Master Craft Construction, LLC v. Pronoun, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

17-569

MASTER CRAFT CONSTRUCTION, LLC

VERSUS

PRONOUN, INC.

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APPEAL FROM THE
THIRTIETH JUDICIAL DISTRICT COURT
PARISH OF VERNON, NO. 92421C
HONORABLE SCOTT WESTERCHIL, DISTRICT JUDGE

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SYLVIA R. COOKS
JUDGE
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Court composed of Sylvia R. Cooks, John D. Saunders and Candyce G. Perret,
Judges.

AFFIRMED.

Francis R. White, III
434 East Lockwood Street
Covington, LA 70433
(985) 898-2124
COUNSEL FOR PLAINTIFF/APPELLEE:
Master Craft Construction, LLC

Elvin C. Fontenot, Jr.
110 East Texas Street
Leesville, LA 71446
(337) 239-2684
COUNSEL FOR PLAINTIFF/APPELLEE:
Master Craft Construction, LLC

Robert J. Williams
4830 Lake Street
Lake Charles, LA 70605
(337) 562-1116
COUNSEL FOR DEFENDANT/APPELLANT:
Pronoun, Inc.

COOKS, Judge.

FACTS AND PROCEDURAL HISTORY

In February 2014, the City of Lake Charles contracted with Master Craft

Construction, LLC for the construction of water service lines. The contract

between the City of Lake Charles and Master Craft required that the work be

completed within sixty (60) days and provided for liquidated damages in the event

of non-completion within the specified time period.

In connection with this contract, Master Craft entered into a subcontract with

Pronoun, Inc., to install several thousand feet of underground water pipes.

Problems arose concerning the performance of Pronoun’s duties under the

subcontract. According to Master Craft, it took Pronoun fifteen days out of the

sixty day project period to man the job. Master Craft also found out later that

Pronoun did not have the insurance required by the subcontract, nor did it have the

capital to purchase the insurance. Pronoun also did not have the necessary

manpower or equipment to perform the contracted work. Master Craft claimed any

work done by Pronoun was substandard and untimely. When Master Craft

terminated the job, they alleged Pronoun had already pulled off the job to work on

another project.

Pronoun was not paid for any of the work it performed. In response,

Pronoun recorded a lien in Calcasieu Parish under the Louisiana Public Works Act,

La.R.S. 38:2241 et seq. Suit to enforce the lien was subsequently filed in the

Fourteenth Judicial District Court. Upon Master Craft’s motion, the suit was

stayed in the district court pursuant to the arbitration clause set forth in the contract

between Master Craft and Pronoun.

Pursuant to the terms of the contract, Master Craft initiated the arbitration by

making demand on Pronoun by certified mail on August 27, 2015. The contract

provided that each party could select an arbitrator; and if both did so, then those

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two arbitrators would select a third arbitrator to handle the proceeding. If only one

party selected an arbitrator, that choice would be the arbitrator. Master Craft

selected William Scott Montgomery, a licensed contractor, who had previous

experience serving as an arbitrator. Pronoun did not select an arbitrator; thus, Mr.

Montgomery became the arbitrator.

On September 18, 2015, counsel for Master Craft forwarded a copy of the

notice of arbitration to Pronoun’s counsel. Pronoun made no claim against Master

Craft and filed no objections to the proceedings. On October 29, 2015, the

arbitrator set the arbitration for November 18, 2015 and sent notice to all parties.

On November 12, 2015, six days before the hearing, counsel for Pronoun

sent a letter requesting the arbitration hearing be reset as his client would be out of

town on the date of the hearing. Master Craft did not oppose the request, and the

arbitration hearing was reset for December 16, 2015. As Master Craft noted,

nothing in the letter sent by Pronoun to the arbitrator referenced any complaint

about the procedures employed by the arbitrator, any need for further discovery or

any need for additional time to prepare.

On December 1, 2015, Pronoun propounded written discovery on Master

Craft. At the request of the arbitrator, Master Craft expedited its responses,

providing answers on December 9 and 10. On December 9, 2015, at Pronoun’s

request, a telephone conference was held. Pronoun requested the reset date of

December 16, 2015 be continued, claiming it had not had sufficient time to

conduct discovery. The arbitrator agreed to postpone the hearing one day to

December 17, 2015.

On December 14, 2015, Pronoun filed a request with the Fourteenth Judicial

District Court (where the previously stayed action was pending), requesting a

Temporary Restraining Order to prevent the arbitration from going forward. In the

request for TRO, Pronoun argued the arbitrator was governed by the rules of the

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American Arbitration Association and Federal Rules of Civil Procedure, which he

failed to properly “observe.” The district court denied the request for the TRO, but

ordered that Master Craft’s principal, C.J. Burgess, be made available for a

deposition.

The arbitration hearing occurred on December 17, 2015, during which

documentary and testimonial evidence was presented. At the end of the hearing,

the arbitrator concluded that Pronoun had performed some work for which it

merited compensation. Thus, the arbitrator awarded Master Craft $40,000.00 in

damages rather than the $65,000.00 it had requested, determining Pronoun was

entitled to $25,000.00 for the work it performed. Master Craft was also awarded

$16,500.00 in attorney fees.

Master Craft then applied to the district court to confirm the arbitration

award and Pronoun moved that the award be vacated. After a hearing, the district

court denied Pronoun’s motion to vacate and entered judgment confirming the

arbitration award. This appeal followed, wherein Pronoun asserts the “trial court

erred in denying [its] Motion to Vacate the Arbitration award, which motion was

based upon the alleged misconduct/misbehavior of the arbitrator.” For the

following reasons, we affirm the trial court’s judgment denying Pronoun’s motion

to vacate and confirming the arbitration award.

ANALYSIS

It has long been noted that “[b]ecause of the strong public policy favoring

arbitration, arbitration awards are presumed to be valid.” National Tea Co. v.

Richmond, 548 So.2d 930, 932 (La.1989). Moreover, “[e]rrors of fact or law do

not invalidate a fair and honest arbitration award,” and “[t]he burden of proof rests

upon the party attacking the award.” Firmin v. Garber, 353 So.2d 975, 978

(La.1977). Such deference to arbitral awards is consistent with the longstanding

recognition that arbitration is intended to “speedily . . . determine disputes and

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controversies by quasi-judicial means, thus avoiding the formalities, the delay, the

expense, and the vexation of ordinary litigation.” Housing Authority of New

Orleans v. Henry Ericsson Co., 2 So.2d 195, 199 (La. 1941).

A district court may not vacate an arbitrators’ award unless specifically

authorized by statute. See La. R.S. 9:4210. An arbitration award, therefore, must

be confirmed by a district court unless statutory grounds for vacating the award

exist. See Johnson v. 1425 Dauphine, L.L.C., 10-793 (La.App. 4 Cir. 12/1/10), 52

So.3d 962. Here, Pronoun sought relief under La.R.S. 9:4210, which provides:

In any of the following cases the court in and for the parish
wherein the award was made shall issue an order vacating the award
upon the application of any party to the arbitration.

A. Where the award was procured by corruption, fraud, or
undue means.

B. Where there was evident partiality or corruption on the part
of the arbitrators or any of them.

C. Where 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
other misbehavior by which the rights of any party have been
prejudiced.

D. Where 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.

A review of the record shows no evidence of corruption, impartiality or undue

means on the part of the arbitrator. Likewise, there is no evidence the arbitrator

engaged in any misconduct in regard to any evidentiary matter or scheduling.

Disagreement by a party with the final judgment based on the facts presented is not

a valid basis for vacating an arbitration award. Manifest error is not a judicially

recognized ground for vacating or modifying an arbitration award. National Tea

Co. v. Richmond, 548 So.2d 930 (La.1989). Absent the existence of any of the

statutory or jurisprudential grounds for vacating or modifying an arbitration award,

a reviewing court is prohibited from reviewing the merits of the arbitrator’s

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decision. Webb v. Massiha, 08-226 (La.App. 5 Cir. 09/20/08), 993 So.2d 345,

writs denied, 08-2834, 08-2845 (La. 02/06/09), 999 So.2d 780.

Pronoun argues the arbitration award should be vacated because the

arbitrator did not employ the full set of rules regarding construction arbitration set

forth in the rules of the American Arbitration Association and the full set of rules

pertaining to discovery set forth in the Federal Rules of Civil Procedure.

Specifically, Pronoun argues this failure to follow these rules impeded its ability to

undertake full discovery and prejudiced its ability to present its case.

However, Pronoun does not list what additional discovery it would have

done and how that discovery might have affected the outcome of the case. As

Master Craft noted, Pronoun was provided all of the documents used by Master

Craft at the hearing, all the documents it requested in discovery and deposed the

one witness called by Master Craft at the hearing.

Further, we agree with Master Craft that the arbitrator made numerous

accommodations requested by Pronoun, including twice continuing the date of the

hearing. Master Craft was also requested to expedite the discovery responses to

Pronoun’s questions, despite the fact they were made “last-minute” and months

after the arbitration proceedings began. Pronoun cannot now complain they were

prejudiced in receiving responses to their discovery shortly before the hearing,

when they did not request them from Master Craft until shortly before the hearing.

Master Craft also was ordered by the arbitrator to make their lone witness available

to Pronoun for a deposition. Thus, we find Pronoun’s assertion that the arbitrator

prejudiced its ability to present its case is not supported by the record.

We also find no merit in Pronoun’s assertion that the arbitrator was required

to adopt and employ all the procedures set forth in the rules of the American

Arbitration Association and the Federal Rules of Civil Procedure. Such a position

is impossible to maintain and would lead to absurd results that would inhibit the

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purpose of arbitration, which is the “speedy disposition of differences through

informal procedures without resort to court action.” Firmin v. Garber, 353 So.2d

975, 977 (La.1977).

As Master Craft notes, the arbitration provision in the contract provides the

arbitrator has the “full powers and functions of a State District Judge with requests

to such discovery.” It is well settled that under Louisiana law “that trial courts in

Louisiana have broad discretion when regulating pre-trial discovery, which

discretion will not be disturbed on appeal absent a clear showing of abuse.”

O’Dwyer v. Our Lady of Lake Nurse Anesthesia Program, 13-703, p. 2 (La.

5/17/13), 117 So.3d 1252, 1253, citing Moak v. Illinois Central Railroad Co., 631

So.2d 401 (La.1994). As set forth above, we find nothing to support the assertion

that any discovery ruling by the arbitrator prejudiced Pronoun.

Master Craft also notes Pronoun’s argument that all of the rules of the

American Arbitration Association must be applied is not meritorious in this case.

Here, the parties agreed to the method specified in the contract that each party may

make their own choice for arbitrator as opposed to the American Arbitration

Association rules which provide that the parties are to rank the candidates provided

by the American Arbitration Association and then the Association would choose

the arbitrator. Further, the rules of the American Arbitration Association and the

Federal Rules of Civil Procedure provide for differing rules regarding the

conducting of discovery. The American Arbitration Association places which

documents are to be exchanged solely in the hands of the arbitrator, whereas the

Federal Rules of Civil Procedure allow the parties to determine which documents

are to be produced. Pronoun’s argument that the arbitrator was bound by all the

rules of the American Arbitration Association and the Federal Rules of Civil

Procedure conflicts with the language of the contract between the parties. We also

note the arbitration provision in the contract makes a general statement that the

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arbitrator is to be governed by the rules of the American Arbitration Association.

It does not state that each and every rule of the American Arbitration Association

is to be applied. It then goes on to state the arbitrator shall apply “the substantive

law of the State of Louisiana” and have the “full powers and functions of a State

District Judge” with respect to discovery. It is well established that, in contract

interpretation, the more specific provision controls the general. Mixon v. St. Paul

Fire & Marine Ins. Co., 84 So. 790 (La. 1920).

Moreover, a primary purpose of substituting arbitration for litigation is to

eschew or avoid the highly technical rules of civil procedure. Haase Construction

Co., Inc. v. Strohmeyer, 98-2967 (La.App. 4 Cir. 6/23/99), 738 So.2d 152. Thus,

arbitration proceedings are not held to the same strict rules as are the courts. Id.

The court in Construction South, Inc. v. Jenkins, 12-63 (La.App. 5 Cir.

6/28/12), 97 So.3d 515, writ denied, 12-1756 (La.11/2/12), 99 So.2d 676,

recognized that an arbitration award can only be challenged on the grounds

specified in La.R.S. 9:4210. It further explained that an appellant cannot seek

review of the merits of his or her claim by framing his or her argument in terms of

the arbitration panel having exceeded its authority. Id. Having found no evidence

of any corruption, impartiality or undue means on the part of the arbitrator in

violation of La.R.S. 9:4210, we confirm the arbitration award.

DECREE

In conclusion, we find Pronoun has failed to establish that any of the factors

set forth in La.R.S. 9:4210 are present in this case. Therefore, we affirm the trial

court’s denial of Pronoun’s motion to vacate and affirm the judgment confirming

the arbitration award. All costs of this appeal are assessed to Pronoun.

AFFIRMED.

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