Davison Design & Development Inc v. Mario Scorza

• Court: Court of Appeals for the Third Circuit
• Decided: March 12, 2025
• Docket: 24-1442
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ______________ No. 24-1442 ______________ DAVISON DESIGN & DEVELOPMENT, INC., Appellant

v.

MARIO SCORZA ______________ On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 2:23-cv-00644) District Judge: Honorable Marilyn J. Horan ______________ Submitted Under Third Circuit L.A.R. 34.1(a) February 4, 2025

Before: RESTREPO, MONTGOMERY-REEVES, and SCIRICA, Circuit Judges.

(Opinion filed: March 12, 2025) ______________ OPINION ______________ MONTGOMERY-REEVES, Circuit Judge.

In this appeal, Davison Design & Development, Inc. (“Davison”) challenges the

District Court’s order confirming an arbitrator’s award of attorney’s fees to Mario Scorza

 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. and granting Scorza additional attorney’s fees for defending against Davison’s challenge.

For the reasons below, we will affirm.

I. BACKGROUND

In 2017 and 2018, Davison and Scorza entered into numerous agreements relating

to Scorza’s invention idea. The business relationship soured, and Scorza commenced

arbitration under the Federal Arbitration Act (the “FAA”). The arbitrator awarded Scorza

$20,042.25 in damages and $199,024.05 in attorney’s fees (collectively, the “Award”).

Davison moved in the District Court to vacate or modify the portion of the Award

concerning attorney’s fees, arguing that the arbitrator exceeded its powers under the

FAA. In response, Scorza moved to confirm the Award, requested pre- and post-

judgment interest, and requested additional attorney’s fees he incurred in answering

Davison’s vacatur motion. The District Court rejected Davison’s argument that the

arbitrator exceeded its powers, confirmed the Award, and granted Scorza additional

attorney’s fees. Davison timely appealed.

2 II. DISCUSSION1

Davison challenges the District Court’s order confirming the Award and granting

additional attorney’s fees. We address each in turn.

A. Confirmation of the Award

When reviewing an arbitration award under the FAA, “we begin with the

presumption that the award is enforceable.” Sutter v. Oxford Health Plans LLC, 675 F.3d

215, 219 (3d Cir. 2012) (“Sutter I”) (citing Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24–25 (1983)), as amended (Apr. 4, 2012), aff’d, 569 U.S. 564

(2013). As such, “[a] more deferential standard of review applies to the arbitration

award itself[,]” and “[w]e do not entertain claims that an arbitrator has made factual or

legal errors.” Id. at 219. This is because when an arbitrator makes a “good faith attempt”

to interpret and enforce a contract, “even serious errors of law or fact will not subject [its]

award to vacatur.”2 Id. at 220 (citing Brentwood Med. Assocs. v. United Mine Workers of

Am., 396 F.3d 237, 243 (3d Cir. 2005)). Instead, only four “narrow grounds” support

vacatur under the FAA. Id. at 219. And the parties agree that only one ground is

applicable here: “where the arbitrators exceeded their powers, or so imperfectly executed

them that a mutual, final, and definite award upon the subject matter submitted was not

1 The District Court had jurisdiction over this case under 28 U.S.C. § 1332. We have jurisdiction over this appeal under 28 U.S.C. § 1291. 2 Indeed, the Supreme Court endorsed this view on appeal of the Sutter case, noting that “the sole question for us is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong.” Oxford Health 31 Plans LLC v. Sutter, 569 U.S. 564, 569 (2013) (“Sutter II”).

3 made.”3 9 U.S.C. § 10(a)(4). An arbitrator exceeds its powers under 9 U.S.C. § 10(a)(4)

when it “decides an issue not submitted to [it], grants relief in a form that cannot be

rationally derived from the parties’ agreement and submissions, or issues an award that is

so completely irrational that it lacks support altogether.” Sutter I, 675 F.3d at 219–20

(citing Ario v. Underwriting Members of Syndicate 53 at Lloyds for the 1998 Year of

Acct., 618 F.3d 277, 295–96 (3d Cir. 2010)).

Davison argues that the arbitrator exceeded its authority by granting Scorza’s

request for attorney’s fees. Davison tacitly acknowledges that Scorza requested

attorney’s fees in multiple filings with the arbitrator. But, according to Davison, Scorza

only identified one statutory basis for obtaining those attorney’s fees: Pennsylvania’s

Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”). And the

arbitrator awarded attorney’s fees to Scorza under the American Inventors Protection Act

(the “AIPA”) and the Texas Invention Development Services Act (the “TIDSA”).

Davison says Scorza never pointed to these statutes as a basis for obtaining attorney’s

fees. Thus, according to Davison, the arbitrator exceeded its authority by basing the

attorney’s fee portion of the Award on the AIPA and the TIDSA. We disagree.

3 The other three grounds warranting vacatur are: “(1) where the award was procured by corruption, fraud, or undue means; (2) where there was evident partiality or corruption in the arbitrators, or either of them;” and “(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.” 9 U.S.C. § 10(a)(1)–(3).

4 Davison ignores the fact that the underlying contracts giving rise to the arbitration

explicitly invoke the AIPA and TIDSA, both of which provide for attorney’s fees.4 And

the record leaves zero doubt that attorney’s fees were contemplated as part of this

arbitration. After listing various causes of action in the fourth section of his demand for

arbitration (hereinafter, the “Arbitration Petition”), Scorza devoted the fifth section to

attorney’s fees, requesting “reasonable attorney’s fees for prosecuting” the suit stemming

from Davison’s “wrongful actions.” Scorza also “request[ed] an award of any and all

further remedies, either at law or in equity, to which he may show himself justly

entitled.” App. 66. These requests for relief did not foreclose the arbitrator from basing

the Award—including attorney’s fees—on any proper legal ground anticipated by the

underlying contracts at the center of the arbitration (i.e., the AIPA and TIDSA). In this

way, the record precludes a finding that the arbitrator had “absolutely no support at all” in

granting attorney’s fees. Ario, 618 F.3d at 295 (quoting United Transp. Union Loc. 1589

v. Suburban Transit Corp., 51 F.3d 376, 379 (3d Cir. 1995)).

Davison responds that Scorza repeatedly and exclusively sought attorney’s fees

under the UTPCPL throughout the arbitration. That is incorrect. While Scorza devotes a

section of his post-hearing brief to the UTPCPL, another section entitled

4 See, e.g., Tex. Bus. & Comm. Code § 52.152(b)(3) (“A customer to whom this section applies may recover in a civil action against the invention developer . . . attorney’s fees.”); see also Am. Inventor Prot. Act, 35 U.S.C. § 297(b)(1) (“Any customer who enters into a contract with an invention promoter and who is found by a court to have been injured . . . may recover in a civil action against the invention promoter . . . in addition to reasonable costs and attorneys’ fees—[actual and statutory damages] as the court considers just.”) (emphasis added).

5 “CONTRACTUAL DISCLAIMERS OF LIABILITY” explicitly invokes the TIDSA.

App. 161–62. It is true that Scorza tethered his attorney’s fee request to the UTPCPL in

his “Application for Fees and Costs,” App. 65–66, but for the reasons stated above, this

tethering, whether proper or not, did not neutralize the attorney’s fee provisions of the

AIPA and TIDSA or their centrality to the arbitration and the subsequent Award.

Scorza’s request for fees was not an eleventh-hour request that the arbitrator improperly

blessed with no support in the parties’ submissions; indeed, the fee issue was present

throughout the arbitration, and the parties had ample opportunity to address it in their

various submissions.

Finally, even if we agreed with Davison that the arbitrator’s justification of the

Award under the AIPA or TIDSA—or its failure to cite the UTPCPL—was an error, the

arbitrator did not exceed its authority in making it. As in Sutter I, Davison’s “allegations

. . . are simply dressed-up arguments that the arbitrator interpreted its agreement

erroneously.” 675 F.3d at 224. And, as in Sutter I, that is not enough. Because we

cannot say that the arbitrator’s awarding of attorney’s fees “was totally irrational,” id.,

Davison cannot win on this claim.5

B. Additional Attorney’s Fees

Davison also challenges the District Court’s order awarding Scorza additional

attorney’s fees, under either its inherent equitable powers or Rule 11, as sanctions for

5 Because we find that the arbitrator did not exceed its authority in granting the attorney’s fee portion of the Award under 9 U.S.C. § 10(a)(4), we need not consider, in the alternative, whether modification of the Award is warranted under 9 U.S.C. § 11(b).

6 Davison’s vacatur motion. “We review a court’s imposition of sanctions under its

inherent power for abuse of discretion.” Chambers v. NASCO, Inc., 501 U.S. 32, 55

(1991) (citing Link v. Wabash R.R. Co., 370 U.S. 626, 633 (1962)). “Although the

traditional American rule ordinarily disfavors the allowance of attorneys’ fees in the

absence of statutory or contractual authorization, federal courts, in the exercise of their

equitable powers, may award attorney[’s] fees when the interests of justice so require.”

Hall v. Cole, 412 U.S. 1, 4–5 (1973) (footnotes omitted). “Thus, it is unquestioned that a

federal court may award counsel fees to a successful party when his opponent has acted

‘in bad faith, vexatiously, wantonly, or for oppressive reasons.’” Id. at 5 (quotation

omitted).

We cannot hold that the District Court abused its discretion when it concluded that

Davison filed its vacatur motion in bad faith because the motion was based on semantics.

Davison’s own contracts and the parties’ arbitral submissions referenced the AIPA and

TIDSA laws and the request for attorney’s fees. Thus, the District Court did not commit

7 reversible error in finding that Davison ignored ample record support that attorney’s fees

were contemplated in the arbitration.6

Given these facts, we cannot say that the District Court abused its discretion.7

III. CONCLUSION

For the reasons discussed above, we will affirm the District Court’s order.

6 Because we conclude that the District Court properly exercised its equitable powers in awarding attorney’s fees, we need not reach whether the award also complies with Rule 11. See, e.g., Fellheimer, Eichen & Braverman, P.C. v. Charter Techs., Inc., 57 F.3d 1215, 1224 (3d Cir. 1995) (noting that courts have the inherent power to award sanctions independent of a Rule 11 violation). 7 Although we affirm the District Court’s award of fees, we decline Scorza’s request for additional fees incurred in this appeal.