# FILED
July 24, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE

EAST ERN SECTIO N

DANIEL W . SMITH, ) LOUDON CHANCERY ) Plaintiff/Appellee ) ) v. ) NO. 03A01-9704- CH-00127 ) M. L. WALLER, JR. and ) HON. FRAN K V. WILLIAMS, III JOYCE C. WAL LER, ) ) Defendants/Appellants ) MODIFIED and ) REMANDED

C. Paul Har rison, Knox ville, for Appellants James Harvey Stutts, Sweetwater, for Appell ee

O P I N I O N

INMAN, Se nior Jud ge
This action was filed in Chan cery Cour t for damages for breach of contract. The plaintiff leased ce rtain premis es from the defendants, w ho allegedly terminated his tenancy

and refused to recognize a renewal opt ion, thereby trigg ering the complaint for dam ages. As pertinent t o the case before us, the lease prov ides that “In the event of any dispute or di sagreement among the parties he reto or to any obligatio n or duty required h erein the sai d parties shal l arbitrat e such dispute . . . and the thre e [arbitrators] after hearing the f acts concerning the matter in dispute , shall arbitrate the matter [emphasis added] and their . . . d ecision shal l be final and bin ding on the parties heret o.” Relying upon the quoted l ease provi sion the defendants fil ed a motion to dismiss. The pl aintiff responded that he had requeste d that the disputebe submitted to arbitrati on, and that his r equest w as ignored which oug ht to estop the defendants from their reliance on the arb itration provision since the plaintiff “has incurred costs,1 Appellant insi sts that Robinson was wrongfully decided, and roundly exegetes it, apparently assuming the contract ma de no provision for attorney fees, which were allow ed notwiths tanding. Overlooked is the decisive fact that the parties treated the contract

as provi ding for attor ney fees, but with no specifi c limi tation on the award. Hence, the arb itration was justified on a “fair and eq uitable basis .” It appears to be cons onant with Arnold v. M organ Keegan Co., Inc., 914 S.W.2d 445 (Tenn. 1996) , decided two years later. 2 attorney’s

fees and trial p reparation ex penses.” Alt ernativel y, he req uested that the motion to dismis s should be treated as an application for arbitr ation pursuant t o the Uniform Arbitr

ation Act, T. C. A. § 29-5-301 et seq. The record does not

reflect how

the case found its way to arbitration, whether by Order of the Chancellor or by ag reement. In any event, a panel of three arbitrators

heard the disput e. The predicate leas e provides only that t he arbitrator s “shall ar bitrate the matter in disp ute.” Variou s matters w ere in disput e; the arbitr ators found that the defendants violated the leasehold interests of the plaintiff and awar ded damages of $4,320.00 for “pers onal property on site.” They

also awar

ded attorney fees to the plaintiff of $2,562.50. The defendants thereupon filed a motion to ‘v acate and/or modify

award,’ alleging that the award of attorney’s fees was beyond the au thority of the arbitrators, since neither

the lease nor the statute [the U niform Arbitrat ion Act] prov ides for attorney fees. This motion was overr uled by the C hancellor w ho relied upon an unreported deci sion of this Cou rt, R. D. Robi nson, Inc. v. D QHSX, Inc., No. 03A01- 9405-CH-00175, Eastern Secti on, October 1994, wherein an award of attor ney fees by an arbit rator, upheld by the Chanc ellor, was affirmed. 1 The defenda nt appeals, insisting that the awar

d of attorney fees w

as unjustified as

beyond the author ity of the arbitrators. This Court i s mandated to rev iew the dec ision of the tri al court in an arbitrati on case under a “ clearly

erroneous” standard, whi ch requires deferential tr eatment. Arnold v. M

organ Keegan Co., Inc., 914 S.W .2d 445 (Tenn. 199 6). Arnold is clear on the point that an arbitrati on award i s not subject to the preponderant ev idence standard of review , and moreover , “that it i s not subject to vacation for a mere mistake of fact or law.” Id. at 451. Quoting with appr oval from3

Carolina F

ashion Exhibi

tors v. Gunter

, 41 N. C. App. 407, 255 S.E.2 d 414 (1979), Arnold holds: “If an arbitrator

makes a mistake, either as to law or fact, it is a misfortune of the party, and there is n o help for it. There is no rig ht of appeal and the Cou rt has n o power to revise t he decisions o f “judges w ho are of the p arties’ own choosi ng.” An [ar bitration] aw ard is intend ed to settle the matter in controversy, and t hus save the expense of lit igation. If a mistake be a sufficient gr

ound for setting aside an award, it opens a door for coming into court in almost ever y case; for i n nine casesout of te n some mistake, either of law

or fact, may

be sugges ted by the dissa tisf ied p arty. Thus arbitrati on, instead of ending , would tend to increase litigati on.” Id. at 451. But Arnold also recog nizes that arbitrators ‘exceed thepowers’ when they go beyond the sco pe of authority granted by

the arbitrat ion agreement. T. C. A. § 29-5- 313(a) prov ides that the C ourt shall vacate an award where (3) the arbitrators exceeded their powers. W e think the arbitrators in the case at han d exceeded their powers in the award of attorney fees. W e cannot rationalize the anom aly created by allowing an arbitrator to award attorney fees as

contrasted to a trial cour t which i ndisputably

could not make s uch an award in the exact circumstances absent contract ual or statutory authority. It is well settled in thi s jurisdi ction that attor ney fees cannot be awarded in contract dis putes unless the contr

act or applicable statutory or decisio nal law s o provides

. Guess v. Maury, 726 S.W.2d 906 (Tenn. App. 1986). In th e case at bar, the lease makes no provisi on for any spec ific recovery, w hether fees, costs , expenses, damages or whatever . It merely

provides

that the arbit rators, after h earing the mat ter in disput e, “shall arb itrate the matter ,” whic h sufficiently focuses the iss ues. T. C. A. § 29-5-302. The lease does not pr

ovide for attor ney fees; unli ke Robinson, there was no concession or

interpreti ve agreement about such fees, and mor eover, it was not a “matter in dispute.” The award was therefo re beyond the authority of the arbitrat ors, unless, as the appellee arg ues, there was a factual basis for the awar

d which, u nder Arnold, should be approved under the clearly erroneous sta ndard. The appellee insi sts that becausehis initi al request to arbitrate the dispute was ignored, thereby compelling the litigation with resultant expenses, the arbitrators were justified in awarding him attorney fees, especially since the lease does not limit4

the remedies available to them , which may be applied on a “fair and equitable ba sis.” This argument i s attractiv e, but it cannot overcome the p lain barri er of the lack of authority. Arbitrator

s do not have carte blanche powers; they are co nfined to interpretati on and applicati on . . . of the agr eement, International T alent Group, supra. We conclude that the award of attorney fees i s clearly erroneous. Pu rsuant to the authority

of T. C. A. § 29-5- 314(b), the deci sion of the arbit rators and the judgment entered thereon is modi fied by elidi ng therefrom the aw ard of attorney fees. Costs are assessed to th e appellee and the case is remanded.

_____________________________ W illiam H. I nman, Senior Ju dge CONCUR:

_______________________________ Housto n M. Godd ard, Pre siding Jud ge

_______________________________ Charles D. Susano , Jr., Jud ge