1. Arbitration and Mediation_validity of clause_evidence consideration
Arbitration was not erroneously compelled where defendants argued that they did not
have the opportunity to present evidence of the invalidity of the arbitration clause, but the trial
court expressly noted that it considered pleadings, evidence, and the contentions of counsel,
defendants offered no suggestion of the evidence they were precluded from presenting, defendants
make no argument about why the evidence before the court was not sufficient, and there was no
infirmity in the evidence that would preclude the court from summarily determining that the
contract had not been induced by fraud and the arbitration clause was enforceable.
2. Arbitration and Mediation_contract clause_validity
An arbitration clause was clear, unambiguous, and valid.
3. Appeal and Error_citation of authority_required
Arguments concerning the validity of an arbitration clause were unavailing where
defendants failed to support any of their theories with citation to authority. Moreover,
defendants' claims concerning the impartiality or suitability of the arbitrators lacked merit.
4. Arbitration and Mediation_multiple arbitrator documents_document for judicial
action
The proper document upon which further judicial action should be taken in a disputed
arbitration was the “arbitration award,” one of several documents signed by the arbitrators and the
case was remanded because the trial court did not confirm that award.
5. Arbitration and Mediation_majority vote of arbitrators_sufficient under agreement
In a disputed arbitration remanded on other grounds, a majority vote of the three
arbitrators should have been sufficient under this arbitration clause.
6. Arbitration and Mediation_damages_multiple arbitrator documents_premises
In an action remanded on other grounds, assignments of error concerning treble damages
in an arbitration award depended upon an arbitrator's decision which was supplanted by an
arbitrator's award. Moreover, defendant's assertion involving the amount of the award was based
on a premise about the amount of its damages, which was for the arbitration panel to decide.
7. Arbitration and Mediation_attorney fees_refused_no abuse of discretion
In an action remanded on other grounds, there was no abuse of discretion by the trial
court in refusing to award defendants attorney fees in a disputed arbitration, assuming that
attorney fees were otherwise available to defendants, where it was defendants who resisted
arbitration.
Richard L. Stanley for plaintiff.
Julie E.D. Shepard for defendants.
CALABRIA, Judge.
Creekside Construction Company (“plaintiff”) and John and
Carla Dowler (“defendants”) appeal from the entry of judgment
confirming an arbitration award. We affirm in part and reverse and
remand in part.
Defendants are the owners of a condominium unit located in
Carteret County. Defendants sought bids concerning desired
renovation work to the condominium unit. Plaintiff's initial
estimate for the work to be performed was approximately $35,000.00
but did not include estimates for plumbing fixtures. Subsequent
meetings between plaintiff and defendants resulted in changes to
the work to be performed, and the parties agreed that the contract
work would be done “on a cost plus 15%” basis. Based on the scope
of work at that time, the estimate for the work to be performed was
in the low to mid-$50,000.00 range. On 4 September 2002, Barry E.
Snipes (“Snipes”), as President on behalf of plaintiff, executed a
construction contract (“contract”) with defendants for renovations
of defendants' condominium unit in accordance with certain
specifications. In addition, the contract contained the following
arbitration clause: 14. Arbitration. Any disagreements arising
out of this Contract or the application of any
provisions hereunder shall be submitted to
binding arbitration by three arbitrators who
shall be licensed general contractors in the
State of North Carolina. Owner and Contractor
shall each select one, and the two arbitrators
shall then agree as to the third arbitrator.
Any decision reached by a majority vote of the
three shall be binding on the parties hereto
and shall have the weight as a legal decision
on any difference arising herein. Either
party may invoke the process of arbitration by
giving the other party notice in writing that
the arbitration procedures herein are being
instituted. Thereafter each party shall have
five working days to select his arbitrator,
and the two so selected shall have a period of
five working days thereafter in which to
select the third arbitrator. The three
arbitrators shall then have a period of
fourteen days thereafter in which to
investigate this matter and to render their
decision concerning any disagreements. The
cost of the arbitration shall be borne equally
between Owner and Contractor.
As renovation work progressed, plaintiff alleged defendants
continued to make changes to the scope of work to be performed and
plaintiff complied with the requested changes, all of which fell
under the payment provisions in the contractual agreement of cost
plus fifteen percent. At the completion of the renovation, the
total billing for the project came to $92,848.03. Defendants paid
$38,228.04 but refused to pay the balance. Defendants and
plaintiff initially agreed to arbitrate the matter, and plaintiff
appointed an arbitrator. Defendants, thereafter, refused to
appoint an arbitrator, and plaintiff filed a claim of lien as well
as an action to foreclose the lien. In addition, plaintiff's
complaint contained a cause of action for breach of contract and a
request for an order compelling arbitration. Finally, plaintiffchanged the locks on the condominium unit to prevent defendants'
access.
Defendants answered the complaint and alleged several
counterclaims, including trespass, fraud, and unfair and deceptive
trade practices. Defendants asserted in their answer that the
arbitration clause was unenforceable and that plaintiff failed to
properly assert it. At the 17 November 2003 hearing, the trial
court heard arguments from the parties, received documents, briefs,
affidavits, and considered the pleadings. Defendants argued that
the contract containing the arbitration clause had been procured by
fraud and the trial court had to conduct a jury trial on the
factual issues concerning fraud before it could proceed to compel
arbitration.
On 15 December 2003, the trial court entered findings of fact
and conclusions of law in an order compelling arbitration. The
matter went before a panel of three arbitrators chosen in
accordance with the contract. In a document signed by all three
arbitrators and dated 4 March 2004, plaintiff was awarded “the
total sum of $67330.00 . . . less $38228.04 already paid by
[defendants] for a balance due of $29101.96[.]” An undated
document signed by all three arbitrators on 5 March 2004 and
entitled “Arbitrator's Decision,” listed the following: (1)
plaintiff did not commit fraud, did commit an unfair trade
practice, and did trespass; and (2) both plaintiff and defendants
breached the contract. For each wrongdoing, the arbitrators found
“nominal or actual damages” in the amount of $1.00. Thus, thisdocument purportedly set forth net “nominal or actual” damages to
defendants in the amount of $2.00. Yet another document, signed by
the three arbitrators and indicating a date of 18 March 2004 was
entitled “Arbitration Award.” This document contained the
arbitration panel's request that the trial court “confirm this
award and adopt the same as the judgment of the Court.”
Recapitulating the reasoning contained in the document of 4 March,
the “arbitration award” awarded plaintiff $29,101.96 and noted that
the award “is over and above all other issues and nominal damages
which have been considered or awarded by the panel.” The
“arbitration award” stated nothing with respect to the
“arbitrator's decision” that specified the panel's findings with
respect to each wrongdoing by the parties and that awarded damages
of $1.00 for each wrongdoing the panel found to have occurred. In
addition, the “arbitrator's award” contained additional language
not in the 4 March 2004 document as follows:
[T]his award shall draw interest at the legal
rate as allowed by North Carolina law, and the
judgment and award as confirmed by the Court
should order the sale of the property owned by
the Defendants under the provisions of Chapter
44A of the North Carolina General Statutes in
order to satisfy Plaintiff's lien and this
award.
On 12 March 2004, defendants filed a motion for treble damages
and an award of attorney fees based on the arbitral determination
of the unfair trade practice. Defendants argued that the
difference between the amount claimed by plaintiff to be owed under
the contract (approximately $96,000.00) and the arbitral award to
plaintiff ($67,330.00) constituted damages awarded by the arbitralpanel to defendants on their counterclaims. At the hearing,
plaintiff asked the trial court to confirm the “arbitration award”
document. With respect to the three documents produced by the
arbitration panel, the trial court disregarded the “arbitrator's
decision” and gave it no effect. The trial court further noted
that the “arbitration award” was “not part of the order that is in
the file” and that it was “not part of their order.”
In an order entered 5 April 2004, the trial court confirmed
the monetary award of $67,330.00, which accorded with both the 4
March 2004 document and the monetary award in the “arbitration
award.” The trial court denied defendants' motion to treble
damages and award attorney fees. From that order, defendants
appeal, asserting the trial court erred in (1) compelling
arbitration due to the lack of an opportunity to present evidence
concerning the invalidity of the arbitration clause and (2)
confirming the arbitration award. Plaintiff appeals the trial
court's failure to provide that the real property should be sold
under Chapter 44A of the North Carolina General Statutes to enforce
plaintiff's lien as set forth in the “arbitration award.”
I. Order Compelling Arbitration
[1] In their first assignment of error, defendants assert the
trial court erred in compelling arbitration because they were
deprived of an opportunity to present evidence of the invalidity of
the arbitration clause. Specifically, defendants argue the
contract was induced by fraud concerning the disparity between the
original bid on the renovation project and the final total cost ofthe project. At the hearing, defendants argued they were entitled
to a jury trial on the issue of whether the arbitration clause was
enforceable on the grounds that the contract was induced by fraud.
On appeal, defendants have abandoned that argument, and we note
that such argument is supported by neither statutory nor case law.
See N.C. Gen. Stat. § 1-567.3 (2001) (emphasis added) (providing
that “if the opposing party denies the existence of the agreement
to arbitrate, the court shall proceed summarily to the
determination of the issue . . .”)
(See footnote 1)
; Barnhouse v. American Express
Fin. Advisors, Inc., 151 N.C. App. 507, 508, 566 S.E.2d 130, 131-32
(2002) (observing that “the court may . . . properly resolve
preliminary issues surrounding the agreement, such as whether or
not the agreement was induced by fraud”).
Instead, defendants argue the trial court deprived them of the
opportunity to present evidence of the invalidity of the
arbitration clause. However, the trial court expressly noted in
its order compelling arbitration that it reviewed and considered
“evidence and documents presented by the parties, the pleadings,
briefs, and affidavits [as well as] the arguments and contentions
of counsel[.]” After considering such evidence, the trial court
entered an order compelling arbitration supported by findings of
fact and conclusions of law, none of which defendants have assigned
as error on appeal. Moreover, defendants offer no suggestion as towhat specific evidence they were precluded from offering at trial
in their brief to this Court and make no argument why the evidence
before the trial court was not sufficient to allow the trial court
to summarily determine the issue of whether the contract containing
the arbitration clause was induced by fraud and, therefore,
unenforceable. Furthermore, after reviewing the record and the
transcript of the proceeding, we find no infirmity in the evidence
before the trial court that would preclude it from summarily
determining that the contract had not been induced by fraud and the
arbitration clause was enforceable. This assignment of error is
overruled.
[2] By their next assignment of error, defendants contend that
the “rudimentary and ambiguous arbitration clause” failed to
provide “guidance or procedures for a hearing, the taking of
evidence, or a right to be heard.” The public policy of North
Carolina strongly supports the settlement of disputes via
arbitration. Johnston County v. R. N. Rouse & Co., 331 N.C. 88,
91, 414 S.E.2d 30, 32 (1992). Moreover, as plaintiff correctly
points out, the arbitration clause in the instant case is
sufficiently similar to that considered in Red Springs Presbyterian
Church v. Terminix Co., 119 N.C. App. 299, 300-01, 458 S.E.2d 270,
272 (1995) to warrant the same result.
(See footnote 2)
In Red Springs, this Court considered the following
arbitration clause:
It is agreed between Purchaser and Terminix
that any controversy or dispute arising
between them relating to: (1) any treatment or
service rendered by or allegedly required to
be rendered by Terminix, or (2) any damage or
injury to person or to property, whether
direct, incidental, or consequential,
allegedly caused by Terminix, or (3) the
enforcement of or any claim under the
'GUARANTY AND EXCLUSIONS' provisions hereof,
shall be settled and resolved exclusively by
arbitration. It is further agreed the said
arbitration shall be controlled by and
conducted under the provisions of the North
Carolina Uniform Arbitration Act, North
Carolina General Statutes 1-567.1 through
1-567.20, as said statutes may be amended or
replaced from time to time, and said North
Carolina statutes are hereby incorporated into
this Contract by reference as if fully set
forth herein. It is further agreed that there
shall be a total of three (3) arbitrators, one
to be chosen by Purchaser, one by Terminix,
and a third by the first two arbitrators. It
is also agreed that the arbitrators shall
render their written award or decision within
thirty days after the conclusion of the
arbitration hearing.
Id., 119 N.C. App. at 300-01, 458 S.E.2d at 272. This Court went
on to state that the “language [of the arbitration clause] is clear
and unambiguous . . . [and] a valid agreement to arbitrate exists.”
Id., 119 N.C. App. at 302, 458 S.E.2d at 272-73. Likewise, in the
instant case, we find the language to be clear and unambiguous.
[3] We also find unavailing defendants' remaining arguments,
including, inter alia, inherent bias, public policy, and commentsby the trial court after arbitration was complete regarding the
trial court's concern that the arbitrators might not have
sufficient knowledge of the law of unfair and deceptive trade
practices to properly determine the issue. Dispositively,
defendants have failed to support any of these various theories
with citation to authority in violation of our appellate rules.
N.C. R. App. P. 28(b)(6) (2005) (providing that assignments of
error “in support of which no reason or argument is stated or
authority cited[] will be taken as abandoned”).
We note in passing that these claims lack merit. As noted
supra, North Carolina's public policy strongly favors arbitration.
Defendants' contention regarding appearance of impartiality starkly
contravenes this Court's holding in Carteret County v. United
Contractors of Kinston, 120 N.C. App. 336, 343, 462 S.E.2d 816, 821
(1995) (rejecting outright arguments of “inherent” or “fundamental”
unfairness against an arbitration panel consisting solely of
contractors without direct ties to a party construction company).
(See footnote 3)
Finally, the language by the trial court reflecting its concerns as
to the suitability of the arbitrators in the instant case is
immaterial. This Court has previously held that an unfair and
deceptive practices claim pursuant to N.C. Gen. Stat. § 75-1.1
(2003) is proper for arbitration. Rodgers Builders v. McQueen, 76N.C. App. 16, 23, 331 S.E.2d 726, 731 (1985). This assignment of
error is overruled.
II. Order Compelling Arbitration
[4] The remaining issues concern the trial court's judgment
purporting to confirm the award of the arbitral panel. As a
preliminary matter, we must determine which document was the award
of the arbitral panel. We conclude the document captioned
“arbitration award” was the award of the arbitral panel.
First, the monetary award contained in the 4 March 2004
document and the “arbitration award” is identical and based on
identical reasoning. Neither document accords with the
“arbitrator's decision” awarding “nominal or actual damages” of
$1.00 for the individual wrongdoings found by the panel. In
addition, the award contained in the “arbitration award” was
expressly stated to be “over and above all other issues and nominal
damages which have been considered or awarded by the panel.”
Notably, the “arbitration award” also expressly contained a
“request” from the “arbitration panel . . . that the Court confirm
this award and adopt the same as the judgment of the Court.”
Finally, the “arbitration award” is the most complete embodiment of
the arbitral panel's determination.
(See footnote 4)
We are also of the opinion
that the panel, in the “arbitration award” denoted that it had
considered the listed wrongdoings of the parties, as contained inthe “arbitrator's decision” as well as the monetary damages flowing
from the breach of contract, and distilled their award into the
“simple announcement of the result of their investigation” in
accordance with their own “notion of justice” that has been
previously approved of by our Supreme Court. Bryson v. Higdon, 222
N.C. 17, 19-20, 21 S.E.2d 836, 837 (1942) (noting that
“[a]rbitrators are no[t] bound to go into particulars and assign
reasons for their award . . . but may award according to their
notion of justice and without assigning any reason”).
We hold the “arbitration award” as opposed to the document
dated 4 March 2004 is the proper document upon which further
judicial action should be taken. The trial court's action with
respect to the “arbitration award” is reasonable as that document,
signed on 18 March 2004, was unavailable at the time defendants
moved for a hearing on 12 March 2004. Nonetheless, having held
that the award of the arbitral panel was contained in the
“arbitration award” and given that the trial court did not confirm
that award, we remand for further proceedings.
[5] Due to the possibility that certain issues may occur upon
remand, we additionally address three other arguments. First, the
record reveals that the trial court, in part, dismissed a portion
of the “arbitration award” containing language for the sale of the
property under Chapter 44A on the grounds that only two out of
three arbitrators agreed to it. Under the facts of this case, the
majority, notwithstanding the lack of unanimity, is sufficient.
The arbitration clause in the contract made binding on the parties“[a]ny decision reached by a majority vote of the three”
arbitrators, which accords with the applicable provisions of the
Uniform Arbitration Act. See N.C. Gen. Stat. § 1-567.5 (2001)
(providing that the “powers of the arbitrators may be exercised by
a majority unless otherwise provided by the agreement or by this
Article”).
[6] Second, defendants assert the trial court erred in denying
the motion for treble damages and award for attorney fees. Both of
these assignments depend on the inclusion of the “arbitrator's
decision” as a part of the arbitral award. Having determined the
trial court correctly confirmed the “arbitration award,” which
supplanted the “arbitrator's decision,” we note these assignments
of error fail. Moreover, defendants' assertion is based upon the
premise that the arbitral panel awarded them over $29,000.00 based
on the difference between the panel's award to plaintiff
($67,330.00) and the full amount plaintiff claimed was due under
the contract ($96,720.98). We disagree. While plaintiff may have
presented evidence that $96,720.98 was due, whether plaintiff was
able to establish that amount sufficiently was for the arbitration
panel to decide.
[7] Regarding defendants' assertion that the trial court
abused its discretion in failing to award attorney fees under N.C.
Gen. Stat. § 75-16.1 (2003), defendants must prove, inter alia,
that “there was an unwarranted refusal by such party to fully
resolve the matter which constitutes the basis of such suit . . .
.” N.C. Gen. Stat. § 75-16.1. It was plaintiff that moved tocompel arbitration, and it was defendants who resisted arbitration
up to and including at the hearing from which the trial court
finally compelled arbitration. Assuming attorney fees were
otherwise available to defendants, we find no abuse of discretion
by the trial court in refusing to award them.
Affirmed in part, reversed and remanded in part.
Judges McGEE and ELMORE concur.
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