Opinion
8:01CV548
July 29, 2002
MEMORANDUM AND ORDER
This matter is before the court on a motion by plaintiff to vacate an arbitration award, Filing No. 1, and a motion by defendant to modify or correct the arbitral award. Filing No. 3. I have carefully reviewed the record, indices of evidence, motions, briefs and relevant case law, and I conclude that the arbitrator's award should be affirmed.
Standard of Review
The scope of review of an arbitrator's decision is very narrow. See Alvey, Inc. v. Teamsters Local Union No. 688, 132 F.3d 1209, 1211 (8th Cir. 1997); United Food Commercial Workers, Local No. 88 v. Shop `N Save Warehouse Foods, Inc., 113 F.3d 893, 894 (8th Cir. 1997). The agreement must be construed broadly, resolving doubts in favor of validity of the agreement. Id. at 895. The arbitrator's award must draw its essence and being from the collective bargaining agreement. See id. Unless the award is not susceptible to the interpretation given to it by the arbitrator, the reviewing court cannot interfere with the award. See Kewanee Machinery Div. v. Local Union No. 21, 593 F.2d 314, 318 (8th Cir. 1979). This is true even if the award by the arbitrator rests on errors of fact or on misinterpretations of the contract. Alvey at 1211.
"[A]n arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice." United Steelworkers v. Enterprise Wheel and Car Corp., 363 U.S. 593, 597 (1960). The arbitrator cannot amend the contract, although he can look to outside sources to aid in interpreting it. See Keebler Co. v. Milk Drivers and Dairy Employees Union, 80 F.3d 284, 288 (8th Cir. 1996). Federal policy strongly favors arbitration. See United Paperworkers Int'l Union v. Misco, 484 U.S. 29, 37 (1987). "Because the parties have contracted to have disputes settled by an arbitrator chosen by them rather than by a judge, it is the arbitrator's view of the facts and the meaning of the contract that they have agreed to accept." Id. at 37-38. Even if the court is convinced that error has occurred, the decision of the arbitrator cannot be overturned if he acted within the scope of his authority and is construing or applying the contract. Id. at 38. Only where there is "manifest disregard" of the law is it subject to reversal. Wilko v. Swan, 346 U.S. 427, 436-37 (1953). Manifest disregard has been interpreted to mean "where the arbitrators clearly identify the applicable, governing law and proceed to ignore it." Hoffman v. Cargill, Inc., 236 F.3d 458, 462 (8th Cir. 2001).
Arbitrator's Decision
On or about October 17, 2000, Worthy Corporation of Collier County, Inc. and Worthy Corporation of Lee County, Inc. (hereafter collectively, Worthy) filed a claim with the American Arbitration Association. Worthy alleged that the Maids International, Inc. (hereafter, Maids) was guilty of fraudulent/negligent misrepresentation and violations of the Florida Unfair and Deceptive Trade Practices Act and the Florida Franchise Act. The Maids counterclaimed stating that Worthy owed it money for payments due under the franchise agreement. The parties agreed that Florida law governed the contract. In May 2001, this action was arbitrated before the Honorable D. Nick Caporale. On July 20, 2001, Judge Caporale issued an award to Worthy in the amount of $362,710.00 on their claims against the Maids. Filing 4, Ex. A. In addition, Judge Caporale awarded the Maids $21,839.32 on its counterclaim against Worthy and $13,000.00 against Worthy for attorney fees.
The arbitrator did not issue a memorandum; consequently, the parties do not know on what claims Worthy was successful. The award also did not address Worthy's request for attorney fees. Maids filed a request to clarify and correct the final award, and Worthy, as the prevailing party, filed a request for attorney fees. On September 27, 2001, the arbitrator denied the request to clarify and denied the request for attorney fees. Filing 4, Ex. B.
Worthy's Arguments
Worthy contends that it is entitled to attorney fees pursuant to Florida law, as it is the prevailing party. Worthy argues that the arbitrator manifestly disregarded Florida law. The claim filed by Worthy alleged that the Maids intentionally misrepresented how other franchisees had previously done in Florida, particularly that two previous franchisees had operated and filed in Southwest Florida. Worthy contends that these fraudulent misrepresentations entitle them to attorney fees and costs. Further, argues Worthy, Florida law states that if a franchise owner is required to pay attorney fees to enforce a franchise agreement, then the court can allow a reasonable attorney fee to the franchise owner if it prevails in an action. Fla. Stat. § 57.105(5). Thus, prevailing parties are required to receive attorney fees. Landry v. Countrywide Home Loans, Inc., 731 So.2d 137, 140 (Fla. 1st Dist.Ct.App. 1999). Florida law has held that fraud suits arising out of a misrepresentation claim are covered by Fla. Stat. § 57.105. Kelly v. Tworoger, 705 So.2d 670 (Fla. 4th Dist.Ct.App. 1998). Worthy also argues that under the Florida Unfair and Deceptive Trade Practices Act it would also be entitled to attorney fees and costs. Fla. Stat. Ann. § 501.2105. Further, reasonable attorney fees and costs are allowed under the Florida Franchise Act. Fla. Stat. Ann. 817.416(2)(b)(3). Worthy argues that because the arbitrator concluded that it won on its "claims" as opposed to its "claim," that at least one of the above statutes would have been invoked for the winning party. See Filing No. 4, Ex. A.
Maids' Arguments
The Maids requests this court to vacate the arbitrator's award pursuant to the Federal Arbitration Act (FAA) 9 U.S.C. § 1, et seq., entered in favor of Worthy. Further, the Maids argues there is no manifest disregard of the law, as required to vacate the failure to award attorney fees. Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 749 (8th Cir. 1986). The Maids argues that the arbitrator properly considered the attorney fee issue during the initial hearing and again when the motion to reconsider was filed. The award of attorney fees, argues the Maids, is discretionary, as each of the statutes relied on by Worthy say the fees "may" be awarded, and the statutes do not mandate an award of attorney fees. Also, the Maids argues that Fla. Stat. Ann. § 57.105 does not encompass Worthy's claims, and the arbitrator would have been free to so find. See, e.g., Anderson Columbia Co., Inc. v. Florida Dept. of Trans., 744 So.2d 1206, 1207 (Fla. 1st Dist.Ct.App. 1999).
Discussion
Although I am concerned by the lack of findings by the arbitrator under the narrow scope of review appropriate for this court, I find no grounds to vacate the arbitration award. I have carefully reviewed the arbitration agreement and the contract between the parties, and I conclude that there is basis both in law and in fact for the decision of the arbitrator as to the claim, counterclaim and attorney fees. I find that the conclusions drawn by the arbitrator "draws its essence from the collective bargaining agreement." Alvey, 132 F.3d 1209, 1211.
Section 6.6 of the Franchise Agreement states:
The Franchise Owner will pay TMI for any and all costs incurred by TMI in the collection of unpaid and past due Continuing Fees and any other fees or payments, including, but not limited to, the amount of actual attorney's fees paid by TMI. . . ." (Emphasis added)
I agree that the arbitrator could have concluded that the issue of fraud and misrepresentation was not included in the contractual language referring to the collection of unpaid fees. Thus, there is support for the arbitrator's decision.
Section 21.2 of the Franchise Agreement states:
The FRANCHISE OWNER will pay all attorneys' fees, costs and expenses incurred by TMI in enforcing any term, condition or provision of this Agreement ***. In any action brought pursuant to this Agreement where TMI prevails against FRANCHISE OWNER, the FRANCHISE OWNER will indemnify TMI for all costs that it incurs in any lawsuit or proceeding arising under this Agreement, including, without limitation, attorneys fees. . . ."
Again, the arbitrator could easily have concluded that there was no "enforcement" of the franchise agreement, and thus there was not entitlement to attorney fees under Florida law. I cannot conclude that the arbitrator manifestly disregarded the law, even though his interpretation might be incorrect. See Wilko, 346 U.S. 436-37 (must show manifest disregard). Further, the Florida law is less than clear in this regard. See Anderson Columbia Co., 744 So.2d at 1206) (fees limited to actions on the bond, and not for breach of contract actions), and General Motors Acceptance Corp. v. Laesser, 791 So.2d 517, 520 n. 3 (Fla. 4th Dist.Ct.App. 2001) ("legislature amended section 501.2105 to place an award of such fees and costs within the discretion of the trial court") (referencing language change by legislature from "shall" to "may"); but cf. Landry v. Countrywide Home Loans, Inc., 731 So.2d 137, 140 (fee award under section 57-105(2) mandatory). The standard is very narrow, and I cannot change the result simply because I might find otherwise. The arbitrator could have concluded that there is not contractual or statutory basis for a fee award under any of the theories of recovery raised by Worthy. THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED THAT:
1. The judgment of the arbitrator is affirmed;
2. The motion to vacate the arbitrator's award, Filing No. 1, is denied; and
3. The motion to modify or correct the arbitral award, Filing No. 3, is denied.