610 F. App'x 464
6th Cir.2015Background
- Crossville Medical Oncology (through Dr. David Tabor) sued Glenwood for breach of a Billing Service Agreement containing an arbitration clause; the dispute proceeded to arbitration.
- Arbitrator found Dr. Tabor personally liable and awarded $221,147.45 plus $16,238.75 in attorneys’ fees.
- Glenwood sought confirmation of the award in federal court; the parties litigated whether Dr. Tabor was bound by the agreement and whether post-arbitration fees could be awarded.
- After a bench trial the district court confirmed the award against Dr. Tabor; Glenwood then moved for additional post-arbitration attorneys’ fees, fee enhancement, and prejudgment interest.
- The district court denied those requests relying on Menke v. Monchecourt; Glenwood appealed.
- The Sixth Circuit affirmed denial of post-arbitration attorneys’ fees and fee enhancement, but reversed and remanded the prejudgment-interest denial for factual findings.
Issues
| Issue | Plaintiff's Argument (Glenwood) | Defendant's Argument (Tabor/Crossville) | Held |
|---|---|---|---|
| Whether the contract authorizes a court to award post-arbitration attorneys’ fees | Paragraph 10 entitles the prevailing party to costs and attorneys’ fees at any stage of litigation, including confirmation | FAA and Menke bar courts from awarding fees absent statutory or clear contractual authorization; paragraph 10 only contemplates arbitrator-awarded fees entered as judgment | Court: Contract does not authorize a court to award fees beyond the arbitrator’s award; affirmed denial of post-arbitration fees |
| Whether bad faith litigation by Tabor justifies awarding post-arbitration fees | Repeated appeals and delay show bad faith; fees should be awarded as sanction | Appeals and litigation were not egregious or frivolous; actions included a successful appeal, so not bad faith | Court: Record does not show egregious misconduct; bad-faith claim fails |
| Request to enhance attorneys’ fees | Enhancement justified by exceptional success or need to reach a reasonable fee | Enhancement improper where no additional post-arbitration fees are awardable | Court: Enhancement request fails because no additional court-awarded fees were authorized |
| Entitlement to prejudgment interest on the award | Prejudgment interest is separate from attorneys’ fees and may be appropriate | District court summarily denied interest without factual findings | Court: Remanded for district court factual findings on prejudgment interest (denial reversed) |
Key Cases Cited
- Menke v. Monchecourt, 17 F.3d 1007 (7th Cir. 1994) (FAA does not provide for attorneys’ fees in confirmation actions absent statute or contract)
- Schlobohm v. Pepperidge Farm, Inc., 806 F.2d 578 (5th Cir. 1986) (court may award post-arbitration fees when agreement does not commit all disputes to arbitration)
- Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (U.S. 1975) (American rule: each party pays its own attorneys’ fees absent statutory or contractual authorization)
- Monroe Auto Equip. Co. v. Int’l Union, 981 F.2d 261 (6th Cir. 1992) (courts may use inherent authority to award fees for bad-faith litigation, but only for truly egregious conduct)
- Drennan v. General Motors Corp., 977 F.2d 246 (6th Cir. 1992) (district courts must support awards or denials of prejudgment interest with factual findings)