ST. TAMMANY MANOR, INC.
v.
SPARTAN BUILDING CORPORATION.
SPARTAN BUILDING CORPORATION
v.
ST. TAMMANY MANOR, INC. and the American Arbitration Association.
Supreme Court of Louisiana.
*425 Richard L. Muller, Muller & Lehman, Mandeville, for defendant-appellant.
Thomas A. Rayer, Denechaud & Denechaud, New Orleans, for plaintiff-appellee.
CALOGERO, Justice.
In this construction contract dispute, the issue is whether grounds exist for modifying or correcting an arbitration award.
The Louisiana Arbitration Law[1] requires that a challenged arbitration award be modified or corrected in any of the following cases:
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 matters submitted.
C. Where the award is imperfect in matter of form not affecting the merits of the controversy.[2]
Utilizing the provisions of La.Rev.Stat. Ann. 9:4209 (West 1983), Spartan Building Corp. filed suit to confirm an arbitration award. St. Tammany Manor, Inc. filed an independent lawsuit requesting that interest commence from the date of the arbitration award instead of the date of substantial completion of the work, as had been awarded by the panel of arbitrators. The trial court consolidated the cases and later rendered a summary judgment modifying the award, effectively granting St. Tammany Manor the relief it had sought. The Fourth Circuit Court of Appeal affirmed, choosing to follow its decision in City Stores Co. v. Gervais F. Favrot Co.,
We reverse. For the reasons discussed below, we determine that there exist here none of the grounds specified in La.Rev. Stat.Ann. 9:4211, the exclusive authority for a court to modify an arbitration award.
On September 16, 1980, Spartan Building contracted to construct a lodge for St. Tammany Manor, the work to be completed by September 26, 1981. The facility was substantially completed on or about September 23, 1981, when the architect reviewed the project and submitted a punch list to Spartan Building. At that time St. Tammany Manor chose to retain $172,986.75 of the moneys which should otherwise have been paid to Spartan, for items it claimed the contractor still had to correct, or complete. Spartan contended that all of the work had been properly completed and that it was owed the $172,986.75 balance. The dispute was submitted to an arbitration panel, as required by the contract. On January 17, 1984, the arbitrators awarded Spartan Building a net sum of $145,642.75[3] with interest at the rate of twelve percent per annum[4] from September 30, 1981 until paid.
The trial court modified the arbitration award to provide that the interest should run only from January 18, 1984, the date the last of the three arbitrators[5] signed the award. As modified, the trial court confirmed the award. The court of *426 appeal affirmed the district court judgment, over a vigorous dissent by the Chief Judge. The court majority quoted La.Civ. Code Ann. art. 1938, that "[a]ll debts shall bear interest ... from the time they become due, unless otherwise stipulated."[6] Then they adopted the reasoning of City Stores Co. v. Gervais F. Favrot Co.,
"Arbitration is a mode of resolving differences through the investigation and determination of one or more individuals appointed for that purpose. The object of arbitration is the speedy disposition of differences through informal procedures without resort to court action." Firmin v. Garber,
La.Rev.Stat.Ann. 9:4209 requires a court to confirm the arbitration award upon application of any party to the arbitration. The only exceptions are that a court may vacate, as prescribed in section 4210[7] (not applicable here), modify or correct, as prescribed in section 4211. The only grounds listed in section 4211 for modification or correction are (1) a material miscalculation of figures or material mistake in a description (of any person, thing, or property), (2) an award upon a matter not submitted to the arbitrators, or (3) an award imperfect in matter of form not affecting the merits of the controversy.
The arbitrators' determination on the merits will not be reviewed by the court since the parties have in advance, by contract, agreed that their decision on issues of fact and law should be final and binding. The award is conclusive unless an error charged to the arbitrators fits one of the statutorily described deficiencies. Wilner, Domke on Commercial Arbitration § 3400, at 475 (1984). "The court cannot substitute its conclusion for that of the arbitrator. United States v. Gleason,
St. Tammany Manor argues that the court of appeal was correct in awarding interest only from the date of the arbitration award. The court of appeal found its decision in City Stores Co. v. Gervais F. Favrot Co.,
In support of its contention that the trial court had the authority to modify the award regarding the amount of interest to which the contractor was entitled and the date of commencement of that interest, St. Tammany Manor first argues that the arbitrators did not make a specific finding of fact that the contract was substantially complete on the date the arbitrators decided interest should commence, i.e., September 30, 1981. Instead, it argues, the award merely itemized the sums respectively due the parties and then simply awarded interest on the net amount due Spartan Building, from an arbitrary date, September 30, 1981.[8] Therefore, according to St. Tammany Manor, the trial court did not interfere with any factual finding of the arbitrators; it only modified the award to have it legally conform to its interpretation of La.Civ. Code Ann. art. 1938, as was done by the court of appeal in City Stores.
This argument ignores the plain language of the statute. An award may be challenged only on grounds specified in sections 4210 and 4211. Firmin,
Respondent argues that the trial court merely corrected a miscalculation regarding interest. We disagree. The trial court's changing the commencing date of the interest to which Spartan Building is entitled is not the correction of "an evident material miscalculation of figures."[9] The type of "evident material miscalculation" of figures contemplated by the statute would be one akin to an arithmetical error, or such as that. Here the trial court examined the legal dispute underlying the award. (Was the amount due certain? Must the sum due and the date from which it was due be ascertainable? Did the arbitrators make a precise finding that the job *428 was completed, and on what date?) The trial court then provided a monetary remedy different from that of the arbitrators.[10] That is not one of the statutorily permitted reasons for modification of the award.
St. Tammany Manor argues that this court has previously given approval to the judicial review of the inclusion of interest in an arbitration award, citing Mt. Airy Refining Co. v. Clark Acquisition, Inc.,
St. Tammany Manor also argues that the awarding of interest on arbitration awards is inherently a judicial function, quoting State v. Blair,
None of the grounds specified in section 4211, the exclusive authority for a court to modify an arbitration award, exist here. The trial court should have granted an order confirming the award, pursuant to section 4209.
Decree
For the foregoing reasons, the judgments of the district court and the court of appeal are reversed. The award of the Commercial Arbitration Tribunal of the American Arbitration Association in Case No. 71-110-0382-82-W is confirmed; and, accordingly, judgment is rendered herein in favor of Spartan Building Corporation and against St. Tammany Manor, Inc. in the sum of $145,642.75, together with interest on this amount at the rate of twelve percent per annum from September 30, 1981, until paid, with administrative fees and expenses *429 of the American Arbitration Association and the remuneration of the arbitrators being borne twenty-five percent by Spartan Building Corp. and seventy-five percent by St. Tammany Manor, Inc. and paid as directed by the American Arbitration Association.[12]
REVERSED AND REMANDED.
NOTES
Notes
[1] La.Rev.Stat.Ann. 9:4201-4217 (West 1983).
[2] Id. 9:4211. This section is substantially the same as Uniform Arbitration Act § 13, 7 U.L.A. 201 (1985) and the federal statute, 9 U.S.C. § 11 (1982).
[3] The arbitrators found that the owner was entitled to retain $27,344.00 from the balance due the contractor for remedial work to repair or properly complete the project. That amount was deducted from the $172,986.75 due Spartan Building, leaving a net due Spartan of $145,642.75.
[4] The contract provided that "[p]ayments due and unpaid under the contract documents shall bear interest from the date payment is due at such rate as the parties may agree upon in writing, or, in the absence thereof, at the legal rate prevailing at the place of the project." La. Civ.Code Ann. art. 2924 (West Supp.1987) set the legal rate of interest on and after September 11, 1981 at twelve percent per annum.
[5] The arbitration panel was composed of a lawyer, an architect, and a contractor.
[6] La.Civ.Code Ann. art. 1938 (West 1977), repealed by, Act of July 2, 1984, 1984 La.Acts 331 (recodified as amended at La.Civ.Code Ann. art. 2038 (West 1987)).
[7] Section 4210 requires the court to vacate the award
[w]here the award was procured by corruption, fraud, or undue means, [w]here there was evident partiality or corruption on the part of the arbitrators or any of them, [w]here the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy, or of any misbehavior by which the rights of any party have been prejudiced, [w]here the arbitrators exceeded their powers or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
In this case, the trial court did not vacate the award under section 4210. It modified the award under section 4211. Accordingly, the pertinent and controlling statutory provisions are to be found in the latter section of this statute.
[8] The arbitrators probably tried to find a date around when construction was substantially completed. They apparently fixed September 30, 1981 because the contract provided for completion by September 26, 1981 and on September 23, 1981 the architect reviewed the project and submitted a punch list to Spartan Building.
[9] La.Rev.Stat.Ann. 9:4211(A). Nor was this change the mere correction of a formal error, Albert v. Denito,
[10] The difference amounted to almost precisely $40,000. At the time of the trial court judgment, December 12, 1985, interest on the award, accrued from September 30, 1981, amounted to approximately $73,500. Accrued from January 18, 1984, interest amounted to approximately $33,500.
[11] There is currently pending in the Legislature a bill which would amend La.Civ.Code Ann. art. 2924 (West Supp.1987) and change the current twelve percent legal interest. It would set legal interest after January 1, 1988 at one percent above the average prime rate as annually set by the commissioner of financial institutions.
[12] This same assessment of costs of the arbitration was made by the arbitrators and confirmed by the trial court.