On 19 December 2000, plaintiffs WMS, Inc. ("WMS"), Cellular
Plus, and David Kilpatrick filed suit in Wake County Superior Court
against defendants Alltel and Jerry W. Weaver, asserting various
claims arising out of business dealings between the parties,
including a claim for unfair and deceptive trade practices under
N.C. Gen. Stat. § 75-1.1 (2003). Cellular Plus and Alltel had
entered into a dealer agreement dated 4 June 1999 (the
"Agreement"). Pursuant to the Agreement, Cellular Plus, an
independent dealer, agreed to market Alltel's wireless cellular
communication services in exchange for payment of commissions by
On 8 January 2001, defendants moved to compel arbitration
pursuant to the Agreement. Section 16.19 of the Agreement
Arbitration: (a) Any controversy,
dispute, or claim arising out of [or] relating
to this contract, the relations between ALLTEL
and [Cellular Plus], or the Service provided
by ALLTEL, including but not limited to a
claim based on or arising from an alleged tortor a dispute as to the applicability of this
provision to any dispute, shall be settled by
arbitration administered by the American
Arbitration Association under its Wireless
Industry Arbitration rules. (b) The
arbitrator may not vary the terms of the
parties' agreement. (c) All statutes of
limitations which would otherwise be
applicable in a judicial action brought by a
party shall apply to any arbitration and shall
be given effect by the arbitrators. (d)
Judgment on the award rendered by the
arbitrator(s) may be entered in any court
having jurisdiction thereof. (e) The
arbitrator shall have no authority to award
punitive damages or any other damages not
measured by the prevailing party's actual
damages, nor shall any party seek punitive
damages relating to any matter arising out of
this contract in any other forum. (f) All
claims shall be arbitrated individually, and
there shall be no consolidation or class
treatment of any claim. (g) The parties
expressly agree that, notwithstanding the
foregoing, in the event either party believes
the Agreement has been or will be unlawfully
terminated and emergency relief is required,
such party may apply to the American
Arbitration Association therefor under its
"Optional Rules for Emergency Measures of
On 15 February 2001, the trial court entered an order concluding
"that all of the claims alleged in the Amended Complaint are
governed by the arbitration clause" and directing plaintiffs to
"pursue their claims with the American Arbitration Association
pursuant to the terms of the arbitration clause[.]"
On 10 October 2002, following an evidentiary hearing, the
three-member arbitration panel issued a "Posthearing Order,"
stating, "[t]he parties have stipulated and the Arbitrators direct"
that (1) the hearing would remain open for submission of briefs,
oral arguments, and submission of other exhibits; and (2) "[t]o theextent that the Arbitrators may deem it appropriate to make an
award of attorneys fees, counsel for the parties will be requested,
not later than the close of the oral arguments on November 25,
2002, to submit affidavits with respect to same." In a second
"Posthearing Order," dated 26 November 2002, the panel stated that
if it found defendants liable under
N.C. Gen. Stat. §
would enter an interim award by 25 December 2002 "on all issues
except for any award of Attorney's fees." If the panel decided
that an award of attorneys' fees would be appropriate, the panel
would receive affidavits from counsel for all parties on the issue
of attorneys' fees and an award would be entered no later than 31
On 23 December 2002, the panel issued an "Interim Award."
Pursuant to an agreement between the parties, the Interim Award
contained no specific findings of fact. The award dismissed all
claims asserted by plaintiffs WMS and Kilpatrick, as well as all
claims asserted against defendant Weaver. In the award, the
arbitrators concluded that Alltel had breached the Agreement and
that Alltel had "engaged in unfair and deceptive acts and practices
under Section 75-1.1 of the General Statutes of North Carolina."
The arbitrators awarded Cellular Plus damages in the amount of
$962,500.00, "said amount to be trebled in accordance with Section
75-16 of the General Statutes . . . to make the award
$2,887,500[.]" With respect to attorneys' fees, the interim award
(7) This award shall be deemed to be an
interim award pending consideration by thePanel of Arbitrators of a further award to
[Cellular Plus], pursuant to Section 75-16.1
of the General Statutes of North Carolina,
allowing a reasonable attorney fee to the
attorneys representing [Cellular Plus].
Pursuant to the consent and stipulation of the
parties at the oral arguments held in this
case on November 25, 2002, counsel for
[Cellular Plus] and counsel for [Alltel] shall
submit to the Panel not later than January 15,
2003, affidavits of said counsel, together
with affidavits of third parties having
knowledge of facts pertinent to the issue, if
any, with respect to (1) the reasonableness of
the amount of the attorneys' fees and expenses
charged by [Cellular Plus'] counsel as set out
in the affidavits submitted to the Panel and
to opposing counsel by [Cellular Plus']
counsel on November 25, 2002 and (2) whether
there was an unwarranted refusal by [Alltel]
to fully resolve the matter constituting the
basis of the claims in this case. Pursuant to
the consent and stipulation of the parties at
the oral arguments held in this case on
November 25, 2002, the Panel will consider and
make a decision and an award on said issues
based upon said affidavits. A Final Award in
this arbitration proceeding, with respect to
attorneys fees, if any, will be entered not
later than January 31, 2003.
On 31 January 2003, the arbitrators issued a "Final Award" in
which they concluded "that there was an unwarranted refusal by
[Alltel] to fully resolve the matter . . . under Section 75-1.1 of
the General Statutes[.]" The arbitrators, therefore, awarded
Cellular Plus attorneys' fees in the amount of $352,640.00. The
Final Award provided that the parties would pay equally the
administrative fees and expenses of the American Arbitration
Association and the compensation and expenses of the arbitrators
totaling $91,515.13. On 3 February 2003, Alltel filed a motion in Wake County
Superior Court, requesting that the court either (1) vacate the
arbitrators' interim and final awards "on the grounds that the
arbitrators exceeded their powers in awarding [Cellular Plus]
treble damages and attorneys' fees," or (2) modify the arbitrators'
interim and final awards to eliminate the awards of treble damages
and attorneys' fees. On 13 February 2003, Cellular Plus moved the
trial court to confirm the arbitrators' interim and final awards.
The trial court concluded, in pertinent part:
5. The arbitration panel did not have
the authority under Section 16.19(e) of the
parties' Arbitration Agreement to award treble
damages to Plaintiffs pursuant to N.C. Gen.
Stat. § 75-16 based on the finding of unfair
and deceptive trade practices. Plaintiffs do
not cite to any evidence that Defendants
waived this issue by participating in the
arbitration of it, and a review of the
arbitration proceedings and the filings in
this matter reveal that Defendants did
challenge the authority of the arbitration
panel to deal with the issue of treble damages
at the hearing on that issue.
6. The arbitration panel did not have
the authority pursuant to Section 16.19(a) of
the parties' Arbitration Agreement and Rules
R-41 and R-4 of the Wireless Industry
Arbitration Rules to award attorneys' fees to
Plaintiffs pursuant to N.C. Gen. Stat. § 75-
7. While as a preliminary matter the
arbitration panel did not have the authority
noted in CONCLUSION OF LAW # 6 to award
attorneys' fees pursuant to the agreement,
Defendants waived the right to contest the
authority of the arbitration panel to address
this matter by fully arguing the attorneys'
fees issue before the arbitration panel
without contending that the arbitrators lacked
authority to decide that issue and withoutpreserving that argument for further judicial
review. As such, Defendants have waived the
right to challenge the award of attorneys'
fees on judicial review of the award.
Based on these conclusions, the trial court modified the
arbitrators' award to provide for an award to Cellular Plus in the
amount of $962,500.00 in actual damages. The court declined to
alter the award of attorneys' fees. The trial court subsequently
denied Cellular Plus' motion pursuant to Rule 59, asking the court
to reinstate the treble damages award based on a 7 April 2003
decision of the United States Supreme Court, PacifiCare Health
Sys., Inc. v. Book, 538 U.S. 401, 155 L. Ed. 2d 578, 123 S. Ct.
On 30 April 2003, Cellular Plus filed a notice of appeal from
the portion of the trial court's order vacating the arbitrators'
award of treble damages. On 16 May 2003, Alltel filed its notice
of cross-appeal from the portion of the order confirming the
arbitrators' award of attorneys' fees. We address Cellular Plus'
appeal and Alltel's cross-appeal in turn.
Since this appeal arises from a decision on a motion to
confirm an arbitration award, we first note "that a strong policy
supports upholding arbitration awards." Cyclone Roofing Co. v.
David M. LaFave Co., 312 N.C. 224, 234, 321 S.E.2d 872, 879 (1984).
As our Supreme Court has stressed:
"There is no right of appeal and the Court has
no power to revise the decisions of 'judges
who are of the parties' own choosing.' An
award is intended to settle the matter incontroversy, and thus save the expense of
litigation. If a mistake be a sufficient
ground for setting aside an award, it opens
the door for coming into court in almost every
case; for in nine cases out of ten some
mistake either of law or fact may be suggested
by the dissatisfied party. Thus . . .
arbitration instead of ending would tend to
Id. at 236, 321 S.E.2d at 880 (quoting Carolina-Virginia Fashion
Exhibitors, Inc. v. Gunter, 41 N.C. App. 407, 414-15, 255 S.E.2d
414, 419-20 (1979)).
 As the trial court recognized, this case presents a
preliminary question: Does the Federal Arbitration Act ("FAA") or
does the North Carolina Uniform Arbitration Act govern the issues
on this appeal? This question cannot be bypassed as the FAA
preempts conflicting state law, including state law addressing the
role of courts in reviewing arbitration awards. Allied-Bruce
Terminix Cos. v. Dobson
, 513 U.S. 265, 272, 130 L. Ed. 2d 753, 763,
115 S. Ct. 834, 838 (1995). If the FAA requires that a particular
question be determined by the arbitrators, while state law would
allow a court to address the issue, the FAA controls. We must,
therefore, first determine whether the parties' arbitration
agreement falls under the FAA.
The FAA governs any "contract evidencing a transaction
involving commerce." 9 U.S.C. § 2 (2000). Under Allied-Bruce
FAA's term "involving commerce" is considered the functional
equivalent of "affecting commerce." Allied-Bruce,
513 U.S. at 277,
130 L. Ed. 2d at 766, 115 S. Ct. at 841. It is broader than theterm "in commerce"
and "signals an intent to exercise Congress'
commerce power to the full." Id.
The trial court concluded below
that the FAA governs in this case. While the parties hedge their
bets on appeal, they have not directly challenged the trial court's
determination. In addition, we see no basis in the record for any
conclusion other than that the contract at issue evidences a
transaction involving commerce. The FAA, therefore, controls. As
a result, this Court is bound, in deciding this appeal, by
decisions of the United States Supreme Court construing and
applying the FAA.
The FAA allows a court to vacate an award "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)(4) (2000), amended by
Act of May 7, 2002, 9 U.S.C.A. § 10(a)(4) (West Supp. 2004).
Defendants asked the trial court to vacate the arbitration award in
this case on the grounds that the arbitration panel did not have
the power, under the parties' contract, to award treble damages.
Defendants rely on the provision in their arbitration agreement
stating: "The arbitrator shall have no authority to award punitive
damages or any other damages not measured by the prevailing party's
actual damages, nor shall any party seek punitive damages relating
to any matter arising out of this contract in any other forum."
In Mastrobuono v. Shearson Lehman Hutton, Inc.
, 514 U.S. 52,
131 L. Ed. 2d 76, 115 S. Ct. 1212 (1995), the United States Supreme
Court addressed an issue almost identical to the one presentedhere. The defendant in Mastrobuono
had moved to vacate an
arbitration award that included punitive damages, arguing that the
arbitrators had, in awarding punitive damages, exceeded their power
under the arbitration agreement. The Supreme Court characterized
the question presented as "whether the arbitrators' award is
consistent with the central purpose of the [FAA] to ensure 'that
private agreements to arbitrate are enforced according to their
at 53-54, 131 L. Ed. 2d at 82, 115 S. Ct. at 1214
(quoting Volt Information Sciences, Inc. v. Board of Trustees of
Leland Stanford Junior Univ.
, 489 U.S. 468, 479, 103 L. Ed. 2d 488,
500, 109 S. Ct. 1248, 1255-56 (1989)).
The Supreme Court first observed that the parties' contract
did not expressly preclude punitive damages. Id.
at 59, 131 L. Ed.
2d at 85, 115 S. Ct. at 1217. The defendant pointed to two
provisions that it contended, when read together, necessarily led
to the conclusion that the arbitrators were barred from awarding
punitive damages. The Supreme Court, however, concluded that those
provisions were not "an unequivocal exclusion of punitive damages
at 60, 131 L. Ed. 2d at 86, 115 S. Ct. at 1217, but
rather rendered the arbitration agreement ambiguous, id.
at 62, 131
L. Ed. 2d at 87, 115 S. Ct. at 1218. The Court then applied the
principles that (1) ambiguities as to the scope of an arbitration
clause must be resolved in favor of arbitration, and (2) a court
should construe ambiguous language in a contract against the
interest of the party that drafted it. Based on this analysis, it
held that "[t]he arbitral award should have been enforced as withinthe scope of the contract." Id.
at 64, 131 L. Ed. 2d at 88, 115 S.
Ct. at 1219. The Court accordingly reversed the decision vacating
the award. Id.
Courts have since interpreted Mastrobuono
as holding "that
arbitrators presumptively enjoy the power to award punitive damages
unless . . . the arbitration contract unequivocally excludes
punitive damages claims." See, e.g., Gateway Tech., Inc. v. MCI
, 64 F.3d 993, 999 (5th Cir. 1995) (emphasis added).
, an arbitrator does not exceed his powers if (1)
state law allows the remedy for the specified cause of action, and
(2) the arbitration contract does not unequivocally preclude it.
at 998. When these two requirements are met, the award falls
"under the arbitrator's broad discretion to decide damages and
fashion remedial relief." Id.
There is no dispute in this case that North Carolina law
allows an award of treble damages in an unfair and deceptive trade
practices case. N.C. Gen. Stat. § 75-16 (2003). Under
we must next determine whether the parties'
arbitration agreement unequivocally precludes an award of treble
Although the words "treble damages" do not appear in the
parties' agreement, defendants contend that the phrase "any other
damages not measured by the prevailing party's actual damages"
unambiguously refers to treble damages because, according to
defendants, it could not refer to anything else. Since there area host of damages remedies "not measured by the prevailing party's
actual damages," we disagree with defendants' contention.
Statutory remedies are the most prevalent type of such
damages. For example, the Copyright Act provides that "[t]he
copyright owner is entitled to recover the actual damages suffered
by him or her as a result of the infringement, and any profits of
that are attributable to the infringement and are not
taken into account in computing the actual damages." 17 U.S.C. §
504(b) (2000) (emphasis added). Alternatively, the statute
permits, upon the copyright owner's election, an award of statutory
damages "not less than $750 or more than $30,000 as the court
considers just" unless the court finds that the infringement was
committed willfully, in which case "the court in its discretion may
increase the award of statutory damages to a sum of not more than
$150,000." 17 U.S.C.
§ 504(c)(1) & (2) (2000). Neither the
infringer's profits nor the statutory damages are "damages measured
by the prevailing party's actual damages[.]" See also
15 U.S.C. §
1117(a) (2000) (authorizing award of both actual damages and the
Lanham Act violator's ill-gotten profits); 18 U.S.C. §
2520(c)(2)(A) & (B) (2000) (with respect to any entity's unlawful
interception, disclosure, or intentional use of a wire or
electronic communication, allowing a court to assess as damages the
greater of actual damages and "any profits made by the violator as
a result of the violation" or "statutory damages of whichever is
the greater of $100 a day for each day of violation or $10,000");
N.C. Gen. Stat. § 66-154(b) (2003) (emphasis added) (for violationof the North Carolina Trade Secrets Protection Act, allowing an
award "measured by the economic loss or the unjust enrichment
caused by misappropriation of a trade secret, whichever is
In addition to statutory remedies not measured by actual
damages, defendants have also overlooked restitutionary awards. As
this Court has explained:
"The restitution claim, on the other hand, is
not aimed at compensating the plaintiff, but
at forcing the defendant to disgorge benefits
that it would be unjust for him to keep." A
plaintiff may receive a windfall in some
cases, but this is acceptable in order to
avoid any unjust enrichment on the defendant's
part. The principle of restitution "is to
deprive the defendant of benefits that in
equity and good conscience he ought not to
keep . . . even though plaintiff may have
suffered no demonstrable losses."
Booher v. Frue
, 86 N.C. App. 390, 393-94, 358 S.E.2d 127, 129
(1987) (internal citations omitted; quoting D. Dobbs, Law of
, § 4.1, at 224 (1973)), aff'd per curiam,
321 N.C. 590,
364 S.E.2d 141 (1988). For example, damages awarded under a theory
of restitution may be measured by the increased value of the assets
unlawfully in the hands of the defendant or by the profits earned
by the defendant. 1 Dan B. Dobbs, Dobbs Law of Remedies
at 566-67 (2d ed. 1993). Neither of these types of damages are
measured by a plaintiff's actual damages.
Finally, defendants have also overlooked "presumed damages."
In a defamation per se
case, under appropriate circumstances (as
dictated by First Amendment considerations), some courts have held
a plaintiff may recover "presumed damages" without proof of actualdamages. Thus, in Brown & Williamson Tobacco Corp. v. Jacobson
827 F.2d 1119, 1142 (7th Cir. 1987), cert. denied,
485 U.S. 993, 99
L. Ed. 2d 512, 108 S. Ct. 1302 (1988), the Seventh Circuit held
that a tobacco company was entitled to $1,000,000.00 in presumed
damages despite its inability to prove that it had suffered any
actual loss or other actual damages.
(See footnote 1)
This summary of available "damages" remedies demonstrates a
wide variety of damages awards that would fall within the scope of
the disputed phrase. The question remains, however, whether
"treble damages" also unequivocally falls within the scope of the
Plaintiffs argue that because treble damages are a multiple of
actual damages, they are "measured by" actual damages. This is a
reasonable construction. Courts have routinely referred to treble
damages as being measured by actual damages. See, e.g.
, Square D
Co. v. Niagara Frontier Tariff Bureau, Inc.
, 476 U.S. 409, 415, 90
L. Ed. 2d 413, 420, 106 S. Ct. 1922, 1926 (1986) ("The shipper
claimed treble damages measured by the difference between the rates
set pursuant to agreement and those that had previously been in
effect."); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.
, 429 U.S.
477, 485-86, 50 L. Ed. 2d 701, 710, 97 S. Ct. 690, 696 (1977) ("Itnevertheless is true that the treble-damages provision, which . .
. measures the awards by a multiple of the injury actually proved,
is designed primarily as a remedy."); Moore v. Radian Group, Inc.
233 F. Supp. 2d 819, 826 (E.D. Tex. 2002) ("[A] private plaintiff
would have standing to sue for treble damages measured by that
portion of a PMI payment that is excessive . . . ."), aff'd
Fed. Appx. 659 (5th Cir. 2003); In re Chlorine & Caustic Soda
, 116 F.R.D. 622, 626 (E.D. Pa. 1987)
("Plaintiffs seek to recover treble damages from defendants
measured by the alleged overcharge resulting from defendants'
conspiracy to fix prices."). Plaintiffs also reasonably suggest
that if the parties truly had intended to limit damages only to
actual damages, the contract would simply say "the arbitrator shall
have no authority to award damages in excess of actual damages."
Given the unusual phrasing of the provision and the fact that
courts have previously described "treble damages" as being measured
by actual damages, we hold both that plaintiff's interpretation is
plausible and that, in any event, there is no unequivocal exclusion
of treble damages, as required by Mastrobuono
This discussion is not meant to conclude that plaintiff's
construction of the disputed phrase is correct. It is simply a
reasonable one, as is defendants'. When a contract is "'fairly and
reasonably susceptible to either of the constructions asserted by
the parties[,]'" then it is deemed ambiguous. Barrett Kays &
Assocs., P.A. v. Colonial Bldg. Co.
, 129 N.C. App. 525, 528, 500
S.E.2d 108, 111 (1998) (quoting Bicket v. McLean Sec., Inc.
, 124N.C. App. 548, 553, 478 S.E.2d 518, 521 (1996)). If ambiguous,
then "'interpretation of the contract is for the jury.'" Id.
(quoting Int'l Paper Co. v. Corporex Constructors, Inc.
, 96 N.C.
App. 312, 317, 385 S.E.2d 553, 556 (1989). Here, it is necessary
to determine whether the question should be resolved by the
arbitrators, who were the triers-of-fact, or by the courts.
suggests that a conclusion that the contract term
is ambiguous should lead to the holding that the arbitrators did
not exceed their powers. More recent cases by the United States
Supreme Court support this view of Mastrobuono
by holding that the
interpretation of ambiguous contract terms not involving a gateway
question of arbitrability is a question for the arbitrators unless
the arbitration agreement provides otherwise. In PacifiCare Health
Sys., Inc. v. Book
, 538 U.S. 401, 155 L. Ed. 2d 578, 123 S. Ct.
1531 (2003), plaintiffs argued that they could not be compelled to
arbitrate claims arising under the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. § 1961
(2000), because their
arbitration agreement with the defendant prohibited an arbitrator
from awarding treble damages. After observing that the terms of
the contract _ precluding an award of "punitive damages" or "extra
contractual damages of any kind" _ were ambiguous when applied to
treble damages, the Court held that the question "whether the
remedial limitations at issue here prohibit an award of RICO treble
damages is not a question of arbitrability." PacifiCare
, 538 U.S.
at 407 n.2, 155 L. Ed. 2d at 584 n.2, 123 S. Ct. at 1536 n.2. The
Court, therefore, declined to address the issue when it had notfirst been considered by the arbitrator. Id.
at 407, 155 L. Ed. 2d
at 583, 123 S. Ct. at 1536.
was followed by Green Tree Fin. Corp. v. Bazzle
539 U.S. 444, 156 L. Ed. 2d 414, 123 S. Ct. 2402 (2003). In Green
, the Court was presented with the question whether an
arbitration agreement barred class arbitration. The Court held
that it could not resolve the question "because it is a matter for
the arbitrator to decide." Id.
at 447, 156 L. Ed. 2d at 419, 123
S. Ct. at 2405. The Court explained:
Under the terms of the parties' contracts, the
question _ whether the agreement forbids class
arbitration _ is for the arbitrator to decide.
The parties agreed to submit to the arbitrator
disputes, claims, or controversies
arising from or relating to this contract or
the relationships which result from this
contract." And the dispute about what the
arbitration contract in each case means (i.e.
whether it forbids the use of class
arbitration procedures) is a dispute "relating
to this contract" and the resulting
"relationships." Hence the parties seem to
have agreed that an arbitrator, not a judge,
would answer the relevant question.
at 451-52, 156 L. Ed. 2d at 422, 123 S. Ct. at 2407 (internal
citations omitted). The Court acknowledged, however, that
questions of arbitrability _ such as the validity of an arbitration
clause or its applicability to the underlying dispute between the
parties _ were questions to be decided by the courts. Id.
156 L. Ed. 2d at 422-23, 123 S. Ct. at 2407.
In this case, as in Green Tree
, the parties agreed broadly
that "[a]ny controversy, dispute, or claim arising out of [or]
relating to this contract, the relations between ALLTEL and Agent,or the Service provided by ALLTEL . . . shall be settled by
arbitration . . . ." The interpretation of the provision
precluding an award of "damages not measured by the prevailing
party's actual damages" is a dispute "relating to this contract"
and, by the terms of the arbitration agreement, must be "settled by
arbitration." The issue does not fall into the narrow exception
recognized in Green Tree
has already held that
interpretation of a remedies provision "is not a question of
, 538 U.S. at 407 n.2, 155 L. Ed. 2d at
584 n.2, 123 S. Ct. at 1536 n.2.
Defendants have argued that Green Tree
is not binding because
it is a four-judge plurality opinion. We are, however, still bound
to follow Green Tree
, as the Supreme Court indicated in Hughes
Elecs. Corp. v. Garcia
, __ U.S. __, 157 L. Ed. 2d 12, 124 S. Ct.
102 (2003) ("Judgment vacated, and case remanded to the Court of
Appeal of California, . . ., for further consideration in light of
Green Tree Fin. Corp. v. Bazzle
, 539 U.S. , 156 L. Ed. 2d 414,
123 S. Ct. 2402 (2003)."). Moreover, the federal courts have found
the plurality opinion to be the controlling precedent since it
represents the position taken by the justices who concurred on the
narrowest grounds. See, e.g.
, Pedcor Mgmt. Co. v. Nations
Personnel of Texas, Inc.
, 343 F.3d 355, 358-59 (5th Cir. 2003).
The Fifth Circuit explained, id.
at 358, that Justice Stevens'
concurrence was not the narrowest ground and that Justice Stevens
had, in any event, stated that "arguably the interpretation of the
parties' agreement should have been made in the first instance bythe arbitrator, rather than the court," and that "Justice Breyer's
opinion expresses a view of the case close to my own." Green Tree,
539 U.S. at 455, 156 L. Ed. 2d at 424, 123 S. Ct. at 2408-09.
Additionally, defendants contend that Green Tree
apply to appeals from arbitration awards, but rather is only
applicable in the context of a motion to compel arbitration.
Defendants have, however, overlooked the fact that Green Tree
an appeal from the South Carolina Supreme Court's affirmance in two
separate cases of a trial court's confirmation of an arbitration
award. In one of the cases, the trial court had certified a class
action and then compelled arbitration resulting in a class award,
while in the second case, the question of class certification was
initially decided by the arbitrator. On appeal, the South Carolina
Supreme Court construed the arbitration agreements to authorize
class arbitration. The United States Supreme Court vacated the
judgments because, as explained above, the decision regarding class
certification was a question for the arbitrator. Even though a
class had been certified in one case by the arbitrator, the Court
ruled that because the arbitrator's determination followed the
earlier trial court decision,
there is at least a strong likelihood . . .
that the arbitrator's decision reflected a
court's interpretation of the contracts rather
than an arbitrator's interpretation. That
being so, we remand the case so that the
arbitrator may decide the question of contract
interpretation _ thereby enforcing the
parties' arbitration agreements according to
at 454, 156 L. Ed. 2d at 423-24, 123 S. Ct. at 2408. In other
words, if the arbitrator had made his decision completely
independent of the courts, as here, the award would have been
confirmed. The procedural posture of this case does not materially
differ from that of Green Tree
Even if Green Tree
is disregarded, Carteret County v. United
Contractors of Kinston, Inc.
, 120 N.C. App. 336, 347, 462 S.E.2d
816, 823 (1995), compels the conclusion that our courts have no
authority to vacate the arbitration award of treble damages. In
, plaintiff asked the trial court to vacate an
arbitration award on the grounds that the parties' contract
prohibited the arbitrator's award of increased overhead expenses.
In rejecting this argument, this Court reasoned:
In this case, the arbitration agreement
reads: "Any controversy or Claim arising out
of or related to the Contract, or the breach
thereof, shall be settled by arbitration . . .
." . . . Here, whether defendant would be
entitled to increased overhead expenses due to
the extension of the contract completion date
is an issue arising out of the contract and
falls within the scope of the arbitration
agreement. Since the arbitrators had the
power to rule on the issue, even if they
erroneously considered evidence of increased
overhead expenses it would not be ground to
vacate the award.
Although this decision construes N.C. Gen. Stat. § 1-
(See footnote 2)
and not the FAA, it is consistent with Green
We hold that the parties' arbitration agreement with its
remedial limitation is ambiguous and that the arbitrators,
therefore, had the authority to construe that provision. Neither
the trial court nor this Court may vacate the arbitration award
based on a disagreement with the arbitrators about the proper
construction of the contract's term. Accordingly, we hold that the
trial court erred in modifying the arbitrators' award to eliminate
the award of treble damages.
 Alltel cross-appeals from the portion of the trial court's
order confirming the arbitrators' award to Cellular Plus of
$352,640.00 in attorneys' fees. As noted above, although the trial
court concluded that the arbitration panel did not have the
authority under the agreement to award attorneys' fees, it ruled
that Alltel had waived the right to contest the authority of the
arbitration panel by failing to argue to the arbitrators that they
lacked authority to award fees.
Because we agree with the trial
court's determination that Alltel waived its right to contest thearbitration panel's authority to award attorneys' fees, we need not
decide whether an award of attorneys' fees was permitted by the
Our review of the record reveals that at arbitration, Alltel
opposed Cellular Plus' application for attorneys' fees solely on
the basis that such an award was not warranted under N.C. Gen.
Stat. § 75-16.1 (2003). In the arbitration proceeding, Alltel
never raised the issue whether the panel lacked authority to award
fees and never objected to the panel's consideration of such an
award, despite several clear opportunities to do so. First, one of
the arbitrators stated at the conclusion of the evidence that the
panel intended to consider awarding attorneys' fees. Second, the
arbitrators' Posthearing Order indicated that they "may deem it
appropriate to make an award of attorneys fees[.]"
arbitrators, in their interim award, instructed the parties to
submit affidavits "with respect to (1) the reasonableness of the
amount of the attorneys' fees . . . and (2) whether there was an
unwarranted refusal by [Alltel] to fully resolve the matter[.]"
This interim award stated that the arbitrators would consider these
affidavits, and "[p]ursuant to the consent and stipulation
parties . . . will consider and make a decision and an award
[regarding attorneys' fees] . . . based upon said affidavits."
(Emphasis added) Significantly, at the conclusion of its
memorandum in opposition to Cellular Plus' application for
attorneys' fees, Alltel implored the arbitration panel to "exerciseits discretion
to award [Cellular Plus] no attorneys' fees under
N.C.G.S. § 75-1.1." (Emphasis added)
Defendants rely upon Nucor Corp. v. General Bearing Corp
N.C. 148, 423 S.E.2d 747 (1992). In Nucor
, our Supreme Court held
that "[t]he specific, uncomplicated language of N.C.G.S. § 1-567.11
clearly reflects the legislative intent that attorneys' fees are
not to be awarded for work performed in arbitration proceedings,
unless the parties specifically agree to and provide for such fees
in the arbitration agreement." Id.
at 153-54, 423 S.E.2d at 750.
(See footnote 3)
Defendants argue that since the arbitration agreement at issue in
this case did not specifically permit attorneys' fees, Nucor
required that the trial court vacate the arbitrators' award of
did not address the situation when, as here, both
parties have consented to consideration of the attorneys' fee issue
by the arbitration panel and no party lodged any objection to the
panel's awarding fees. Indeed, to agree with defendants' argument,
we would have to disregard the policies upon which Nucor
as well as established North Carolina authority barring a party
from raising objections in confirmation proceedings that could have
been, but were not, raised prior to or during the arbitration
proceeding. In Nucor
, the Supreme Court reached its holding in reliance
upon "important policy considerations," including promotion of the
purpose of arbitration "to provide and encourage an expedited,
efficient, relatively uncomplicated, alternative means of dispute
resolution, with limited judicial intervention or participation,
and without the primary expense of litigation _ attorneys' fees."
at 154, 423 S.E.2d at 750. As support, the Court cited Cyclone
, discussed above, McNeal v. Black
, 61 N.C. App. 305, 300
S.E.2d 575 (1983), and Thomas v. Howard
, 51 N.C. App. 350, 276
S.E.2d 743 (1981).
, this Court held that a party's "participation in
the arbitration without making any protest or demand for jury trial
. . . waived any right to object to the award later on these
grounds." 61 N.C. App. at 307, 300 S.E.2d at 577. The Court noted
that "[a] party may waive a constitutional as well as a statutory
benefit by express consent, by failure to assert it in apt time, or
by conduct inconsistent with a purpose to insist upon it." Id.
Based on these principles and the purpose of arbitration to reach
a final settlement of disputed matters without litigation, the
Court held that a party "cannot be allowed to participate in
arbitration, raising no objections, and then refuse to be bound by
an adverse award. This type of conduct would serve to defeat the
purpose of arbitration." Id.
at 308, 300 S.E.2d at 577. In
, this Court held, applying identical reasoning, that a party
could not seek to vacate an arbitration award based on the bias of
an arbitrator if the party, knowing of the grounds fordisqualification, did not object at the arbitration proceeding. 51
N.C. App. at 353-54, 276 S.E.2d at 746.
Likewise, in Andrews v. Jordan
, 205 N.C. 618, 172 S.E. 319
(1934), the Supreme Court held that the defendants waived any
objection to the arbitrators' failure to comply with statutorily
prescribed deadlines. The Court noted that defendants were
notified of the hearing dates, made no objection and, indeed,
agreed to those dates. Id.
at 624, 172 S.E. at 322. In concluding
that the defendants had waived any right to attack the award, the
Court held "'if the parties participate in the arbitral hearing
without objection to the point that a time limitation has expired
it will be held generally that they have thereby waived the time
(quoting Sturges, Commercial Arbitration and
, at 524-25 (1930)).
Here, there is no question that defendants could have argued
to the arbitrators that the parties' agreement together with Nucor
precluded any award of attorneys' fees. Instead of doing so, they
litigated plaintiff's entitlement to fees. We can see no
meaningful distinction between a failure to object to an award of
attorneys' fees and a failure to object to arbitration generally,
to the timeliness of the hearing dates, or to the bias of an
arbitrator. If, as our courts have held, a failure to object
during arbitration regarding these significant matters leads to
waiver, then defendants here necessarily waived any right to seek
vacation of the attorneys' fee award. See also McDaniel v. Bear
Stearns & Co.
, 196 F. Supp. 2d 343, 364-65 (S.D.N.Y. 2002)(internal citations omitted) ("Courts have held that, consistent
with [N.Y. C.P.L.R. § 7513], arbitrators may
award attorneys' fees
if either (1) the parties' agreement to arbitrate so provides, or
(2) the parties acquiesce to the payment of attorneys' fees . . .
. Although [defendant] argued that its actions did not warrant a
sanction, it never raised a legal objection
to the award of
attorneys' fees. Because [defendant] never maintained, as it does
here, that attorneys' fees are unlawful, it implicitly conceded
that it was within the Panel's authority to award such fees.").
(See footnote 4)
Cf. Wood v. Weldon
, 160 N.C. App. 697, 699, 586 S.E.2d 801, 803
(noting that it is well settled in this jurisdiction that
any contention not raised and argued in the trial court may not be
raised and argued for the first time in an appellate court), disc.
358 N.C. 550, __ S.E.2d __, 2004 NC LEXIS 701 (June
24, 2004). We therefore hold that the trial court properly
confirmed the arbitrators' award of attorneys' fees.
Reversed in part and affirmed in part.
Judges BRYANT and ELMORE concur.