Lou-Con, Inc. v. Trans-Vac Systems, LLC and Philadelphia Indemnity Insurance Company

• Court: Louisiana Court of Appeal
• Decided: December 4, 2019
• Docket: 2019-CA-0576
• Status: Published

Opinion

LOU-CON, INC. * NO. 2019-CA-0576

VERSUS * COURT OF APPEAL TRANS-VAC SYSTEMS, LLC * AND PHILADELPHIA FOURTH CIRCUIT INDEMNITY INSURANCE * COMPANY STATE OF LOUISIANA *******

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2016-03803, DIVISION “D” Honorable Nakisha Ervin-Knott, JUDGE ****** Judge Daniel L. Dysart ****** (Court composed of Judge Roland L. Belsome, Judge Daniel L. Dysart, Judge Paula A. Brown)

Paula M. Wellons Travis B. Wilkinson TAYLOR WELLONS POLITZ & DUHE, APLC 1515 Poydras Street, Suite 1900 New Orleans, LA 70112 COUNSEL FOR PLAINTIFF/APPELLANT

Keith J. Bergeron Brian S. Schaps DEUTSCH KERRIGAN, L.L.P. 755 Magazine Street New Orleans, LA 70130 COUNSEL FOR DEFENDANT/APPELLEE

AFFIRMED

DECEMBER 4, 2019 This is an appeal of a trial court judgment granting a motion to confirm an

arbitration award. For the reasons that follow, we affirm the trial court’s judgment.

FACTS AND PROCEDURAL HISTORY

In 2011, the State of Louisiana retained Skanska USA Building, Inc., and

MAPP Construction, LLC (collectively “Skanska/ Mapp) to construct a new

Hospital in New Orleans – the University Medical Center. Skanska/MAPP, the

general contractor on the project, then entered into a subcontract with defendant,

Trans-Vac Systems, L.L.C., to develop an automated waste and linen system for

the hospital. In turn, Trans-Vac subcontracted with plaintiff, Lou-Con, Inc., to

“perform all the work necessary to install the Trash and Linen Piping System

Work.”

On December 22, 2015, Lou-Con filed a Sworn Statement and Claim under

the Louisiana Public Works Act in the sum of $304,895.11, the amount it claimed

was owed by Trans-Vac under the subcontract, as well as expenses it incurred

when it was required to store excess materials ordered by Trans-Vac.

Lou-Con then instituted this action on April 14, 2016, seeking those sums

set forth in its lien, legal interest, attorney’s fees and costs. In response, Trans-Vac

1 and its surety, Philadelphia Indemnity Insurance Company (collectively, “Trans-

Vac”), filed an exception of prematurity, seeking to invoke a mandatory arbitration

provision in the subcontract. The trial court held a hearing on the exception and by

judgment dated July 25, 2016, granted the exception, staying the proceeding

pending arbitration.

The parties then participated in an arbitration proceeding during which a

final hearing was held from February 27-28 and on March 1, 2018. Thereafter, the

parties provided closing spreadsheet submissions to the arbitrator and had

argument from March 5-6, 2018. A final award was made by the arbitrator on

March 7, 2018, “fully resolving all claims submitted in arbitration,” and awarding

$8,767.05 to Trans-Vac and against Lou-Con.1

On June 7, 2018, Lou-Con filed a “Motion to Lift Stay and to Modify and

Correct the Arbitrator’s Final Award Pursuant to LSA- R.S. §9:4211” in the

pending matter. In this motion, Lou-Con sought to lift the stay so that the trial

court could “correct an evident material miscalculation of figures” and enter

judgment modifying and correcting the arbitration award. Trans-Vac opposed the

motion, asserting that the motion was not served within the time period set forth in

the Louisiana Binding Arbitration Law, and more specifically, La. R.S. 9:4213.

The trial court denied Lou-Con’s motion by judgment dated November 14, 2018.

In the interim, on November 8, 2018, Trans-Vac filed a Motion with

incorporated memorandum to confirm the arbitration award. Lou-Con opposed the

motion on the same basis that it previously sought, unsuccessfully, to modify the

arbitration award for “material miscalculations,” attaching its June 7, 2018 motion

1 The parties have both indicated that Trans-Vac had claims against Lou-Con as well.

2 and memorandum in support of its position. In reply, Trans-Vac, again, asserted

that the motion to modify the arbitration award was untimely.

The trial court held a hearing on the motion February 15, 2019 and rendered

judgment on March 7, 2019, granting Trans-Vac’s motion, confirming the

arbitration award and entering judgment in the amount of $8,767.05 in Trans-Vac’s

favor.

This appeal followed.

DISCUSSION

At the outset, we note that Lou-Con moved for a suspensive appeal of the

March 7, 2019 judgment granting the motion to confirm the arbitration award.

Lou-Con had previously timely appealed the trial court’s November 14, 2018

judgment denying its motion to correct the arbitration award, but then withdrew its

motion for appeal as premature.2

In this appeal, Lou-Con contends that the trial court erred in confirming the

arbitration award and, similarly, erred in failing to correct “evident material

miscalculations of figures and arithmetical errors.” It seeks a reversal of the trial

court’s judgment confirming the arbitration award and a judgment from this Court

“correcting” the miscalculation and rendering judgment in its favor of $92,385.31.

Trans-Vac does not address the issue of whether the arbitration award

2 Trans-Vac comments in its appellate brief that, while Lou-Con sought a suspensive appeal, it “failed to post its appeal bond within the statutory time prescribed by La. Code Cov. Proc. Art. 2124.” It is true that “[i]n a suspensive appeal the appellant must file both the petition for appeal and furnish the security within the delay allowed in La.C.C.P. art. 2123.” Franco v. Franco, 04- 0967, p. 7 (La. App. 4 Cir. 7/28/04), 881 So.2d 131, 135 (quoting Blue, Williams & Buckley v. Brian Investments, Ltd., 96-1451, p. 5 (La. App. 1 Cir. 6/20/97), 706 So.2d 999, 1002). Here, the suspensive bond, filed on April 30, 2019 (albeit the date set forth in the trial court’s Order granting the suspensive appeal), was not filed within thirty days of the “expiration of the delay for applying for a new trial” under La. C.C.P. art. 2323. However, the consequence of this failure is that “the suspensive appeal should be converted to a devolutive appeal, so long as the appellant has met the requirements for taking a devolutive appeal.” Stevens v. St. Tammany Par. Gov't, 16-0534, p. 8 (La. App. 1 Cir. 1/18/17), 212 So.3d 568, 574.

3 contained mathematical errors; rather Trans-Vac focuses strictly on its argument

that Lou-Con failed to timely serve its motion to modify the arbitration award, an

argument it raised in response to Lou Con’s motion. Indeed, Trans-Vac takes the

position that the trial court “correctly refused to modify the arbitration award after

Lou-Con failed to timely serve its motion.”

A careful reading of the transcript of the November 5, 2018 hearing on Lou

Con’s motion reflects that, while the majority of the arguments of counsel focused

on the timeliness of the motion to correct the arbitration award, the trial court never

made a ruling on the issue of its timeliness. Although the trial judge commented

that “timeliness or untimeliness is a big issue,” the trial court made no actual

finding that the motion was untimely. To the contrary, after the parties argued

their positions on the timeliness of the motion, the trial judge simply indicated that

she was “not going to modify this.” Thus, neither the November 14, 2018

judgment, nor the comments of the trial judge reflect a ruling on the issue of Lou-

Con’s timeliness in serving its motion.

As concerns the trial court’s March 7, 2019 judgment confirming the

arbitration award, the record does not contain a transcript from the February 15,

2019 hearing on the motion to confirm the arbitration award. Nor does the record

contain any written reasons for judgment. Thus, there is no indication that the trial

court considered the issue of the timeliness of Lou-Con’s motion in response to

Trans-Vac’s motion to confirm the arbitration award. However, our review of the

judgment granting Trans-Vac’s motion is de novo, and we therefore conduct an

independent review of the record and the issue of the timeliness of Lou-Con’s

motion. See Brice Bldg. Co. v. Southland Steel Fabricators, Inc., 15-1110, p. 3

4 (La. App. 4 Cir. 6/17/16), 194 So.3d 1285, 1288 (“[a]n appellate court reviews a

district court judgment confirming an arbitration award de novo.”).

Our jurisprudence is well-settled that “[b]ecause of the strong public policy

favoring arbitration, arbitration awards are presumed to be valid.” Mack Energy

Co. v. Expert Oil & Gas, L.L.C., 14-1127, p (La. 1/28/15), 159 So.3d 437, 441-42

(quoting National Tea Co. v. Richmond, 548 So.2d 930, 932 (La.1989)). This

presumption is rooted in “the longstanding recognition that arbitration is intended

to ‘speedily ... determine disputes and controversies by quasi judicial means, thus

avoiding the formalities, the delay, the expense, and the vexation of ordinary

litigation.’” Id., p. 7, 159 So.3d at 442 (quoting Housing Authority of New Orleans

v. Henry Ericsson Co., 197 La. 732, 745, 2 So.2d 195, 199 (1941)).

Arbitration awards are not necessarily absolute, however, and there is

statutory authority for modifying or correcting an arbitration award under certain

circumstances. As pertains to the instant matter, La. R.S. 9:4211 (A) provides that

an arbitration award may be modified or corrected “[w]here there was an evident

material miscalculation of figures or an evident material mistake in the description

of any person, thing, or property referred to in the award.”

Importantly, a party seeking to have an arbitration award modified or

corrected must comply with La. R.S. 9:4213, which states, in pertinent part as

follows:

Notice of a motion to vacate, modify, or correct an award shall be served upon the adverse party or his attorney within three months after the award is filed or delivered, as prescribed by law for service of a motion in an action.

Lou-Con urges this Court to construe La. R.S. 9:4213 as setting forth a

prescriptive period which should be strictly construed against prescription, arguing

5 that the requirement that a party serve an adverse party within three months would

have the effect of “shorten[ing] the period” provided by the statute. Lou-Con

maintains that this result would be untenable as it would be “contrary to

Louisiana’s policy of liberal application of prescriptive statutes.”

There is no dispute that Lou-Con’s motion was not served within three

months of the arbitration award. Thus, the only manner by which this Court could

find Lou-Con’s motion to be timely is to substitute the term “filed” for the term

“served,” which this Court is without power to do. While it is a court’s “province

‘to consider the reason and spirit of a law,’ we are ‘not free to rewrite the law to

effect a purpose that is not otherwise expressed.’” Foti v. Holliday, 09-0093, p. 13

(La. 10/30/09), 27 So.3d 813, 821, quoting Naquin v. Titan Indem. Co. 00-1585, p.

9 (La.2/21/01), 779 So.2d 704, 710. The Foti Court likewise recognized that “it is

not the function of the judicial branch in a civilian legal system to legislate . . . .”

Id. See also, Kelly v. State Farm Fire & Cas. Co., 14-1921, p. 20 (La. 5/5/15),

169 So.3d 328, 340 (“the wording proposed [by appellant] amounts not to statutory

interpretation, but to a wholesale rewriting . . . . Such rewriting is not, however, the

role of this or other Louisiana courts.”).

It is clear that compliance with the statute is dependent on the service of a

motion to modify and not on the filing of the motion. The use of the term “shall”

indicates the mandatory nature of this requirement. See Borel v. Young, 07-0419,

p. 11(La. 11/27/07), 989 So.2d 42, 50 (“[t]he use of the word ‘shall’ . . . must be

interpreted as a mandatory provision”); See also, La. C.C.P. art. 5053 (“Words and

phrases are to be read in their context, and are to be construed according to the

common and approved usage of the language employed. The word ‘shall’ is

mandatory, and the word “may” is permissive”); Ernest N. Morial New Orleans

6 Exhibition Hall Auth. v. New Limits New Limits, LLC, 16-0706, p. 8 (La. App. 4

Cir. 4/5/17), 215 So.3d 974, 978.

Few Louisiana cases have addressed the issue of the timeliness of a motion

filed under La. R.S. 9:4213 and none have found that the filing of a motion within

the three-month period is sufficient to comply with the statute. To the contrary,

our case law has cited the statute precisely as it was written by the Legislature.

See, e.g., St. George Fire Prot. Dist. No. 2 v. J. Reed Constructors, Inc., 17-1006,

p. 3 (La. App. 1 Cir. 2/20/18), 243 So.3d 145, 148; NCO Portfolio Mgmt., Inc. v.

Walker, 08-1011 p. 7 (La. App. 3 Cir. 2/4/09), 3 So.3d 628, 633; FIA Card Servs.,

N.A. v. Gibson, 43,131 p. 5 (La. App. 2 Cir. 3/19/08), 978 So.2d 1230, 1234;

Robert S. Robertson, Ltd. v. State Farm Ins. Companies/State Farm Fire & Cas.

Companies, 05-435, p. 6 (La. App. 5 Cir. 1/17/06), 921 So.2d 1088, 1091.

Moreover, as Lou-Con recognizes, Louisiana’s arbitration law is virtually

identical to federal arbitration law. Accordingly, this Court may look to federal

law in interpreting Louisiana’s arbitration laws. Lakeland Anesthesia, Inc. v.

CIGNA Healthcare of LA, Inc., 01-1059, p. 3 (La. App. 4 Cir. 2/6/02), 812 So.2d

695, 698.

The federal counterpart to La. R.S. 9:4213 is 9 U.S.C.A. § 12, which states,

in identical language that “[n]otice of a motion to vacate, modify, or correct an

award must be served upon the adverse party or his attorney within three months

after the award is filed or delivered.” Federal cases (and Louisiana cases)

interpreting this federal statute have likewise consistently held that the timeliness

of a motion to modify or correct is dependent on service of the motion within the

three month period. See Chase Bank USA, N.A. v. Leggio, 43,751, p. 4 (La. App. 2

Cir. 12/3/08), 999 So.2d 155, 158; NCO Portfolio Mgmt., Inc., 08-1011 p. 7, 3

7 So.3d at 633; Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir.1986)( “[t]he Federal

Arbitration Act requires that motions to vacate be served on the opposing party

within three months after the award is filed or delivered.”); Parsons, Brinckerhoff,

Quade & Douglas, Inc. v. Palmetto Bridge Constructors, 647 F. Supp. 2d 587, 591

(D. Md. 2009); Sverdrup Corp. v. WHC Constructors, Inc., 989 F.2d 148, 151 (4th

Cir. 1993)(“a motion to modify ‘must be served’ within three months of the

award”); American Postal Workers Union, AFL–CIO v. United States Postal Serv.,

823 F.2d 466, 470 (11th Cir.1987) (noting that 9 U.S.C. § 12 “plainly requires

service, rather than mere filing, within 3 months of the arbitration award.”).

Furthermore, federal jurisprudence indicates that a party who fails to comply

with 9 U.S.C.A. § 12 by serving notice of a motion to modify (or vacate) an

arbitration award forfeits the right to a review of the arbitration award. See, e.g.,

Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598, 600 (8th Cir. 1981)(“[n]otice

motion to vacate, modify, or correct an award must be served upon the adverse

party or his attorney within three months after the award is filed or delivered . . . A

party to an arbitration award who fails to comply with the statutory precondition of

timely service of notice forfeits the right to judicial review of the award.”); Int'l

Bhd. of Elec. Workers, Local Union No. 969 v. Babcock & Wilcox, 826 F.2d 962,

966 (10th Cir.1987)(“[a] party to an arbitration award who fails to comply with the

statutory precondition of timely service of notice forfeits the right to judicial

review of the award.”); Corey v. New York Stock Exch., 691 F.2d 1205, 1212 (6th

Cir. 1982); Franco v. Prudential Bache Sec., Inc., 719 F. Supp. 63, 64 (D.P.R.

1989); Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, 477 F.3d 1155,

1158 (10th Cir. 2007).

8 Similarly, federal case law indicates that efforts to modify or correct an

arbitration award must be made within the parameters of 9 U.S.C.A. § 12 and may

not be raised in defense of a motion to confirm an arbitration award. See, e.g.,

Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir. 1986)(“We adopt the rule . . . that

court held that once the three-month period has expired, an attempt to vacate an

arbitration award could not be made even in opposition to a later motion to

confirm.”); Florasynth, Inc. v. Pickholz, 750 F.2d 171, 175 (2d Cir.

1984)(“defendant’s failure to move to vacate the award within the three month

time provided precludes him from later seeking that relief when a motion is made

to confirm the award.”); Cullen v. Paine, Webber, Jackson & Curtis, Inc., 863 F.2d

851, 854 (11th Cir. 1989)(“the failure of a party to move to vacate an arbitral

award within the three-month limitations period prescribed by section 12 of the

United States Arbitration Act bars him from raising the alleged invalidity of the

award as a defense in opposition to a motion brought . . . to confirm the award.”).

The St. George Court has touched on this issue as well and rejected the

argument “that the time delay in [La. R.S. 9:]4213 may be avoided by

characterizing the challenge under Sections 4210 and 4211 as an affirmative

defense, then raising it in the answer to the petition for confirmation.” St. George,

17-1006, p. 5, 243 So.3d at 149. In that case, no motion to vacate, modify or

correct the arbitration award was filed and when one party moved to confirm the

arbitration award, the other party sought to have it modified. The Court held:

Section 4213 limits the time period for such challenges to three months and provides for no exceptions. Thus, the failure to serve notice of a motion to vacate, modify, or correct the award within the three-month time period is a waiver of an objection under either Sections 4210 or 4211.

9 Id.

In the instant matter, therefore, and based on the foregoing well-settled

principles, we find that Lou-Con failed to timely move to modify or correct the

arbitration award. As such, the trial court properly confirmed the arbitration

award. Case law indicates that “a proceeding to confirm an arbitration award the

confirmation of an arbitration award is a summary proceeding that merely makes

what is already a final arbitration award a judgment of the court.” St. George, 17-

1006, p. 7, 243 So.3d at 150. See also, Taylor, 788 F.2d at 220 (a confirmation

proceeding “is intended to be summary: confirmation can only be denied if an

award has been corrected, vacated, or modified.”); FIA Card Servs., N.A. v. Smith,

44,923, p. 9 (La. App. 2 Cir. 12/22/09), 27 So. 3d 1100, 1106-07 (“[i]t was

mandatory that the trial court confirm the award, so long as the award had not been

vacated, modified, or corrected.”); D.H. Blair & Co. v. Gottdiener, 462 F.3d 95,

110 (2d Cir. 2006).

We are not persuaded that the case of Cole v. Hiller, 30,397 (La. App. 2 Cir.

4/8/98), 715 So.2d 451, supports the contention that filing a motion to modify an

award within the three month period satisfies the requirements of La. R.S. 46:4213,

as Lou-Con contends. While the Cole Court noted that the motion to modify an

arbitration award that contained mathematical errors and which was otherwise

ambiguous was “filed . . . within three months after the joint request [for the

arbitrator to correct the award] was denied,” Id., p. 7, 715 So.2d 455, this language

cannot be viewed in a vacuum or to suggest that the statute does not require service

of a motion to modify. Indeed, the Court quoted the statute as it is written; namely,

that “[n]otice of a motion to modify or correct an award ‘shall be served upon the

adverse party or his attorney within three months after the award is filed or

10 delivered, as prescribed by law for service of a motion in an action.’” Id., p. 4, 715

So.2d at 454.

The issue in Cole centered on the timeliness of a motion to modify based on

when the time period to do so began. There, the parties agreed that there were

calculation errors in the award and both sought to have the arbitrator modify the

award. The motion to modify was then filed in the district court within three

months of the arbitrator’s denial of the request for modification. Based on these

facts, the Cole Court held that it “[could not] say the trial court erred in finding

Cole’s motion timely under § 4213.” Id., p. 8, 715 So.2d at 455.

Thus, in light of the foregoing, Lou-Con’s motion to correct or modify the

arbitration award was not timely served as required by La. R.S. 46:2413. Lou-Con

therefore waived any defenses it “may have had to confirmation that [might have

been] asserted in a timely motion to vacate.” Domino Grp., Inc. v. Charlie Parker

Mem’l Found., 985 F.2d 417, 419 (8th Cir. 1993). Because the arbitration award

in this case had not timely been modified or corrected, the trial court’s judgment

confirming the arbitration award was proper.

CONCLUSION

For the reasons set forth more fully herein, the judgment of the trial court is

affirmed.