand, it was not a function of the chancery court, in confirming the award of
the arbitrators, to retry the case presented to the arbitrators. This Court has stated that the scope of judicial
review of arbitration awards is quite narrow. Herrin v. Milton M. Stewart, Inc., 558 So. 2d 863, 864
(Miss. 1990) (citing Craig v. Barber, 524 So. 2d 974, 977 (Miss. 1988)). In Herrin, this Court explained
that arbitration awards are to be "liberally construed so as to encourage the settlement of disputes and the
prevention of litigation, and every reasonable presumption will be indulged in favor of the validity of
arbitration proceedings." Herrin, 558 So. 2d at 864-65 (quoting Hutto v. Jordan, 204 Miss. 30, 42, 36
So. 2d 809 (1948)). To require the chancery court to hold an evidentiary hearing and to enter findings of
fact and conclusions of law destroys the purpose of arbitration as an expeditious, informal, and inexpensive
alternative to litigation.
¶27. The majority writes that this Court is unable to determine whether the order of the chancery court was
violated without the chancery court's findings of fact and conclusions of law. The chancellor apparently
believed otherwise. Specifically, Americrete asserts that the record does not include "any of the documents
considered by the arbitrators, the issue-defining initial submission of the parties, nor any transcripts or
stenographic records of any presentations to the arbitrators." The majority and Americrete, however, fail to
note that this Court would be able to determine whether the order of the chancery court was violated had
Americrete made certain that the record was complete. Such is a duty charged to the Appellant. In re
V.R., 725 So. 2d 241, 245 (Miss. 1998); Cassidy v. Central Lumber Co., 219 Miss. 96, 114-15, 67
So. 2d 266, 268 (1953).
¶28. Additionally, the majority claims that the granting of attorney fees to the plaintiff's attorney was error.
The plaintiff made demand for attorney fees pursuant to Section 32 of the November 5, 1993, agreement
of the parties. Additionally, the parties' Stipulation of Facts noted that "the prevailing party may recover
attorney fees" governed by the laws of Mississippi in accordance with the November 5, 1993 agreement at
page 30. Also, attorneys fees was a proper subject for the arbitrators to consider according to the June 10,
1997, arbitration order at page 6. Subsequent to the arbitration panel finding for the plaintiff, the arbitrators
met again pursuant to the plaintiff's demand for attorney fees and after due consideration, noted that
"Plaintiff has prevailed in this action," and awarded costs and expenses in the amount of $37,262.28.
Americrete certainly was aware that this issue was ongoing before the arbitration panel in that the demand
for attorney fees by the plaintiff was included in its Motion for A New Trial filed January 7, 1998.
Thereafter, on February 20, 1998, both sides filed their briefs before the chancellor and the court ruled on
the entire proceeding on April 8, 1998. The chancellor was obviously aware and ruled on the attorney fees
awarded plaintiff by the arbitration panel.
¶29. In my view, the learned chancellor did not err in refusing, in effect, to re-hear this case, and I would
affirm the judgment of the chancery court which refused to allow Americrete a $40,000, much less the
claimed $80,000, reduction in the original purchase price for West Alabama's business assets, and further
required distribution of the $223,226.50 plus interest held in escrow by the arbitrators to West Alabama's
attorneys and an award of costs and attorney fees of $37,262.28 to plaintiff's attorneys.
¶30. For these reasons, I respectfully dissent.
MILLS AND COBB, JJ., JOIN THIS OPINION.
1. We emphasize that the parties in this case agreed that the arbitrators' decision should be reviewed by the
chancery court and that the chancery court retained ultimate decision-making authority. This opinion does
not imply that parties may not enter into binding arbitration agreements, nor does this Court discourage the
practice and principles of arbitration or any other form of alternative dispute resolution.