1 United States Court of Appeals,

Fifth Circuit.

No. 95-60780

Summary Calendar.

DOLE OCEAN LINER EXPRESS, Plaintiff-Appellee,

v.

GEORGIA VEGETABLE COMPANY, Defendant-Appellant.

June 6, 1996.

Appeal from the United States District Court for the Southern

District of Mississippi.

Before REAVLEY, SMITH and DeMOSS, Circuit Judges.

REAVLEY, Circuit Judge:

This is an appeal of a district court's reversal of an

arbitration panel's decision. There is no question that Dole

breached its contract with Geo rgia Vegetable. Pursuant to that

contract, Georgia Vegetable requested arbitration of its loss. The

arbitra tion panel awarded Georgia Vegetable damages in excess of

the amount provided for in the liquidated damages clause in the

contract. The district court found that the arbitration panel

exceeded its authority under the contract and r eversed the

arbitration panel decision. The court reduced the damages to an

amount equal to the liquidated damages provision. Believing that

the arbitration panel did not exceed its authority to interpret the

contract, we reverse the district court.

Dole agreed to provide Georgia Vegetable with 40 foot

containers and to transport those containers. Georgia Vegetable

was the marketing manager for Manprosa, a Nicaraguan company.1 The parties have settled the claim on 93 of the containers

shipped on other carriers pursuant to the liquidated damages

clause of the contract. Dole paid $46,500, the maximum permitted

under the contract.

2 The arbitration clause of the contract, section 14.4,

provides in pertinent part that, "[a]ny dispute, controversy or

claim, arising out of or relating to this Contract or a breach

thereof, shall be finally resolved by arbitration."

3 The total amount awarded was reduced by $14,000 due Dole

for unpaid freight.

2 Manprosa owned the onions being shipped and Georgia Vegetable

received commissions for the sale of the onions in America. The

perishable goods were to be transported aboard Dole's vessels from

a port in Nicaragua to America. The contract provided for a

minimum number of containers and a price per container. Georgia

Vegetable contracted for a total of 170 containers from Dole. Dole

shipped only 12. Through another carrier Georgia Vegetable was

able to arrange the shipment of 9 6 containers. 1 However, despite

Georgia Vegetable's best efforts, 62 containers of onions were

never shipped, and the goods perished at the port.

Georgia Vegetable invoked the arbitrat ion clause of the

contract and sought recovery of its expectancy damages for Dole's

breach. 2 The arbitration panel threw out the liquidated damages

clause and awarded Georgia Vegetable $114,506.56, the value of its

lost commissions, and awarded Manprosa $550,606.50 for its loss. 3

The basis for the arbitration panel's decision was as follows,

Faced with a rather severe container shortage, it would

appear that Do le made the business decision to maximize the

utilization of the available containers by restricting their

dispersal to other countries, i.e., Nicaragua. This policy

worked successfully for their ships operated at very close to

maximum capacity, principally with [Dole's] proprietary cargo.4 The liquidated damages provision, section 7.2 of the

contract, provided,

In the event that [Dole] shall fail to transport

containers duly tendered by [Georgia Vegetable]

pursuant to this Contract, to the extent that [Georgia

Vegetable] must and does transport such containers on

alternative ocean carrier's vessels, [Dole] shall pay

to [Georgia Vegetable] a sum equal to the amount such

alternative carrier's rates exceed the Base Rates of

[Dole]; provided however that such sum shall in no

event exceed $500.00 per container. In the event that

[Georgia Vegetable,] after due diligence, is unable to

ship on an alternative carrier, then providing [Georgia

Vegetable] exercised due diligence to locate and ship

on an alternative carrier, [Dole] shall pay to [Georgia

Vegetable] US$500.00 for each container not shipped by

[Dole] after duly tendered by [Georgia Vegetable].

3 [Dole,] after initial shipments, abandoned their contractual

obligations to [Georgia Vegetable] without sufficient or

a dequate notification and having aborted by abandonment t h e contract, [Dole] cannot seek protection under it.

The liquidated damages provision served its purpose, as

intended, to cover the additional expen ses incurred on the

containers shipped via other carriers at higher expense. The

$500.00 pe r container provision in no way meets the

requirements of just and reasonable compensation for the loss

of approximately $10,728 per container not shipped on account

of abandonment of the contractual o bligations to carry this

perishable commodity. It has been established that carriers

may not limit liability when possible causes could reasonably

be known to them.

The district court reversed the arbitration panel's decision

because it "exceeded "the express limitations of [the] contractual

mandate' by a warding $10,727.63 per container for a total of

$665,113.06—rather than $500 per container for a total of $31,000

(less $14,000 in undisputed unpaid freight)." Dist. Ct. Memorandum

Order p. 7. 4

We review the district court's decision de novo. Our review

of the arbitrator's award itself is very deferential, and we should5 First Options of Chicago, Inc. v. Kaplan, --- U.S. ----, --

--, 115 S.Ct. 1920, 1923, 131 L.Ed.2d 985 (1995).

6 Gateway Technologies, Inc. v. MCI Telecommunications Corp.,

64 F.3d 993, 996 (5th Cir.1995); 9 U.S.C. § 10(a).

7 See Farmers Export Co. v. M/V Georgis Prois, Etc., 799 F.2d

159, 162 (5th Cir.1986).

8 Varner v. Varner, 666 So.2d 493, 496 (Miss.1995); Board of

Trustees of State Institutions of Higher Learning v. Johnson, 507

So.2d 887, 890 (Miss.1987).

4 set aside that decision only in narrow circumstances. 5 As we said

in Gateway Technologies, the award "shall not be vacated unless:

(1) the award was procured by corruption, fraud, or undue means;

(2) there is evidence of partiality or corruption among the

arbitrators; (3) the arbitrators were guilty of misconduct which

prejudiced th e rights of one of the parties; or (4) the

arbitrators exceeded their powers." 6 Dole argues, and the district

court found, that the arbitration panel exceeded its power in

awarding damages in excess of the liquidated damages provision in

the contract.

The cont ract provided that the arbitration panel was to

interpret the contract in accordance with the "procedural and

substantive laws of the Maritime Law of the United States and, to

the extent possible, the State of Mississippi." The determination

of whether a liquidated damages clause is enforceable is made by

application of a legal standard to the evidence. 7 In Mississippi,

liquidated damages provisions are not enforceable if they are not

a reasonable pre-estimation of damages. 8 The arbitration panel

determined tha t the $500.00 per container liquidated damage9 Arbitration Panel op. p. 6.

10 See Farmers Export, 799 F.2d at 162; Varner, 666 So.2d at

496; Johnson, 507 So.2d at 890.

11 Delta Queen Steamboat Co. v. District 2 Marine Engineers

Beneficial Ass'n., 889 F.2d 599 (5th Cir.1989), cert. denied, 498

U.S. 853, 111 S.Ct. 148, 112 L.Ed.2d 114 (1990).

12 Id. at 604.

5 provision "in no way meets the requirements of just and reasonable

compensation for the loss ..." 9

Whatever our belief about the enforceability of the

liquidated damages clause may be, it is clear that the arbitration

panel had the power to determine that it was not a reasonable

pre-estimate of damages and the refore void. 1 0 Because the

determination of whether the liquidated damages provision was

legally en forceable was left to the arbitration panel under the

contract, the arbitration panel did not "exceed their powers" by

finding, as a matter of law, that it was void.

Dole believes our opinion in Delta Queen Steamboat 11 controls

the disposition of this case and requires a different result. In

Delta Queen Steamboat, we held that "arbi tral action contrary to

express contractual provisions will not be respected." 12 The

arbitrator there lacked authority to order reinstatement of a pilot

found to be grossly careless. In this case, however, the

arbitration p anel had the l egal power to find the liquidated

damages clause void. Once done, there was no contractual provision

which the arbitration panel had to follow to determine Georgia13 We note, however, that Georgia Vegetable is still limited

in its recovery to only damages submitted to the arbitration

panel. Compare Valentine Sugars, Inc. v. Donau Corp., 981 F.2d

210, 213 (5th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 3039,

125 L.Ed.2d 725 (1993) (broad arbitration provision permitted

resolution of issues presented to arbitrator), and Totem Marine

Tug & Barge, Inc. v. North American Towing, Inc., 607 F.2d 649,

651 (5th Cir.1979) (where party expressly stated issue was not

before arbitrator and other party relied on representation then

issue could not be decided by arbitrator).

14 Valentine Sugars, 981 F.2d at 213.

15 Dole asserts on appeal that the arbitration panel misread

the applicable contract between Manprosa and Georgia Vegetable.

As the agreement is not in the record, we have deferred to the

arbitration panel's factual determination of the contract's

scope.

16 Arbitration Panel op. p. 2-3.

6 Vegetable's loss. 13 The district court's and Dole's reliance on

Delta Queen was misplaced.

Finally, Dole asserts the arbitration panel excee d ed its

authority in ordering payment to Manprosa, a third party. As a

part of its decision, the arbitration panel awarded a portion of

the losses to Manprosa, the grower of the onions in Nicaragua.

Dole asserts it has been forced to arbitrate its dispute with

Manprosa without any contractual duty to do so. We disagree.

In determining whether the arbitration p anel exceeded its

jurisdiction, we resolve all doubts in favor of arbitration. 1 4

There is no question that Georgia Vegetable had the right to seek

damages on behalf of Manprosa as its agent. 15 Manprosa e xplicitly

authorized Georgia Vegetable to handle any type of litigation

concerning the onions, "in its own name just as if it were owners

of said onions." 16 "A person with whom an agent makes a contract17 Restatement (Second) of Agency § 364 (1958); Lubbock Feed

Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250, 258 (5th

Cir.1980), reh'g denied, 634 F.2d 1355 (5th Cir.1980); Forest

Oil Corp. v. Tenneco, Inc., 626 F.Supp. 917, 921-22

(S.D.Miss.1986).

18 § 14.4 of the Contract.

19 As evidence that Dole is being forced to arbitrate the

case with Manprosa, Dole asserts that it refused to permit

Manprosa to be a signatory of the contract. Dole Brief, p. 18 n.

12; Arbitration Panel op. p. 3. However, the mere fact that

Dole insisted it deal with Manprosa's agent and not Manprosa does

not support such a contention. Dole was aware that Georgia

Vegetable was Manprosa's agent, and as such should have been

aware that Manprosa's agent would enforce the contract on behalf

of the principal.

7 on behalf of a principa l is subject to liability in an action

brought thereon by the agent in his own name on behalf of the

p rincipal if the agent is a party promisee." 1 7 Furthermore, the

contract between Dole and Georgia Veg etable required the

arbitration of "[a]ny dispute, controversy or claim, arising out of

or relating to [t he] contract or a breach thereof...." 1 8 From

Dole's perspe ctive, the two entities were one for purposes of

recovering under the contract. Because Georgia Vegetable was free

to sue Dole on behalf of Manprosa, we believe it was entitled to

also seek arbitration. 19

Any error which occurred concerned not whether Dole had to pay

the damages, but rather to whom the damages should be paid.

Because the arbitration was between Dole and Georgia Vegetable, the

entire amount should have been awarded to Georgia Vegetable. For

purposes of Dole's agreement with Georgia Vegetable, Georgia

Vegetable was the owner o f the perishable goods. Dole was not

forced to arbitrate a dispute with Manprosa. Dole was only forced8

to pay an amount due to Georgia Vegetable, and by it to a third

party. Because Georgia Vegetable does not complain, we find Dole's

argument meritless.

The district court is REVERSED, the cause is REMANDED to that

court to reinstate the arbitration panel award.