Filed: Jun. 10, 2011
Latest Update: Jun. 10, 2011
Summary: Not to be Published OPINION CLAYTON, JUDGE. This is an appeal of a decision of the Pulaski Circuit Court affirming an arbitration award. For the reasons that follow, we affirm the decision of the circuit court. BACKGROUND INFORMATION Appellant, Lake Cumberland Community Action Agency ("Lake Cumberland"), entered into a contract with Appellees, CMW, Inc. ("CMW") and Alliance Corporation ("Alliance") in 2001 for the construction of the Dunbar Intergeneration Center ("Dunbar"). This facility w
Summary: Not to be Published OPINION CLAYTON, JUDGE. This is an appeal of a decision of the Pulaski Circuit Court affirming an arbitration award. For the reasons that follow, we affirm the decision of the circuit court. BACKGROUND INFORMATION Appellant, Lake Cumberland Community Action Agency ("Lake Cumberland"), entered into a contract with Appellees, CMW, Inc. ("CMW") and Alliance Corporation ("Alliance") in 2001 for the construction of the Dunbar Intergeneration Center ("Dunbar"). This facility wa..
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Not to be Published
OPINION
CLAYTON, JUDGE.
This is an appeal of a decision of the Pulaski Circuit Court affirming an arbitration award. For the reasons that follow, we affirm the decision of the circuit court.
BACKGROUND INFORMATION
Appellant, Lake Cumberland Community Action Agency ("Lake Cumberland"), entered into a contract with Appellees, CMW, Inc. ("CMW") and Alliance Corporation ("Alliance") in 2001 for the construction of the Dunbar Intergeneration Center ("Dunbar"). This facility was to be used to house preschool students, Alzheimer patients and senior citizens. Pursuant to the contract entered into by the parties, disputes regarding the construction of the facility would be heard by an arbitrator selected by the construction industry.
Lake Cumberland brought an action before the arbitrator alleging that there were design and construction defects which caused issues regarding the trusses which were structurally part of the building. It contended that there were violations of the Kentucky Building Code and that there were problems with the Heating, Ventilation, and Air Conditioning ("HVAC") system. The claims were heard by an arbitrator, Gerald Stovall, and he made findings that there were damages in excess of $106,000 for which the Appellees were liable. The Appellees filed an action to affirm the arbitrator's award in the Pulaski Circuit Court. Lake Cumberland filed a counter motion to vacate or correct the award pursuant to Kentucky Revised Statutes (KRS) 417.045, et seq., asserting that the award was in error.
The Pulaski Circuit Court upheld the arbitrator's decision finding that:
A court has no equitable power to vacate an arbitration award and "a court may only set aside an arbitration award pursuant to those grounds set forth in the [Kentucky Uniform Arbitration] Act." (Citation omitted). . . .
In support of its motion to vacate the arbitration award, the Respondent argues that the award should be vacated because it violates Kentucky law and public policy. The ground that an arbitration award generally violates Kentucky law is not expressly outlined in KRS § 417.160. As a result, this Court has no power to vacate the arbitration award on this ground since this Court has no general equitable power to do so. . . . As a result, this Court is without the authority to vacate an arbitration award on the grounds of public policy or on the grounds that the award violates the Kentucky Building Code.
Lake Cumberland then appealed the circuit court's ruling to our Court. In its brief, Lake Cumberland argues that the Kentucky Building Code applies to all Kentucky construction, and that the circuit court should have vacated the award. Lake Cumberland also asserts that the award should be set aside because it failed to provide complete relief and violated state law as well as public policy. Finally, Lake Cumberland argues that it was entitled to a "full damages" award.
STANDARD OF REVIEW
Pursuant to KRS 417.160(1), an arbitration award shall be vacated where:
(a) The award was procured by corruption, fraud or other undue means;
(b) 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;
(c) The arbitrators exceeded their powers;
(d) 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 KRS 417.090, as to prejudice substantially the rights of a party; or
(e) There was no arbitration agreement and the issue was not adversely determined in proceedings under KRS 417.060 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 is not ground for vacating or refusing to confirm the award.
KRS 417.170 (1) provides that an arbitration award may be modified where:
(a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
(b) The arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or
(c) The award is imperfect in a matter of form, not affecting the merits of the controversy.
In 3D Enterprises Contracting Corp. v. Lexington-Fayette Urban County Government, 134 S.W.3d 558, 561 (Ky. 2004), the Supreme Court of Kentucky held that:
In determining whether the arbitrators exceeded their power, a court should look to whether the award was fairly and honestly made within the scope of the issues submitted for resolution or whether the arbitrators acted beyond the material terms of the contract. (Citation omitted). In reviewing whether an arbitrator exceeded his powers, a court should not review the merits of the award, only whether the issues were submitted and covered by the contract.
With these statutory standards and interpretive caselaw in mind, we will examine the affirmation of the arbitration award.
DISCUSSION
First, Lake Cumberland contends that the Kentucky Building Code applied to all Kentucky construction. It fails to show, however, how the arbitrator failed to apply appropriate standards regarding construction within the Commonwealth. Lake Cumberland was awarded over $106,000 for its claims. $56,390 of the amount was for structural damage against CMW and the remaining $38,750 was for the cost of repair to the HVAC system against Alliance. Both these awards were supported by proof of what the repair cost would be. While Lake Cumberland contends that it should have received the cost of tearing down the inner structure and rebuilding, there is nothing to show that there was any fraud or bias on the part of the arbitrator in making his decision.
Lake Cumberland also contends that the arbitration award violates public policy. It has not, however, shown any grounds upon which we find that the arbitrator has refused to comply with or to enforce public policy. Public policy in Kentucky favors arbitration. A party who seeks to have an arbitration award vacated must assert statutory grounds upon which a court may grant relief. Conagra Poultry Co. v. Grissom Transp. Inc., 186 S.W.3d 243, 246 (Ky. App. 2006). In this case, Lake Cumberland has asked the court to do a de novo review of the arbitration award. Such is not our standard of review.
As the circuit court explained in its opinion, the arbitrator's award must be upheld since none of the factors in either KRS 417.160 or KRS 417.170 occurred here. There is no evidence that the arbitrator exceeded his authority or was fraudulent in any way. Evidence was presented and the arbitrator made a decision based upon that evidence. We, therefore, affirm the trial court's affirmation of the arbitration award.
ALL CONCUR.
