August 23, 2018 practice point

Mississippi Supreme Court Rejects Trial Court’s Modification of Award

By Katharine Kohm

It is uniformly settled that a court's right to vacate or modify an arbitration award is extremely limited. That said, many state arbitration statutes, as well the Federal Arbitration Act, and the Uniform Arbitration Act, allow correction or modification for an evident miscalculation in the arbitrator’s award. See, e.g., 9 U.S.C. § 11(a). Many state courts have held that an award can be corrected only for “miscalculations” that appear on “the face of the award” and for mathematical errors that are “patently clear.” See, e.g., Fogal v. Stature Const., Inc., 294 S.W.3d 708 (Tex. App. 2009); Jones v. Summit Ltd. P’ship Five, 635 N.W.2d 267 (Neb. 2001); Cole v. Hiller, 715 So. 2d 451 (La. Ct. App. 1998); Foust v. Aetna Cas. & Ins. Co., 786 P.2d 450 (Colo. App. 1989); Severtson v. Williams Constr. Co., 173 Cal. App. 3d 86 (1985); Morrison-Knudsen Co., Inc. v. Makahuena Corp., 675 P.2d 760 (Haw. 1983); Carolina Virginia Fashion Exhibitors, Inc. v. Gunter, 255 S.E.2d 414 (N.C. Ct. App. 1979). Until recently, however, this issue had not been addressed in the state of Mississippi.

In D. W. Caldwell, Inc. v. W.G. Yates & Sons Constr. Co., No. 2017-CA-00116-SCT, 242 So.3d. 92 (Miss. May 10, 2018), the Mississippi Supreme Court considered a trial court’s modification of an arbitration award on the grounds of “evident miscalculation.” The supreme court reversed, holding that modification was improper because the error was not “apparent from face of arbitration award.” Id. at 99.

In Caldwell, the underlying dispute concerned a roofing subcontract for a dormitory at Auburn University. After starting work, the subcontractor discovered structural issues. The subcontractor made the structural repairs and completed the roofing, but it was not fully paid. The dispute was submitted to arbitration, and the arbitrator issued a reasoned award in the subcontractor’s favor. The general contractor requested clarification from the arbitrator, which was denied, and then moved to alter, amend, or vacate the award in court.

In Mississippi, the grounds to amend or correct an award are “an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; (b) The arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.” Miss. Code. Ann. § 11-15-135.

The trial court denied the subcontractor's motion to confirm and instead allowed the general contractor to introduce evidence and testimony as to the alleged miscalculation. The trial court held that there was a “facially evident miscalculation” because “the arbitrator had duplicated the labor costs for shingle installation in its award—once under the original subcontract and once under the oral agreement to repair the structural damage.” To correct this error, the trial court reduced the award by $104,507.

On appeal, the Mississippi Supreme Court reversed. It held that the “award contained no evident miscalculations which would merit modification.” The court first focused on the extreme narrowness of arbitration review but acknowledged that the court had not previously defined what qualified as an “evident miscalculation.” After reviewing cases from other jurisdictions, it settled on this definition: an “evident (plain, obvious, or clearly understood) miscalculation must be apparent from nothing more than the four corners of the award and the contents of the arbitration record.” The moving party must show “[w]ithout looking outside the undisputed facts or relying upon testimony from a witness in the trial court” that “a different, but correct, calculation could be made.” The court examined the “award for any facially evident miscalculations or computational errors,” but found none. Looking next to the attorney-written arguments, oral arguments, and agreed-upon record evidence, [it] likewise failed to find such errors.”

After reaching this holding, the court also stated that the trial court abused its discretion by hearing and crediting witness testimony during the award modification hearing. The court emphasized that “arbitration is meant to supplant litigation, not supplement it” and that the trial court’s error “transformed . . .the very narrow and limited purpose of its review, and [instead impermissibly] imbu[ed] it with the responsibility of the factfinder.”

 

Katharine Kohm is an associate at Pierce Atwood, LLP in Providence, Rhode Island. A portion of this case note appeared in the ABA Forum on Construction Law’s Division 1 blog, “The Dispute Resolver.”


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