### IN THE UNI TED STAT ES COURT OF APPEALS FOR THE FIF TH CIRCU IT

No. 11-20141

PETROFAC, INCORPORATED,
Plaintiff - Appellee,

v. DYNMCDERMOTT PETROLEUM OPERATIONS COMPANY,
Defendant - Appellant.

Appeal from the United States District Court for the Southern District of Texas

Before DeMOSS, CLEMENT, and ELROD, Circuit Judges. JENNIFER WALKER ELROD, Circuit Judge: DynMcDermott Petroleum Operations Company ( D M ) a p p e a l s t h e district court’s confirmation of an arbitration award in favor of Petrofac, Incorporated. Because DM fails to show any reversible error, we AFFIRM.
I.
D M o p e ra te s th e S tra te g ic P e tro le u m R e se rv e fo r t h e D e p a rtm e n t o f
E n e rg y

. D M su b co n tra cte d w ith P e tro fa c to d e sig n a n d in sta ll a tra n sp o rta b le
d e g a s p la n t to se rv ice th e re se rv e

. O n J u ly 3 0 , 2 0 0 3 , D M a n d P e tro fa c a g re e d

to re so lv e a n y cl a im u n d e r th e su b co n tra ct th ro u g h b in d in g a rb itra tio n

. T h e

co n tra ct sta te d : P e t r o f a c a n d D M a g re e to e n te r in to b in d in g a rb itra tio n fo r a n y U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D July 17, 2 012
Lyle W . Cayce Clerk Case: 11-20141 Document: 00511922960 Page: 1 Date Filed: 07/17/2012No. 11-20141

R e q u e st fo r E q u ita b le A d ju stm e n t o r cla im su b m itte d a g a in st th e
re fe re n ce d su b co n tra ct, in lie u o f litig a tio n , in th e e v e n t th a t a
m u tu a lly a g re e a b le re so lu tio n ca n n o t b e b ila t e ra lly a ch ie v e d b e tw e e n D M a n d P e tro fa c th ro u g h n e g o tia tio n s. In M a y 2 0 0 4 , P e tro fa c se n t D M a m u l t i-v o lu m e R e q u e st fo r E q u ita b le
A d ju s t m e n t (R E A ). T h e re , P e tro fa c a sse rte d th a t D M d isru p te d P e tro fa c’s

a b ility to p e rfo rm its w o rk a n d so u g h t d a m a g e s fo r d iffe rin g site c o n d itio n s, d e la y s, d isru p tio n co sts, lo st p ro d u ctiv ity , a n d a cce le ra tio n co sts. O n D e ce m b e r 6 , 2 0 0 5 , P e tro fa c a g re e d to re le a se D M fr o m a ll b u t a fe w
sp e cifica lly p re se rv e d cla im s. A m o n g th e se p re se rv e d cla im s, th e re le a se in clu d e d P e tro fa c’s R E A “a s m a y b e a m e n d e d o r su p p le m e n te d .” 1
B y J u ly 2 0 0 6 , th e p a rtie s h a d fa ile d to re so l v e t h e R E A d isp u te v ia

n e g o tia tio n

. P u rsu a n t to th e 2 0 0 3 a rb itra tio n a g re e m e n t, D M a n d P e tro fa c

e n te re d in to a n “A g re e m e n t fo r A rb itra tio n a n d fo r L o ca tio n a n d M e th o d o lo g y

o f A rb itra tio n .” T h e re , th e p a rtie s a g re e d th a t “[t]h e y sh a ll su b m it to b in d in g

a rb itra tio n th e [R E A ] a n d a ll cla im s a n d d isp u te s b e tw e e n th e m a risin g o u t o f

o r re la tin g to th e S u b co n tra ct.” In a d d itio n , th e p a rtie s a g re e d th a t th e

a rb itra tio n w o u ld b e co n d u cte d b y th e A m e rica n A rb itra tio n A sso cia tio n u n d e r

The r eleas e s tat ed that : 1 In cons ide rat i o n o f p a y m e n ts mad e here tof ore , or to be mad e, by DM

. . . [Pet rof ac] here by uncon dit ionall y rele ase s DM

. . . fr om any and all liens and clai ms wh ats oever aris ing out of or dur ing the per for man ce of sai d Subc ontr act othe r than suc h clai ms , if any, that may

. . . be sp ecif ical ly excep ted fr om the ter ms of t his Rel eas e a nd Cert ifi cat e, st ated be low : 1. Reques t for Equita ble Adjus tm ent sub mi tte d by Petr ofa c, Inc. as may be ame nded or s upp lem ente d; 2. Invoic e N o. 2004- 79-8 55 i n t he amo unt of $995, 718. 00 .

. . ; 3. Invoic e N o. 2005- 01-8 55 i n t he amo unt of $338, 400. 00; 4. All right s and clai ms of [Pet rof ac] in conne cti on wi th its dis put es and objec tio ns to DM ’s U nilat eral Change O rd ers 17, 18, and 22; 5. Claim for Equita ble Adjus tm ent in the amo u n t o f $ 536, 128. 08 sub mi tte d by L. S. Wo mac k, Inc. a sub cont rac tor of Pet rof ac, Inc. ; and 6. Sp ecif

ied clai ms in full and pr ecis e amo unts to b e r ece ived by the Su b cont rac t Man ager wi thin ninet y (90) cale ndar days fr om the is su a n ce of fina l a cce pt ance by the Subc ontr act M anager

.

2 Case: 11-20141 Document: 00511922960 Page: 2 Date Filed: 07/17/2012No. 11-20141

its C o n stru ctio n In d u stry A rb itra tio n R u le s (A A A R u le s).
P e tro fa c su b se q u e n tly file d i t s d e m a n d fo r a rb itra tio n

. In J u n e 2 0 0 8 , P e tro fa c p ro v id e d D M th e re p o rt o f its d a m a g e s e x p e rt, F ra n k A d a m s. T h e A d a m s re p o rt ca lcu la te d P e tro fa c’s d a m a g e s u sin g a d iffe re n t m e th o d o lo g y a n d

r e a c h e d a d iffe re n t a m o u n t th a n th e o rig in a l R E A

. T h e a rb itra tio n b e g a n i n M a rch 2 0 0 9

. A fte r fiv e d a y s o f h e a rin g s, h o w e v e r, th e a r bitration panel

re ce sse d fo r se v e n m o n th s. W h e n th e arbitration re co n v e n e d , D M o b je cte d to th e a rb itra tio n p a n e l h e a rin g a n y cla im s ste m m in g fro m th e d iffe re n t d a m a g e s

m e t h o d o lo g y u se d in th e A d a m s re p o rt, cla im in g th a t it e ffe ctiv e ly cre a te d a

n e w co n stru ctiv e ch a n g e cla im o u tsid e th e p a rtie s’ a g re e m e n t to a rb itra te

. T h e arbitration panel d ism isse d D M ’s o b je ctio n b e ca u se “th e a rb itra tio n

a g re e m e n t is cle a r a n d e n co m p a sse s a ll o f th e i s s ues b e tw e e n th e p a rtie s a risin g

o u t o f th is co n tra ct. It is a lso cle a r th a t D M w a iv e d a n y o b je ctio n it h a d to th e

a rb itra tio n o f a co n stru ctiv e ch a n g e cla im .” T h e arbitration panel su b se q u e n tly

a w a rd e d P e tro f

ac damages f

or t h e “co n tra ct b a la n ce , d a m a g e s fo r a co n stru ctiv e ch a n g e to th e co n tra ct, a n a w a rd fo r th e b e n e fit o f W o m a ck , a n d in te re st fro m A u g u st 2 4 , 2 0 0 6 to J u ly 2 6 , 2 0 1 0 ” to b e p a id “w ith in th irty d a y s o f th e A w a rd .”
T h e d istrict co u rt co n firm e d th e a w a rd

. T h e d istrict co u rt re je cte d D M ’s

a rg u m e n t th a t th e R E A a n d th e A d a m s re p o rt re p re se n te d d iffe re n t cla im s. T h e re fo re , th e d istrict co u rt ru le d th a t th e arbitration panel d id n o t e x ce e d its

a u th o rity b y a w a rd in g d a m a g e s a s p re se n te d in th e A d a m s r e p o r t

. T h e co u rt

a lso d e te rm in e d th a t th e a w a rd w a s n o t p ro cu re d th ro u g h fra u d o r u n d u e

m e a n s u n d e r 9 U .S .C

. § 1 0 (a )(1 ). F i n a l l y , th e d istrict co u rt o rd e re d

p re ju d g m e n t in te re st a fte r A u g u st 2 6 , 2 0 1 0 , ru lin g th a t p re ju d g m e n t in te re st

re co m m e n ce d a fte r D M fa ile d to p a y th e a w a rd w ith in th e th irty -d a y p e rio d

. II. This court reviews “a district court’s confirmation of an award de novo , but

t h e review of the underlying award is exceedingly deferential.” A p a ch e B o h a i

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C o r p

. L D C v

. T

ex a co C h in a B V

, 4 8 0 F .3 d 3 9 7 , 4 0 1 (5 th C ir. 2 0 0 7 ) (in t e r n a l

q u o ta tio n m a rk s o m itte d ). A. On appeal, DM argues that the arbitration panel exceeded its powers by issuing an award on a claim not covered by the parties’ arbitration agreement.
9 U .S .C

. § 1 0 (a )(4 ) (a llo w in g a d istrict co u rt to v a ca te a n a w a rd “w h e re th e

a rb itra to rs e x ce e d e d th e ir p o w e rs”). Specifically, DM contends that the
calculations in the expert report were extinguished by t h e 2 0 05 release and therefore fall outside the parties’ agreement to arbitrate. Petrofac responds that the parties contracted for the arbitration panel (and not the courts) to decide this question of arbitrability, and even if the arbitration panel did not have the power
to decide arbitrability, the district court properly determined that the claims at issue were within the arbitration agreement. We first consider if the arbitration panel properly determined the initial question of arbitrability, i.e. whether the claim is within the parties’ agreement
to arbitrate. “J u st a s th e a rb itra b ility o f th e m e rits o f a d isp u te d e p e n d s u p o n

w h e th e r th e p a rtie s a g re e d to a rb itra te th a t d isp u te , so th e q u e stio n ‘w h o h a s th e p rim a ry p o w e r to d e cid e a rb itra b ility ’ tu rn s u p o n w h a t th e p a rtie s a g re e d

a b o u t th a t m a tte r.” F irst O p tio n s o f C h i., In c. v

. K a p la n , 5 1 4 U .S

. 9 3 8 , 9 4 3 (1 9 9 5 ) (in te rn a l cita tio n s o m itte d ). W e w ill n o t a ssu m e th a t th e p a rtie s a g re e d

to a rb itra te a rb itra b ility “[u ]n le ss th e p a rtie s cle a rly a n d u n m ista k a b ly p ro v id e

o th e rw ise .” A T & T T

ech s., In c. v

. C o m m c’n s W o rk ers o f A m

. , 4 7 5 U .S

. 6 4 3 , 6 4 9 (1 9 8 6 ). A cco rd i n g l y , w e m u st d e cid e if D M a n d P e tro fa c “cle a rly a n d

u n m ista k a b ly ” p ro v id e d fo r th e a rb itra tio n p a n e l to d e cid e a rb itra b ility

. H e re , th e p a rtie s e x p re ssly in co rp o ra te d in to th e ir a rb itra tio n a g re e m e n t th e A A A R u le s. T h e se ru le s sta te th a t “[t]h e a rb itra to r sh a ll h a v e th e p o w e r to

ru le o n h is o r h e r o w n ju risd ictio n , in clu d in g a n y o b je ctio n s w ith re sp e ct to th e

e x iste n ce , sco p e o r v a lid ity o f th e a rb itra tio n a g re e m e n t.” W e a g re e w ith m o st

4 Case: 11-20141 Document: 00511922960 Page: 4 Date Filed: 07/17/2012No. 11-20141

o f o u r siste r circu its th a t th e e x p re ss a d o p tio n o f th e se ru le s p re se n ts cle a r a n d

u n m ista k a b le e v id e n ce th a t th e p a r t ie s a g re e d to a rb itra te a rb itra b ility

. See
Fallo v. High-Tech Inst. , 559 F.3d 874, 878 (8th Cir. 2009) (“[W]e conclude that the arbitration provision’s incorporation of the AAA Rules

. . . constitutes a clear and unmistakable expression of the parties’ intent to leave the que s t i o n of arbitrability to an arbitrator.”); Qualcomm Inc. v. Nokia Corp. , 466 F.3d 1366,
1372–73 (Fed. Cir. 2006) (same); Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship , 432 F.3d 1327, 1332–33 (11th Cir. 2005) (same); Contec Corp. v. Remote Solution Co. , 398 F.3d 205, 208 (2d Cir. 2005) (same); Apollo Computer, Inc. v. Berg , 886 F.2d 469, 473 (1st Ci r. 1989) (same result under the similar ICC Rules). But see Riley Mfg. Co. v. Anchor Glass Container Corp. , 157 F

. 3d 775,
780 (10th Cir. 1998). T h e re fo re , th e a rb itra tio n p a n e l p ro p e rly m a d e th e 2
d e cisio n th a t th e d a m a g e s c a l c u l a tio n s in th e A d a m s re p o rt fe ll w ith in th e

a g re e m e n t to a rb itra te

. 3
B. Next, DM contends that Petrofac procured the overtime premium portion of the award through fraud or undue means. 9 U .S .C

. § 1 0 (a )(1 ) (p e rm ittin g th e d istrict co u rt to v a ca te a n a w a rd “w h e re th e a w a rd w a s p ro cu re d b y co rru p tio n , fra u d , o r u n d u e m e a n s”). Among the many claims brought in the original REA, Petrofac brought two distinct claims for damages: (1) a n o v e r t i m e p r e m i u m c l aim for the additional overtime on the degas project; and (2) a claim for DM’s impact

Today’ s hold ing com pli es wi th our ow n pr ior sugges tio ns that the inco rp orat ion of the 2 AAA Rules “m ay be suf fic ient to sho w that the par tie s to thos e agree me nts inte nded to conf er that pow er on the arbit rat ion pane l.” DK Jo i n t V e n tu re 1 v. Wey and , 649 F.3d 310, 317 n.9 (5t h Cir. 2011) (em phas is om itt ed)

. Also , wh ile the Texas Sup rem e Court has not we ighed in

on the iss ue, Texas app ellat e cour ts have ado pt ed the sam e app roac h. See Schl umb erge r Tec h. Corp . v. Baker Hughes , Inc. , 355 S. W.3 d 791, 802–03 (Tex. App .–H ous ton [1st Di st .] Oc t. 12, 2011)

. Altho ugh DM c harac ter izes it s cont rac ts as nar row ar bitr atio n agr eem ents f or only 3

a few pr es erved dis put es , noth ing lim its the par tie s’ broa d agree me nt to arbit rat e “all clai ms and dis put es ” that rela ted to the sub cont rac t. Indeed , the 2006 arbit rat ion agree me nt cover ed all dis put es “ inclu ding but not lim ite d to” t hos e p res erved in t he 2005 rele ase

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on oth e r p r ojects. Petrofac made a strategic decision to abandon the latter 4

c l aim, while maintaining the former. DM argues that Petrofac pulled a bai t

- a n d

switch by representing that it had abandoned its impact on other jobs claim, but then slipped those damages back in through its overtime premi u m claim. Rather than a covert legerdemain hidden from t h e arbitration panel, DM thoroughly advocated these arguments to the arbitration panel (both before and during the arbitration) and to the district court. In e a c h case, the arbitration panel or court rejected DM’s arguments. S ee F o rsy th e In t’l, S .A

. v

. G ib b s O il C o

.

o f T ex

. , 9 1 5 F .2 d 1 0 1 7 , 1 0 2 2

– 2 3 (5 th C ir. 1 9 9 0 ) (re v e rsin g a d istrict co u rt’s

v a ca tu r o f a w a rd w h e re th e a rb itra tio n p a n e l h e a rd e v id e n ce o f th e fra u d a n d

ru le d it im m a te ria l). Having examined the record, we c o n c lude that DM’s allegation of fraud misunderstands the distinct nature of Petrofac’s claims. C.
Final l y , DM argues the district court committed reversible error by ordering prejudgment interest. “Texas law governs the award of prejudgment interest on the [arbitration] award,” and “[u]nder Texas law, prevailing parties receive prejudgment interest as a matter of course.” Executone Info. Sys., Inc.
v. Davis , 26 F.3d 1314, 1329 (5th Cir. 19 94). On July 26, 2010, the arbitration panel ruled that Petrofa c w a s e n t itled to interest, calculated the amount of
interest as of the date of the award, and ordered paym e n t o f “ i n terest from August 24, 2006 to July 26, 2010, within thirty days of the Award.” DM did not

pay within the required thirty-day period. The district court ordered that DM

pay additional interest, reasoning that by ordering payment by August 25, 2010, the arbitrat i on panel created “a thirty-day interest-free window from the date of the award,” and DM “is not permitted to dis c ount the arbitration panel’s

Und er the overt im e clai m, Petr ofa c so ught to rec over the amo unt of overt im e paid to 4

em plo yees wh o we re bille d on othe r pr oject s but, beca use of DM ’s dis rup tio n, need ed to wo rk overt im e on the degas pr ojec t

. Und er the imp act on othe r pr oject s claim, Petr ofa c dem ande d dam ag e s b e caus e DM ’s dis rup tio n of the degas pr oject requ ired Petr ofa c to hire add itio nal sub cont rac tor s and pay overt im e f or wo rk on two othe r pr ojec ts t o k eep t hem on s ched ule.

6 Case: 11-20141 Document: 00511922960 Page: 6 Date Filed: 07/17/2012No. 11-20141

a w a rd by recalcitrantly delaying payment.” We agree. The distric t c o u r t properly reinstated the arbi t r a tion panel’s interest award after DM refused to pay within the required period. 5
III.
The district court properly confirmed th e arbitration panel’s arbitration award. On appeal, DM has failed to demonstrate rev e rsible error. Consequently, the judgment of the district court is AFFIRMED.

T he arbit rat ion pane l’s aw ard of inte res t— and ord er that it be paid wi thin thir ty 5 days —d ist inguis hes this cas e fr om othe rs wh ere the arbit rat ion pane l d ecid ed not to aw ard inte res t to the pr evailin g p art y. See Gl ove r v. IBP, Inc. , 334 F.3d 471 , 477 (5t h Cir

. 2003)

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