MID ATLANTIC CAPITAL CORPORATION v. BEVERLY BIEN; DAVID H. WELLMAN
Nos. 18-1195 and 18-1200
United States Court of Appeals, Tenth Circuit
April 14, 2020
Christopher M. Wolpert, Clerk of Court
PUBLISH
Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CV-00122-RPM)
Andrew Stanton, Jones Day, Pittsburgh, Pennsylvania, (Derek C. Anderson, Winget, Spadafora & Schwartzberg, LLP, Boulder, Colorado, with him on the briefs), for Appellant / Cross-Appellee.
Richard Fosher, Oakes & Fosher, LLC, St. Louis, Missouri, for Appellees / Cross-Appellants.
Before BRISCOE, HOLMES, and McHUGH, Circuit Judges.
A married couple, Ms. Beverly Bien and Mr. David Wellman, invested money with Mid Atlantic Capital Corporation (“Mid Atlantic“). Their investments performed poorly. Stung by the losses, Ms. Bien and Mr. Wellman initiated arbitration proceedings against Mid Atlantic. The arbitration panel awarded Ms. Bien and Mr. Wellman damages, attorney‘s fees, and arbitration costs. The panel also ordered Ms. Bien and Mr. Wellman to reassign their ownership interests in their investments to Mid Atlantic.
Mid Atlantic moved the federal district court to modify the arbitration award to correct “an evident material miscalculation of figures.”
Both parties appeal from the district court‘s order. Mid Atlantic specifically challenges the court‘s denial of its motion to modify the arbitration award. Ms. Bien and Mr. Wellman cross-appeal, challenging the court‘s rulings applying prejudgment interest to only the damages portion of the award and ordering them to reassign any distributions that they had received since the arbitration award due to their ownership interests in the investments. Exercising jurisdiction under
Mid Atlantic is a brokerage firm registered with the Financial Industry Regulatory Authority (“FINRA“).1 Ms. Bien and Mr. Wellman opened several brokerage accounts with Mid Atlantic. Through those accounts, Ms. Bien and Mr. Wellman invested in two investment vehicles, Sonoma Ridge Partners and KBS REIT [i.e., real estate investment trusts] (“KBS“). Ms. Bien and Mr. Wellman‘s contracts with Mid Atlantic each included an identically worded arbitration
clause. That clause obligated the parties to resolve all disputes through binding arbitration conducted according to FINRA rules. See, e.g., Aplt.‘s App., Vol. III, at 715 (Brokerage Account Appl. of Ms. Bien, executed Feb. 12, 2007) (“All controversies that may arise between you, [and] us . . . including, but not limited to, controversies concerning . . . breach of this or any other agreement between you and us . . . shall be determined by arbitration“).
A
After their investments in Sonoma Ridge Partners and KBS suffered heavy losses, Ms. Bien and Mr. Wellman initiated arbitration proceedings against Mid Atlantic. They alleged that Mid Atlantic had, among other things, sold them unreasonably risky investments. To remedy the resulting harm, Ms. Bien and Mr. Wellman sought damages, as well as attorney‘s fees, costs, and interest.
The arbitration panel held a hearing. At the hearing, Ms. Bien and Mr. Wellman‘s expert offered the panel two ways to calculate the losses at issue. The first option looked to Ms. Bien and Mr. Wellman‘s “net out-of-pocket” losses. Aplt.‘s App., Vol. II, at 244 (Arbitration Hr‘g Tr., dated Nov. 3, 2016). The expert calculated Ms. Bien and Mr. Wellman‘s net out-of-pocket losses as $292,411. The second measure of damages looked to Ms. Bien and Mr. Wellman‘s “market-adjusted damages.” Id. at 250. The measure of those damages is “the difference between the actual return on these investments and what the return would have been if [Ms. Bien and Mr. Wellman‘s] money had been invested in a well-managed ‘benchmark’ account.” Id., Vol. V, at 1079 (Order, entered Mar. 23, 2018); see also id., Vol. II, at 251 (the expert observing that “market-adjusted damages” is “[t]he difference” between what Ms. Bien and Mr. Wellman would have received if they “had been invested in a diversified portfolio” and what they actually received by “investing” in the riskier investments at issue). The expert calculated Ms. Bien and Mr. Wellman‘s market-adjusted damages as between $484,684 and $618,049. Mid Atlantic did not present any expert testimony on damages.
During the hearing‘s closing arguments, Ms. Bien and Mr. Wellman read into the record a written final prayer for relief. In it, they requested only market-adjusted damages. Indeed, they asserted that compensating
The arbitration panel ruled in substantial part in favor of Ms. Bien and Mr. Wellman. It ordered Mid Atlantic to pay them two forms of damages: (1) initial investment-loss damages and (2) compensatory damages. The panel‘s damages award looked like this:
| Damages Award | Ms. Bien | Mr. Wellman | Both | Total |
|---|---|---|---|---|
| Initial Investment Loss | $240,321 | N/A | $52,090 | $292,411 |
| Compensatory Damages | $437,286 | $47,397 | N/A | $484,683 |
| Total | $677,607 | $47,397 | $52,090 | $777,094 |
In addition, the arbitration panel ordered Mid Atlantic to pay interest at 8% per year on each form of damages. That interest would accrue from the date Ms. Bien and Mr. Wellman initiated arbitration proceedings until the damages were “paid in full.” Id., Vol. I, at 28 (Arbitration Award, dated Dec. 12, 2016). The award also called for Mid Atlantic to pay $118,560 in attorney‘s fees, $26,812.82 in costs, and all arbitration fees. The panel declined, however, to award any other remedies, such as punitive damages. And it did order Ms. Bien and Mr. Wellman to “reassign ownership of all Sonoma Ridge Partners and KBS REIT investments to [Mid Atlantic].” Id.
B
Mid Atlantic moved the district court to modify the arbitration award.2 It argued, among other things, that the arbitration panel had given Ms. Bien and Mr. Wellman a double recovery. According to Mid Atlantic, the panel‘s $292,411
award in initial-investment-loss damages corresponded with Ms. Bien and Mr. Wellman‘s expert‘s testimony that their net out-of-pocket losses were $292,411. And the panel‘s $484,683 award in compensatory damages almost exactly matched the $484,684 in market-adjusted damages that the expert had at one point said Ms. Bien and Mr. Wellman incurred. Yet, that expert had presented net out-of-pocket damages and market-adjusted damages as alternative measures of their losses, and Ms. Bien and Mr. Wellman had asked for only market-adjusted damages in their final prayer for relief. Thus, by effectively awarding Ms. Bien and Mr. Wellman both net out-of-pocket damages and market-adjusted damages, the panel allegedly gave them a double recovery. To correct this purported double recovery, Mid Atlantic asked the district court to modify the arbitration award.
In response, Ms. Bien and Mr. Wellman moved the district court to confirm the award. As they saw it, the district court could modify the arbitration award to correct the alleged double recovery only if there was “an evident material miscalculation of figures” on the face of the award. Id., Vol. III, at 517 (Br. in Supp. of Mot. to Confirm Award) (quoting
The district court sided with Ms. Bien and Mr. Wellman. Like Mid Atlantic, the court thought the arbitration award was “disturbing.” Id., Vol. V, at 1084. It agreed that “what the panel called ‘initial investment loss[es]‘” and “compensatory damages” corresponded with what Ms. Bien and Mr. Wellman had called, respectively, “net out-of-pocket losses” and “market-adjusted damages.” Id. So the court found that by awarding “both net out-of-pocket losses . . . and market-adjusted damages,” the panel effectively gave Ms. Bien and Mr. Wellman a double recovery. Id. But the district court read
After receiving proposed judgments from the parties, in April 2018, the district court entered an amended final judgment. That judgment awarded Ms. Bien and Mr. Wellman damages, attorney‘s fees, and costs in the same amounts that the arbitration panel had specified. The court likewise confirmed the arbitration panel‘s award of 8% yearly prejudgment interest on the damages—but with no interest on the attorney‘s fees or costs. As for postjudgment interest, the
court applied the 2.1% federal rate listed in
C
Both parties filed timely appeals from the amended final judgment. Mid Atlantic‘s appeal presents one question for our review: Did the district court err by holding that it lacked authority to modify the arbitration award to correct an alleged evident material miscalculation of figures because that miscalculation does not appear on the face of the arbitration award? In their cross-appeal, Ms. Bien and Mr. Wellman raise three questions. Did the district court err by (1) granting post-award interest on damages, but not on attorney‘s fees and other costs; (2) awarding postjudgment interest at the federal rate; and (3) ordering Ms. Bien and Mr. Wellman to reassign to Mid Atlantic any post-award distributions from their ownership interests in Sonoma Ridge Partners and KBS (as well as interest thereon).
II
In answering these questions, we “review the district court‘s factual findings for clear error and its legal determinations de novo.” Burlington N. & Santa Fe Ry. Co. v. Pub. Serv. Co. of Okla., 636 F.3d 562, 567 (10th Cir. 2010). We “must give extreme deference” to the arbitration panel‘s conclusions because our “review of arbitral awards is among the narrowest known to law.” THI of N.M. at Vida Encantada, LLC v. Lovato, 864 F.3d 1080, 1083 (10th Cir. 2017) (emphasis omitted) (quoting Brown v. Coleman Co., 220 F.3d 1180, 1182 (10th Cir. 2000)). Given this limited review, we should “exercise ‘great caution’ when a party asks for an arbitration award to be set aside” or modified. Id. (quoting Ormsbee Dev. Co. v. Grace, 668 F.2d 1140, 1147 (10th Cir. 1982). Indeed, “[o]nce an arbitration award is entered,
More specifically, the party seeking vacatur or modification bears the burden of establishing a ground for relief under either
Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 194 (4th Cir. 1998). If the party cannot carry this burden, “[i]t [will] not [be] enough . . . to show that the [arbitration] panel committed an error—or even a serious error.” Stolt-Nielsen, 559 U.S. at 671; see id. at 696 (Ginsburg, J., dissenting) (noting that we “may not disturb the arbitrators’ judgment, even if convinced that ‘serious error’ infected the panel‘s award” (quoting United Paperworkers Int‘l Union v. Misco, Inc., 484 U.S. 29, 38 (1987))); accord Oxford Health Plans, LLC v. Sutter, 569 U.S. 564, 569 (2013); cf. Major League Baseball Players Ass‘n v. Garvey, 532 U.S. 504, 511 n.2 (2001) (per curiam) (noting that the arbitrator‘s “decision hardly qualifies as serious error, let alone irrational or inexplicable error” and “any such error would not justify the actions taken by the [circuit] court [in rejecting the arbitrator‘s findings]“).
III
Guided by those standards, we turn first to the question Mid Atlantic raises in its appeal. That question has two parts. First, does
A
Section 11(a) authorizes courts to modify an arbitration award if it contains “an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award.”
phrase as allowing it to correct only those miscalculations that appear on the face of the award. Mid Atlantic argues that the district court erred in interpreting the text of
Whether
1
We must interpret
Let‘s start with
But even with these dictionary definitions, the meaning of
scheme.” (quoting Davis, 489 U.S. at 809)); see also United States v. Santos, 553 U.S. 507, 532 (2020) (Alito, J., dissenting) (“I do not suggest that the question presented in this case can be answered simply by opening a dictionary. When a word has more than one meaning, the meaning that is intended is often made clear by the context in which the word is used . . . .“); see also Scalia & Garner, supra, at 33 (“[V]agueness can often be clarified by context.“); cf. Cabell v. Markham, 148 F.2d 737, 739 (2d Cir. 1945) (Hand, J.) (“Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.“), aff‘d on other grounds, 326 U.S. 404 (1945). And
Consider the FAA‘s purposes. See Abramski v. United States, 573 U.S. 169, 179 (2014) (noting the importance of considering a statute‘s textually derived purpose in interpreting a provision). Its “‘principal purpose’ . . . is to ‘ensur[e] that private arbitration agreements are enforced according to their terms.‘” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (alteration in original) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989)). “This purpose is readily apparent from the FAA‘s text.” Id. And it “reflects the overarching principle that arbitration is a matter of contract.” Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013). Moreover, part of the parties’ arbitration contract is their
Reading this statutory term “evident” as relating to a material miscalculation that appears on the face of the award furthers the FAA‘s purposes. A face-of-the-award limitation preserves the integrity of the parties’ bargain. Specifically, it preserves the parties’ deal for an arbitrator‘s, rather than a court‘s, resolution of their dispute. This bargain essentially negates the risk that a court may substitute its judgment (inadvertently or otherwise) for that of the arbitrator when it goes beyond the award‘s face in search of obvious, material mathematical errors. Further, a face-of-the-award approach also ensures that arbitration remains an efficient means to resolve disputes rather than “merely a prelude to a more cumbersome and time-consuming judicial review process.” Hall St., 552 U.S. at 588 (quoting Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 998 (9th Cir. 2003)). Reading
The FAA‘s history supports this reading. “When a statutory term is ‘obviously transplanted from another legal source,’ it ‘brings the old soil with it.‘” Taggart v. Lorenzen, 587 U.S. ----, 139 S. Ct. 1795, 1801 (2019) (quoting Hall v. Hall, 584 U.S. ----, 138 S. Ct. 1118, 1128 (2018)); see also AIG Baker, 508 F.3d at 1000 (noting that it was “be[ing] guided by the established meaning that the words of section 11(a) had at the time they were adopted“). Congress enacted the FAA in 1925 and lifted the statute‘s text from “New York‘s [1920] arbitration statute.” Hall St., 552 U.S. at 589 n.7; accord AIG Baker, 508 F.3d at1000; see also Hall St., 552 U.S. at 589 n.7 (“The text of the FAA was based upon that of New York‘s arbitration statute. . . . The New York Arbitration Law incorporated pre-existing provisions of the New York Code of Civil Procedure.“). Section 11(a)‘s text, in particular, was “virtually identical” to New York‘s provision in effect in 1925. Hall St., 552 U.S. at 589 n.7; see AIG Baker, 508 F.3d at 1000 (“The language of section 11(a) of the federal Act matched almost verbatim the language of section 2375 of the New York Code of Civil Procedure, which had long been a part of New York law and the New York Arbitration Law incorporated by reference.“). That provision allowed courts to modify an arbitration award to correct “an evident miscalculation of figures.”
By the time Congress transplanted that language into
The face-of-the-award limitation therefore “was part of the ‘old soil‘” that
Looking to the FAA‘s structure confirms what its purposes and statutory history have already taught. Sections 9 through 11 of the FAA provide for “expedited judicial review to confirm, vacate, or modify arbitration awards.” Hall St., 552 U.S. at 578. Section 9 “unequivocally” commands that courts “‘must’ confirm an arbitration award ‘unless’ it is vacated, modified, or corrected.” Id. at 582. Section 11(a) likewise allows for modifications only to “address egregious departures from the parties’ agreed-upon arbitration.” Id. at 586. This structure counsels narrowly interpreting
circumstances into a freewheeling authorization for the courts to dig through the arbitration record in search of significant miscalculations. On the other hand, our construction—that limits the courts to considering the face of the award—preserves
This reading of
Mid Atlantic’s primary textual argument against the face-of-the-award limitation is unpersuasive.6 It argues that “[t]he only way to determine whether a miscalculation or mistake is ‘material’ is to analyze the [arbitration] record.” Mid Atlantic’s Opening Br. at 20. And thus, as Mid Atlantic reasons,
We find this reasoning wholly unpersuasive. Take a hypothetical award that orders the defendant to pay $100,000 in punitive damages and $100,000 in compensatory damages but then adds these figures on the award’s face for a total of $2,000,000. One need not dive into the arbitration record to say that the award includes a significant (i.e., material) mathematical error. It is untrue, then, that a face-of-the-award limitation renders null
We are similarly unmoved by Mid Atlantic’s related policy argument that a face-of-the-award limitation effectively produces arbitrary results. To illustrate these supposedly arbitrary results, Mid Atlantic offers the following hypothetical:
[C]onsider a hypothetical award which grants postjudgment interest at the rate of 8%. Assume further that the award does not cite any source for the 8% rate of interest, but that the parties had in fact stipulated to the statute governing interest and that statute provides for a 4% rate of interest. In other words, assume the 8% interest rate is indisputably wrong but the “face of the award” does not contain information required to reach that conclusion. Under the District Court’s interpretation, this error cannot be corrected.
Id. at 28–29. According to Mid Atlantic, this hypothetical outcome is arbitrary. And
Yet, contrary to Mid Atlantic’s contentions, the FAA’s purpose, history, and structure make it clear that this is precisely how Congress intended
What’s more in dispelling Mid Atlantic’s misguided notion that the statute functions in an arbitrary manner—under a face-of-the-award approach—it is important to keep in mind that “arbitration is a matter of contract.” Henry Schein, 139 S. Ct. at 529. If Mid Atlantic wished to avoid the supposedly random chance that the arbitration panel would not show its work, it could have contracted for a fully explained award. See Am. Express, 570 U.S. at 233 (noting that parties can contract to specify the arbitrator and the rules for arbitration); United Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 598 (1960) (“Arbitrators have no obligation to the court to give their reasons for an award.”). But Mid Atlantic did not do so. In fact, the current contracts lead us to the opposite conclusion. Most obviously, Mid Atlantic’s contracts with Ms. Bien and Mr. Wellman specify, “[t]he arbitrators do not have to explain the reason(s) for their award.” Aplt.’s App., Vol. III, at 737. We thus cannot (and would not attempt to) rewrite the parties’ contracts just because Mid Atlantic is now dissatisfied with the fruits of its bargain. After all, “by agreeing to arbitrate,” Mid Atlantic traded “procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” Gilmer, 500 U.S. at 31 (quoting Mitsubishi, 473 U.S. at 628). Stated otherwise, that Mid Atlantic is displeased with the level of informality with which the arbitration panel resolved the dispute is not cause to undo the bargain it struck with Ms. Bien and Mr. Wellman. Cf. Beumer Corp. v. ProEnergy Servs., LLC, 899 F.3d 564, 566 (8th Cir. 2018) (“The parties bargained for the arbitrator’s decision; if the arbitrator got it wrong, then that was part of the bargain.”).
In sum, we conclude that
2
Persuasive authority from our sister circuits confirms our reading of
The Fourth Circuit’s reasoning and holding in Apex buttress ours. As we do here, Apex grounds its holding on
To escape this potent and persuasive authority, Mid Atlantic tries to distinguish Apex. In doing so, it casts that case as one involving “an alleged miscalculation of a line item in an arbitration award.” Mid Atlantic’s Opening Br. at 26. But that fact does not distinguish Apex from this case. Indeed, akin to the error in Apex, the miscalculation here involves an alleged duplication of a line item in an arbitration award. Compare id. at 17 (complaining that the arbitration panel awarded net-out-of-pocket losses and market-adjusted damages), with Apex, 142 F.3d at 193 (summarizing U.S. Supply’s complaint that the arbitration panel “included inventory over one year old in its valuation of Apex’s entire inventory”). So Mid Atlantic’s effort to distinguish Apex falls flat.
Trying a different tack, Mid Atlantic faults Apex for “borrow[ing] the ‘face of the award’ phrasing from Hough v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 757 F. Supp. 283, 288 (S.D.N.Y. 1991).” Mid Atlantic’s Opening Br. at 27. As Mid Atlantic points out, Hough involved New York’s arbitration statute, not the FAA. Implicit in that observation is the critique that by citing a case interpreting New York law to support its view that
Such an implicit critique, however, is misguided because of the close connection between New York arbitration law and the FAA—especially with respect to the language of
To be sure, although Congress has left the relevant language of
Consequently, Apex was on solid ground in relying on New York law—and, more specifically, Hough—in holding that
Mid Atlantic also complains that Apex, in any event, misread Hough. It contends that the language from Hough that Apex relied on was taken out of context, resulting in Apex’s misreading of Hough’s import. Set in its full context, Mid Atlantic explains, the Hough language that Apex relies on reads: “Where no mathematical error appears on the face of the award and where no computational error can be clearly inferred, an arbitration award will not be altered.” Mid Atlantic’s Opening Br. at 27 (quoting Hough, 757 F. Supp. at 288). But Apex omitted the italicized language. See 142 F.3d at 194. And that “clearly inferred” language, Mid Atlantic posits, proves that the phrase “face of the award” is “non-statutory shorthand” that imposes no “actual requirement that district courts ignore a properly submitted arbitration record” in determining whether an award has an “evident material miscalculation.” Mid Atlantic’s Opening Br. at 27–28. Put differently, Mid Atlantic argues that the “face of the award” language encompasses clear inferences that courts may glean from the arbitration record. In this sense, it reasons that Hough—and by extension, Apex—“actually supports [its] position here.” Id. at 27.
We disagree. Hough’s “clearly inferred” language came from an earlier New York case, City of Troy v. Village of Menands, 48 A.D.2d 733, 734 (N.Y. App. Div. 1975). See Hough, 757 F. Supp. at 288 (citing City of Troy). However,
Under such a reading, the sole touchstone for the court’s analysis would still be the face of the award. And crucially, the arbitration record would remain off limits. Indeed, at least one New York court quoting City of Troy’s “clearly inferred” statement has read that language precisely in this manner. See Curtis Lumber Co. v. Am. Energy Care, Inc., 910 N.Y.S. 2d 761, 2010 WL 1756883 at *4, (N.Y. Sup. Ct. Apr. 30, 2010) (unpublished) (reading “miscalculation of figures” to mean “‘mathematical errors on the face of the . . . award’ or ‘computational errors [that] can be clearly inferred’ from the award” (alterations in original) (emphasis added) (quoting City of Troy, 48 A.D. 2d at 734)). And we have discerned no contrary view in other New York cases. Thus, as we see it, neither the “clearly inferred” language in Hough nor Apex’s reliance on Hough “actually supports” Mid Atlantic’s position. Mid Atlantic’s Opening Br. at 27.
Finally, Mid Atlantic wrongly claims that Apex did “not identify a statutory basis for limiting a court’s review to errors that appear ‘on the face of the award.’” Mid Atlantic’s Reply & Resp. Br. at 8. However, as we do, Apex grounded the face-of-the-award limitation in
We find similar (though admittedly less robust) support in Grain v. Trinity Health, Mercy Health Services Inc., 551 F.3d 374 (6th Cir. 2008). In that case, a married couple won a sizable arbitration award but moved to modify the award to correct “an evident material miscalculation of figures.” Id. at 378 (quoting
Grain supports our reading of
We recognize that Mid Atlantic marshals certain cases that purportedly bolster its position. Chief among them is Eljer Manufacturing, Inc. v. Kowin Development Corp., 14 F.3d 1250 (7th Cir. 1994). The arbitration award there gave the defendant, Kowin, almost $15 million in damages. See 14 F.3d at 1253. The award divided these damages “into three separate” categories of (1) about $3 million, (2) around $8.4 million, and (3) $3.5 million. Id. The award itself did not clarify what these amounts represented or how the arbitrator calculated them. Id. But as it turned out, the three categories “duplicated precisely the amounts requested by Kowin in the damages section of its post-hearing brief.” Id. By consulting that brief, the district court determined that the first category inadvertently included $1.25 million that Eljer had already paid Kowin, and that the third category included $2.5 million that the first category had already accounted for. To correct these errors, the district court granted Eljer’s motion for modification under
The Seventh Circuit in Eljer agreed with the district court that the “[t]he basis for each of the arbitrator’s awards” was Kowin’s brief. Id. at 1254. It rejected Kowin’s contention that “the [district] court’s reduction of the award rest[ed] on impermissible speculation as to what each of the arbitrator’s three awards was attempting to redress,” reasoning that “[i]t was hardly speculative for the district court to base its analysis on Kowin’s own explanation of its damages.” Id. The court observed that “Kowin confuses a narrow standard of review with a nonexistent standard of review.” Id. With this information from beyond the face of the award, the Seventh Circuit concluded that the award provided for double recoveries. And it reasoned that a “[d]ouble recovery constitutes a materially unjust miscalculation which may be modified under section 11.” Id. Thus, the Seventh Circuit affirmed the district court’s order modifying the award. See id. at 1257.
The face-of-the-award limitation that we adopt here is admittedly in some tension with the Seventh Circuit’s decision in Eljer. But we do not find Eljer’s analysis persuasive, and, thus, it gives us no pause. See, e.g., United States v. Krueger, 809 F.3d 1109, 1116 n.9 (10th Cir. 2015) (declining to rely on “unpersuasive out-of-circuit cases”). For starters, Eljer did not expressly hold that
The other cases Mid Atlantic cites are similarly unpersuasive. Consider Transnitro, Inc. v. M/V Wave, 943 F.2d 471 (4th Cir. 1991). The arbitrator there awarded M/V damages accounting for, among other things, certain expenses that M/V had incurred and about $57,000 in interest that had accrued on a bond. After the award was issued, M/V discovered that it had failed to inform the arbitrator or Transnitro that it had already earned about $34,000 in interest on the bond. Likewise, M/V had not reported some $28,000 in expenses. In federal court, Transnitro moved to modify the award to subtract the unreported $34,000 from the $57,000 interest award. For its part, M/V asked to collect the $28,000 in unreported expenses. The district court agreed to subtract the $34,000 from the interest award because it would be “unfair to permit [M/V] to reap the benefit of [its own] failure.” Id. at 474. But fairness did not likewise compel the court to allow M/V to collect the unreported expenses.
On appeal, M/V argued “that the district court had no power under
Mid Atlantic relies heavily on Transnitro. It reads that case as proof that “the Fourth Circuit . . . endorsed a review of material beyond even the arbitration record itself.” Mid Atlantic’s Opening Br. at 22. Mid Atlantic adds that Transnitro even “revers[ed] a district court’s decision not to correct an error based upon a review of factual information that was never submitted to the arbitration Panel.” Id. At bottom, Mid Atlantic reads Transnitro to stand for the proposition that when, “as here, there is a mathematical error in an award, the district court could have (and should have) looked at the materials in the arbitration record . . . to determine the fix for that mathematical error.” Id. at 25.
Drilling down on it, however, Transnitro is less helpful than Mid Atlantic thinks. To begin, that case interpreted the language “evident material mistake” from the second half of
Even if Transnitro were the only word from the Fourth Circuit on
At the end of the day, what is important is what the Transnitro court did—and, especially, did not do—in reaching its holding, not the theory that motivated its actions. And, in addition to tacitly eschewing a textual analysis of
unpersuasive touchstone for our own interpretation of that provision. In sum, contrary to Mid Atlantic‘s reading of the case, we do not find that Transnitro speaks persuasively—if at all—to the circumstances before us.
We are likewise unpersuaded by Valentine Sugars, Inc. v. Donau Corp., 981 F.2d 210 (5th Cir. 1993), which Mid Atlantic also cites. That case contains the following passage:
Next, Valentine argues that we should vacate the award because it is based upon a material mistake of fact. Title
9 U.S.C. § 11(a) allows us to vacate an award “[w]here there was an evident material miscalculation of figures . . . .” The Sixth Circuit has held that “where the record that was before the arbitrator demonstrates an unambiguous and undisputed mistake of fact and the record demonstrates strong reliance on the mistake by the arbitrator in making his award, it can fairly be said that the arbitrator ‘exceeded [his] powers or so imperfectly executed them’ that vacation may be proper.”
981 F.2d at 214 (alterations in original) (quoting Nat‘l Post Office Mailhandlers v. United States Postal Serv., 751 F.2d 834, 843 (6th Cir. 1985)). Later Fifth Circuit cases have read that passage as holding “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 Comput. Servs., Inc., 324 F.3d 391, 396-97 (5th Cir. 2003) (emphasis added) (quoting Valentine, 981 F.2d at 214), overruled on other grounds by Hall St., 552 U.S. 576. Viewed in this light, Valentine arguably stands for the proposition that
At its core, Valentine rests on an untenable reading of National Post Office. See Valentine, 981 F.2d at 214 (relying on National Post Office). In that case, the Postal Service fired an employee who had been indicted for drug trafficking. The employee protested the discharge and initiated arbitration proceedings. Although the arbitrator had “doubts,” he nevertheless “sustain[ed] the discharge.” 751 F.2d at 838. The arbitrator‘s “written decision . . . includ[ed] the glaring misstatement that the employee had pleaded guilty to marijuana trafficking . . . prior to the Postal Service‘s discharge action.” Id. (emphasis added). In truth, the employee pleaded guilty “four weeks after the discharge.” Id. Given such an error, the employee‘s union moved to vacate the arbitration decision. The district court denied the motion.
The Sixth Circuit reversed. It reasoned that 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, it can fairly be said that the arbitrator ‘exceeded [his] powers, or so imperfectly executed them’ that vacation may be proper.” Id. at 843 (quoting
As this description suggests, properly read, National Post Office has nothing to do with
We must respectfully conclude, therefore, that Valentine misread National Post Office. It took National Post Office‘s discussion of when vacatur under now-
* * *
To recapitulate, we hold that
B
Having concluded that
The arbitration award ordered Mid Atlantic to pay Ms. Bien and Mr. Wellman two forms of damages: (1) initial-investment-loss damages and (2) compensatory
| Damages Award | Ms. Bien | Mr. Wellman | Both | Total |
|---|---|---|---|---|
| Initial Investment Loss | $240,321 | N/A | $52,090 | $292,411 |
| Compensatory Damages | $437,286 | $47,397 | N/A | $484,683 |
| Total | $677,607 | $47,397 | $52,090 | $777,094 |
Mid Atlantic argues that the award “included a clear ‘double-counting.‘”10 Mid Atlantic‘s Opening Br. at 12. It posits that the $292,411 award for “initial investment loss” reflected the $292,411 in net out-of-pocket losses that Ms. Bien and Mr. Wellman‘s expert had testified that they suffered. Similarly, the $484,683 in “compensatory damages” almost exactly matched the $484,684 in “market-adjusted damages” that the expert had at one point said Ms. Bien and Mr. Wellman incurred. And, Mid Atlantic notes that the expert had testified, “market
adjusted damages include net out-of-pocket losses.” Id. at 17. Indeed, the expert had presented net out-of-pocket damages and market-adjusted damages as alternative measures of the couple‘s losses. And Ms. Bien and Mr. Wellman had asked for only market-adjusted damages in their final prayer for relief. But the arbitration panel awarded Ms. Bien and Mr. Wellman what it labeled “initial investment losses” and “compensatory damages.” In so doing, according to Mid Atlantic, the panel mistakenly awarded Ms. Bien and Mr. Wellman damages twice.
Even if we accept Mid Atlantic‘s double-counting argument, it does not carry the day on appeal. For example, let us say that Mid Atlantic is correct that the award included double counting. After all, it is conceivable that the arbitration panel misunderstood the alternative measures of damages that Ms. Bien and Mr. Wellman‘s expert had presented. And the panel may have inadvertently given them a double recovery by awarding them both measures of damages (i.e., net out-of-pocket losses and market-adjusted damages).
Mid Atlantic‘s double-counting argument, however, still would not permit it to prevail. Most obviously, the alleged material miscalculation did not appear on the face of the award. Further, the award did not even state that the “initial investment loss” damages corresponded to what the expert had called net out-of-pocket losses. Nor did the award say that the “compensatory damages” were equivalent to the market-adjusted damages that the expert discussed. Critically, missing from the award was an explanation as to how the panel calculated the damages figures. We need not definitively opine on how much of such
IV
With the issue Mid Atlantic raises in its appeal resolved, we turn now to the three questions that Ms. Bien and Mr. Wellman raise in their cross-appeal. Those questions ask whether the district court erred by (1) granting post-award interest on damages, but not attorney‘s fees and other costs; (2) awarding postjudgment interest at the federal rate; and (3) ordering Ms. Bien and Mr. Wellman to reassign to Mid Atlantic any post-award distributions from their ownership interests in Sonoma Ridge Partners and KBS (including interest thereon). We hold that the district court did not err in any of these respects. Thus, we affirm the remainder of the amended final judgment.
A
We start with the district court‘s first supposed error—granting post-award interest on damages, but not on attorney‘s fees and other costs. As we explain, the district court did not err.
The arbitration award ordered Mid Atlantic to pay Ms. Bien and Mr. Wellman damages, attorney‘s fees, and arbitration costs. As discussed above, the award ordered Mid Atlantic to pay two types of damages—“an initial investment loss” and “compensatory damages.” Aplt.‘s App., Vol. I, at 28. It also specified that Mid Atlantic was “liable for and shall pay . . . interest at the rate of 8% per annum beginning February 6, 2015[,] until” each type of damages was “paid in full.” Id. However, in stating that Mid Atlantic was “liable for and shall pay” attorney‘s fees and costs, the award said nothing about interest. Id. By negative implication, the award seemed to effectively deny interest on the attorney‘s fees and costs. See Scalia & Garner, supra, at 107-11. The award made this more explicit by clarifying that “[a]ny and all claims for relief not specifically addressed herein . . . are denied.” Aplt.‘s App., Vol. I, at 28 (emphasis added).
A “claim for relief” is “[a] demand for money, property, or a legal remedy to which one asserts a right.” Claim, BLACK‘S LAW DICTIONARY 311 (11th ed. 2019). As applicable here, the language “demand for money” in the definition of “claim” is naturally read as encompassing Ms. Bien and Mr. Wellman‘s request for interest on the attorney‘s fees and costs. See Aplt.‘s App., Vol. I, at 27 (noting that Ms. Bien and Mr. Wellman sought any and all “relief which [the arbitration] Panel deem[ed] just and proper“). Yet, the arbitration panel‘s award did “not specifically address[]” this claim for relief (i.e., demand for money) of Ms. Bien and Mr. Wellman. Id. at 28. As a result, the arbitration award had the effect of not ordering Mid Atlantic to pay interest on attorney‘s fees or costs—only on the damages, which the award did address. Accordingly, the district court did not err in adhering to the award‘s terms by ordering Mid Atlantic to pay interest on only the damages.
Ms. Bien and Mr. Wellman, however, beg to differ. They contend that “the
An award shall bear interest from the date of the award:
- If not paid within 30 days of receipt;
- If the award is the subject of a motion to vacate which is denied; or
- As specified by the panel in the award.
This argument fails. For starters, whether
B
We now consider the district‘s second supposed error—awarding postjudgment interest at the federal rate. Again, the district court did not err.
1
Federal law sets the rate at which postjudgment interest accrues on civil judgments in federal court. See
Outside the arbitration context, the parties’ failure to clearly, unambiguously, and unequivocally express their intent to contract around the federal rate is dispositive. See, e.g., In re Riebesell, 586 F.3d at 794-95. But in the arbitration context, there is another wrinkle to consider. Whether the parties intended to contract around the federal postjudgment interest rate “is a quintessential fact question.” Newmont, 615 F.3d at 1277. So the parties may have agreed to have the arbitration panel decide whether they contracted around the federal postjudgment interest rate. Id. And if the arbitration panel concludes that the parties have done so, the panel may, “[c]onsistent with
To recap, the federal postjudgment interest rate in
2
a
Given our narrow review of arbitration awards, we begin with the second condition. Insofar as there was a “controvers[y]” between the parties with respect to the rate of postjudgment interest, the parties contracted to place that dispute in the hands of the arbitration panel. See, e.g., Aplt.‘s App., Vol. III, at 715 (“All controversies that may arise between you, [and] us . . . including, but not limited to, controversies concerning . . . breach of this or any other agreement between you and us . . . shall be determined by arbitration“). The award here, however, never used the word “postjudgment.” See id., Vol. I, at 26-28. Indeed, in reciting the relief Ms. Bien and Mr. Wellman had requested, the award listed “[p]re-judgment interest” but not postjudgment interest. Id. at 27. The arbitration panel seemingly did not consider postjudgment interest. Perhaps for that reason, the award did “not specifically address[]” postjudgment interest. Id. at 28. As a result, the terms of the award dictate that the arbitration panel denied a claim for any specified rate of postjudgment interest, along with every other claim for relief “not specifically addressed” in the award. Id. Thus, even if “the matter of postjudgment interest was properly before the arbitration panel,” Newmont, 615 F.3d at 1276, the panel did not award postjudgment interest at a rate other than that in
b
Our examination of the parties’ contracts ends with the same conclusion. The word “postjudgment” appears nowhere in the contracts themselves See Aplt.‘s App., Vol. III, at 705-37. True,
Ms. Bien and Mr. Wellman disagree.11 They point to
This argument fails. Its key misstep is in reading the “until paid in full” language as providing for an award of postjudgment interest. Court after court has
rejected this argument. Take Tricon as an example. As here, the arbitration award imposed interest “until paid.” 718 F.3d at 459. “[T]hough, interpreted literally,” that language would apply “beyond the judgment,” the Fifth Circuit held that the award spoke only to prejudgment interest. See id. at 459-60. “Such boilerplate language,” the court explained, could not “circumvent the merger rule” and deviate from the federal postjudgment interest rate. Id. at 460. The Second, Ninth, and Eleventh Circuits have reached similar or analogous conclusions in the arbitration context. See Carte Blanche Pte., Ltd. v. Carte Blanche Int‘l, Ltd., 888 F.2d 260, 264, 270 (2d Cir. 1989) (holding the federal rate applied despite award of interest “to the date of payment“); Parsons & Whittemore Ala. Mach. & Servs. Corp. v. Yeargin Const. Co., 744 F.2d 1482, 1483-84 (11th Cir. 1984) (holding that the federal rate applied despite award of interest “until the award was paid“); cf. Durga Ma, 387 F.3d at 1024 (holding award of “interest at the statutory rate” did not circumvent the federal rate).
Outside of the arbitration context, our court has likewise held that a contract using the language “shall accrue interest until payment” was not a “contract for a post-judgment interest rate,” meaning “the federal rate applie[d].” In re Riebesell, 586 F.3d at 794-95. Given this contrary authority, Ms. Bien and Mr. Wellman‘s reliance on the “until paid in full” language is misplaced.12
In summary, even if the postjudgment-interest issue were properly before the arbitration panel, we would not read the panel‘s award as clearly and unequivocally awarding postjudgment interest. Nor did the parties clearly, unambiguously, or unequivocally express their intent to contract
C
We now consider whether the district court erred by ordering Ms. Bien and Mr. Wellman to reassign to Mid Atlantic any post-award distributions from their ownership interests in Sonoma Ridge Partners and KBS (including interest thereon). We conclude that Ms. Bien and Mr. Wellman have not demonstrated that the district court erred.
The arbitration award ordered Ms. Bien and Mr. Wellman to “reassign ownership of all Sonoma Ridge Partners and KBS REIT investments to [Mid Atlantic].” Aplt.‘s App., Vol. I, at 28. Mid Atlantic was served with the award in December 2016. After this service, Ms. Bien and Mr. Wellman say that they contacted Mid Atlantic about reassigning the investments. According to the couple, Mid Atlantic thought reassigning the investments was “premature” because it had moved to vacate the award. Ms. Bien & Mr. Wellman‘s Resp. & Principal Br. at 52 n.18. Consequently, Ms. Bien and Mr. Wellman retained ownership of the investments during the district court proceedings.
Having confirmed the arbitration panel‘s award, in its amended final judgment entered in April 2018, the district court ordered Ms. Bien and Mr. Wellman to “reassign ownership of all Sonoma Ridge Partners and KBS REIT investments to . . . Mid Atlantic.” Aplt.‘s App., Vol. V, at 1093. However, the court specifically clarified that “the reassignment shall include any and all amounts distributed to [Ms. Bien and Mr. Wellman] by the Sonoma Ridge Partners and KBS REIT investments after the [arbitration] Award, as well as any interest earned on such distributions.” Id.
Ms. Bien and Mr. Wellman now argue that the district court erred in ordering them to reassign to Mid Atlantic any post-award distributions from their ownership interests in Sonoma Ridge Partners and KBS. They argue that the district court strayed from “[t]he plain language of the [arbitration] Award.” Ms. Bien & Mr. Wellman‘s Resp. & Principal Br. at 52. That award “did not require” them to pay Mid Atlantic the post-award distributions from the investments. Id. Had the arbitration panel meant to do so, they argue it “could have stated so in the Award.” Id. But the panel did not, and instead ordered that Ms. Bien and Mr. Wellman assign only “their ‘ownership’ in the [Sonoma Ridge Partners and KBS investments].” Id. Hence, Ms. Bien and Mr. Wellman contend that the district court erred by improperly modifying the award to require them to reassign the post-award distributions.
This argument is unpersuasive. Notably, Ms. Bien and Mr. Wellman cite to no on-point legal authority to support this contention of error. This failing in itself inclines us to reject their challenge. See, e.g., Grissom v. Roberts, 902 F.3d 1162, 1173 (10th Cir. 2018) (“It is a party‘s duty to develop an argument if it wishes a determination by this court.“); Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 679 (10th Cir. 1998) (“Arguments inadequately briefed in the opening brief are waived . . . .“).
Moreover, Ms. Bien and Mr. Wellman do not meaningfully dispute Mid Atlantic‘s factual assertions concerning the status of their investments at the time the district court ruled. Specifically, Mid Atlantic underscores in its briefing that “investments are not static” and that Ms. Bien and Mr. Wellman “were paid cash distributions on those investments post-Award . . . . [and]
This failure to meaningfully dispute Mid Atlantic‘s factual assertions is significant. Part and parcel of Ms. Bien and Mr. Wellman‘s overarching obligation to explain how the district court erred is the obligation to give us an accurate picture of the factual landscape before the district court when it ruled. Cf. Nixon v. City & Cty. of Denver, 784 F.3d 1364, 1366 (10th Cir. 2015) (“The first task of an appellant is to explain to us why the district court‘s decision was wrong.“). Consequently, because Ms. Bien and Mr. Wellman have not meaningfully challenged—and indeed seem to agree with—Mid Atlantic‘s assertions concerning the status of their investments at the time the district court ruled, we proceed on the premise that Mid Atlantic‘s assertions are correct.
With this understanding of the factual landscape, and without the benefit of citations of apposite authority from Ms. Bien and Mr. Wellman, we find their last contention of error unpersuasive. Ms. Bien and Mr. Wellman‘s argument begs the important question—what does “ownership” of the investments mean? The investments were “common stock” in KBS and Sonoma Ridge Partners. Aplt.‘s App., Vol. IV, at 885-87 (Proposed Assignment of Stock, dated June 12, 2017). The ordinary legal understanding of “common stock” is “[a] class of stock entitling the holder . . . to receive dividends . . . and to share in assets upon liquidation.” Common Stock, BLACK‘S LAW DICTIONARY, supra, at 1713; see, e.g., 18 C.J.S. Corporations § 215, Westlaw (database updated Mar. 2020) (noting that “[a] common stockholder is an owner of the enterprise in proportion that his or her stock bears to the entire stock and ordinarily he or she is entitled to . . . ultimate distribution of assets of the corporation“).
“Ownership” of the investments, then, entailed the right to receive distributions and to share in the liquidated assets. Thus, the arbitration award that ordered Ms. Bien and Mr. Wellman in December 2016 to reassign ownership of their investments in Sonoma Ridge Partners and KBS to Mid Atlantic also should be read as having effectively ordered them to reassign to Mid Atlantic (in addition to any actual common stock) their rights to future distributions from those investments. And it is undisputed that—irrespective of the reason—Ms. Bien and Mr. Wellman did not act on the arbitration panel‘s order: that is, they did not reassign their ownership interests in the Sonoma Ridge Partners and KBS investments to Mid Atlantic before the district court entered its amended final judgment in April 2018. It is further uncontested that at the time the court entered its amended final judgment, essentially all that was left of the ownership interests of Ms. Bien and Mr. Wellman in Sonoma Ridge Partners and KBS was their distributions following liquidation.
V
For the reasons stated above, we AFFIRM the amended final judgment in all respects.13
Notes
In either of the following cases the United States court in and for the district wherein the award was made may make an order modifying or correcting the award upon the application of any party to the arbitration—
(a) Where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award.
(b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted.
(c) Where the award is imperfect in matter of form not affecting the merits of the controversy.
The order may modify and correct the award, so as to effect the intent thereof and promote justice between the parties.