# FILED
Novemb er 25, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk WILLIAM W . MILLSAPS and w ife, ) MARTHA MILLSA PS, ) ) Plaintiffs/App ellants, ) ) Appeal No. ) 01-A-01-9704- CH-00160 VS. ) ) Marion Chancery ) No. 5477 ROBERTSON-VAUGHN ) CONSTRUCTION COMPANY , INC., ) ) Defendant/Appellee. )



### COURT OF APPEALS OF TEN NESSEE MIDDLE SECT ION AT NASHVIL LE

APPEALE D FRO M THE C HANC ERY C OURT O F MAR ION C OUNTY AT JASPER, TENNES SEE THE HONORABLE JEFFREY STEWART, CHANCELLOR

ROBERT L. HUS KEY 514 Hillsboro Boulevard Manchester, Tennes see 37355 Attorney for Plaintiffs/Appella nts BEN P. LYNCH 107 First Av

enue, N.E. P. O. Box 310 Winchester, Tennessee 37398 Attorney for Defendant/Appellee

AFFIR MED I N PART ; REVE RSED I N PART ; MODIFIED AND REMAN DED

BEN H. CAN TRELL, JUDGE CONCUR: TODD, P.J., M .S. KOCH, J. 

## O P I N I O N- 2 - This is an action to e nforce an arbitr ator’s award or for damag es for failing to comply w ith the awar d. The trial judg e refused to enforce theaward on t he ground that it was unreasonable, i nequitable, an d shocking to the conscienc e of the court. We reverse that conclu sion and order that the awa rd be enforced in accordance with the lower court’s alternative findings.

I.

In April of 1986, th e Reveren d a nd Mrs. Mi llsaps hired RobertsonVaughn Co nstruction C o., Inc. to cons truct a house i n Monteagle. The cost-plus contract called for the n ew house to beconnected to an existi ng house on the l ot. As the work pr

oceeded, the Mil lsaps became dis satisfied w ith the qual ity of the work and filed suit against the contractor for dam ages. Before the case cam e to trial, however, the parties ag reed to submit the disp ute to arbitr ation -- a dec ision that may set alternative dispute resol ution back a g eneration.

The record is

not clear

about the det ails of the arbi tration proceed ing, but the arbitrator made his award on M ay 10, 1990. Theaward listed twelve specific itemsfor the contract or to complete “ at no further charge” to the owners. In addition, the award or

dered the contra ctor to complete a three page, barely legible, handwritt en “pun ch list” that had been prepared by the owner’s form er attorney. The remainin g work was to be s upervised byan architect hired by the owners, and the wor k was to be completed wi thin thirty days of the hir ing of the arch itect. The contractor took no action to modify

or vacate the award.

The owner’s architect issued a work order, and after a considerable dela y, the contractor

attempted to make some o f the correcti ons. The wor k stretched into the next ye ar, however, and the ow ners finally terminated the contractor ’s efforts and filed this ac

tion on the award.- 3 - The contractor filed a counter-claim, alleging that it had performed work n ot covered by

the arbitrat ion award and that the ow ners were responsibleforth e costs incur red in performin g the wor k not covered by the award.

The Chancery

Court of Mari on County g rant ed par tial summary judgmentto the owner s. Th e cour

t found t hat theparti es we re boun d by t he ter ms and conditions of the award becaus e the time to appea l any part of the award had passed. The order left for a futur e hearing the questions of what part of the award had not been complied with, whether th e defendant should be al lowed to complete the remaining i tems, and, if not, w hat would be the reasonable c ost of completion.

After a subsequent he aring, the trial judg e filed a memorandu m an d ord er containing the followin g findings: that the arbit rator’s award shoc ked th e conscience of the court; that the award ordered the contractor to perf orm thousands of dollars worth of work for which the owners would otherwise have been liable on the cost-pluscontract; that it was equallyshocking that the contractor did not appeal the award; that the contrac

tor had performed work not covered by

the award forwhich the plai ntiffs were li able; that the amount due the contracto r was eq ual to or g reater than the amount due the plai ntiffs for the items l eft outstanding on the award.

T he orde r contained two alternative judgments: The first simply dismissed the complaint because the owner s did not prove that e nforcem ent of the arbitrator’s award would be equita ble, given the uncompensate d benefits already best owed o n the m. T he al tern ative order, to apply if an appellate cour t ordered the enforcement of the arbitrator’s awar d, contained findings of the i tems in the award that had been completed and theitems that remai ned unfinished. Finally, the trial judge entere d a $2,8 44.00 j udgmen t on thecontractor ’s cou nterc laim.

II.1 Even under pr ior law a court of chancer y had no jur isdi cti on to set aside an award except for frau d or m istak e. Graham v. Bates , 45 S.W . 465 (Tenn . Ch. App. 1898 ). - 4 - a. A rbitratio n in General

With the pas sage of the Uniform Arbi tration Act, Tenn. Code Ann. §§ 29- 5-301--320, arbitrati on took on a new life in Tennessee. ( See Meirowsky v . Phipps , 432 S.W.2d 885 (1968) for thestatus of arbitration under prior law.) “The act governs the scope of judici al revi ewof arbitration awards.” International Talent Group , Inc. v. Copyright

Management, Inc. , 769 S. W .2d 217 at 218 (Ten n. App. 1988). Only in limited cir cumstances may the cour ts vacate, modify, or cor rect the award. 1 (See Tenn. Code Ann. § 29-5- 313 on vacati on and § 29-5-314 on modi ficati on or correction. ) And these powers must be invoked in a timely manner; generally within ninety days of the date a copy of the award i s deliver ed to the applic ant. Id.

In this case the contractor did not ask the co urt to modify or correct the award, and to this date, has not assert ed that any of the statutory reasons for modification or correction exist. Although we are puzzl ed, as the tri al judge was, why the arbitrator

ordered the con tractor toperform sever al items of new

constructi on at no cost to the owners , the time to cor rect that part of the order

is past, and the court’s ability to co rrect the a ward is sever ely lim ited . “As lo ng as t he ar bitra tor is , argu ably, construing or applying the contract and acting within the scope of his a utho rity, t he fact that a court i s convinc ed he committed ser ious error does not suffice tooverturn his decision.” Arnold v. Morgan Keegan & Co., In c. , 914 S.W.2d 445 at 449 (Tenn. 1996). Therefore, we are of the opinion that the trial c ourt was in error i nsofar as its order may be interprete d as a refusal to enforce the awar d because it was erroneous or because the court thought th e award went too far.
b. The Offset Findings- 5 - The trial cour

t’s order contained a findingthat the “value of the work and materials provided [ by the contr actor] and unpaid foris equal to or great er than any obligation owed to Pl aintiffs by the Defen dant.” W e think t his is a signi fican t find ing, even though neither party chose to address it on ap peal.

An action may b e brou gh t on an arbitrator’s award as on an ordinary contract. See

4 Am. Jur. 2d Alternative Dispute Resolution § 218. It follow

s that the defendant in the action may plead set off or recoupment. Howard v. Abernathy , 751 S.W.2d 432 (Tenn. App. 1988); Lowry v. Hawes , 57 Tenn. 688 (187 3). That is how we view the state of the plea dings at the time of the hearing below: t he owners had sued for enfor

cement of the award or , in th e alter native, a mone y jud gme n t; the contracto rdenied ow ing anyt hing on the award and filed a cou nterclaim for money due from the owner

s (1) asa result of the cost plus nature of the original contract and (2) the extra work per

formed that fell outsi de of the origi nal contract. Having made the finding quoted abov e, the trial judge denied any recovery to the owner

s and entered judgm ent on t he cont racto r’s c ounterclaim
.

That would ordinarily end the matter, since the appellants do not attack that finding on appeal. The contractor , howeve r, does not re ly on it either. On appeal, he insists t hat the orig inal awar d should not be enforced because theagreement to arbitrate is not in therecord. W e think that contention co mes much too late since the parties obviously agreed to arbitration, went through the process , and allow ed the award to become final. Thecontractor, in the alternative, agrees to perform the work in the award that the trial judge found w as yet incomplete. Therefore, we think the tr ial judge ’s alt erna tive f indi ngs re pres ent a just r esol utio n of this c ontr overs y.

III. The Alternativ

e Finding- 6 - In the final order , the trial judge specifical ly found the it ems in the arbitrator’s award that remained to be comp leted. On appeal, the contractor agrees to co mply wi th th e cou rt’s a ltern ative order. We think that will b ring this unfortunate case to an end. Although the owners protest that it is futile to give the contractor more time to complete the contract, the owners are not entirely blameless in the search for the reasons why it has taken more than ten years to end this controversy. The contractor

will be given sixty

days from the dat e the man date is sues from this court to complete the items listed as un finished in the trial court’s alter native judg ment. In the event the con tractor does not comply w ith the court’ s order --if reasonably allowed to do so -- it will pay th e owne rs the cost to co mply. The judg ment of $2,844.00 entered on the cont ractor’s counterclaim i s affirmed.

IV.

The owners al so appeal the tr ial judge’s r efusal to tax t he costs oftwo discovery

depo sition s to the contra ctor. The deposi tions were of the architect who was to ov

ers ee th e com plet ion of thearb itrator ’s awar d and of acontractor who was to testify about the costs to complete the awa rd. The judge initially held that there was no proof that the owners had to p ay the costs for the architect. W hen the owners soughta new tri al on their moti on, the judge specifically held that the dep ositions were not taken pursuant to T enn. R. Civ. Proc. 26.02(4)(A)(ii) or (B).

The relevant portions of Rule 2 6.02 read as follows:
(4) TRIAL PREPARATION : EXPERTS. Discovery of facts known a nd opinions held by expe rt s, otherwise discoverable under the prov isions of subdivis ion (1) of this rule and acquired or

developed i n anticipation of litigati on or for trial, may be obtained only as follows:

. . . (ii) A party may

also depos e an y other party’s expert witness expected to testify at trial.- 7 - (B) A party may

not discover

the identity

of, facts known by, or opi n ions held by an expert w ho has been consulted b y another par ty in anti cipation of lit igation or preparation for trial and who is not to be called as a witness at trial except as provi ded in Rule 35.02 or upon a showing that the party seeking discovery cannot obtain facts or opinions on the sa me subject by other means. (C) Unl ess mani fe st injustice w ould result, (i) the court sha ll requi re that the part y seeking discover

y pay the expert a reasonable fee for ti me spent in res ponding to discover

y under subdivisions (4)(A)(ii) and (4)(B) of this rule; and (ii) with res pect to discover y obtained under sudivisi on (4)(A)(ii) of this rule the court may require, and wit h res pect to discov ery obtaine d under subdiv ision (4)(B) of this rule the court shall require, the party seek ing discover y to pay the other

party a fair

portion of the fees and expen ses re ason ably in curre d by th e lat ter p arty i n obtaining facts

and opinions from t he expert.

Rule 26.02(4) all ows a part y to disc over the opi nions of an opp o site party’s expert witness (1) if the expert is expected to testify at trial or (2) if the expert is not expected to testify at trial, by requesting the report available under Rule 35. 02 or by showing that the facts and opinions cann ot be obtained by other mea ns.

It is obvious that this case involves only an e xpert ex pected to testify at trial
. Subdivis ion (C) of R ule 26.02(4) pr ovides in that event that the court shal l , unless manifest injusti ce would r esult, req ui re the part y seek ing di scove ry to pa y a rea sonable fee to the expert for time spent in responding to discove ry, and may require the party seek ing discov ery to pay

the other party

a fair portion of the fees and expenses re asonably i ncurred in obt aining facts a nd opinions from the expert.

The trial judg e found as fac t that th e depositions were not taken pursuantto Rule 26.02(4)(A)(ii). W ith respect t o the architec t, we ag ree. The information sought from him w as what had oc curred and what remained to be done. In other wor

ds, the sort of i nformation one wou ld get from a fact w itness, n ot a n expert.- 8 - With respect to the other wi tness, who was to g ive an opinion on w hat it would cost to complete the work, we think the trial judge erred in holding that he did not come within the rule. W e are, however, at a loss to discover from the record the chargesthat would be due to him for his time spen t in responding to discoveryor the costs the owners incurred in obtain ing his opinion. Therefore, for a lack of relevant proof we affirm the trial judge’s decision not to award any costs to the appellants.

The judgment

of the t rial court

is rev ersed in part

and modified to enforce t h e alternative dispositio n suggeste d in the order . In all other respects the judgmentis affirmed and the c ause is remande d to the Chancery Court of Mari on County for further proce edings. Tax the costs on appeal equall y to the appellants and the appellee.

_________________________________ BEN H. CAN TRELL, JUDGE CONCUR:

_______________________________ HENRY F . TODD, PRESID ING JUDGE MIDDLE SEC TION

_______________________________ WILLIAM C. KOCH, JR., J UDGE