Court Opinion

ID: 1042539
Source: CourtListenerOpinion
Date Created: 2013-10-01 19:37:44.644836+00
Date Added: 2024-06-11T12:59:54.782354
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 12-1464

WELLS FARGO ADVISORS, LLC,

                Claimant - Appellee,

          v.

CLIFFORD JOHN WATTS,

                Respondent - Appellant.

                             No. 12-1484

WELLS FARGO ADVISORS, LLC,

                Claimant - Appellant,

          v.

CLIFFORD JOHN WATTS,

                Respondent - Appellee.

Appeals from the United States District Court for the Western
District of North Carolina, at Statesville.   Max O. Cogburn,
Jr., District Judge. (5:11-cv-00048-MOC-DLH)

Submitted:   July 29, 2013                 Decided:   October 1, 2013

Before MOTZ and DIAZ, Circuit Judges, and John A. GIBNEY, Jr.,
United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed in part; reversed and remanded in part by unpublished
per curiam opinion.

Matthew K. Rogers, LAW OFFICE OF MATTHEW K. ROGERS, PLLC,
Hickory, North Carolina, for Appellant/Cross-Appellee. Charles
E. Raynal, Matthew H. Mall, PARKER POE ADAMS & BERNSTEIN, LLP,
Raleigh, North Carolina, for Appellee/Cross-Appellant.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

     Clifford John Watts (“Watts”), a former employee of Wells

Fargo Advisors, LLC (“Wells Fargo”), appeals a judgment of the

district       court    enforcing     an    arbitration         award    against    him.

Wells     Fargo    cross-appeals         the     district      court’s    refusal      to

enforce the arbitrator’s award of attorneys’ fees to it.                              We

affirm in part and reverse and remand in part.

                                           I.

     In October 2007, Watts signed a retention bonus agreement

providing that he would receive a bonus of $306,726 from Wells

Fargo’s     predecessor,          Wachovia,        to     be     paid     in     monthly

installments.          The same day, Watts also signed a promissory note

allowing him to receive his full bonus upfront as a “loan” and

repay the loan in monthly installments, which the monthly bonus

payments       would    offset.      The       retention       bonus    agreement    and

promissory       note    explained       that,    should       Watts    terminate    his

employment, he would stop receiving bonus payments and would be

liable    to     pay    the     amount    outstanding       on    his    loan.      Both

agreements also included clauses designating arbitration as the

“exclusive remedy” for adjudicating disputes arising out of the

agreements.

     In     July        2009,      Watts       resigned        from     Wells      Fargo.

Approximately $237,000 remained unpaid on the promissory note.

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Wells Fargo moved to collect the balance from Watts.                                   When he

refused to pay, Wells Fargo initiated an arbitration proceeding.

The arbitration panel enforced the note, entering an award in

favor    of     Wells    Fargo.      Relying        on   a     provision        in    the    note

stating that Watts “agree[d] to pay . . . without limitation,

reasonable attorneys’ fees,” the arbitrators also granted Wells

Fargo attorneys’ fees in the amount of $60,480.25.

      Watts moved to vacate the arbitration award –- including

both the unpaid balance and the attorneys’ fees award.                                      Wells

Fargo    moved     to    confirm    the     full     award.           As   to    the    unpaid

balance, the district court denied Watts’ motion to vacate and

granted       Wells     Fargo’s    motion      to    confirm.          But,      as    to    the

attorneys’ fees, the district court vacated the award on the

ground    that     the    arbitration       panel        had    not    articulated           “any

analysis whatsoever” to explain the amount of the award.                                    This

appeal and cross-appeal followed.

                                            II.

      We review a district court’s legal conclusions de novo.

MCI Constructors, LLC v. City of Greensboro, 610 F.3d 849, 857

(4th Cir. 2010).          But “[o]ur authority to review the arbitration

award[] at issue, like the authority of the district court to do

the     same,    is     substantially       circumscribed.”                Id.       (internal

quotation       marks    omitted).        In    fact,        “the     scope     of    judicial

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review for an arbitrator’s decision is among the narrowest known

at law.”      Id. (internal quotation marks omitted).               “In order for

a reviewing court to vacate an arbitration award, the moving

party    must   sustain   the     heavy   burden   of   showing      one   of   the

grounds specified in the Federal Arbitration Act (the ‘FAA’) or

one of certain limited common law grounds.”              Id.

      The     very    limited     statutory    grounds     for      vacating     an

arbitration award are:            “(1) where the award was procured by

corruption, fraud, or undue means; (2) where there was evident

partiality or corruption in the arbitrators . . . ; (3) where

the arbitrators were guilty of misconduct . . . ; or (4) where

the     arbitrators    exceeded     their     powers,    or    so     imperfectly

executed them that a mutual, final, and definite award upon the

subject matter submitted was not made.”             9 U.S.C. § 10(a).           The

equally     circumscribed       common-law    grounds    may   “include     those

circumstances where an award fails to draw its essence from the

contract, or the award evidences a manifest disregard of the

law.”       MCI Constructors, 610 F.3d at 857 (internal quotation

marks omitted).

                                      III.

      Watts presents no basis for vacating any portion of the

arbitration award covering the unpaid balance on the promissory

note.       As the district court properly held, Watts failed to

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offer any particularized support for his argument that Wells

Fargo somehow engaged in fraud, corruption, or undue means in

procuring its award, including in its conduct during discovery.

Watts similarly failed to provide any particularized support for

his argument that the arbitrators engaged in any improprieties

within the scope of the FAA.      Further, he made no showing that

the arbitrators engaged in “manifest disregard of the law,” a

“carefully   circumscribed”    concept   that   requires   that   “the

arbitrator refused to heed” a “clearly defined” legal principle

that is “not subject to reasonable debate.”       Wachovia Sec., LLC

v. Brand, 671 F.3d 472, 483 (4th Cir. 2012) (internal quotation

marks omitted).

     Nor has Watts presented a basis for vacating this portion

of the arbitration award on public policy grounds.         Watts has

offered no “well defined and dominant” public policy reason to

refuse to enforce the retention bonus agreement or promissory

note that is “ascertained by reference to law[] . . . and not

from general considerations of supposed public interests.”         See

W.R. Grace & Co. v. Local Union 759, Int’l Union of the United

Rubber Workers, 461 U.S. 757, 766 (1983).       This is no surprise.

For there is no such reason.    The bonus agreement and promissory

note that the arbitrators enforced clearly explain the nature of

the transaction Watts entered and are standard agreements in the

industry that courts routinely uphold.

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                                          IV.

       These same principles render the district court’s holding

vacating     the    arbitrators’        award      of     attorneys’      fees    to    Wells

Fargo error.        A court must defer to the arbitrators’ findings as

to   the    appropriate        amount    of       attorneys’      fees.         The    strict

deference courts owe to arbitrators applies to factual findings

as well as legal determinations.                         See Upshur Coals Corp. v.

United     Mine    Workers,     Dist.    31,       933    F.2d    225,    229    (4th     Cir.

1991).      Moreover,      “[a]rbitration           panels       are   not     required    to

explain their decisions.”                MCI Constructors, 610 F.3d at 859

n.6.     Thus, a court must defer to arbitrators’ factual findings

on attorneys’ fees even if the arbitrators do not explain a

basis for the precise amount.                 This deference seems particularly

appropriate in this case, given that the arbitrators awarded an

attorneys’ fees amount well below Wells Fargo’s request and the

district court made no findings as to the excessiveness of the

award.

                                           V.

       Accordingly,       we    affirm    the       district       court’s       denial    of

Watts’     motion    to   vacate    the       arbitration         award      covering      the

unpaid balance on the promissory note and grant Wells Fargo’s

motion to confirm that award.                  We reverse the district court’s

ruling     vacating    the     arbitration         panel’s       grant    of     attorneys’

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fees.    We remand the case to the district court for entry of an

order enforcing the attorneys’ fees award.                  We dispense with

oral    argument   because    the    facts   and   legal     contentions    are

adequately   presented   in    the    materials    before    this   court   and

argument would not aid the decisional process.

                                                         AFFIRMED IN PART;
                                             REVERSED AND REMANDED IN PART

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