Opinion ID: 6128
Heading Depth: 3
Heading Rank: 2

Heading: Correction of the arbitration award

Text: 26 Judicial review of an arbitration award is extremely limited; courts should defer to the arbitrators' resolution of the dispute whenever possible. Anderman/Smith Operating Co. v. Tennessee Gas Pipeline Co., 918 F.2d 1215, 1218 (5th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 2799, 115 L.Ed.2d 972 (1991). Review of the district court's judgment is de novo, enabling this Court to determine whether the district court accorded sufficient deference to the arbitrators' decision. Forsythe Int'l, 915 F.2d at 1020-1021 (5th Cir.1990). 27 Atlantic argued before the district court that the arbitration panel's failure to award Atlantic the balance due under the contract was a technical error and requested the district court to modify or correct the award to reflect the panel's intentions on this undisputed issue. Apparently, the arbitrators interpreted the promissory note executed by EBM to be unconditional payment to Atlantic for the remaining balance due under the contract. In reality, the note was conditioned upon the panel's entering an award in that amount to Atlantic; the note was surety for an anticipated award and not payment of the amount owed. The panel also construed the arbitration clause of the contract to limit its power to award payments to the parties. 28 It is clear, notwithstanding the confusion of the panel regarding the promissory note and the arbitration clause, that at least two members of the panel 12 intended for the award to EBM for delay damages to be offset against the balance owed by EBM to Atlantic under the contract. 13 Furthermore, it is undisputed that EBM owes $111,643 to Atlantic for the completion of the contract. In its proposed Findings of Fact and Conclusions of Law, submitted to the arbitration panel, EBM stated: 29 Atlantic did deliver Serial No. 173, with [a supplemental type certificate], on November 9, 1989. As such, it completed its work, and should be paid the balance of the contract price. Under these circumstances, that would involve a set-off against EBM's claims, and EBM would agree that such a set-off would be equitable. Plaintiff's Exhibit 33, page 62. 30 In addition, testimony of Mr. Schwartz and Mr. Cunningham reveals that there was no dispute concerning the $111,643 owed to Atlantic. 14 31 The Texas General Arbitration Act provides that a court shall modify or correct an award where: (1) there was an evident miscalculation of figures or other descriptive mistake; (2) the arbitrators entered an award upon a matter not submitted to them, the correction of which would not affect the merits of the decision upon the issues submitted; or (3) the award is imperfect in a matter of form, not affecting the merits of the controversy. 15 TEX.REV.CIV.STAT.ANN. art. 238 Sec. A (Vernon 1973). 32 Atlantic suggests that the omission of a ruling on the balance due could have been corrected by the district court under any of the three circumstances set forth in the Texas General Arbitration Act. 16 It argues that the arbitrators erroneously considered the issue of the promissory note (panel finding number four) as being a matter not before them. It contends that substitution of a finding on the undisputed issue of the contract balance would not affect the merits of the decision and would be proper under subdivision (2) above. Atlantic also argues that correction would be proper under subdivision (1), viewing the failure to offset as a miscalculation, or under subdivision (3), viewing the award as imperfect in form. 33 We find that the failure of the panel to award the balance remaining under the contract to Atlantic was in essence a clerical error which may be corrected without disturbing the merits of the arbitrators' decision. Neither party disputed that the money was owed, and the testimony of a majority of the arbitrators reveals that it was the panel's intention to offset the amount awarded to EBM by the amount EBM still owed to Atlantic. Correcting the award to reflect this intention neither changes the panel's findings that Atlantic breached its duty timely to deliver the aircraft to EBM nor affects the panel's award of $16,664 to EBM. 34 We reverse the district court's ruling that it could not modify or correct the arbitration award without affecting the merits of the dispute. Upon remand, the district court should enter an order, correcting the arbitrator's decision to reflect the $111,643 owed by EBM to Atlantic. 35 Because we reverse and remand this dispute to the district court for modification of the arbitration award, we need not address the propriety of the district court's remanding the matter to a new panel of arbitrators rather than to the original panel. 17