Filed: Jun. 09, 1998
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ Nos. 97-2718/2739 _ Val-U Construction Company of * South Dakota, * * Appellee/Cross-Appellant, * * * Appeal from the United States * District Court for the v. * District of South Dakota. * Rosebud Sioux Tribe and the * United States for the use and * benefit of the Rosebud Sioux Tribe, * * Appellants/ Cross-Appellees. * _ Submitted: March 11, 1998 Filed: June 9, 1998 _ Before BEAM and HEANEY, Circuit Judges, and WATERS,1 District Judge. _
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ Nos. 97-2718/2739 _ Val-U Construction Company of * South Dakota, * * Appellee/Cross-Appellant, * * * Appeal from the United States * District Court for the v. * District of South Dakota. * Rosebud Sioux Tribe and the * United States for the use and * benefit of the Rosebud Sioux Tribe, * * Appellants/ Cross-Appellees. * _ Submitted: March 11, 1998 Filed: June 9, 1998 _ Before BEAM and HEANEY, Circuit Judges, and WATERS,1 District Judge. _ W..
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 97-2718/2739
___________
Val-U Construction Company of *
South Dakota, *
*
Appellee/Cross-Appellant, *
*
* Appeal from the United States
* District Court for the
v. * District of South Dakota.
*
Rosebud Sioux Tribe and the *
United States for the use and *
benefit of the Rosebud Sioux Tribe, *
*
Appellants/ Cross-Appellees. *
___________
Submitted: March 11, 1998
Filed: June 9, 1998
___________
Before BEAM and HEANEY, Circuit Judges, and WATERS,1 District Judge.
___________
WATERS, District Judge.
1
The Honorable H. Franklin Waters, United States District Judge for the Western
District of Arkansas, sitting by designation.
The Rosebud Sioux Tribe (the "Tribe") appeals the district court's2 entry of
summary judgment in favor of Val-U Construction Company of South Dakota ("Val-
U") on the issue of whether an award Val-U obtained from an arbitration hearing, in
which the Tribe chose not to participate, is valid. Val-U cross-appeals the district
court's denial of its motion to amend the judgment to include prejudgment interest from
the date of the arbitration award to the entry of judgment.
I. BACKGROUND
In July of 1989, the Tribe and Val-U entered into a contract for the construction
of housing units on the Rosebud Sioux Indian Reservation. The contract contained an
arbitration provision. Problems arose during the performance of the contract and the
Tribe terminated the contract in September of 1990. Val-U demanded arbitration of
the contract termination, but the Tribe refused to participate in the arbitration
proceedings. Instead, the Tribe filed a lawsuit in federal court. The following is an
outline of the factual and procedural history relevant to the court's opinion in this case.
October 26, 1990 Val-U filed a demand for arbitration of the contract
termination with the American Arbitration Association
("AAA").
December 11, 1990 The Tribe notified the AAA that it would not participate
in arbitration based on principles of sovereign immunity.
March 5, 1991 The AAA advised the Tribe that a hearing in the matter
would begin on May 6, 1997.
2
The Honorable Charles B. Kornmann, United States District Judge for the
District of South Dakota.
–2–
April 9, 1991 The Tribe filed suit in the United States District Court
for the District of South Dakota against Val-U claiming,
among other things, breach of contract.
May 3, 1991 Val-U filed an answer and pleaded as an affirmative
defense the contract's arbitration clause and, later,
collateral estoppel based on the subsequent arbitration
award in its favor. Val-U also asserted various
counterclaims, including breach of contract. (The district
court did not compel arbitration of the Tribe's claims
against Val-U, or stay the arbitration of Val-U's claims
against the Tribe).
May 6, 1991 The AAA held an arbitration hearing and Val-U
presented its case. The Tribe was not represented at the
hearing.
May 23, 1991 The Tribe reasserted its position to the AAA that it did
not believe it had to participate in arbitration based on
principles of sovereign immunity.
May 29, 1991 The Tribe acknowledged receipt of the "proposed"
arbitration award by the AAA and again stated its
position that it was not bound by such an award under
principles of sovereign immunity.
June 18, 1991 The AAA issued an award in favor of Val-U, finding the
Tribe in breach of the contract and awarded Val-U
$793,943.58, plus interest, fees, and costs. A copy of
the award was forwarded to the Tribe on June 20, 1991.
–3–
March 30, 1994 The district court, the Honorable John B. Jones, upon the
Tribe's motion for a voluntary dismissal, dismissed the
Tribe's claims with prejudice, and dismissed Val-U's
breach of contract claim on the basis that it was barred
by the Tribe's sovereign immunity to the extent it sought
recovery beyond recoupment.
March 16, 1995 Val-U appealed the dismissal of its counterclaims against
the Tribe. On appeal, we held that the arbitration clause
waived the Tribe's sovereign immunity as to all claims
under the contract. Thus, we remanded to the district
court to hear Val-U's counterclaims, and to determine the
validity of the arbitration award Val-U obtained against
the Tribe. See Rosebud Sioux Tribe v. Val-U Const. Co.
of South Dakota, Inc., 50 F.3d 560 (8th Cir. 1995).
March 6, 1997 On remand, the district court, the Honorable Charles B.
Kornmann, upon consideration of Val-U's motion for
summary judgment, held that the doctrine of res judicata
barred the Tribe from challenging the arbitration award
and ordered the clerk to enter judgment in favor of Val-U
in the amount of the arbitration award.
May 15, 1997 The district court denied Val-U's motion to amend the
judgment to include pre-judgment interest from the date
of the arbitration award to the entry of judgment
–4–
II. THE TRIBE'S APPEAL
The issues presented by the Tribe's appeal were decided by summary judgment.
The court reviews a district court's grant of summary judgment de novo, and examines
the record in the light most favorable to the nonmoving party. Lang v. Star Herald, 107
F.3d 1308, 1311 (8th Cir.), cert. denied,
118 S. Ct. 114 (1997). See also Fed. R. Civ.
P. 56(c).
A.
The Tribe's first argument on appeal concerns the court's previous opinion in this
case on the issue of sovereign immunity. Specifically, the Tribe asserts that both the
Supreme Court and the Eighth Circuit cases have consistently held that, absent a clear
and unequivocal waiver, Indian tribes possess sovereign immunity. The Tribe further
asserts that the prevailing federal law at the time that Val-U demanded arbitration was
that an arbitration provision in a contract was not a clear and unequivocal waiver of
sovereign immunity. Thus, the Tribe contends that when this court held in Rosebud,
supra, that the arbitration provision in the contract constituted a waiver of sovereign
immunity, the decision was contrary to the prevailing federal law on what represents
a waiver of sovereign immunity. Therefore, the Tribe asserts that our decision in
Rosebud should only be applied prospectively.
It is well established that Indian tribes posses the same common-law immunity
from suit traditionally enjoyed by sovereign powers. Santa Clara Pueblo v. Martinez,
436 U.S. 49, 58 (1978) (citations omitted). The Supreme Court has stated that "[t]his
aspect of tribal sovereignty, like all others, is subject to the superior and plenary control
of Congress. But without congressional authorization, the Indian Nations are exempt
from suit."
Id. (internal quotation marks and citation omitted). Furthermore, the
Supreme Court has made it clear that "a waiver of sovereign immunity cannot be
–5–
implied but must be unequivocally expressed." Id. (internal quotation marks and
citations omitted).
This court has also recognized a tribe's sovereign immunity and has held that a
waiver of immunity cannot be implied but must be unequivocally expressed. See
Rosebud, 50 F.3d at 562; Weeks Const. Inc. v. Oglala Sioux Housing Authority,
797
F.2d 668, 670 (8th Cir. 1986). In Rosebud, we addressed the issue of whether an
arbitration clause in a contract constituted a waiver of sovereign immunity. The
arbitration provision reads: "[a]ll questions of dispute under this agreement shall be
decided by arbitration in accordance with the Construction Industry Arbitration Rules
of the American Arbitration Association." Appellant's Separate Appendix at 92. We
found that the language of the arbitration clause was "spare but explicit that disputes
under the contract 'shall be decided by arbitration.'"
Rosebud, 50 F.3d at 562.
Therefore, we concluded that "the parties clearly intended a waiver of sovereign
immunity . . . ."
Id. We noted that "while the Supreme Court has expressed its
protectiveness of tribal sovereign immunity by requiring that any waiver be explicit, it
has never required the invocation of 'magic words' stating that the tribe hereby waives
its sovereign immunity."
Id. at 563.
The Tribe contends that our decision in Rosebud was inconsistent with our
previous holding in American Indian Agric. Credit Consortium, Inc. v. Standing Rock
Sioux Tribe, 780 F.2d 1374 (8th Cir. 1985). In Standing Rock, we held that an Indian
tribe had not waived its sovereign immunity through certain language in a promissory
note. Specifically, the promissory note provided for several remedies in the event of
a default by the Standing Rock Sioux Tribe, "in addition to such other and further rights
and remedies provided by law."
Id. at 1376. The note also awarded attorney fees in
the event of a collection action and stated that the law of the District of Columbia
would apply. In refusing to find an express waiver in the language of the promissory
note, we stated that "Standing Rock did not explicitly consent to submit any dispute
over repayment on the note to a particular forum, or to be bound by its judgment."
Id.
–6–
at 1380. We noted that the promissory note did not "expressly speak to Standing
Rock's consent to suit or to waiver of immunity from suit."
Id. at 1376 (footnote
omitted). The court stated that to find an express waiver of sovereign immunity in such
language "simply asks too much."
Id. at 1381.
In Rosebud, we distinguished Standing Rock by stating that unlike Standing
Rock:
the parties [in Rosebud] specifically designated an arbitral forum to settle
disputes under the contract, as well as arbitration rules that explicitly
provide for judicial enforcement of any arbitration award. The parties
clearly manifested their intent to resolve disputes by arbitration, and the
Tribe waived its sovereign immunity with respect to any disputes under
the contract.
Id. at 563. Thus, our opinion in Rosebud was consistent with our holding in Standing
Rock because in Rosebud we determined that by agreeing to arbitration, the Tribe
expressly consented to submit any disputes arising under the contract to arbitration and
to be bound by the arbitrator's determination. Therefore, we did not imply a waiver of
sovereign immunity as the Tribe suggests.
The Supreme Court has recently held that:
[i]n the ordinary case, no question of retroactivity arises. Courts are as
a general matter in the business of applying settled principles and
precedents of law to the disputes that come to bar. . . . Where those
principles and precedents antedate the events on which the dispute turns,
the court merely applies legal rules already decided, and the litigant has
no basis on which to claim exemption from those rules. It is only when
the law changes in some respect that an assertion of nonretroactivity may
be entertained, the paradigm case arising when a court expressly overrules
a precedent upon which the contest would otherwise be decided
–7–
differently and by which the parties may previously regulated their conduct.
James B. Beam Distilling, Co. v. Georgia, 501 U.S. 529, 534 (1991) (citation omitted).
We conclude that our decision in Rosebud was not contrary to the principles and
precedents relating to waivers of tribal sovereign immunity. Moreover, our opinion in
Rosebud did not overrule a previous opinion or decision of this court.3 Indeed, we
were simply applying the law at the time to the facts presented before us. The Tribe,
or its counsel, simply misjudged how the court would rule in this instance. Judge
Kornmann described the Tribe's course of conduct best in his opinion on this issue:
[t]he Tribe, represented by counsel of their choosing, consciously and
intentionally took a reckless and totally ill-conceived course without any
substantial legal basis. The Tribe argues that the Eighth Circuit decision
in this case changed existing law. That argument is rejected. There was
no Eighth Circuit case directly on point. While the Tribe obviously did
not correctly anticipate the appellate ruling as to sovereign immunity, they
had no way of knowing or even forecasting what that decision would
ultimately be. There is no dispute that the Tribe had repeated notices
from the arbitrator and a great deal of time to carefully decide what to do.
* * * The extremely high risk strategy used by the Tribe and their
attorneys (and it is important to note that the Tribe's present attorneys had
no part in such decisions) was akin to being served with process in a
lawsuit and ignoring the matter, hoping that an appellate court would
ultimately find lack of jurisdiction. This is inexcusable neglect.
Appellant's Addendum at 3.
3
The Tribe asserts that our decision was contrary to Pan America Co. v. Sycuan
Band of Mission Indians, 884 F.2d 416, 420 (9th Cir. 1989), where the court held that
an arbitration clause in a contract does not effect a waiver of a tribe's sovereign
immunity. It goes without saying, however, that the state of the law in the Ninth Circuit
at the time the Tribe refused to arbitrate is not controlling precedent in this circuit.
–8–
Therefore, we hold that our opinion in Rosebud should be applied retroactively.
As a result, the Tribe is not entitled to sovereign immunity from Val-U's breach of
contract claims.
B.
The rest of the Tribe's arguments concern the validity of the arbitration award.
First, the Tribe contends that the preferred disposition of a case is on the merits and not
by default.4 The Tribe asserts that the arbitration award should be vacated, and it
should be given an opportunity to present its case because: (1) significant sums of
money are involved; (2) significant facts exist that establish the Tribe has a meritorious
defense against Val-U's claims; and (3) the Tribe did not participate in the arbitration
proceedings based on its determination that the law at the time afforded it sovereign
immunity from such a proceeding. We have already determined that the Tribe acted
unreasonably in refusing to participate in the arbitration hearing based on its belief that
it possessed immunity from suit, and thus, unless the Tribe can show that, under the
Federal Arbitration Act (the "FAA"), it is entitled to have the award vacated, the award
should be upheld.
This court recently held that "[j]udicial review of an arbitration award is
extremely limited. Beyond the grounds for vacation provided in the FAA, an award
will only be set aside where 'it is completely irrational or evidences a manifest disregard
for the law.'" Kiernan v. Piper Jaffray Companies, Inc., 137 F.3d 588, 594 (8th Cir.
1998) (quoting Lee v. Chica,
983 F.2d 883, 885 (8th Cir. 1993) (internal quotation
marks and citations omitted)).
4
We note that this case was not decided by default. Val-U presented evidence
to the arbitrator at the hearing, and the arbitrator issued an award based on the evidence
submitted. This is in accordance with Rule 30 of the Construction Industry Arbitration
Rules which forbids an award to be issued solely on the default of a party.
–9–
Under the FAA, a court may vacate an arbitration award in any of the following
cases: (1) where the award was procured by corruption, fraud, or undue means; (2)
where there was evident partiality or corruption in the arbitrators; (3) where the
arbitrators were guilty of misconduct in refusing to postpone the hearing, or in refusing
to hear evidence material to the controversy, or of any other misbehavior; or (4) where
the arbitrators exceeded their powers, or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter was not made. 9 U.S.C.A. § 10(a)
(Supp. 1997). Under § 12 of the FAA, a party can file a motion to "vacate, modify, or
correct an award." 9 U.S.C.A. § 12 (1970). Such a motion, however, "must be served
upon the adverse party or his attorney within three months after the award is filed or
delivered." Id. Furthermore, we have held that a "failure to file a motion to vacate,
modify, or correct within three months of either the initial award or the Clarification of
Award waived any defenses to confirmation that might be asserted in a timely motion
to vacate." Domino Group, Inc. v. Charlie Parker Memorial Foundation,
985 F.2d 417,
419 (8th Cir. 1993) (citations omitted).
First, there is no evidence that the Tribe ever made any motion to the district
court to vacate the arbitration award. Second, even if the Tribe had made such a
motion, the Tribe would not have been entitled to an order vacating the award. The
Tribe has not contended that Val-U obtained its arbitration award through fraud and
there is no evidence of corruption in the arbitration proceedings. In addition, the Tribe
never requested that the AAA postpone the hearing until the issue of sovereign
immunity was resolved. Thus, in addition to the fact that it appears the Tribe's motion
to vacate the arbitration award is clearly untimely, there are no grounds under the FAA
to grant such a request. We cannot say that the arbitration award is completely
irrational or evidences a manifest disregard for the law.
The Tribe relies on the case of Food Handlers Local 425, Amalgamated Meat
Cutters and Butcher Workmen of North America, AFL-CIO v. Pluss Poultry, Inc., 260
F.2d 835, 837 (8th Cir. 1958), where the court held that an arbitration clause must
–10–
contain a provision that permits one party to initiate and prosecute to a conclusion an
arbitration proceeding without the other party's participation. Otherwise, the court
held, an award obtained under such circumstances is void and unenforceable.
In Food Handlers, there was a collective bargaining agreement providing that
disputes arising between the employer and the union could be submitted by either party
to the Board of Arbitrators. The arbitration provisions in the agreement provided that
the Board of Arbitrators would consist of a three member panel, one member to be
appointed by each party, and a third member to be chosen by the first two members.
A dispute arose and the union demanded arbitration, however, the employer contended
that the disputes were not arbitrable, and refused to cooperate in the arbitration
proceedings. The district court held that the arbitration award was void and
unenforceable and this court affirmed. In doing so, the court held that the employer
never consented to arbitration of disputes where it took no part in the selection of any
arbitrator.
We believe that Food Handlers is easily distinguished. In this case, the parties
agreed that "[a]ll questions of dispute under this agreement shall be decided by
arbitration in accordance with the Construction Industry Arbitration Rules of the
American Arbitration Association." Appellant's Separate Appendix at 92. Rule 30 of
the Construction Industry Arbitration Rules of the American Arbitration Association
states that:
[u]nless the law provides to the contrary, the arbitration may proceed in
the absence of any party or representative who, after due notice, fails to
be present or fails to obtain a postponement. An award shall not be made
solely on the default of a party. The arbitrator shall require the party who
is present to submit such evidence as the arbitrator may require for the
making of an award.
–11–
Therefore, unlike the employer in Food Handlers, the Tribe agreed, via the
arbitration clause, that an arbitration hearing may proceed in its absence as long as it
was given notice of the hearing and an opportunity to obtain a postponement of the
hearing. Val-U asserts that it presented evidence before the arbitrator and based on the
evidence offered, the arbitrator entered a final award. In our view, the Tribe agreed to
this possibility and is undeserving of an order vacating the award.5
C.
The Tribe contends that because Val-U never sought to compel the Tribe to
participate in the arbitration proceedings, the Tribe was not obligated to participate in
the hearing. The Tribe asserts that Val-U clearly had this mechanism available to them,
and because they did not use it, the Tribe had no duty to participate at the arbitration
hearing.
Section 4 of the FAA states that: "[a] party aggrieved by the alleged failure,
neglect, or refusal of another to arbitrate under a written agreement for arbitration may
petition any United States district court . . . for an order directing that such arbitration
5
We note that the Tribe asserts in its brief that the contract with Val-U was never
approved by the Bureau of Indian Affairs, and thus, the validity of the contract and the
arbitration provision is at issue. See 25 U.S.C.A. § 81 (1983) (Secretary of the Interior
and the Commissioner of Indian Affairs must approve all contracts made with Indians
or Indian tribes "relative to their lands."). Furthermore, the Tribe indicates that it may
have been "duped into making such agreement." Brief of Appellant at 26 n. 6. We find
the Tribe's arguments totally without merit. The court has reviewed each of the letters
written by the Tribe's counsel at the time, Mason D. Morisset, and at no time did Mr.
Morisset even suggest that the agreement was invalid, or that the Tribe was
fraudulently induced into signing it. In addition, he did not assert that the arbitration
clause was not part of the agreement. Moreover, the Tribe did not assert these
arguments in the district court, and thus, we will not address them here.
–12–
proceed in the manner provided for in such agreement." 9 U.S.C.A. § 4 (1970)
(emphasis added). Other circuits have held that the procedural requirements of § 4 are
permissive, not mandatory. See Bernstein Seawell & Kove v. Bosarge, 813 F.2d 726,
733 (5th Cir. 1987); Kentucky River Mills v. Jackson,
206 F.2d 111, 120 (6th Cir.
1953).
We believe that § 4 of the FAA is clearly permissive. As such, Val-U was not
required to petition the district court for an order compelling the Tribe to participate in
the arbitration proceedings.
D.
The Tribe asserts that at the time that the arbitration hearing took place, this
lawsuit was pending in federal district court. Thus, the Tribe contends that Val-U was
required to move the district court to stay the federal lawsuit pending the outcome of
the arbitration proceedings.
Section 3 of the FAA states that:
[i]f any suit or proceeding is brought in any of the courts of the United States
upon any issue referable to arbitration under an agreement in writing for such
arbitration, the court in which such suit is pending, upon being satisfied that the
issue involved in such suit or proceeding is referable to arbitration under such
an agreement, shall on application of one of the parties stay the trial of the action
until such arbitration has been had in accordance with the terms of the
agreement, providing that the applicant for the stay is not in default proceeding
with such arbitration.
9 U.S.C.A. § 3 (1970).
–13–
Section § 3, like § 4, is permissive, not mandatory. Nowhere in the statute does
it require either party to file a motion to stay. Thus, Val-U was not required to file a
motion in district court to stay the lawsuit pending the outcome of the arbitration
hearing.
E.
The Tribe contends that while Val-U secured an arbitration award in this case
in June 1991, it has never taken any steps to confirm the award. The Tribe asserts that
even if its motion for summary judgment in this case is considered as an effort to
confirm its judgment, that motion was not made until August 10, 1993, more than two
years after the award was entered. The Tribe asserts that Val-U should be estopped
from pursuing enforcement of the arbitration award.
Section 9 of the FAA states that:
[i]f 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.A. § 9 (1970).
The Fourth Circuit has held that the language of § 9 is permissive, that the one-
year period is not a statute of limitations, and that a party may apply for confirmation
of an award beyond the one-year period. Sverdrup Corp. v. WHC Constructors, Inc.,
989 F.2d 148 (4th Cir. 1993). The court stated that if it construed § 9 to be a statute
of limitations, the court "would merely encourage, at the expense of judicial economy,
–14–
the use of another analogous method of enforcing awards." Id. at 155. But cf., In re
Consolidated Rail Corp.,
867 F. Supp. 25 (D.D.C. 1994) (holding that a party may
apply for confirmation only within the one year period).
We hold that § 9 is a permissive statute and does not require that a party file for
confirmation within one year. If Congress intended for the one year period to be a
statute of limitations, then it could have used the word "must" or "shall" in place of
"may" in the language of the statute. Thus, Val-U may seek confirmation of its award
more than one year after the award was issued.
F.
The Tribe asserts that the lower court erred when it determined that the
unconfirmed arbitration award was res judicata and entered summary judgment in Val-
U's favor. The Tribe cites Gruntal & Co. v. Steinberg,854 F. Supp. 324 (D.N.J. 1994),
where the court held that "[a]bsent judicial confirmation, an arbitration award will not
result in a final judgment and cannot, therefore, have preclusive effect on subsequent
litigation." Id. at 337 (internal quotation marks, footnote and citation omitted).
Val-U asserts that the award is a final judgment on the merits. Val-U contends
that the fact that the award was not confirmed is irrelevant because given the summary
nature of a confirmation proceeding, and the limited review a court of appeals has in
such cases, confirmation would have easily been obtained. Thus, Val-U asserts that
having the award confirmed would have changed nothing in this case and the Tribe
should not be able to avoid the doctrine of res judicata on this issue.
The doctrine of res judicata bars a party from asserting a claim if three
requirements are met: "(1) the prior judgment was entered by a court of competent
jurisdiction; (2) the decision was a final judgment on the merits; and (3) the same cause
–15–
of action and the same parties or their privies were involved in both cases." United
States v. Brekke, 97 F.3d 1043, 1047 (8th Cir. 1996) (citations omitted). The Tribe
asserts that in each of the cases where this court determined that an arbitrator's award
constituted a final judgment on the merits, both parties had been a part of the arbitration
proceedings and had been able to argue their case on the merits. The Tribe contends
that it would be unfair in this case to award Val-U judgment against the Tribe when the
Tribe has not had the opportunity to present its claims and defenses.
The court, although not addressing "unconfirmed awards," has held that an
arbitrator's award constitutes a final judgment for the purposes of collateral estoppel.
See American Federation of Television & Radio Artists Heath & Retirement Funds v.
WCCO Televison, Inc., 934 F.2d 987, 991 (8th Cir. 1991). In holding that the award
was a final judgment, the court noted that the parties "had a full and fair opportunity to
litigate the issue in that proceeding."
Id.
In Wellons, Inc. v. T.E. Ibberson Co.,
869 F.2d 1166, 1169 (8th Cir. 1989),
however, we stated that for purposes of collateral estoppel "[t]he fact that the award
in the present case was not confirmed by a court and was modified by a subsequent
settlement agreement does not vitiate the finality of the award." The Second Circuit
has expressly held that, under New York law, an unconfirmed arbitrator's award can
furnish the basis for res judicata. Jacobson v. Fireman's Fund. Ins. Co.,
111 F.3d 261,
267-68 (2nd Cir. 1997).6
6
We note that the Second Circuit in Jacobson declined to follow its earlier
opinion in Leddy v. Standard Drywall, Inc., 875 F.2d 383, 385 (2nd Cir. 1989), where
it held that an unconfirmed arbitration award could not be given preclusive effect.
Leddy was one of the cases relied upon by the district court in
Gruntal, supra.
–16–
We conclude that the Tribe's breach of contract claims are barred by the
arbitration award. The Tribe was given a full and fair opportunity to litigate the issues
at the arbitration hearing, but chose not to participate in the hearing, knowing full well
that an award would be entered against it by the arbitrator. It is clear that had Val-U
filed for confirmation of its award prior to filing its motion for summary judgment, the
district court would have confirmed the award because under the FAA, confirmation
of an arbitration award is mandatory unless the award is vacated, modified or corrected.
Indeed, we have stated that "[a]bsent a timely motion to vacate, in most cases the
confirmation of an arbitration award is a summary proceeding that makes what is
already a final arbitration award a judgment of the court." Domino Group, Inc., 985
F.2d at 420 (internal quotation marks and citation omitted). It appears from the record
that the district court simply confirmed the arbitration award at the same time that it
granted summary judgment in favor of Val-U. Therefore, we hold that the principles
of res judicata and collateral estoppel apply to the arbitration award in this case.
II. VAL-U'S CROSS-APPEAL
The issue presented on cross-appeal was not decided by the summary judgment
motion, but was decided by the court on Val-U's motion to amend the judgment. A
decision to deny prejudgment interest is reviewed on appeal under the abuse of
discretion standard. Smith v. World Ins. Co., 38 F.3d 1456, 1467 (8th Cir. 1994).
Val-U asserts that it is entitled to prejudgment interest from the date of the
arbitration award to the date of the entry of judgment. Val-U contends that in this case,
judgment was awarded to Val-U in 1991, that the Tribe has had the use and benefit of
its money for over six years, and that there are no exceptional circumstances that would
make such an award inequitable.
–17–
This court has held that:
[a]s a general rule, prejudgment interest is to be awarded when the
amount of the underlying liability is reasonably capable of ascertainment
and the relief granted would otherwise fall short of making the claimant
whole because he or she has been denied the use of money which was
legally due.
Stroh Container Co. v. Delphi Ind., Inc., 783 F.2d 743, 752 (8th Cir. 1986) (citations
omitted). In addition, the court stated that "awarding prejudgment interest is intended
to serve at least two purposes: to compensate prevailing parties for the true costs of
money damages incurred, and, where liability and the amount of damages are fairly
certain, to promote settlement and deter attempts to benefit unfairly from the inherent
delays of litigation."
Id. The court held that prejudgment interest should be awarded
"unless exceptional or unusual circumstances exist making the award of interest
inequitable."
Id. (citations omitted).
The district court, relying on our opinion in Stroh, found that prejudgment
interest would be inequitable in this case because Val-U was dilatory in getting the
award confirmed, did not seek a stay of the proceedings, and did not seek an order to
compel the Tribe to participate. The district court determined that Val-U should not
be rewarded for such delays. We cannot say that the district judge abused his
discretion in not awarding pre-judgment interest in this case.
III. CONCLUSION
The district court's entry of summary judgment in favor of Val-U is affirmed in
full. The district court's denial of Val-U's motion to amend the judgment is also
affirmed.
–18–
A true copy.
ATTEST:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
–19–
