This opinion will be unpublished and may not be cited except as provided by Minn . Stat. § 480A.08, subd. 3 (201 4 ). STATE OF MINNESOTA IN COURT OF APPEALS A14
- 1187
The Jamar Company, Respondent,

vs. Independent School District No. 2142, St. Louis County Schools, Minnesota,

Appellant.

Filed May 18, 2015 Reversed and remand ed Chutich , Judge St. Louis County District Court File No. 69VI

- CV

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- 260 Dean B. Thomson, Matthew T. Collins, Lucas T. Clayton, Fabyanske, Westra, Hart & Thomson, P.A., Minneapolis, Minnesota (for respondent) Stephen M. Knutson, Michelle D. Kenney, Knutson, Flynn & Deans, P.A., Mendota Heights, Minnesota (for appellant)
Considered and decided by Smith , Presiding Judge; Chutich , Judge; and Minge , Judge

. 

 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.2 U N P U B L I S H E D O P I N I O N CHUTICH , Judge
A ppellant Independent School District No. 214 2 , St. Louis Count y Schools (the school district ) challenges the district court’s decision to vacate an arbitration award designating the school district as the prevailing party in a construction contract dispute. The school district further argues that the district court erred in modifying the arbitration award to name respondent Jamar Company as the prevailing party entitled to attorney fees . Because the arbitrator did not exceed his authority in designating the school district as the prevailing party , we reverse and remand for the district court to calculate the appropriate amount of attorney fees to award in favor of the school district

. FACTS In August 2010, Jamar signed a $1,430,485 contract with the school district to construct a roof for a new school buildin g in New Independence

. I nstall ation of the new roof was to begin on February 3, 2011, and be completed by March 31, 2011. The
contract stated that Jamar would install a certain type of roof, known as a sure

- white roofing system, which could only be insta lled if the surface and/or ambient temperature was 25 degrees Fahrenheit or warmer . The contract also specified that Jamar was responsible for ensuring that it could install the roof despite winter conditions. In early November 201 0 , Jamar told the scho ol district , through the project construction manager, that installation of the sure

- white roofing system would be impossible because the temperature would likely remain below 25 degrees Fahrenheit for at least some of the installation period. Despite Jam ar’s breach, the school district chose3

not to ter minate the contract and instead elected to accommodate Jamar and change to an alternative hot

- mopped roof system. On March 7, 2011, the school district issued a construction change directive to allow Jamar to proceed with installation of the hot

mopped system. In August 2011, Jamar estimated that changing to the hot

- mopped roof had cost an ad ditional $183,000. The school d istrict refused to pay this amount . On April 16, 2012, Jamar initiated an arbitration proceeding to recover the cost of installing the hot

- mopped system, seeking $149,308.65 in damages plus interest, fees, and costs. The school district counterclaimed, seeking an award of $75,000 plus in terest, fees, and costs. Before the arbitration i n September 2012, Jamar hired an expert witness to review its claim and as a result, reduce d it s demand to $86,786.72. During arbitration, Jamar argued that the temperature only became an issue after the project construction manager, Kraus

- Anderson , moved its installation schedule up to early January. The arbitrator found that this argument was inconsistent with testimony presented because Kraus

- Anderson did not raise the issue of moving up the schedule u ntil December 2010 and Jamar asked to change the roof type in November. Indeed, Jamar’s

own expert testified that the proposed change in the construction schedule was immaterial because Jamar would have needed to use some form of winter protection regardl ess of whether the work was performed in January or February.
T he arbitr ator awarded Jamar $40,809.22. The arbitrator determined that Jamar breached its contract when it refused to install the sure

- white roofing system but that the school district waive d its right to terminate the contract when it elected to accept the hot

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mop roof system. The arbitrator stated that Jamar had originally priced its work on the hot

- mopped system at $183,000, and reduced it to $149,000, then to $86,786.72, and ultimately r ecovered only $40,809.22. The arbitrator stated that “[i]f Jamar had accurately calculated the costs for the changed work from the beginning, this entire dispute would have likely been avoided.” The arbitrator then concluded that the school district was the prevailing party and awarded it $109,454.85 for attorney f ees and $10,300 for expert

- witness fees. Jamar moved to vacate and modify the arbitration award in district court , arguing that the arbitrator exceeded his authority

. T he district court granted Jamar’s motion and vacated the portion of the arbitration award designating the school district as the prevailing party . It concluded that the arbitrator exceeded his authority by relying on facts outside the record, specifically focusing on the a rbitrator’s statement that “[i]f Jamar had accurately calculated the costs for the changed work from the beginning, this entire dispute would have likely been avoided.” The district court characterized this statement as “pure speculation and without any e videntiary support in the record.” The district court also modified the award and named Jamar as the prevailing party entitled to recover attorney fees and costs and remanded the issue of calculating attorney fees to the arbitrator.
T he school district th en appealed the district court’s decision to vacate and modify the arbitration award . This court dismissed the appeal because it was taken from a nonfinal order. Jamar next moved the arbitrator for an award of all attorney fees, costs, and disbursements that it had incurred

.5

T he arbitrator issued a modified award, granting Jamar $125,865.20 in attorney fees, costs, and disbursements relating to the arbitration. The arbitrator declined to award
Jamar attorney fees for its motion to vacate and modify the arbitration award, stating that these amounts would be “more appropriately addressed by the District Court.” Accordingly , Jamar filed a motion in district court to confirm the arbitration award. The district court confirmed the award and concluded that Jamar’s motion for attorney fees was timely. The district court also granted Jamar an additional $37,374.58
for attorney fees and costs incurred in the lawsuit following the arbitration. The s chool d istrict appealed

. D E C I S I O N The arbitration pro cess is favored in the law. Ehlert v. W. Nat’l Mut. Ins. Co. , 296 Minn. 195, 199, 207 N.W.2d 334, 336 (1973). A rbitrators make final determinations of law and fact. Grudem Bros. Co. v. Great W. Piping Corp. , 297 Minn . 313, 316, 213 N.W.2d 920, 922

- 23 (1973). An arbitration award is set aside “ only when the objecting party meets its burden of proof that the arbitrators have clearly exceeded the powers granted to them in the arbitration agreement

. ” Seagate Tech., LLC v. W. Digital Corp. , 854 N.W.2d 750, 760

- 61 (Minn. 2014) (quotation omitted)

. In reviewing the arbitrator’s authority, this court exercises every reasonable presumption “in favor of the finality and validity of the award.” Nat’l Indem. Co. v.
Farm Bureau Mut. Ins. Co. , 348 N.W.2d 748, 750 (Minn. 1984). Thus, an appeal from an arbitration decision is “subject to an extremely narrow standard of review.” Hunter, Keith Indus., Inc. v. Piper Capital Mgmt. Inc ., 575 N.W.2d 850, 854 (Minn. App. 1998).6

This court reviews the scope of an arbitra tor’s authority de novo. Seagate Tech. , 854 N.W.2d at 760. The s chool d istrict argues that the contract gave the arbitrator broad discretion to designate a prevailing party and sufficient evidence in the record supported his decision

. Jamar contends that the arbitrator exceeded hi s authority in designating the school d istrict as the prevailing party because the award relied on evidence outside the record. We
agree with the school d istrict

. “The scope of an arbitrator’s authority is a matter of contra ct interpretation to be determined from a reading of the parties’ arbitration agreement.” Cnty. of Hennepin v. Law Enforcement Labor Servs., Inc., Local No. 19 , 527 N.W.2d 821, 824 (Minn. 1995). Arbitration awards will be set aside if the objecting party shows that the arbitrator has clearly exceeded the powers granted in the arbitration agreements. Seagate Tech. , 854 N.W.2d at 760

– 61. “ [C]ourts will not overturn an award merely because they may disagree with the arbit rators’ decision on the merits. ” I d. at 761 (q uotation omitted). Here, the contract between the two parties stated , “[T]he ‘prevailing party’ shall b e determined by Arbitrator(s).” The term “prevailing party” was not defined in the
contract. The contract therefore g ave the arbitrator com plete discretion to name the prevailing party

. Despite this broad discretion, Jamar contends that the arbitration award lacked evidentiary support because it relied on an assumption outside the record

— that the conflict could have been avoided had Jamar a ccurately calculated the cost for the7

changed work at the outset. After carefully reviewing the arbitrator’s decision, we disagree.
T he evidence here shows that Jamar breached the contract, the school d istrict accommodated the breach, and Jamar’s explanation for the breach was not credible and belied by the testimony of its own expert witness. The record also shows a notable discrepancy between Jamar’s initial asking price of $183,000, and its ultimate recovery of $40,809.22. Jamar argues that this discrepancy was not a “fact” in the record and that the arbitrator exceeded his authority by inferring that the entire litigation would have been avoided had Jamar priced its work reasonably at the outset. 1 But the arbitration award did not rest solely on this discrepancy , and even if it w ere part of the arbitrator’ s reasoning, the arbitrator’s reliance on it was not an error warranting vacation of the award

. See Garvey , 532 U.S. at 509 , 121 S. Ct. at 1728 ( stating that an arbitrator’s improvident and even “ silly ” fact

- finding is not a basis for a reviewing court to refuse to enforce the award). Jamar also cites to numerous federal cases for the proposition that vacating an arbitration award is warranted when the record reveals no support whatsoever for the arbitrator’s determination. We reject this argument because, as stated above, sufficient

1 The arbitrator’s statement could also reasonably be interpreted as a way of chastising Jamar. But regardless of the statement’s interpretation, it was not the only fact supporting the arbitration award and is therefore not a basis upon which the aw ard can be vacated. Cf. Major League Baseball Players Ass’n v. Garvey , 532 U.S. 504, 510, 121 S. Ct. 1724, 1728 (2001) (“ It is only when the arbitrator strays from interpretation and application of the agreement and effectively ‘dispense [s] his own brand of industrial justice’ that his decision may be unenforceable ” (quoting Steelworkers v. Enterprise Wheel & Car Corp. , 36 3 U.S. 593, 597, 80 S. Ct. 1358, 1361 (1960) )).8

evidence in the record supports the arbitrat ion award. Moreover, these federal cases are all distinguishable becaus e, contrary to the situation here, the arbitrators in those cases either relied on obvious mistakes of fact or modified clear contractual language. See United Elec. Radio & Mach. Workers of Am., Local 1139 v. Litton Microwave Cooking Prod s. , Litton Sys. I

nc. , 704 F.2d 393, 396

- 97 (8 th Cir. 1983) (concluding that the arbitrator erroneously calculated the work week); Storer Broad. Co. v. Am. Fed’n of TV & Radio Artists, Cleveland Local, AFL

- CIO , 600 F.2d 45, 4 8 (6 th Cir. 1979) (determining that the arbitrato r’s finding that the union told its members they would receive credited amounts in their profit sharing accounts was wholly unsupported in the record); Detroit Coil Co. v. Int’l Ass’n of Machinists & Aerospace Workers, Lodge No.
82 , 594 F.2d 575, 580

– 81 (6 th Cir. 1979) (concluding that the arbitrator modified clear and unambiguous language in a collective bargaining agreement). Jamar further contends that the arbitrat ion award is irreconcilable with Minnesota cases that define “ prevailing party .” We need not reach this issue , however, because arbitration awards “ will not be reviewed or set aside for mistake of either law or fact in the absence of fraud, mistake in applying its own theory, misconduct, or other disregard of duty. ” See Seagate Tech. , LLC v. W. Digital Corp. , 834 N.W.2d 555, 565 (Minn. App. 2013) ( emphasis added) ( quo tation omitted) , aff’d , 854 N.W.2d 750 (Minn. 2014)

. Because the arbitrator here did not engage in the type of conduct that would warrant a review of the award , we decline to rev iew the award for a misapplication of Minnes ota caselaw

. See id.9

Lastly, Jamar argues that the arbitrator’s “irrational analysis regarding potential settlement demonstrates ‘evident partiality’ against Jamar” and is another basis for affirming the district court’s vacation of the arbitration award. A district court shall
vacat e an arbitration award if the arbitrator shows “ evident parti ality.” Minn. Stat. § 572B.23(a) (2)(A) (2014)

. But Jamar cites no compelling evidence to show that the arbitrator demonstrated evident partiality here : the contract empowered the arbitrator to designate a prevailing party and the arbitrator did so. Cf. Ag Servs. of Am., Inc. v. Schroeder , 693 N.W.2d 227, 236

– 37 (Minn. App. 2005) (concluding that receiving an adverse ruling is not a proper basis upon which to impute bias to a district court judg e). Accordingly, this contention fails

. In sum, we conclude that the vacation and modification of the arbitration award was improper because the arbitrator did not exceed his authority or demonstrate evident partiality , and the record supported his award

. The original arbitration award is therefore reinstated , and we reverse the attorney fees and costs awarded to Jamar for the arbitration and ensuing litigation

. We also remand for the district court to calculate reasonable attorney fees, costs, disbursements, and interest in favor of the school d istrict. Given our conclusion above, we need not address the school d istrict’s argument regarding the timeliness of Jamar’s motion for attorney fees.
Reversed and remand ed.