Court Opinion

ID: 1080197
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:38:36.100602+00
Date Added: 2024-06-11T13:14:11.629494
License: Public Domain

WILLIAM W. MILLSAPS and wife,              )
MARTHA MILLSAPS,                           )
                                           )
      Plaintiffs/Appellants,               )
                                           )   Appeal No.
                                           )   01-A-01-9704-CH-00160
VS.                                        )
                                           )   Marion Chancery
                                           )   No. 5477
ROBERTSON-VAUGHN
CONSTRUCTION COMPANY, INC.,
                                           )
                                           )
                                           )
                                                          FILED
      Defendant/Appellee.                  )
                                                          November 25, 1997

                                             Cecil W. Crowson
                                            Appellate Court Clerk
                   COURT OF APPEALS OF TENNESSEE
                     MIDDLE SECTION AT NASHVILLE

APPEALED FROM THE CHANCERY COURT OF MARION COUNTY
AT JASPER, TENNESSEE

THE HONORABLE JEFFREY STEWART, CHANCELLOR

ROBERT L. HUSKEY
514 Hillsboro Boulevard
Manchester, Tennessee 37355
      Attorney for Plaintiffs/Appellants

BEN P. LYNCH
107 First Avenue, N.E.
P. O. Box 310
Winchester, Tennessee 37398
       Attorney for Defendant/Appellee

                   AFFIRMED IN PART; REVERSED IN PART;
                         MODIFIED AND REMANDED

                                               BEN H. CANTRELL, JUDGE

CONCUR:
TODD, P.J., M.S.
KOCH, J.

                                OPINION
              This is an action to enforce an arbitrator’s award or for damages for

failing to comply with the award. The trial judge refused to enforce the award on the

ground that it was unreasonable, inequitable, and shocking to the conscience of the

court.   We reverse that conclusion and order that the award be enforced in

accordance with the lower court’s alternative findings.

                                          I.

              In April of 1986, the Reverend and Mrs. Millsaps hired Robertson-

Vaughn Construction Co., Inc. to construct a house in Monteagle. The cost-plus

contract called for the new house to be connected to an existing house on the lot. As

the work proceeded, the Millsaps became dissatisfied with the quality of the work and

filed suit against the contractor for damages. Before the case came to trial, however,

the parties agreed to submit the dispute to arbitration -- a decision that may set

alternative dispute resolution back a generation.

              The record is not clear about the details of the arbitration proceeding,

but the arbitrator made his award on May 10, 1990. The award listed twelve specific

items for the contractor to complete “at no further charge” to the owners. In addition,

the award ordered the contractor to complete a three page, barely legible, handwritten

“punch list” that had been prepared by the owner’s former attorney. The remaining

work was to be supervised by an architect hired by the owners, and the work was to

be completed within thirty days of the hiring of the architect. The contractor took no

action to modify or vacate the award.

              The owner’s architect issued a work order, and after a considerable

delay, the contractor attempted to make some of the corrections. The work stretched

into the next year, however, and the owners finally terminated the contractor’s efforts

and filed this action on the award.

                                         -2-
              The contractor filed a counter-claim, alleging that it had performed work

not covered by the arbitration award and that the owners were responsible for the

costs incurred in performing the work not covered by the award.

              The Chancery Court of Marion County granted partial summary

judgment to the owners. The court found that the parties were bound by the terms

and conditions of the award because the time to appeal any part of the award had

passed. The order left for a future hearing the questions of what part of the award

had not been complied with, whether the defendant should be allowed to complete the

remaining items, and, if not, what would be the reasonable cost of completion.

              After a subsequent hearing, the trial judge filed a memorandum and

order containing the following findings: that the arbitrator’s award shocked the

conscience of the court; that the award ordered the contractor to perform thousands

of dollars worth of work for which the owners would otherwise have been liable on the

cost-plus contract; that it was equally shocking that the contractor did not appeal the

award; that the contractor had performed work not covered by the award for which the

plaintiffs were liable; that the amount due the contractor was equal to or greater than

the amount due the plaintiffs for the items left outstanding on the award.

              The order contained two alternative judgments: The first simply

dismissed the complaint because the owners did not prove that enforcement of the

arbitrator’s award would be equitable, given the uncompensated benefits already

bestowed on them. The alternative order, to apply if an appellate court ordered the

enforcement of the arbitrator’s award, contained findings of the items in the award that

had been completed and the items that remained unfinished. Finally, the trial judge

entered a $2,844.00 judgment on the contractor’s counterclaim.

                                          II.

                                         -3-
                                  a. Arbitration in General

                With the passage of the Uniform Arbitration Act, Tenn. Code Ann. §§ 29-

5-301--320, arbitration took on a new life in Tennessee. (See Meirowsky v. Phipps,

432 S.W.2d 885 (1968) for the status of arbitration under prior law.) “The act governs

the scope of judicial review of arbitration awards.” International Talent Group, Inc. v.

Copyright Management, Inc., 769 S.W.2d 217 at 218 (Tenn. App. 1988). Only in

limited circumstances may the courts vacate, modify, or correct the award.1 (See

Tenn. Code Ann. § 29-5-313 on vacation and § 29-5-314 on modification or

correction.) And these powers must be invoked in a timely manner; generally within

ninety days of the date a copy of the award is delivered to the applicant. Id.

                In this case the contractor did not ask the court to modify or correct the

award, and to this date, has not asserted that any of the statutory reasons for

modification or correction exist. Although we are puzzled, as the trial judge was, why

the arbitrator ordered the contractor to perform several items of new construction at

no cost to the owners, the time to correct that part of the order is past, and the court’s

ability to correct the award is severely limited. “As long as the arbitrator is, arguably,

construing or applying the contract and acting within the scope of his authority, the

fact that a court is convinced he committed serious error does not suffice to overturn

his decision.” Arnold v. Morgan Keegan & Co., Inc., 914 S.W.2d 445 at 449 (Tenn.

1996). Therefore, we are of the opinion that the trial court was in error insofar as its

order may be interpreted as a refusal to enforce the award because it was erroneous

or because the court thought the award went too far.

                                    b. The Offset Findings

        1
         Even under prior law a court of chancery had no jurisdiction to set aside an award except for
fraud or m istak e. Graham v. Bates, 45 S.W . 465 (Tenn . Ch. App. 1898 ).

                                                -4-
              The trial court’s order contained a finding that the “value of the work and

materials provided [by the contractor] and unpaid for is equal to or greater than any

obligation owed to Plaintiffs by the Defendant.” We think this is a significant finding,

even though neither party chose to address it on appeal.

              An action may be brought on an arbitrator’s award as on an ordinary

contract. See 4 Am. Jur. 2d Alternative Dispute Resolution § 218. It follows that the

defendant in the action may plead set off or recoupment. Howard v. Abernathy, 751
S.W.2d 432 (Tenn. App. 1988); Lowry v. Hawes, 57 Tenn. 688 (1873). That is how

we view the state of the pleadings at the time of the hearing below: the owners had

sued for enforcement of the award or, in the alternative, a money judgment; the

contractor denied owing anything on the award and filed a counterclaim for money

due from the owners (1) as a result of the cost plus nature of the original contract and

(2) the extra work performed that fell outside of the original contract. Having made the

finding quoted above, the trial judge denied any recovery to the owners and entered

judgment on the contractor’s counterclaim.

              That would ordinarily end the matter, since the appellants do not attack

that finding on appeal. The contractor, however, does not rely on it either. On appeal,

he insists that the original award should not be enforced because the agreement to

arbitrate is not in the record. We think that contention comes much too late since the

parties obviously agreed to arbitration, went through the process, and allowed the

award to become final. The contractor, in the alternative, agrees to perform the work

in the award that the trial judge found was yet incomplete. Therefore, we think the trial

judge’s alternative findings represent a just resolution of this controversy.

                                           III.

                               The Alternative Finding

                                          -5-
              In the final order, the trial judge specifically found the items in the

arbitrator’s award that remained to be completed. On appeal, the contractor agrees

to comply with the court’s alternative order. We think that will bring this unfortunate

case to an end. Although the owners protest that it is futile to give the contractor more

time to complete the contract, the owners are not entirely blameless in the search for

the reasons why it has taken more than ten years to end this controversy. The

contractor will be given sixty days from the date the mandate issues from this court

to complete the items listed as unfinished in the trial court’s alternative judgment. In

the event the contractor does not comply with the court’s order -- if reasonably allowed

to do so -- it will pay the owners the cost to comply. The judgment of $2,844.00

entered on the contractor’s counterclaim is affirmed.

                                           IV.

              The owners also appeal the trial judge’s refusal to tax the costs of two

discovery depositions to the contractor. The depositions were of the architect who

was to oversee the completion of the arbitrator’s award and of a contractor who was

to testify about the costs to complete the award. The judge initially held that there was

no proof that the owners had to pay the costs for the architect. When the owners

sought a new trial on their motion, the judge specifically held that the depositions were

not taken pursuant to Tenn. R. Civ. Proc. 26.02(4)(A)(ii) or (B).

              The relevant portions of Rule 26.02 read as follows:

                      (4) TRIAL PREPARATION: EXPERTS. Discovery
              of facts known and opinions held by experts, otherwise
              discoverable under the provisions of subdivision (1) of this
              rule and acquired or developed in anticipation of litigation
              or for trial, may be obtained only as follows:

                      ...

                     (ii) A party may also depose any other party’s
              expert witness expected to testify at trial.

                                          -6-
                      (B) A party may not discover the identity of, facts
               known by, or opinions held by an expert who has been
               consulted by another party in anticipation of litigation or
               preparation for trial and who is not to be called as a
               witness at trial except as provided in Rule 35.02 or upon
               a showing that the party seeking discovery cannot obtain
               facts or opinions on the same subject by other means.

                      (C) Unless manifest injustice would result, (i) the
               court shall require that the party seeking discovery pay
               the expert a reasonable fee for time spent in responding
               to discovery under subdivisions (4)(A)(ii) and (4)(B) of this
               rule; and (ii) with respect to discovery obtained under
               sudivision (4)(A)(ii) of this rule the court may require, and
               with respect to discovery obtained under subdivision
               (4)(B) of this rule the court shall require, the party seeking
               discovery to pay the other party a fair portion of the fees
               and expenses reasonably incurred by the latter party in
               obtaining facts and opinions from the expert.

               Rule 26.02(4) allows a party to discover the opinions of an opposite

party’s expert witness (1) if the expert is expected to testify at trial or (2) if the expert

is not expected to testify at trial, by requesting the report available under Rule 35.02

or by showing that the facts and opinions cannot be obtained by other means.

               It is obvious that this case involves only an expert expected to testify at

trial. Subdivision (C) of Rule 26.02(4) provides in that event that the court shall,

unless manifest injustice would result, require the party seeking discovery to pay a

reasonable fee to the expert for time spent in responding to discovery, and may

require the party seeking discovery to pay the other party a fair portion of the fees and

expenses reasonably incurred in obtaining facts and opinions from the expert.

               The trial judge found as fact that the depositions were not taken

pursuant to Rule 26.02(4)(A)(ii). With respect to the architect, we agree. The

information sought from him was what had occurred and what remained to be done.

In other words, the sort of information one would get from a fact witness, not an

expert.

                                            -7-
                With respect to the other witness, who was to give an opinion on what

it would cost to complete the work, we think the trial judge erred in holding that he did

not come within the rule. We are, however, at a loss to discover from the record the

charges that would be due to him for his time spent in responding to discovery or the

costs the owners incurred in obtaining his opinion. Therefore, for a lack of relevant

proof we affirm the trial judge’s decision not to award any costs to the appellants.

                The judgment of the trial court is reversed in part and modified to

enforce the alternative disposition suggested in the order. In all other respects the

judgment is affirmed and the cause is remanded to the Chancery Court of Marion

County for further proceedings. Tax the costs on appeal equally to the appellants and

the appellee.

                                           _________________________________
                                           BEN H. CANTRELL, JUDGE

CONCUR:

_______________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION

_______________________________
WILLIAM C. KOCH, JR., JUDGE

                                          -8-