D. W. Caldwell, Inc. v. W.G. Yates & Sons Construction Company

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2017-CA-00116-SCT
D. W. CALDWELL, INC.
v.
W.G. YATES & SONS CONSTRUCTION
COMPANY
DATE OF JUDGMENT: 01/10/2017
TRIAL JUDGE: HON. CHRISTOPHER A. COLLINS
TRIAL COURT ATTORNEYS: DORSEY R. CARSON, JR.
TERRY L. JORDAN
CHRISTOPHER SOLOP
TRAVIS JONATHAN CONNER
JERALD R. HANKS
DAVID SANDERS HUMPHREYS
JULIE CHRISTINE SKIPPER
COURT FROM WHICH APPEALED: NESHOBA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: CHRISTOPHER SOLOP
TRAVIS JONATHAN CONNER
JERALD R. HANKS
ATTORNEYS FOR APPELLEE: DORSEY R. CARSON, JR.
DAVID SANDERS HUMPHREYS
TERRY L. JORDAN
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: REVERSED AND REMANDED - 05/10/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE RANDOLPH, P.J., KING AND BEAM, JJ.
BEAM, JUSTICE, FOR THE COURT:
¶1. This Court adheres to the widely recognized standards providing for a trial court’s
amendment of an arbitration award under limited conditions. Importantly, those standards
provide that a court may modify an arbitrator’s award to correct an evident miscalculation
of figures before entering its judgment. See Miss. Code Ann. § 11-15-135 (Rev. 2004).
However, this Court has yet to determine what qualifies as an evident miscalculation and to
what extent a judge may inquire to determine whether such a miscalculation exists.
¶2. Through the analysis below, we find first that the miscalculations alleged in this
matter are not evident from the award itself, nor are they apparent from the agreed-upon
record. Additionally, we find that the judge erred when he allowed the parties to present
witness testimony regarding the extent of any alleged miscalculations, rather than relying on
the award and the arbitration record as the relevant law suggests. Finding error, we reverse
the circuit court’s decision and remand this case to the circuit court with directions to confirm
the December 8, 2015, arbitration award. Furthermore, because the subcontract between the
parties provides that each contractor will be responsible for his own fees and costs, the Court
declines to assess costs to one party over the other, and instead, enforces their bargained-for
agreement.
FACTS AND PROCEDURAL HISTORY
¶3. Yates Construction, LLC, and D.W. Caldwell, Inc., entered into a construction sub-
contract for the roof installation on a residential dormitory at Auburn University in Auburn,
Alabama. Caldwell–the roofing subcontractor–began work on the roof in October 2012.
Early on, Caldwell employees identified structural issues with the building, preventing the
company from moving forward with the roof installation. Caldwell notified Yates of the
issues, and after some discussion about the repairs needed, Caldwell agreed to repair the
building prior to installing the roof. Rather than amending the existing subcontract or
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creating a new contract for the repair expenses, Yates urged Caldwell to bill against
“unperformed work” for those costs related to the extra work completed. Although the
arrangement was unconventional, Caldwell orally agreed to the billing scheme, requiring that
it be paid weekly, on a “cost plus overhead and profit basis.”
¶4. When Caldwell completed both the repairs and the roof installation, it had yet to
receive total payment for the structural repairs. The companies disputed the scope and
expense of these repairs and quickly negotiated their way to an impasse. Thereafter,
Caldwell filed a claim against Yates for causing delay and increased costs by failing to pay
for work performed, which was in breach of the agreements between the parties.
¶5. The parties proceeded to arbitration. Although the arbitration record was neither
recorded nor transcribed, the parties concede that the arbitrator considered arguments,
reviewed evidence, and heard witness testimony over the course of three days. He then
reopened the proceedings for additional documentation, before issuing his thirteen-page
award on December 8, 2015. Shortly thereafter, Yates timely filed its motion for clarification
and/or correction of the arbitration award, which was summarily dismissed by the arbitrator.
Noting that the award included no clerical, typographical, technical, or computational errors,
the arbitrator determined he lacked the authority to re-evaluate the merits of any claim
already decided, under the circumstances.
¶6. Within two weeks of the arbitrator’s decision to deny Yates’s motion, Caldwell
requested that the circuit court confirm the award under Mississippi Code Section 11-15-125.
One month later, Yates moved the trial court to alter, amend, or vacate the award under
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Mississippi Code Section 11-15-25.1 With the understanding that Yates would provide oral
argument on its motion at the award confirmation hearing, Caldwell filed a request to limit
the presentation of proof before the circuit court.
¶7. The hearing on all three motions was held on December 1, 2016. The circuit court
judge began by requesting arguments on Caldwell’s motion to limit proof. Throughout the
presentations, the court asked questions of the parties’ representatives and heard arguments
on several issues under discussion. Believing that an evident miscalculation was present as
it related to the retainage amounts2 included in both the subcontract and the final award, the
court overruled Caldwell’s request to limit proof and permitted the parties to proceed on
Yates’s motion to alter, amend, or vacate the arbitration award. During this second phase of
the hearing, the trial court allowed the parties to introduce evidence and witness testimony.
Though Caldwell’s attorneys objected on the basis of whether such evidence was on the
record during the arbitration and whether such testimony was considered by the arbitrator in
his ultimate decision, the court allowed counsel for Yates to continue with his witness
examination and evidence presentation.
1
Both Mississippi Code Sections 11-15-25(a) and 11-15-135(a) provide that award
modifications may be made if “there is an evident miscalculation of figures or an evident
mistake in the description of any person, thing or property referred to in the award.” Miss.
Code Ann. §§ 11-15-25(a), 11-15-135(a) (Rev. 2004). Yates failed to cite the provisions
of the Mississippi Code construction arbitration laws under Section 11-15-101 through 143,
though any error here is harmless, as the statutes are identical.
2
Retainage is money withheld in a construction project pending satisfactory
completion of the work.
4
¶8. Ultimately, the trial court reviewed fourteen exhibits and the testimony of one witness
in making its decision. Based on this evidence, the court issued its order modifying the
arbitrator’s award on January 10, 2017. Under Mississippi Code Section 11-15-135 and the
Federal Arbitration Act, the court determined that the award contained a “facially evident
miscalculation which permitted . . . Caldwell to receive double payment.” Finding that the
arbitrator had duplicated the labor costs for shingle installation in its award–once under the
original subcontract and once under the oral agreement to repair the structural damage
(referred to as the Repair Agreement)–it amended the award, reducing the total by $104,507.
¶9. On appeal, Caldwell argues that the trial court erred when it denied the motion to limit
proof and allowed Yates to present evidence and witness testimony. Caldwell also contends
that the trial court erred in finding that the arbitrator’s award contained a facially evident
miscalculation. We agree. Based on the analysis below, this Court finds that the arbitrator’s
award contained no evident miscalculations which would merit modification. Moreover, the
circuit court erred by allowing Yates to present witnesses before the court. Therefore, we
reverse the decision of the Neshoba County Circuit Court and remand for the court to
confirm the arbitration award.
APPLICABLE LAW
¶10. This matter involves a contract’s choice-of-law provision and the applicability of
federal and state statutes, as well as trade-association regulations. Caldwell (a Georgia-based
company) and Yates (a Mississippi corporation) entered into a subcontract in Mississippi to
be performed in Alabama. It is undisputed that, between the two companies, their
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employees, and their distributors, both labor and materials crossed state lines.
Unquestionably, these facts affect interstate commerce, creating the need to continue under
the mandate of the Federal Arbitration Act. See 9 U.S.C.A. §§ 1, 2. Therefore, Yates
correctly argues that the Federal Arbitration Act applies to this matter. See MS Credit Ctr.,
Inc. v. Horton, 926 So. 2d 167, 173 (Miss. 2006) (quoting Guinness Harp Corp. v. Jos.
Schlitz Brewing Co., 613 F. 2d 468 (2d Cir. 1980) (requiring that “[w]hen a commercial
transaction involving interstate commerce includes an agreement to arbitrate disputes, federal
law controls the enforcement of the arbitration agreement.” (emphasis added))).
¶11. However, “[w]here . . . parties have agreed to abide by state arbitration rules,
enforcing those rules according to the terms of the agreement is fully consistent with the
FAA . . .”. Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468,
469 (1989), 109 S. Ct. 1248, 1250, 103 L. Ed. 2d 488 (United States Supreme Court
determined that the parties’ contractual agreement to pursue arbitration under their state rules
of arbitration was not preempted by the Federal Arbitration Act when those rules did not
“undermine the goals and policies of the FAA.”) Article XIV of the parties’ subcontract,
titled “Dispute Resolution,” begins as follows:
This Subcontract shall be deemed entered into in Philadelphia, Mississippi,
upon execution by the parties. The laws of the state of Mississippi govern this
Subcontract . . . .
Although the FAA applies directly to the matter, the parties knowingly and willingly
contracted for the laws of this state to govern any disputes related to their agreement.
Furthermore, neither party objected to the role of Mississippi law in the contract, nor did
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either insist on adherence to the FAA prior to the arbitration award’s disclosure. Because
this Court previously has provided that parties may limit contractually the issues which they
will arbitrate (see Doe v. Hallmark Partners, LP, 227 So. 3d 1052, 1055 (Miss. 2017)), this
Court will not hesitate to extend that provision–as the United States Supreme Court has–to
allow parties to specify by contract the laws and rules under which that arbitration will be
conducted. After all, “[a]rbitration under the Act is a matter of consent, not coercion, and
parties are generally free to structure their arbitration agreements as they see fit.” Volt Info.
Sci., Inc., 489 U.S. at 479, 109 S. Ct. at 1250, 103 L. Ed. 2d 488.
¶12. Based on their agreement, the parties’ intent to proceed under Mississippi law is clear,
and this Court therefore will apply the same. As a result, we continue our analysis under the
provisions in Mississippi Code Sections 11-15-101 through 143. Titled “Arbitration of
Controversies Arising from Construction Contracts and Related Agreements,” this section
of Mississippi’s Arbitration Act applies “to any agreement for the . . . engineering,
construction, erection, repair or alteration of any building, structure, fixture, . . . or any part
thereof . . . ”. Miss. Code Ann. § 11-15-101 (Rev. 2004). Because the underlying dispute
concerns the installation of a roof and a subcontract between two contractors, the laws under
this section control the discussion below.
I. Whether the trial court erred in finding that the arbitrator’s award
contained an “evident miscalculation” of figures, justifying the
award’s modification.
¶13. A defining characteristic of arbitration is its finality and the binding disposition of a
controversy. See Schaefer v. Allstate Ins. Co., 63 Ohio St. 3d 708, 590 N.E. 2d 1242 (1992).
7
Parties to an arbitration enter the process knowing that the arbitrator’s award will signal the
factual end of their dispute, rather than leaving open the door to the possibility of future
appeals. With this in mind, courts asked to review, confirm, or modify an arbitrator’s award
do so through an extremely limited lens. See Wilson v. Greyhound Bus Lines, Inc., 830 So.
2d 1151, 1155 (Miss. 2002). In this regard, “[t]he scope of judicial review of an arbitration
award is quite narrow, and ‘every reasonable presumption will be indulged in favor of the
validity of arbitration proceedings.”’ Id. (quoting Craig v. Barber, 524 So. 2d 974, 977
(Miss. 1988)) (see also Hutto v. Jordan, 36 So. 2d 809, 811 (Miss. 1948)). Specifically,
judicial review of an arbitrator’s award is limited to Sections 10 and 11 of the Federal
Arbitration Act, 9 U.S.C. § 1 et seq., and Sections 11-15-23, -25, -133 and -135 of the
Mississippi Code. See Forsythe Int’l, S.A. v. Gibbs Oil Co. of Texas, 915 F. 2d 1017, 1020
(5th Cir. 1990). Accordingly, a circuit court has no authority to modify a construction-related
arbitration award unless the exceptions outlined under Mississippi Code Section 11-15-
135(1)(a) and (2), or its nearly identical, sister provision, found in United States Code
Chapter 9, Section 11(a), are met. See generally Margerum v. Bud’s Mobile Homes, Inc.,
823 So. 2d 1167, 1173 (Miss. 2002) (noting that “[t]he trial court is not allowed to substitute
its own judgment on the merits of the controversy for that of the arbitrator but is instead
constrained to determine whether the award fails analysis under § 11–15–23.”). The
applicable provision under Mississippi’s construction arbitration statutes provides
(1) Upon application made by a party to the arbitration within ninety (90) days
after receipt of a copy of the award, the court shall modify or correct the award
where:
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(a) There is an evident miscalculation of figures or an evident
mistake in the description of any person, thing or property
referred to in the award;
...
(2) If such application is granted, the court shall modify and correct the award
so as to effect its intent and shall confirm the award as so modified and
corrected; otherwise, the court shall confirm the award as made.
Miss. Code Ann. § 11-15-135 (Rev. 2004).
¶14. “A district court enforcing an arbitration award does not engage in a de novo review
of the award”; rather, “it may reverse or modify the award only on specified grounds.”
Parsons & Whittemore Alabama Mach. and Servs. Corp. v. Yeargin Constr. Co., Inc., 744
F. 2d 1482, 1484 (Ala. Ct. App. 1984). This Court embraces an identical standard, requiring
that trial courts narrowly focus their judicial review of arbitration awards on those extremely
limited exceptions outlined by statute. Those courts limit their analysis of motions to vacate,
modify, or correct an arbitration award and do not use such review as an opportunity to
relitigate issues decided in the arbitration. See City of Hattiesburg v. Precision Constr.,
LLC, 192 So. 3d 1089, 1096 (Miss. Ct. App. 2016). Rather, courts indulge “‘every
reasonable presumption . . . in favor of the validity of arbitration proceedings.’” Wilson, 830
So. 2d at 1155 (quoting Craig, 524 So. 2d at 977).
¶15. To that end, “[t]he standard by which an appellate court reviews a trial court’s order
confirming an arbitration award under the Federal Arbitration Act is that questions of law
are reviewed de novo and findings of fact are reviewed only for clear error.” Turquoise
Props. Gulf, Inc. v. Overmyer, 81 So. 3d 1250, 1253–54 (Ala. 2011) (citing Riccard v.
Prudential Ins. Co., 307 F. 3d 1277, 1289 (11th Cir. 2002)). Although this standard applies
9
to review of awards under the FAA, this State’s arbitration act–specifically the statutes in
question–present nearly identical requirements and exceptions for this Court’s review. We
embrace this standard of review to evaluate properly the application of the statutes in
question, while reviewing the trial court’s actions for error.
A. What amounts to an evident miscalculation in an arbitration
award?
¶16. The trial court determined that the arbitrator’s award contained a “facially evident
miscalculation,” meriting a reduction of $104,507. As indicated supra, the Court has yet to
determine what amounts to an evident miscalculation justifying modification under the law.
Like the trial court, some courts have suggested that the error not only must be evident, but
that it must be facially evident from the text of the award. See generally Apex Plumbing
Supply, Inc. v. U.S. Supply Co., Inc., 142 F. 3d 188, 194 (4th Cir. 1998); Grain v. Trinity
Health, Mercy Health Servs. Inc., 551 F. 3d 374, 379 (6th Cir. 2008). Some have argued
that the miscalculation must reflect a mathematical or computational error in the award. See
generally Grain, 551 F. 3d at 378; Apex Plumbing Supply, Inc. 142 F. 3d at 194. See also
Stroh Container Co. v. Delphi Indus., Inc., 783 F. 2d 743, 749 (8th Cir. 1986) (finding that
a miscalculation under 9 U.S.C. § 11(a) is evident “when a simple formal, descriptive, or
mathematical mistake was made”). The Fifth Circuit has gone so far as to determine that
an “‘evident material [mis]calculation’ occurs ‘where the record that was before the arbitrator
demonstrates an unambiguous and undisputed mistake of fact and the record demonstrates
strong reliance on that mistake by the arbitrator in making his award.’” Prestige Ford v. Ford
Dealer Computer Servs., Inc., 324 F. 3d 391, 396 (5th Cir. 2003) (quoting Valentine
10
Sugars, Inc. v. Donau Corp., 981 F. 2d 210, 214 (5th Cir. 1993)), overruled on other
grounds.
¶17. Recently, the Mississippi Court of Appeals united these standards in City of
Hattiesburg v. Precision Constr., LLC., 192 So. 3d 1089 (Miss. Ct. App. 2016). Similar to
the matter at hand, the City of Hattiesburg court was asked to review the circuit court’s
decision to deny the City’s request to modify the arbitrator’s award based on an allegedly
evident miscalculation under Mississippi Code Section 11-15-135. Id. at 1090-91. With no
record to review and only a transcript of the arbitrator’s decision to supplement the written
award, the court considered the parties’ arguments, deferring to the arbitrator’s decision and
indulging every presumption in favor of its validity. Id. at 1093.
¶18. In this unanimous opinion, the court began by evaluating the various positions on the
meaning of “evident miscalculation.”3 It determined that neither “a mistake of fact or
misinterpretation of law by an arbitrator” could amount to an evident miscalculation; rather,
such a finding must include “a ‘mathematical error’ apparent ‘on the face of the award.’” Id.
at 1094. Further, the court adopted the Fifth Circuit’s interpretation, supra, finding an
evident material miscalculation when “the record that was before the arbitrator demonstrates
an unambiguous and undisputed mistake of fact and the record demonstrates strong reliance
on that mistake by the arbitrator in making his award.” Id. Combining these tests, the court
determined that the City had failed to establish the statutory requirement for modification.
Id.
3
Wilson, J., writing; Lee, C.J., Irving and Griffis, P.JJ., Barnes, Ishee, Carlton and
Greenlee , JJ., concurring; Fair and James, JJ., not participating.
11
¶19. Assessing this standard, we note first that the Court recognizes arbitration as a
binding, bargained-for, dispute-resolution method, and that those matters arbitrated should
not be retried by the courts of this state. See City of Hattiesburg, 192 So. 3d at 1096
(holding that “judicial review of arbitration award is narrowly limited, and a motion to
vacate, modify, or correct an arbitration award is not an opportunity to relitigate issues
decided in the arbitration.”). See also Johnson Land Co. v. C.E. Frazier Constr. Co., Inc.,
925 So. 2d 80, 86 (Miss. 2006) (holding that “arbitration is a substitute for, rather than a
mere prelude to, litigation.”). Accordingly, arbitration awards are considered final, with very
few, narrow exceptions outlined by statute. See generally Craig, 524 So. 2d at 977.
¶20. Concerning the narrow exception at issue, the Court finds that the “evident” (plain,
obvious, or clearly understood) miscalculation must be apparent from nothing more than the
four corners of the award and the contents of the arbitration record. See Apex Plumbing
Supply, Inc., 142 F. 3d at 194 (holding that “even if the claimed miscalculation . . .
constituted a ‘material mistake,’ the miscalculation was not ‘evident’ because it did not
appear on the face of the arbitration award.”). See also Overmyer, 81 So. 3d at 1257(recognizing an evident material miscalculation of figures was “apparent on the face of the
award”). Looking to evidence beyond “the face” of the award or the arbitration record
allows the parties an opportunity to retry the matter in front of a trial judge. Not only does
this diminish the binding nature and finality of arbitration proceedings, but by seeking a new
judgment from a trial court after resolving the matter through arbitration, the parties
implicitly are deprived of their right to a jury trial if desired. See Riverboat Corp. of
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Mississippi v. Harrison Cty. Bd. of Supervisors, 198 So. 3d 289 (Miss. 2016); Edmonds v.
State, 234 So. 3d 286 (Miss. 2017) (confirming that the right to a jury trial exists in civil
matters). We fail to find any law supporting the notion that our courts should grant parties
an opportunity to present new evidence or witness testimony–even in the absence of an
arbitration record–and we decline to create such law now. Rather, we find that “[t]he
miscalculation, to be evident, must appear on the face of the award or be so readily apparent
from the documentation in the case that explanation by proofs is not necessary.” Severtson
v. Williams Constr. Co., 220 Cal. Rptr. 400, 405 (Cal. App. 2 Dist. 1985). By limiting the
trial court’s review to the arbitration award and the arbitration record alone, we ensure the
integrity of arbitration proceedings will endure, preserving parties’ right to review under the
statute.
¶21. Secondly, we distinguish the Court of Appeals’application of the Fifth Circuit
standard in the City of Hattiesburg from the matter at hand. “The Fifth Circuit has held that
‘an evident material miscalculation occurs where the record that was before the arbitrator
demonstrates an unambiguous and undisputed mistake of fact and the record demonstrates
strong reliance on that mistake by the arbitrator in making his award.’” City of Hattiesburg,
192 So. 3d at 1094 (quoting U-Save Auto Rental of Am., Inc. v. Barton, No.
3:15–CV–348–DPJ–FKB, 2016 WL 595545, at *5 (S.D. Miss. Feb. 12, 2016)). However,
because our statutes require that a miscalculation only be evident, and not also material, the
federal standard does not apply. Because the federal statute differs in this one, critical aspect,
we decline to adopt the “unambiguous and undisputed mistake of fact” test. See Barton,
13
2016 WL 595545, at *5. Instead, we apply the Court of Appeals approach to modifying
arbitration agreements under the applicable Mississippi statutes and seek only to answer
whether the arbitrator made a computational or mathematical error, apparent on the face of
the award.
B. Was a miscalculation evident under this standard?
¶22. In City of Hattiesburg, the Court of Appeals noted that the City’s arguments regarding
the alleged miscalculation failed on two accounts. First, it found that “[t]he concept of an
‘evident miscalculation’ presupposes that the parties presented the arbitrator with evidence
from which a ‘correct’ calculation could have been made.” City of Hattiesburg, 192 So. 3d
at 1095. If the arbitrator’s “calculations were consistent with the evidence and argument
presented, then there [was] no miscalculation.” Id. However, with no record of the
arbitration, the court was limited in its ability to investigate the City’s claim on the evident
miscalculation. Recognizing the limitation, it moved its analysis to look to factual arguments
made by the City to support its motion. Id. There, it found that the City’s arguments failed
because, as a rule, our appellate courts do not “inquire into the evidentiary basis of the
award.” Id.
¶23. Because “[t]he City’s argument relie[d] on a series of alleged facts, assumptions,
prices, and calculations that [were] not ‘evident’ from the arbitrator’s decision or anything
else in the record,” the court held that “the City [could not] identify any evident
miscalculation of figures or any other basis for vacating or modifying the arbitrator’s award.”
City of Hattiesburg, 192 So. 3d at 1096. Caldwell’s appeal tasks this Court with the same
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question: Can Yates identify evidence from which a different, but correct, calculation could
be made and if not, can it identify an evident miscalculation of figures? Without looking
outside the undisputed facts or relying upon testimony from a witness in the trial court, we
find that Yates is unable successfully to identify either.
¶24. We note that the extremely limited judicial scope of arbitration awards permits little
room for the Court’s analytical autonomy in this matter. See Wilson, 830 So. 2d at 1155.
According to precedent set by the Court of Appeals and the Fifth Circuit, this Court may
review (1) the arbitrator’s award, (2) the written arguments by the attorneys in their motions
to the trial court and in their briefs on appeal, (3) the oral arguments presented to the judge
regarding the motion to limit proof, and (4) all documents agreed by the parties to be part of
the record before the arbitrator. What the Court may not consider is the witness testimony
garnered during the trial court’s hearing: such consideration allowed the trial court to enter
into a fact-finding position, not appropriate under such circumstances. Our statutes
concerning the modification and vacation of awards by “an arbitral tribunal are precisely and
narrowly drawn to prohibit such complete de novo review of the substance of the award, as
distinguished from gross calculation errors or inadequacies in the makeup of the tribunal
itself.” Legion Ins. Co. v. Ins. Gen. Agency, Inc., 822 F. 2d 541, 543 (5th Cir. 1987).
Consequently, “[t]he only basis . . . for reversal of an arbitrator’s decision is a violation of
the appropriate statute.” Robinson v. Henne, 115 So. 3d 797, 800 (Miss. 2013). Such limited
review has engendered this Court’s history of deference to arbitrators, fostering “‘the general
rule [that arbitrators] are the final judges of both law and fact, and an award will not be
15
reviewed or set aside for mistake in either.’” Hutto v. Jordan, 204 Miss. 30, 36 So. 2d 809(1948).
¶25. Importantly, relevant Mississippi law supports the trial court’s review of the
arbitrator’s award when determining whether an evident miscalculation exists. This same
law provides for the presentation of party arguments through motions and court hearings.
While written arguments and those orally presented during a hearing may not have been
identical to the arguments before the arbitrator, precedent indicates that attorney-delivered
arguments are permissible during the confirmation process of an arbitrator’s award. See
generally City of Hattiesburg, 192 So. 3d 1089 (reviewing the circuit court’s decision to
confirm an arbitration award without a transcript or a record, after conducting an evidentiary
hearing on the parties’ arguments). Likewise, when the arbitration record is not made
available to the court, and the parties agree that the documentary and tangible evidence
proffered was a part of the record before the arbitrator, a trial court may, at its discretion,
accept that evidence for review. See Wilson, 830 So. 2d at 1156–57 (“The trial court did not
abuse its discretion by” limiting its review to documents included as part of the original
arbitration record.) However, the court shall use the record evidence only in its efforts to
“confirm the award, not review its substance.” Johnson Land Co. v. C.E. Frazier Constr.
Co., Inc., 925 So. 2d 80, 86 (Miss. 2006).
¶26. Following guidelines established by the Court of Appeals and various other courts
across the country, we begin our narrow analysis by looking to the thirteen-page award for
any facially evident miscalculations or computational errors. In doing so, we find that no
16
such errors are present. Looking next to the attorney-written arguments, oral arguments, and
agreed-upon record evidence, we likewise fail to find such errors.
¶27. In addressing the alleged errors, we specifically highlight Yates’s claim regarding the
arbitrator’s approach to the retainage amounts. Yates argues that the arbitrator erroneously
dismissed the retainage claim without prejudice, asserting that the arbitration award and
disposition can either be final or not final, but that it cannot be both. The company alleges
that Caldwell’s ability to submit the retainage portion of its award to another arbitration
single-handedly warrants modification of the award, either vacating the claim entirely or
entering the award, with prejudice. We disagree and find that this claim does not amount to
an evident miscalculation. Rather, we find that the arbitrator clearly defined the retainage
amounts and subtracted them from the overall award as monies “unpaid yet remaining under
dispute.” Contrary to the explanation provided by Yates, the retainage amounts were not
included as recoverable in the award and then left open for determination at a later date.
Instead, such amounts were completely removed from the award as not ripe for review.
¶28. While we have yet to address whether arbitration awards may be partial, final, and
binding all at once, the general understanding of retainage and the information provided
through the party arguments indicate that the retainage was not yet payable. Consequently,
it was not yet clear what amounts the arbitrator should or should not award. Recognizing this
limitation, the arbitrator’s award contemplates retainage based on the original subcontract
and reserves its resolution for when the specific amounts become due. We find no error in
this conclusion.
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¶29. Reviewing the award, the parties’ arguments, and the agreed-upon record, we fail to
find that the arbitrator erroneously duplicated costs of labor and relied on such a duplication
in making his award. Nor can we ascertain that the arbitrator erred by excluding the
retainage totals. As a result, the trial court exceeded its jurisdiction by assuming the role of
factfinder and reviewing witness testimony outside the arbitration record to determine where
and to what extent a miscalculation existed. Instead, the court should have considered only
the parties’ initial arguments, along with any agreed-upon-arbitration-record evidence
presented to supplement the written award.
C. Even if the trial court could have detected a miscalculation in
the award, was it error to allow parties to present witness
testimony?
¶30. Time and again, our appellate courts have held that “it is not appropriate for this Court
to inquire into the evidentiary basis of [an arbitrator’s] award.” D’Angelo v. Hometown
Concepts, Inc., 791 So. 2d 270, 273 (Miss. Ct. App. 2001) (affirming the trial court upon
finding that any error in the amount of damages the arbitrator awarded was not the product
of an evident miscalculation of figures, but a contested issue of fact). To do otherwise would
be to open the door to the boundless legal and evidentiary appeals that can “‘rende[r]
informal arbitration merely a prelude to a more cumbersome and time-consuming judicial
review process,’ and bring arbitration theory to grief in post arbitration process.” Hall Street
Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008), 128 S. Ct. 1396, 1405, 170 L. Ed.
2d 254 (holding U.S.C. §§ 9, 9-11 as the substance of a national policy favoring arbitration
and its limited review, maintaining the essential quality of arbitration as its ability to
18
immediately resolve disputes). “In the years before the passage of the FAA, arbitration
awards were subject to thorough and broad judicial review . . . . In §§ 10 and 11 of the FAA,
Congress significantly limited the grounds for judicial vacatur or modification of such
awards in order to protect arbitration awards from hostile and meddlesome courts.” Hall
Street Assocs., 552 U.S. at 595. Much like Sections 10 and 11 of the FAA, the Mississippi
construction arbitration statutes significantly limit the grounds for vacation and modification
under Mississippi Code Sections 11-15-133 and 11-15-135 respectively. Courts adhering to
these rules have no need to hear witness testimony to determine whether an award should be
modified or withdrawn; rather, courts make these decisions based on the evident nature–the
clear and obvious presence–of the error in the award.
¶31. The evident nature of an award’s calculation error along with the arguments and
record evidence presented by the parties would have been enough for the trial court to make
its decision. While the trial judge determined that an evident miscalculation existed in the
award prior to hearing the witness testimony, the judge erred by later permitting the
testimony and using it to make his ultimate decision on where and to what extent the
miscalculation existed. Such an error transformed the trial court’s role in the confirmation
and modification hearing, expanding the very narrow and limited purpose of its review, and
imbuing it with the responsibility of the factfinder. Because arbitration is meant to supplant
litigation, not supplement it, the court abused its discretion by allowing witness testimony
during the award-confirmation hearing, resulting in plain error by the court.
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¶32. This Court holds that in such a situation, courts requested to confirm, modify and/or
vacate arbitration awards are not at liberty to permit the examination of witnesses. Providing
otherwise would permit courts to relitigate factual matters already decided. We previously
noted that “the confirmation of an award . . . is not a trial. Findings of fact [are]
superfluous.” Johnson Land Co., 925 So. 2d at 86 (quoting Thorgaard Plumbing &
Heating Co. v. Cty. of King, 71 Wash. 2d 126, 132 (1967)). “The object [of arbitration] is
to avoid what some feel to be the formalities, the delay, the expense and vexation of ordinary
litigation.” Id. Likewise, today we recognize that witness testimony outside the confines of
the arbitration record amounts to fact finding by the trial court, exceeding the scope of the
court’s review. Such “complete de novo review of the substance of the award” is prohibited
by our narrowly drawn statutes. Legion Ins. Co., 822 F. 2d at 543. To that end, we find that,
even if the judge was warranted in his initial determination that a miscalculation existed, it
was error for the court to permit the examination of witnesses to determine the character and
extent of the mistake.
II. Whether Caldwell is entitled to attorney’s fees and costs of appeal.
¶33. Mississippi Code Section 11-15-137 provides that “[u]pon the granting of an order
confirming, modifying or correcting an award, a judgment or decree shall be entered and be
enforced as any other judgment or decree. Costs may be awarded by the court.” Miss. Code
Ann. § 11-15-137 (Rev. 2004). Citing this statute, Caldwell asserts that Yates understood
the extremely limited standard for arbitration-award review, and because it failed to raise
cognizable grounds for the trial court to amend, alter, or vacate the award, this Court should
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award attorney’s fees and costs resulting from Yates’s motions in the trial court. Though we
find that Caldwell’s argument fails on several points under this request, the most relevant is
that the parties contracted away their right to request fees and costs.
¶34. In their original subcontract, the parties stipulated that if the two engaged in litigation
or arbitration over “a monetary claim[,] each party shall be solely responsible for its
respective costs, expenses and attorneys fees. . . .” While the determination of “‘reasonable
attorneys’ fees is a matter ordinarily within the sound discretion of the trial court,” (See
Mississippi Power & Light Co. v. Cook, 832 So. 2d 474, 486 (Miss. 2002) (quoting Gilchrist
Tractor Co. v. Stribling, 192 So. 2d 409, 418 (Miss. 1966)), this Court has long held that
“[a]bsent some statutory authority or contractual provision, attorneys’ fees cannot be awarded
unless punitive damages are also proper.” Fulton v. Mississippi Farm Bureau Cas. Ins. Co.
105 So. 3d 284, 287-88 (Miss. 2012) (citations omitted). Neither is available here.
¶35. Moreover, the Mississippi Rules of Appellate Procedure broadly describe the Court’s
role in awarding fees and costs under Rule 36. The authority under this rule provides the
Court with generous discretion in making such an award. Exercising that discretion, the
Court recognizes the parties’ agreement, holding them responsible for their individual costs
and fees and dividing the costs of appeal accordingly.
CONCLUSION
¶36. Generally, arbitrators have broad discretion in determining the remedy appropriate for
the matters before them. With statutorily guided deference, courts of this state limit their
judicial review of such proceedings, indulging “every reasonable presumption . . . in favor
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of the validity of arbitration.” Hutto v. Jordan, 36 So. 2d 809, 811 (Miss. 1948). We do not
use the statutory exceptions “to inquire into the original merits . . . or to show that in the
evidence the award ought to have been different . . . or that the decision, in view of all facts
and circumstances, was unjust.” Id. Instead, our courts employ the limited exceptions, all
while “resist[ing] the temptation to condemn imperfect proceedings without a sound statutory
basis for doing so.” Forsythe Int’l, S.A. v. Gibbs Oil Co. of Texas, 915 F. 2d 1017, 1022 (5th
Cir. 1990).
¶37. Applying this review, we find the award at issue contains no evident miscalculations
and is accurate according to the facts demonstrated by the parties to have been before the
arbitrator. Because Yates failed to show that any mathematical error appears on the face of
the award there is insufficient proof of an evident miscalculation that would compel the
Court to modify the award. Therefore, we reverse the circuit court’s decision to modify the
arbitrator’s award, and remand the case to the circuit court with directions to confirm the
award as determined by the arbitrator.
¶38. REVERSED AND REMANDED.
WALLER, C.J., RANDOLPH, P.J., KING, COLEMAN, MAXWELL, CHAMBERLIN
AND ISHEE, JJ., CONCUR. KITCHENS, P.J., SPECIALLY CONCURS WITH SEPARATE
WRITTEN OPINION JOINED BY KING, J.; COLEMAN, J., JOINS IN PART.
KITCHENS, PRESIDING JUSTICE, SPECIALLY CONCURRING:
¶39. I agree with the majority’s decision that the arbitrator’s award in this case did not
demonstrate an “evident miscalculation” within the meaning of Mississippi Code Sections
11-15-25(a) and 11-15-135(a), necessitating a modification, and that the Circuit Court of
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Neshoba County erred by allowing witness testimony during the award confirmation hearing.
I write separately solely for the purpose of making an observation.
¶40. Mississippi Code Section 11-15-1 states:
All persons, except infants and persons of unsound mind, may, by instrument
of writing, submit to the decision of one or more arbitrators any controversy
which may be existing between them, which might be the subject of an action,
and may, in such submission, agree that the court having jurisdiction of the
subject matter shall render judgment on the award made pursuant to such
submission.
Miss. Code Ann. § 11-15-1 (Rev. 2014). Mississippi Code Section 11-15-21 (Rev. 2014)
states:
Upon presentation of the articles of submission and the award to the court
designated in the submission or the court having jurisdiction of the subject
matter of the award, the court shall, upon motion, confirm the award, unless
the same be vacated or modified, or a decision thereon be postponed, as
hereinafter provided.
Miss. Code Ann. § 11-15-21 (Rev. 2014). Mississippi Code Section 11-15-25 allows any
party to the arbitration to move to modify or correct the award “[w]here there is an evident
miscalculation of figures or an evident mistake in the description of any person, thing, or
property referred to in such award . . . .” Miss. Code Ann. § 11-15-25(a) (Rev. 2014).
Mississippi Code Section 11-15-135 requires the court to modify or correct the arbitral award
when “[t]here is an evident miscalculation of figures or an evident mistake in the description
of any person, thing or property referred to in the award . . . .” Miss. Code Ann. § 11-15-
135(a) (Rev. 2014).
¶41. As the majority recognizes, this Court has held that:
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We agree with the analysis and ruling of the Supreme Court of Washington,
in Thorgaard Plumbing & Heating Co. v. County of King, 71 Wash. 2d 126,
132, 426 P. 2d 828 (1967), that arbitration 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 ordinary litigation. Id.“[T]he confirmation of an award . . . is not a trial. Findings of fact would have
been superfluous.” Id. at 136, 426 P.2d 828. This reasoning supports the
long-standing public policy, set forth in Scottish Union & National Ins. Co.
v. Skaggs, 114 Miss. 618, 619, 75 So. 437, 438 (1917), to “permit parties to
arbitrate their differences and to give effect to a valid submission and award.”
Id. Further, the Skaggs Court articulated the public policy that the arbitration
and award statute “shall be liberally construed for the encouragement of the
settlement of disputes and the prevention of litigation.” Id.Johnson Land Co. v. C.E. Frazier Constr. Co., Inc., 925 So. 2d 80, 86 (Miss. 2006).
¶42. The Mississippi Constitution provides that “[t]he circuit court shall have original
jurisdiction in all matters civil and criminal in this state not vested by this Constitution in
some other court, and such appellate jurisdiction as shall be prescribed by law.” Miss. Const.
art. 6, § 156. The Constitution prescribes that “[t]he powers of the government of the State
of Mississippi shall be divided into three distinct departments, and each of them confided to
a separate magistracy, to-wit: those which are legislative to one, those which are judicial to
another, and those which are executive to another.” Miss. Const. art. 1, § 1. “No person or
collection of persons, being one or belonging to one of these departments, shall exercise any
power properly belonging to either of the others.” Miss. Const. art. 1, § 2.
¶43. This Court has held that it is the province of the judiciary “to draw upon its inherent
power to prescribe rules of procedure to facilitate the administration of justice in the courts
throughout the state.” Newell v. State, 308 So. 2d 71, 78 (Miss. 1975). This Court continued:
[A]s long as rules of judicial procedure enacted by the legislature coincide
with fair and efficient administration of justice, the Court will consider them
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in a cooperative spirit to further the state’s best interest, but when, as here, the
decades have evidenced a constitutional impingement, impairing justice, it
remains our duty to correct it.
Id.
¶44. Both parties in the present case, seasoned contractors and subcontractors, contracted
to forego any potential remedy in the courts of this State by agreeing to arbitrate their claims.
Nevertheless, being dissatisfied with the arbitral award, Yates, employing procedures
outlined in the controlling statutes, invoked the services of this State’s court system to amend
that award.
¶45. Here, but for the parties’ having made a valid agreement to arbitrate, the Circuit Court
of Neshoba County would have had original jurisdiction of the dispute. The arbitration
statutes establish rules of procedure for resolving disputes outside this State’s court system.
But the statutes go further than that by mandating that the circuit court confirm the award,
while at the same time limiting the court’s review of the award. Thus far, this Court has
forgone its constitutional prerogative by acquiescing in such legislative limitation of its
authority over matters of judicial procedure; and the statutes do appear, in the present case,
to “coincide with fair and efficient administration of justice” not resulting in a “constitutional
impingement, impairing justice.”
KING, J., JOINS THIS OPINION. COLEMAN, J., JOINS THIS OPINION IN
PART.
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