The issues presented by this appeal are: (I) whether there
was an agreement between the parties to enter into binding
arbitration; and (II) whether any statutory ground exists to vacate
the arbitration award.
Defendants argue that the trial court erred by ordering
arbitration and adopting the award of the arbitrator when there was
no valid agreement to arbitrate. We disagree.
The applicable provision of the Uniform Arbitration Act
regarding the validity of arbitration agreements reads as follows:
Two or more parties may agree in writing to
submit to arbitration any controversy existingbetween them at the time of the agreement, or
they may include in a written contract a
provision for the settlement by arbitration of
any controversy thereafter arising between
them relating to such contract or the failure
or refusal to perform the whole or any part
thereof. Such agreement or provision shall be
valid, enforceable, and irrevocable except
with the consent of all the parties, without
regard to the justiciable character of the
controversy.
N.C. Gen. Stat. § 1-567.2 (2001).
(See footnote 1)
This Court's review of the trial court's order is
de novo.
Sloan Fin. Grp., Inc. v. Beckett, 159 N.C.App. 470, 477, 583 S.E.2d
325, 330 (2003). As a general rule, “public policy favors
arbitration.”
Raspet v. Buck, 147 N.C. App. 133, 135, 554 S.E.2d
676, 678 (2001). Before a dispute can be ordered resolved through
arbitration, there must be a valid agreement to arbitrate.
United
Steelworkers v. Warrior & G. Nav. Co., 363 U.S. 574, 4 L. Ed.2d
1409 (1960)
; Sloan Fin. Grp., 159 N.C. App. at 477, 583 S.E.2d at
329
; LSB Fin. Servs., Inc. v. Harrison, 144 N.C. App. 542, 547,
548 S.E.2d 574, 577-8 (2001).
“Thus whether a dispute is subject
to arbitration is a matter of contract law.”
Sloan Fin. Grp., 159
N.C. App. at 478, 583 S.E.2d at 330.
Accord Ragan v. Wheat First
Sec., Inc., 138 N.C. App. 453, 531 S.E.2d 874,
disc. review
denied, 353 N.C. 268, 546 S.E.2d 129 (2000). “Parties to an
arbitration must specify clearly the scope and terms of their
agreement to arbitrate.”
Id. (citing
Futrelle v. Duke University,127 N.C. App. 244, 488 S.E.2d 635,
disc. review denied, 347 N.C.
398, 494 S.E.2d 412 (1977). The court cannot force a party to
submit to arbitration unless the party has agreed to do so.
AT&T
Technologies v. Communications Workers, 475 U.S. 643, 89 L. Ed. 2d
648 (1986). Although a party cannot be forced to submit a claim
to arbitration if he or she has not agreed to do so, “a variety of
nonsignatories of arbitration agreements have been held to be bound
by such agreements under ordinary common law contract and agency
principles.”
LSB Financial Services, 144 N.C. App. at 547, 548
S.E.2d at 578 (quoting
In re Prudential Ins. Co. of America
Litigation, 133 F.3d 225, 229 (3rd Cir. 1998)).
In the instant case, plaintiffs and defendants appeared in the
trial court with their attorneys on 11 February 2003 and announced
in open court that they had reached an agreement to enter into
binding arbitration. The trial court entered a consent order which
reads as follows:
AND at the call of the matter for hearing the
plaintiffs appeared represented by their
counsel of record, Gary A. Grady from the
Bladen County Bar and the defendants appeared
represented by their attorney of record,
Junius B. Lee, III of the Columbus County Bar.
AND at the call of the matter for hearing the
parties announced that all matters and things
in controversy between them, for the purpose
of this hearing, had been resolved by an
agreement to enter into binding arbitration in
this cause. The parties further announced
that under the terms of binding arbitration
the following specific terms will apply:
1. Within thirty (30) days from the date that
this order is entered in open court, or on or
before March 13, 2003, the parties shall
jointly select a single arbitrator to decidethis case, or if unable to do so, shall each
select an arbitrator to serve in this cause.
If the parties cannot agree on a single
arbitrator, then the two (2) arbitrators so
selected by each of the parties shall select a
third arbitrator and the three arbitrators
shall act together to hear evidence and make a
binding decision.
2. Within ninety (90) days from the date of
the entry of this order, the parties shall
schedule the arbitration subject to the rules
for the same as provided by the American
Arbitration Association.
3. Within thirty (30) days thereafter, the
arbitrator/arbitrators shall report their
decision to the court and the same shall be
binding to the same extent as a court order or
a decision by a jury in this cause, subject to
such other and further orders of this court as
are necessary to enforce the same.
4. The parties agree that there will be no
appeal from this arbitration decision except
under those limited circumstances provided by
law for binding arbitration.
The consent order was signed: “Approved as to Terms, Gary A.
Grady, Attorney for Plaintiffs” and “Approved as to Terms, Junius
B. Lee, III, Attorney for Defendants.”
Defendants contend there was never a valid arbitration
agreement in this case as the only “agreement” was the order of the
court signed by the parties' attorneys as neither plaintiffs nor
defendants signed an agreement to arbitrate.
“[T]here is a presumption in North Carolina in favor of an
attorney's authority to act for the client he professes to
represent.”
Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827,
829, 534 S.E.2d 653, 654-5 (2000). Principles of agency are
applicable to the attorney-client relationship.
Id. When theagent acts within the scope of his actual authority, the principal
is liable on the contract.
Foote & Davies, Inc. v. Arnold Craven,
Inc., 72 N.C. App. 591, 595, 324 S.E.2d 889, 892 (1985).
“[T]he
authorities seem to sustain the view that it is presumed that the
attorneys had the necessary authority from their clients.”
Keen v.
Parker, 217 N.C. 378, 389, 8 S.E.2d 209, 216 (1940). In the case
sub judice, the consent order expressly states that the parties
appeared in court and through their attorneys announced they had
reached an agreement to enter into binding arbitration. The
consent order sets out the terms of the arbitration agreement. We
note that defendants complied with the terms of the Consent Order
by participating in the selection of an arbitrator and submitting
a memorandum concerning the issues for arbitration. We also note
that defendants participated in a two-day evidentiary hearing
before the arbitrator without objecting to the hearing. Defendants
raise the issue of the validity of the arbitration agreement for
the first time on appeal. We hold that the consent order which
sets forth the terms of the parties' agreement for binding
arbitration executed by the parties' attorneys in this case is a
valid written agreement for binding arbitration under the Uniform
Arbitration Act.
Defendants next argue that the trial court erred in adopting
the judgment of the arbitrator, because the arbitration judgment
contains inconsistent rulings that are unenforceable, and is
contrary to state law. “Judicial review of an arbitration award is confined to [a]
determination of whether there exists one of the specific grounds
for vacation of an award under the arbitration statute.”
Semon v.
Semon, 161 N.C. App. 137, 141, 587 S.E.2d 460, 463 (2003)(quoting
Fashion Exhibitors v. Gunter, 41 N.C. App. 407, 410-11, 255 S.E.2d
414, 417-18 (1979)).
“An arbitration award is presumed valid and
the burden of proving specific grounds for vacating an award rests
on the party attacking it.”
Turner v. Nicholson Properties, Inc.,
80 N.C. App. 208, 212, 341 S.E.2d 42, 45,
cert. denied, 317 N.C.
714, 347 S.E.2d 457
(1986). A court may only vacate such an award
for the reasons enumerated in North Carolina General Statutes §
1-567.13.
Scholar Bus. Assocs. v. Davis, 138 N.C. App 298, 301,
531 S.E.2d 236, 239 (2000).
Section 1-567.13(a) of the North Carolina General Statutes
provides as follows:
Upon application of a party, the court shall
vacate an award where:
(1) The award was procured by corruption,
fraud or other undue means;
(2) There was evident partiality by an
arbitrator appointed as a neutral or
corruption in any of the arbitrators or
misconduct prejudicing the rights of any
party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the
hearing upon sufficient cause being shown
therefor or refused to hear evidence material
to the controversy or otherwise so conducted
the hearing, contrary to the provisions of
G.S. 1-567.6, as to prejudice substantially
the rights of a party; or
(5) There was no arbitration agreement and the
issue was not adversely determined in
proceedings under G.S. 1-567.3 and the party
did not participate in the arbitration hearing
without raising the objection; but the fact
that the relief was such that it could not or
would not be granted by a court of law or
equity is not ground for vacating or refusing
to confirm the award.
N.C. Gen. Stat. § 1-567.13(a) (2001). Unless an objective showing
can be made that one of the statutory grounds exists for vacating
the arbitration award, the court must confirm the award.
FCR
Greensboro, Inc. v. C&M Investments, 119 N.C. App. 575, 578, 459
S.E.2d 292, 294,
cert. denied, 341 N.C. 648, 462 S.E.2d 510 (1995);
Wilson Building Co. v. Thorneburg Hosiery Co. Inc., 85 N.C. App.
684, 686, 355 S.E.2d 815, 817,
disc. review denied, 320 N.C. 798,
361 S.E.2d 75 (1987). "If an arbitrator makes a mistake, either as
to law or fact . . ., it is the misfortune of the party . . . .
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.'"
Cyclone Roofing Co. v. LaFave Co., 312 N.C. 224, 236, 321 S.E.2d
872, 880 (1984)(quoting
Fashion Exhibitors, 41 N.C. App. at 415,
255 S.E.2d at 420. In addition, N.C. Gen. Stat. § 1-567.13(a)(5)
provides, "the fact that the relief was such that it could not or
would not be granted by a court of law or equity is not ground for
vacating or refusing to confirm the award." Thus an award “
may not
be vacated because the arbitrator erred as to law or fact.”
Smith
v. Young Moving and Storage, Inc., ___N.C. App.____
,___, 606
S.E.2d 173, 175 (2004). In the instant case, defendants do not argue any of the
specific grounds enumerated in N.C. Gen. Stat. § 1-567.13 exist and
we find no statutory ground exists for vacating the arbitration
award. Therefore we affirm the order of the trial court adopting
the arbitration award.
For the reasons stated, we affirm the order and judgment
confirming the arbitration award pursuant to N.C. Gen. Stat. §
1-567.12.
Affirmed.
Chief Judge MARTIN and Judge BRYANT concur.
Report per Rule 30(e).
Footnote: 1