TRANSCRAFT CORPORATION v. THE WALKER COMPANY OF KENTUCKY, INC.
Annotate this Case
Download PDF
RENDERED: May 5, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-000350-MR
TRANSCRAFT CORPORATION
v.
APPELLANT
APPEAL FROM MONTGOMERY CIRCUIT COURT
HONORABLE WILLIAM MAINS, JUDGE
ACTION NO. 96-CI-90077
THE WALKER COMPANY OF
KENTUCKY, INC.
APPELLEE
OPINION AND ORDER
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, JOHNSON AND KNOPF, JUDGES.
GUIDUGLI, JUDGE.
Transcraft Corporation (Transcraft) appeals
from a judgement entered by the Montgomery Circuit Court on
January 15, 1999, granting judgment in favor of The Walker
Company of Kentucky, Inc. (Walker) pursuant to an arbitration
award.
We affirm.
This appeal arises from the construction of the
Transcraft-Eagle Manufacturing facility (the facility) in Mt.
Sterling, Kentucky.
Transcraft is the owner of the facility.
In 1994, Transcraft hired CMW, Inc. (CMW) to design the
facility and serve as construction manager.
To this end, on July
1, 1994, Transcraft and CMW executed AIA Document B141/CM
Standard Form of Agreement Between Owner and Architect 1980
Edition and AIA Document B801 Standard Form of Agreement Between
Owner and Construction Manager 1980 Edition.
Both agreements
contained provisions requiring Transcraft and CMW to first submit
disputes to non-binding mediation and then to binding
arbitration.
Arbitration, if necessary, was required to be held
in Louisville unless otherwise agreed to by Transcraft and CMW.
Walker, as successful bidder on several aspects of the
construction of the facility, contracted with Transcraft to
perform, among other things, concrete work on the facility's
foundation and slabs.
On November 4, 1994, Walker and Transcraft
executed AIA Document A101/CMa Standard Form of Agreement Between
Owner and Contractor.
This agreement contained an arbitration
clause, but unlike the agreements between Transcraft and CMW did
not contain a mediation clause and did not dictate where
arbitration was to be held.
All applications for payment submitted by Walker
throughout the course of construction were duly signed and
approved by CMW.
When Transcraft refused to make final payment
in the amount of $366,155.42, Walker filed a
mechanic’s/materialman’s lien against the facility on or about
February 16, 1996.
It also appears that problems developed between
Transcraft and CMW during the course of the project, and on
January 23, 1996, CMW filed its own mechanic’s/materialman’s lien
against the facility.
On May 21, 1996, CMW executed a demand for
-2-
mediation pursuant to the agreements between it and Transcraft
alleging that Transcraft breached the agreements and had failed
to pay fees owed to CMW.
Despite having initiated mediation
proceedings pursuant to the agreements, CMW filed a complaint
against Transcraft on July 19, 1996, seeking to enforce its lien.
Walker was included as a named defendant in CMW’s complaint.
On or about July 30, 1996, Walker served a formal
demand for arbitration on Transcraft.
In its demand, Walker
alleged that Transcraft was refusing to pay approved applications
for payment and interest thereon.
In its response to Walker’s
demand, Transcraft claimed Walker’s work was “defective,
incomplete and untimely . . . which entitles Transcraft to
liquidated damages and reimbursement of increased construction
costs.”
On August 6, 1996, Transcraft filed a motion to dismiss
CMW’s complaint and motion to compel arbitration as required by
the terms of the agreement pursuant to KRS 417.060.
On August
16, 1996, CMW responded with a motion to stay the proceedings and
in opposition to Transcraft’s motion to dismiss.
On October 1,
1996, the trial court entered an order denying Transcraft’s
motion to dismiss and granting CMW’s motion to stay.
The order
further provided that “the parties shall advise the Court and
counsel upon receipt of an award rendered by a duly appointed
arbitrator upon the Issues presented in such arbitration, or upon
the dismissal or conclusion of such arbitration.”
On October 4,
1996, Walker filed an answer to CMW’s complaint in which it
presented a counterclaim against Transcraft.
-3-
While the motions to compel arbitration of the dispute
between CMW and Transcraft were pending,
the arbitration
proceedings between Transcraft and Walker were ongoing.
During a
meeting with one of its experts, Transcraft was advised of a
potential problem with the concrete floor of the facility.
Transcraft hired Law Engineering to test and analyze the floor.
Law prepared a report in which it concluded that Walker had not
constructed the floor slab in accordance with contract
specifications.
Transcraft submitted Law’s report several weeks
before the arbitration hearing was scheduled to commence, and
apparently asked the arbitrators for permission to amend its
claim against Walker to include damages for the faulty slab.
The
arbitration hearing was initially postponed but ultimately
occurred in December 1997, in Lexington, Kentucky.
On or about January 14, 1998, the arbitrators rendered
their decision on the dispute between Transcraft and Walker.
award provided in pertinent part:
1. [Transcraft] is entitled to compensation
for the concrete slab in “Area 1" . . . and
for crack repairs. The amount awarded for
the non-conforming slab is $61,200 and the
amount awarded for crack repairs is
$4,000.00, for a total of $65,200.00. The
Arbitrators find that there was insufficient
evidence presented to justify an award of
delay. With regard to other items in the
Counterclaim, there is no award for any of
the items claimed.
2. [Walker] shall be paid $300,955.00 (which
represents the contract balance of
$366,155.00 less $62,500) plus adjusted
interest at $53,737.00 plus interest in the
-4-
The
amount of $78.33 per day commencing on
December 1, 1997 until the date paid.1
On February 25, 1998, Walker filed motions reporting the
conclusion of arbitration between it and Transcraft and asking
that the arbitrator’s award be confirmed and its lien enforced.
In its motion to confirm, Walker stated that venue was proper in
the trial court “since the Defendant, Transcraft, maintains a
place of business in Montgomery County.”
On March 23, 1998,
Transcraft filed a motion asking the trial court to transfer
venue of the claims between it and Walker to the Fayette Circuit
Court.
In support of its motion, Transcraft argued that pursuant
to KRS 417.210, the award is to be confirmed in the county where
the arbitration hearing was held.
On April 19, 1998, Transcraft
filed a motion to vacate the arbitration award on the ground that
the arbitrators were partial and biased against Transcraft and
that their partiality resulted in a grossly inadequate award.
On October 21, 1998, the trial court entered an order
denying Transcraft’s motions, holding:
Transcraft originally requested this Court to
compel arbitration if the action was not
otherwise dismissed. This Court considers
this to be an “initial application” as
contemplated by KRS 417.190. Therefore, the
change of venue request is denied.
Transcraft claims that the arbitration award
should be set aside and vacated. Case law
indicates that there must be a gross mistake
of law or fact in order to set aside an
arbitration award, and the evidence
supporting setting it aside must be clear and
strong. Smith v. Hillerich and Bradsby, Ky.,
253 S.W.2d 629 (1952). The Court is of the
1
The award was modified by the arbitrators on or about April
14, 1998 to change $62,500 in the second paragraph to $65,200.
-5-
opinion that Transcraft has not met its
burden of proof to set the arbitration order
aside. Therefore, the award should be
confirmed.
On December 4, 1998, Walker filed a motion asking that the
arbitration award be confirmed as a judgment.
On January 15,
1999, the trial court entered a judgment in which it adopted the
arbitrators’ award.
This appeal followed.
Transcraft maintains that the trial court erred in not
transferring venue of the Transcraft/Walker dispute to the
Fayette Circuit Court pursuant to KRS 417.210, which provides in
part:
An initial application shall be made to the
court of the county in which the agreement
provides the arbitration hearing shall be
held, or, if the hearing has been held, in
the county in which it was held.
Transcraft maintains that venue of the dispute between it and
Walker lies with the Fayette Circuit Court because the
arbitration hearing was held in Lexington, Kentucky.
We
disagree.
We believe that this matter is controlled by KRS
417.060, which provides in pertinent part:
(1) On application of a party showing an
agreement [to arbitrate disputes] as
described in KRS 417.050, and the opposing
party’s refusal to arbitrate, the court shall
order the parties to proceed with
arbitration.
. . .
(3) If an issue referable to arbitration
under the alleged agreement is involved in an
action or proceeding pending in a court
having jurisdiction to hear applications
under subsection (1) of this section, the
application shall be made therein. Otherwise
-6-
and subject to KRS 417.210, the application
may be made in any court of competent
jurisdiction.
As the dispute between Transcraft and Walker was involved in an
action pending before the trial court at the time Transcraft
filed its motion to compel arbitration, venue over the matter was
proper in the trial court pursuant to KRS 417.060(3).
This
statute clearly provides that venue is to be decided pursuant to
KRS 417.210 only when the issue referable to arbitration is not
involved in an action pending before a court.
Because Transcraft
filed its initial application with the trial court as required by
KRS 417.060(1), and because KRS 417.210 goes on to provide that
“all subsequent actions shall be made to the court hearing the
initial application,” the trial court did not err in refusing to
transfer venue to the Fayette Circuit Court.
Transcraft also maintains that the trial court erred in
refusing to vacate the arbitration award.
Transcraft contends
that the arbitrators:
displayed evident partiality which prejudiced
Transcraft; refused to hear material
evidence; prevented Transcraft from being
fully heard; and prevented Transcraft from
cross-examining Walker’s witnesses. The
arbitrator’s [sic] bias and fundamental
unfairness finally culminated in a grossly
inadequate award - they awarded less than
twenty percent of the actual damages
sustained, even when Transcraft’s evidence on
these damages was undisputed.
Transcraft alleges that the arbitrators’ bias was
apparent during two teleconferences that took place prior to the
arbitration hearing.
Transcraft further alleges that “[p]alpable
bias, partiality and overt hostility continued throughout the
-7-
arbitration hearing.”
Transcraft maintains that this bias on
behalf of the arbitrators resulted in an inadequate award in that
the arbitrators ignored uncontroverted evidence as to the amount
of damages suffered due to the defective concrete.
In its brief
on appeal, Transcraft includes numerous cites to the five-volume
transcript of the arbitration hearing as evidence of the bias
which occurred during the hearing.
First, we find Transcraft’s inclusion of the hearing
transcript as part of the record on appeal improper.
A review of
the record on appeal shows that although Transcraft provided
citations to the hearing transcript in its application to vacate,
copies of excerpts from the hearing transcript were not attached
to the application.
Transcraft did not move to file the hearing
transcript with the trial court until April 15, 1999, some four
months after judgment was entered.
Transcraft also included the
transcript in its designation of record on appeal which was filed
with the trial court on April 15, 1999, pursuant to CR 75.01.
The intent of CR 75.01 and CR 75.07(1) is
that the record on appeal contain the
evidence available to the trier of fact. A
party cannot utilize CR 75.01 to include
evidence in the record on appeal if that
evidence was not first placed before the
fact-finder during trial. Therefore,
[transcripts] . . . not introduced into
evidence . . . should not be included in the
record on appeal.
Lucas v. Lucas, Ky. App., 720 S.W.2d 352, 353 (1986).
Thus, the
transcript of the arbitration hearing is hereby ordered stricken
from the record on appeal.
As there is no evidence supporting
Transcraft’s allegations on appeal regarding the arbitrators’
-8-
alleged bias during the course of the hearing, we will not
consider these arguments.
In regard to Transcraft’s allegations concerning bias
on behalf of the arbitrators allegedly occurring during several
pre-hearing teleconferences, a similar problem exists.
First, no
transcripts of these teleconferences were filed with the trial
court.
Second, Transcraft’s allegations concerning what
transpired over the course of these teleconferences are
unsubstantiated as no affidavits concerning the contents of these
teleconferences were attached to Transcraft’s application to
vacate.
Therefore, the trial court did not err in finding that
Transcraft did not meet its burden of proof as to this argument.
Having considered the parties’ arguments on appeal, the
order of the Montgomery Circuit Court is affirmed.
Furthermore,
the five-volume transcript of the arbitration hearing is hereby
ordered stricken from the record on appeal.
ALL CONCUR.
/s/ Daniel T. Guidugli
JUDGE, COURT OF APPEALS
ENTERED:
May 5,2000
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
William C. Hurt, Jr.
Lexington, KY
Thomas H. Glover
Lexington, KY
-9-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
