Hypower, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh

HYPOWER, INC., Plaintiff, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, andENVIRONMENTAL CHEMICAL CORPORATION, Defendants.

Case No. 13-CV-2326-DDC-TJJ

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

November 23, 2015

MEMORANDUM AND ORDER

This matter comes before the Court on plaintiff Hypower, Inc.'s Motion to Confirm Arbitration Award (Doc. 28). Intervenor Environmental Chemical Corporation ("ECC") has submitted a Response to plaintiff's motion (Doc. 33), and plaintiff has filed a Reply (Doc. 34).¹ Thus, the motion is fully briefed and ripe for the Court's decision. After considering the parties' arguments, the Court grants in part and denies in part plaintiff's Motion to Confirm Arbitration Award (Doc. 28), for the reasons explained below.

I. Factual and Procedural Background

ECC was awarded a federal contract to perform construction and repairs on a project located at McConnell Air Force Base in Wichita, Kansas. ECC executed a payment bond covering the federal contract, with defendant National Union acting as surety, as the Miller Actrequires. See 40 U.S.C. § 3131(b)(2). ECC, as the general contractor, and plaintiff, as a subcontractor, entered into an agreement ("the Subcontract"), in which plaintiff agreed to perform electrical work on the federal construction project. The parties agreed in the Subcontract to submit "[a]ll claims, disputes arising out of, or relating to, this Agreement or the Work" to arbitration. Doc. 28-2 at 14 (Subcontract § 12.4.a). The parties also agreed that "[t]he award rendered by the arbitrator(s) shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction." Id. at 15 (Subcontract § 12.6).

On July 8, 2013, plaintiff filed a Complaint against National Union under the Miller Act, 40 U.S.C. § 3133, seeking payment on the Miller Act payment bond for ECC's alleged breach of the Subcontract. Doc. 1. On August 27, 2013, defendant National Union filed a Motion for Stay and to Compel Arbitration (Doc. 7), requesting that the Court stay the lawsuit and order plaintiff to follow the mandatory dispute resolution procedures that it had agreed to in its Subcontract with ECC. That same day, ECC filed a Motion to Intervene (Doc. 8), seeking leave to intervene for the purpose of moving the Court to stay the litigation and compel plaintiff's compliance with the Subcontract's mandatory dispute resolution procedures. The Court granted ECC's Motion to Intervene as unopposed (Doc. 12), and on September 27, 2013, ECC filed a Motion to Stay Case and Compel Arbitration (Doc. 13). The Court granted that motion on August 27, 2014, thereby staying the case pending arbitration (Doc. 22).

Plaintiff and ECC submitted their dispute to the American Arbitration Association ("AAA") for arbitration. On March 2, 2015, the arbitrator issued an award for plaintiff and against ECC in the amount of $529,002.44. Doc. 28-1 at 11. The arbitrator also ordered ECC to perform its contractual obligations for certain outstanding change order requests ("RCOs"). This relief required ECC to cooperate with plaintiff to submit certain RCOs to the government—asmandated by the Subcontract—and ordered ECC to pay plaintiff any amounts received from the government for the work described in the RCOs. Id. at 8-9, 11. The arbitrator denied plaintiff's demand for prejudgment interest, but concluded that "[i]nterest payable following the execution and delivery of this Award shall be governed by applicable Texas law." Id. at 11. The arbitrator also denied the parties' requests for attorney's fees. Id. at 10. The arbitrator concluded that neither plaintiff nor ECC was a "prevailing party" as defined by the Subcontract, and therefore the Subcontract did not entitle either party to attorney's fees. Id.

On April 2, 2015, plaintiff filed a Motion to Lift Stay (Doc. 23), so that it could file a motion to confirm the arbitration award. The Court granted the motion and lifted the stay (Doc. 27). Plaintiff then filed its Motion to Confirm Arbitration Award (Doc. 28), which the Court now addresses.

II. Legal Standard

Plaintiff moves the Court to confirm the arbitration award under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and the Kansas Uniform Arbitration Act ("KUAA"), K.S.A. § 5-401, et seq. Section 9 of the FAA provides in pertinent part:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.

9 U.S.C. § 9 (emphasis added). The Tenth Circuit has instructed that "'judicial review of an arbitration award is very narrowly limited.'" ARW Expl. Corp. v. Aguirre, 45 F.3d 1455, 1463 (10th Cir. 1995) (quoting Foster v. Turley, 808 F.2d 38, 42 (10th Cir. 1986)). In fact, the standard of review for arbitration awards "is 'among the narrowest known to the law.'" Air Methods Corp. v. OPEIU, 737 F.3d 660, 665 (10th Cir. 2013) (quoting LB & B Assocs., Inc. v.Int'l Bhd. of Elec. Workers, Local No. 113, 461 F.3d 1195, 1197 (10th Cir. 2006)). This standard of review comports with the "'primary purpose behind arbitration agreements'"—avoiding "'the expense and delay of court proceedings.'" ARW Expl. Corp., 45 F.3d at 1463 (quoting Turley, 808 F.2d at 42); see also Air Methods Corp., 737 F.3d at 665 (explaining that courts should apply a deferential standard to an arbitrator's award "since the parties have contracted for an arbitrator to resolve their disputes, not a court." (citation and internal quotation marks omitted)).

A court may vacate an arbitration award only under "limited circumstances" which include (1) the reasons stated in the FAA, 9 U.S.C. § 10, or (2) "a handful of judicially created reasons." Denver & Rio Grande W. R.R. Co. v. Union Pac. R.R. Co., 119 F.3d 847, 849 (10th Cir. 1997) (citations omitted). "Outside of these limited circumstances, an arbitration award must be confirmed." Id. (citing 9 U.S.C. § 9).

III. Analysis

Plaintiff asks the Court to confirm the arbitration award and enter a judgment that includes: (1) an award of "post judgment" interest at the rate of 5% per annum under the Texas Finance Code, beginning from the date of the arbitration award; (2) an award of attorney's fees; and (3) an order mandating ECC's specific performance of certain obligations under the Subcontract. Those obligations are that: (a) ECC must cooperate with plaintiff to submit certain RCOs to the government, and (b) ECC must pay plaintiff any amounts received from the government for the work described in the RCOs.

In its original motion, plaintiff requested the Court to enter a judgment for $607,645.30, which, plaintiff claimed, represents the $529,002.44 awarded by the arbitrator plus the amount of certain outstanding change orders that the government had paid to ECC as of December 30, 2014. Doc. 28 at 1. But, in its Reply, plaintiff represents that it has entered into a ConfidentialSettlement Agreement with National Union that resolves the face amount of the award and a portion of the specific performance awarded by the arbitrator. Doc. 34 at 1. Plaintiff asserts, however, that the Confidential Settlement Agreement does not restrict its right to seek judgment against ECC for the specific performance of the remaining change orders—RCO #22 and RCO #23. Id. at 2. Plaintiff requests in its Reply that the Court "confirm the arbitration award and [enter] a judgment against ECC for specific performance directing ECC to submit RCOs #22 and #23 to the government and to pay [plaintiff] any amounts received from the government related to the RCOs, plus attorney's fees from ECC associated with this motion and post judgment interest." Id. at 3. The Court construes plaintiff's Reply as withdrawing its request for a judgment in the amount of $607,645.30. Instead, the Court understands that plaintiff now seeks the relief described in the Reply—that is, confirmation of the arbitration award and a judgment against ECC for specific performance, plus attorney's fees and "post judgment" interest. Id.

ECC opposes plaintiff's requests for "post judgment" interest and attorney's fees.² Doc. 33 at 1-2. But ECC has not moved the Court to vacate, modify, or correct the arbitration award. Absent such a request, ECC has waived its right to oppose confirmation. See Baer v. Terminix Int'l Co., 975 F. Supp. 1272, 1279 (D. Kan. 1997) ("A party that does not move to vacate an arbitration award loses the right to oppose confirmation of the same award sought by the other party." (citing Lander Co. v. MMP Invs., Inc., 107 F.3d 476, 478 (7th Cir.), cert. denied, 522 U.S. 811 (1997)). Because ECC has provided no reason for this Court to vacate, modify, orcorrect the arbitration award and because the Court finds that none of the limited circumstances for vacating the award apply here, the Court confirms the arbitration award for plaintiff and against ECC in the amount of $529,002.44.

The Court next turns to plaintiff's other requests.

A. Plaintiff is not entitled to "post award" interest.

Plaintiff requests "post judgment" interest beginning from the date of the award, March 2, 2015, under Texas Finance Code § 304.003. Although plaintiff refers to its request as "post judgment" interest, the Court notes that plaintiff actually seeks "post arbitration award" interest because it demands interest from the date of the award, not the date of a court judgment. Thus, the Court refers to plaintiff's request as "post award" interest going forward.

ECC responds that plaintiff is not entitled to "post award" interest because it has resolved the principal amount claimed in the Motion to Confirm...