Bell-Corley Construction, LLC v. Orange State Realty, Inc.
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Cite as 2011 Ark. App. 289
ARKANSAS COURT OF APPEALS
D IV IS IO N I
No. CA 10-968
BELL-CORLEY CONSTRUCTION,
LLC
APPELLANT
V.
ORANGE STATE REALTY, INC.,
ORANGE STATE REALTY, LLC, and
LASALLE BANK, N.A.
APPELLEES
Opinion Delivered
APRIL 20, 2011
APPEAL FROM THE UNION
COUNTY CIRCUIT COURT,
[NO. CV-2007-206-6]
HONORABLE DAVID F. GUTHRIE,
JUDGE
AFFIRMED
JOHN B. ROBBINS, Judge
The only issue presented in this appeal pertains to attorney’s fees. Appellant BellCorley Construction (BCC) argues that the Union County Circuit Court abused its
discretion in denying its request for attorney’s fees as the successful party in its lienforeclosure action against appellees Orange State Realty, Inc. and Orange State Realty, LLC
(collectively “OSR”).1 We affirm.
1
BCC also named LaSalle Bank, N.A., as a defendant in this action. Although the trial
court never disposed of the claim against the bank, Ark. R. Civ. P. 54(b)(5) provides that any
claim against a named but unserved defendant is dismissed by the circuit court’s final
judgment or decree. Because the bank was never served, that claim was dismissed by the final
order now on appeal. See Jackson v. Sparks Reg’l Med. Ctr., 375 Ark. 533, 294 S.W.3d 1
(2009).
Cite as 2011 Ark. App. 289
On January 24, 2006, BCC and OSR executed a contract in which BCC agreed to
construct a Walgreen’s store on property owned by OSR. The contract sum to be paid by
OSR to BCC upon completion of the project was $1,615,600. The construction contract
required the parties to arbitrate any disputes, subject to exceptions not relevant to this case.
The contract also provided that if a claim relates to or is the subject of a mechanic’s lien, the
party asserting such claim may proceed in accordance with applicable law to comply with the
lien notice or filing deadlines prior to resolution of the claim by arbitration.
After BCC completed its construction, a dispute arose between the parties. On May
21, 2007, BCC recorded a mechanic’s lien in circuit court, asserting that OSR owed
$407,799.61 for materials and labor provided to OSR by BCC under the contract. Later that
day, OSR filed a bond to discharge the lien.
On May 30, 2007, BCC filed a complaint against OSR in circuit court, wherein it
alleged that there had been a breach of contract. BCC sought to recover unpaid amounts on
the construction contract and to foreclose its lien. OSR answered the complaint on July 13,
2007, and brought a counterclaim for breach of contract and negligence. Among other
things, OSR sought damages for BCC’s alleged late completion of the project and faulty
workmanship. Pursuant to an agreed order filed on August 22, 2007, the circuit court stayed
the action pending arbitration. That order memorialized the parties’ agreement that their
contract required arbitration of any dispute arising therefrom.
After a six-day arbitration hearing, the arbitrator awarded BCC $263,721,
which included the undisputed retainage amount of $169,834. The arbitrator awarded
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OSR $123,379 on its counterclaim. Due to a clerical error, the award to BCC was
subsequently corrected to $254,178. The modified arbitration award was dated October 29,
2008, and as modified, BCC obtained a net arbitration award in the amount of $130,798.
In both the original arbitration award and the modified award, the arbitrator addressed
the issue of attorney’s fees. The original arbitration award recites:
BCC recovered 41% of its disputed monetary claim. It has been awarded 3% of its
time claim. OSR has been awarded 56% of its counterclaim and has not been awarded
specific performance. In these circumstances I cannot say either party was the
prevailing party and, therefore, no award of attorney fees or costs is made.
The modified award of the arbitrator referenced a request by BCC for modification or
clarification regarding attorney’s fees. In denying BCC’s request for modification of
attorney’s fees, the arbitrator wrote:
The denial of an award of attorney fees to Claimant is confirmed. The Arbitrator’s
determination that BCC recovered 41% of its “disputed” monetary claim was based
on the following calculation:
$396,964.00 - Total Claim
-169,834.00 - Retainage (Undisputed)
$227,130.00 - “Disputed Monetary” Claim
That portion of $227,130.00 awarded Claimant per the Arbitrator Worksheet was
$93,887.00. The latter sum is 41% of the “disputed” amount claimed. (I recognize
that the Retainage was “disputed” in the sense that it was not paid, and that this
arbitration was necessary to recover it. Retainage was never contested, however, and
it was not considered in the “prevailing party” determination because, in my
respectful opinion, both the equities and the overall outcome of the contested matters
were pretty evenly balanced. I do not believe that the law, logic or common sense
require me to award an attorney fee solely because one party recovers more money
than the other party in the Claim/Counterclaim context. I regret any confusion
caused by the lack of clarity in the determination.) It should also be noted that
inclusion of Retainage in the calculation would not have affected the decision to deny
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an award of attorney fees. My decision denying attorney fees was the result of a
conclusion that Claimant’s actions and failures were to blame for many of the
problems besetting this Project.
On April 27, 2009, BCC petitioned the circuit court to confirm the arbitration award,
to foreclose its lien, and to award attorney’s fees pursuant to Ark. Code Ann. § 18-44-128
(Repl. 2003), which provides:
When any contractor, subcontractor, or material supplier who has filed a lien, as
provided for in this chapter, gives notice thereof to the debtor or owner of property
which has been subjected to the lien in writing sent by registered or certified mail,
and the claim has not been paid within twenty (20) days from the date of the mailing,
and if the contractor, subcontractor, or material supplier is required to sue for the
enforcement of his or her claim, the court shall allow the successful party in the action
a reasonable attorney’s fee in addition to other relief to which he or she may be
entitled.
BCC requested $85,834.50 in attorney’s fees as the prevailing party in the action.
The circuit court held two hearings on BCC’s petition. After the first hearing, the
circuit court issued an order on August 4, 2009, confirming the arbitrator’s award subject to
a remand to the arbitrator on a postarbitration counterclaim by OSR.2 The August 4, 2009,
order reserved the issue of attorney’s fees. After the second hearing, the circuit court entered
an order on February 19, 2010, confirming the arbitration award but denying BCC’s request
for attorney’s fees on the basis that “[t]he arbitrator addressed this issue and it will not be
revisited.”
2
OSR’s postarbitration counterclaim was later dismissed with prejudice by the circuit
court on OSR’s motion.
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Cite as 2011 Ark. App. 289
BCC now appeals from the circuit court’s February 19, 2010, order, arguing that the
circuit court abused its discretion by failing to award attorney’s fees to BCC as the successful
party in its lien-foreclosure action. Subsequent to an amendment that did not materially
change the statute for purposes of this case, Ark. Code Ann. § 18-44-128 (Supp. 2009) now
provides:
(a) When any contractor, subcontractor, laborer, or material supplier who has
filed a lien, as provided for in this chapter, gives notice thereof to the owner of
property by any method permitted under § 18-44-115(f)(3) and the claim has not
been paid within twenty (20) days from the date of service of the notice, and if the
contractor, subcontractor, laborer, or material supplier is required to sue for the
enforcement of his or her claim, the court shall allow the successful contractor,
subcontractor, laborer, or material supplier a reasonable attorney’s fee in addition to
other relief to which he or she may be entitled.
(b) If the owner is the prevailing party in the action, the court shall allow the
owner a reasonable attorney’s fee in addition to any other relief to which the owner
may be entitled.
BCC argues that under subsection (a) of the statute, an award of a reasonable attorney’s fee
was mandatory because BCC was required to sue for the enforcement of its claim and BCC
was successful.
While BCC acknowledges that it requested attorney’s fees from the arbitrator, it
maintains that the arbitrator only had discretion to award such fees in connection with the
parties’ contract arbitration. BCC asserts that its subsequent request to the circuit court for
attorney’s fees under Ark. Code Ann. § 18-44-128 was not before the arbitrator, and that the
arbitrator lacked authority to award attorney’s fees under that statute. BCC relies on RMP
Rentals v. Metroplex, Inc., 356 Ark. 76, 146 S.W.3d 861 (2004), where the supreme court said
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that only an Arkansas court has the subject-matter jurisdiction to enforce the liens and to
order foreclosure on real property located within its borders. BCC submits that its action to
foreclose its lien fell exclusively within the authority of the circuit court, and that because
BCC succeeded in foreclosing its lien, the lien statute required the circuit court to award
attorney’s fees.
In deciding the issue in this appeal, we begin with Arkansas Code Annotated section
16-18-201 (Repl. 2006), which provides:
(a) A written agreement to submit any existing controversy to arbitration
arising between the parties bound by the terms of the writing is valid, enforceable,
and irrevocable, save upon such grounds as exist for the revocation of any contract.
(b)(1) A written provision to submit to arbitration any controversy thereafter
arising between the parties bound by the terms of the writing is valid, enforceable,
and irrevocable, save upon such grounds as exist for the revocation of any contract.
(2) This subsection shall have no application to personal injury or tort matters,
employer-employee disputes, nor to any insured or beneficiary under any insurance
policy or annuity contract.
In the present case, the parties agreed that any claim arising out of or related to the contract,
which would include the issue of attorney’s fees, was subject to arbitration.
As a matter of public policy, arbitration is strongly favored. Hart v. McChristian, 369
Ark. 656, 42 S.W.3d 552 (2001). Arbitration is looked upon with approval by courts as a less
expensive and more expeditious means of settling litigation and relieving docket congestion.
Id. Any doubts and ambiguities of coverage will be resolved in favor of arbitration. Id.
In Arkansas Dep’t of Parks and Tourism v. Resort Managers, Inc., 294 Ark. 255, 743
S.W.2d 389 (1988), the supreme court indicated that judicial review of an arbitrator’s award
is more limited than appellate review of a trial court’s decision, and that mistakes of fact or
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law are not a basis to set aside an award. The supreme court quoted from Coleman v. Local
No. 570, 317 P.2d 831 (Kan. 1957):
Thus, the fact that the arbitrator made erroneous rulings during the hearing, or
reached erroneous findings of fact from the evidence, is no ground for setting aside
the award, because the parties have agreed that he should be the judge of the facts.
Even his erroneous view of the law would be binding, for the parties have agreed to
accept his view of the law. Were it otherwise in either of these cases, arbitration
would fail of its chief purpose; instead of being a substitute for litigation, it would
merely be the beginning of litigation. Error of law renders the award void only when
it would require the parties to commit a crime or otherwise to violate a positive
mandate of the law.
Id. at 261, 743 S.W.2d at 392. Arkansas Code Annotated section 16-108-211 (Repl. 2006)
confers authority on the circuit court to confirm an arbitration award, and, whenever
possible, a court must construe an award so as to uphold its validity. Chrobak v. Edward D.
Jones & Co., 46 Ark. App. 105, 878 S.W.2d 760 (1994).
In the case at bar it is undisputed that BCC and OSR contractually agreed to arbitrate
their disputes. After a six-day arbitration hearing, the arbitrator awarded substantial amounts
on both BCC’s complaint and OSR’s counterclaim, resulting in a net arbitration award to
BCC for $130,798. The issue of attorney’s fees was squarely put before the arbitrator and
decided. In BCC’s post-arbitration brief, BCC requested $85,834.50 “as attorney’s fees
provided by Arkansas law and the contract.” The arbitrator visited the issue twice, both times
concluding that under the circumstances neither party was the prevailing party, and thus that
no attorney’s fees would be awarded.
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Cite as 2011 Ark. App. 289
Notwithstanding the denial of attorney’s fees by the arbitrator, BCC petitioned the
circuit court for $85,834.50, again claiming to be the prevailing party, and asserting
entitlement to such attorney’s fees under Ark. Code Ann. § 18-44-128. The circuit court
denied the fee request stating that the arbitrator had addressed the issue and it would not be
revisited, and we hold that this ruling did not constitute error. BCC had a full and fair
opportunity in the arbitration proceedings to litigate the issue of attorney’s fees, and the fact
that BCC submitted its disputes to arbitration implied an agreement to be bound by the
arbitrator’s decision. See Ruth R. Remmel Revocable Trust v. Regions Fin. Corp., 369 Ark. 392,
255 S.W.3d 453 (2007). Except in certain limited situations, a valid and final award by an
arbitrator has the same effect under the rules of res judicata as the judgment of a court. Id.
While BCC posits that the arbitrator lacked the authority to award attorney’s fees
under Ark. Code Ann. § 18-44-128, it does not support that claim with authority or
convincing argument. Moreover, it is clear that the attorney’s fees incurred by BCC were
primarily related to the arbitration of the complaint and counterclaim as opposed to
any particular effort associated with obtaining the lien. Furthermore, the lien was never
foreclosed. The arbitrator denied BCC’s request for attorney’s fees, and we reject BCC’s
argument that the circuit court abused its discretion in confirming that decision.
Affirmed.
PITTMAN and GLOVER, JJ., agree.
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