Beumer Corporation v. ProEnergy Services
899 F.3d 564
8th Cir.2018Background
- Beumer contracted with ProEnergy to furnish and fabricate steel for a pipe conveyor; disputes arose over alleged deficient work and withheld payments.
- ProEnergy initiated arbitration seeking ~ $500,000; Beumer counterclaimed for ~$2.3 million.
- The contract included (a) an arbitration clause, (b) a limitation-of-liability clause capping contractor liability at 100% of the Contract Sum, and (c) a Missouri choice-of-law clause and an attorneys’-fees provision.
- The arbitrator found the liability cap enforceable and calculated the Contract Sum at $699,702.39, but ruled the cap did not apply to attorneys’ fees and awarded Beumer that cap in damages plus $916,027.90 in attorneys’ fees and expenses, and interest.
- The district court confirmed the award; ProEnergy paid the damages and interest but moved to vacate the attorneys’-fees portion under 9 U.S.C. § 10(a)(4), arguing the arbitrator exceeded his powers by misapplying the contract’s Missouri governing-law clause.
- The Eighth Circuit affirmed, holding the arbitrator acted within his contractual authority; any legal error in applying Missouri law did not constitute excess of powers under the FAA.
Issues
| Issue | Plaintiff's Argument (ProEnergy) | Defendant's Argument (Beumer) | Held |
|---|---|---|---|
| Whether attorneys’ fees are subject to the contract’s limitation of liability | Missouri law treats attorneys’ fees as part of “loss” or “damage,” so fees should count toward the cap | The arbitrator reasonably concluded the liability cap did not encompass attorneys’ fees; other jurisdictions classify fees as costs outside the cap | The arbitrator’s interpretation stands; award confirmed—any error of law does not show the arbitrator exceeded his authority |
| Whether the arbitrator exceeded his powers by disregarding the contract’s Missouri choice-of-law provision | The arbitrator cited non-Missouri authorities and thus failed to apply the parties’ chosen Missouri law, exceeding his powers under § 10(a)(4) | The arbitrator applied Missouri law elsewhere, likely found no Missouri authority on the specific issue, and reasonably relied on persuasive out-of-state authorities | The court held that even if the arbitrator erred in applying Missouri law, that is not a ground to vacate the award; no excess of powers was shown |
Key Cases Cited
- Medicine Shoppe Int’l, Inc. v. Turner Invs., Inc., 614 F.3d 485 (8th Cir. 2010) (standard for confirming arbitration award; arbitrator must be "arguably construing or applying the contract")
- McGrann v. First Albany Corp., 424 F.3d 743 (8th Cir. 2005) (same principle on arbitrator authority and deference)
- Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (2008) (statutory grounds in FAA §§ 10 and 11 are exclusive for vacatur/modification)
- Chicago Ins. Co. v. Archdiocese of St. Louis, 740 F.3d 1197 (8th Cir. 2014) (predictive-use of other jurisdictions when state law has not addressed an issue)
- Affymax, Inc. v. Ortho-McNeil-Janssen Pharm., Inc., 660 F.3d 281 (7th Cir. 2011) (recognizes that "manifest disregard" is not an independent FAA vacatur ground post-Hall Street)