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Appellate Rights for Arbitration Litigants

14JUL

Appellate Rights for Arbitration Litigants

As those in the industry are aware, the standard AIA documents – as well many of the other form contracts in construction – include arbitration provisions, the result of which is that many construction matters are litigated in arbitration fora. While arbitration is theoretically not as expensive a means of dispute resolution as the court system, the concern is that, absent very limited circumstances, parties have virtually no appellate rights after a final ruling.  AFloridatrial court recently dealt with this issue and in doing so reminded us that there is, indeed, a modicum of appellate rights for parties in arbitration.  We thought our readers would benefit from the education of that court’s ruling. 

 

            The trial court has limited jurisdiction and power over decisions rendered by arbitrators, and is similarly limited in reviewing those decisions.  In Yeary v. Superior Pools, Spas, & Waterfalls, Inc., 19 Fla. L. Weekly Supp. 418a, the 17th Judicial Circuit in and for Broward County, in its appellate capacity, determined that the county court had no authority to modify an arbitration award to designate a contractor as the prevailing party and award attorney’s fees.  Specifically, in Yeary, a contractor brought an action in county court against owners of real property to recover damages for an alleged breach of contract and to foreclose on a construction lien, and the owners counterclaimed for breach of contract.  Pursuant to an arbitration provision in the contract, the contractor elected to transfer all claims to binding arbitration. 

 

            The arbitrators awarded more money to the contractor than to the owners, but the award did not identify a prevailing party and denied the contractor’s request for attorney’s fees.  The contractor then moved the county court to modify and correct the award, arguing that the arbitrator’s decision not to award attorney’s fees was contrary to established law because it was the prevailing party.  The trial court remanded the claims to the arbitrators and asked for clarification as to the basis for the award and as to why attorney’s fees had been denied.  The arbitrators responded that the award was “based only in equity, not on contract or lien.”  Following the clarification from the arbitrators, the trial court agreed with the contractor, and designated the contractor the prevailing party and awarded entitlement to attorney’s fees.  The owner appealed. 

 

            The circuit court, serving in its appellate capacity, overturned the order designating the contractor as the prevailing party, and the award of attorney’s fees.  The appellate court determined that trial court did not have the authority to designate the contractor as the prevailing party and to award it attorney’s fees.  Under the Florida Arbitration Code, an arbitrator has no authority to award attorney’s fees unless the parties by agreement expressly waive their statutory right to have the issue of attorney’s fees decided in court.  See Fla. Stat. § 682.11.  The court explained that by the contractor submitting the prevailing party issues to the arbitrators, initially, as a matter of law, the contractor waived its entitlement to have the prevailing party (along with a potential award of attorney’s fees) determined by the trial court. 

 

            The law inFloridais well-settled that attorney’s fees cannot be awarded as a matter of equity.  As mentioned above, the arbitrators responded, in clarifying the initial decision, that the award was based only in equity.  Thus, there was no basis to award fees.           

 

            The decision in Yeary cautions those individuals and/or entities wishing to reserve their rights to have a trial court retain jurisdiction to determine attorney’s fees.  Per this opinion, they must be careful at the contracting stage not to draft language that subsequently will be interpreted by a court to expressly waive such right.