St. Tammany Manor v. Spartan Bldg. Corp.St. Tammany Manor v. Spartan Bldg. Corp.
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 Law1 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
We reverse. For the reasons discussed below, we determine that there exist here none of the grounds specified in
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 $145,642.753 with interest at the rate of twelve percent per annum4 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 arbitrators5 signed the award. As modified, the trial court confirmed the award. The court of
“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, 353 So. 2d 975, 977 (La.1977) (citing Housing Authority v. Henry Ericsson Co., 197 La. 732, 2 So. 2d 195 (1941)). “It is important to the effectiveness of the arbitration process that the award be promptly performed.” Pirsig, Some Comments on Arbitration Legislation, 10 Vand.L.Rev. 685, 707 (1957).
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, 175 U.S. 588, 20 S. Ct. 228, 44 L. Ed. 284 (1900); Housing Authority v. Henry Ericsson Co., 197 La. 732, 2 So. 2d 195 (1941); Greer v. Lowe, 94 So. 2d 560 (La.App.1957); Ogden v. Baile, 73 Fla. 1103, 75 So. 794 (1917); 5 Am. Jur.2d, Arbitration and Award, § 188, p. 659.” Firmin v. Garber, 353 So. 2d at 977.
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., 359 So. 2d 1031 (La.App. 4th Cir.1978) to be dispositive of the issue in this case. City Stores involved three different “cost plus” construction contracts between the two parties. The arbitration award included pre-award interest on the amount found to be due the contractor. The trial court, differing with the arbitrator, made its own finding concerning
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
This argument ignores the plain language of the statute. An award may be challenged only on grounds specified in
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
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., 470 So. 2d 890 (La.App. 4th Cir.), writ denied, 476 So. 2d 351 (La.1985). A writ denial by this Court has no precedential value. Coco v. Winston Industries, 341 So. 2d 332, 335 n. 1 (La.1976) (citing Barham, The Importance of Writ Denials, 21 Loy.L.Rev. 835 (1975)). Furthermore, Mt. Airy Refining does not support respondent‘s argument. The court of appeal in that case actually respected the principle that an arbitration award may be challenged only for grounds specified in the statute. In Mt. Airy Refining, the arbitrator found pre-award interest due by a party, at the rate provided in the pertinent promissory note. However, he gave post-award interest at a greater rate, “Whitney prime plus one percent.” The court of appeal approved this ad hoc post-award interest determination by the arbitrators. Id. at 893. Because the award of post judgment interest did not violate any of the provisions of
St. Tammany Manor also argues that the awarding of interest on arbitration awards is inherently a judicial function, quoting State v. Blair, 445 So. 2d 133 (La. App. 3d Cir.1984). The Blair court said that “the trial court had the authority to award judicial interest from the date of judicial demand.” Id. at 137. It is of course true that courts award judicial interest. That judicial power, however, does not make the arbitrators’ award of interest any less proper. In fact, in Blair, the court of appeal did not have to decide if the arbitrators could give post-award interest, because the interest in that arbitration award (twelve percent), and the date of commencement, happened to coincide with the rate of interest and the date interest otherwise commenced from judicial demand (from date suit was filed). Id. n. 1. Assessing that legal question now, however, we can discern no reason why an arbitration award cannot assess post-award interest, absent a prohibition in the contract. In this case, the arbitrators awarded interest at twelve percent from the date of substantial completion until paid. Interest will accrue at that rate in accordance with the award until the amount due is paid, notwithstanding the date of legal demand or judgment, or any change to
None of the grounds specified in
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
REVERSED AND REMANDED.
Notes
[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.