Huff v. M&J Constr. & Remodeling

• Decision Date: 21 July 2022
• Docket Number: 1375-2021
• Parties: LESTER ANDREW HUFF v. M&J CONSTRUCTION AND REMODELING, LLC
• Court: Court of Special Appeals of Maryland

LESTER ANDREW HUFF v. M&J CONSTRUCTION AND REMODELING, LLC

No. 1375-2021

Court of Special Appeals of Maryland

July 21, 2022

Circuit Court for Montgomery County Case No. 486191V

Graeff, Tang, Kenney, James A., III (Senior Judge, Specially Assigned), JJ.

OPINION ^[*]

Graeff, J.

This appeal arises from a dispute between Lester Andrew Huff ("Dr. Huff"), appellant, and M&J Construction and Remodeling, LLC ("M&J"), appellee regarding residential renovation work that M&J performed at Dr. Huff's home in Silver Spring, Maryland. The parties submitted the dispute to arbitration with the American Arbitration Association ("AAA"), and the arbitrator issued a Final Award in favor of M&J, in the amount of $45,916, plus costs, and $24,162 in attorney's fees (the "award").

M&J subsequently filed a petition to confirm the award in the Circuit Court for Montgomery County. Dr. Huff then filed a petition to vacate, or alternatively, to modify the award. After a hearing, the circuit court denied Dr. Huff's petition, confirmed the award, and granted M&J's request for attorney's fees.

On appeal, Dr. Huff presents the following questions for this Court's review, which we have reordered and rephrased slightly, as follows:

1. Did the circuit court err in denying Dr. Huff's petition to vacate, or alternatively, to modify the award on grounds that there was evident partiality by the arbitrator?

2. Did the circuit court err in denying Dr. Huff's petition to vacate, or alternatively, to modify the award on grounds that the arbitrator exceeded the scope of his authority in awarding M&J attorney's fees?

3. Did the circuit court err in denying Dr. Huff's petition to vacate, or alternatively, to modify the award on grounds that the arbitrator manifestly disregarded the law in awarding M&J "consequential damages," i.e., lost profits and unrecovered office overhead?

For the reasons set forth below, we shall affirm the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Underlying Dispute

In 2020, Dr. Huff began a renovation project at his home in Silver Spring. Although he was not a construction general contractor, he acted as the general contractor for this project. Dr. Huff contracted with M&J to provide demolition of portions of the house to make room for the renovation and replacement of building systems. Because Dr. Huff's home was originally constructed in the late 1890s, there were no drawings indicating what, if anything, was behind the walls in the house or which walls were primary structural elements. Therefore, the walls needed to be demolished to uncover systems that needed to be replaced or upgraded so the project architect could complete his design.

After the operating systems were completed and replacement work was installed, M&J was to replace the walls. Dr. Huff wanted the house to be ready for occupancy by August 2020. M&J started construction at Dr. Huff's home in early April 2020. Difficulties ensued. In May 2020, Dr. Huff terminated M&J's work.

II. The Arbitration Agreement and Selection of the Arbitrator

In October 2020, Dr. Huff and M&J entered into an Agreement to Arbitrate (the "Agreement"), submitting "all claims or disputes arising out of or relating to work performed" by M&J at Dr. Huff's residence to "arbitration under the auspices of the [AAA] in accordance with the Construction Industry Arbitration Rules currently in effect." The Agreement further provided that "[t]he award rendered by the arbitrator shall be final, and judgment may be entered in accordance with applicable law by any court having jurisdiction thereof."

Dr. Huff subsequently filed a demand for arbitration with the AAA, asserting that M&J owed him $100,000 for uncompleted work and costs to repair M&J's defective work.^[1]M&J counterclaimed, alleging that Dr. Huff owed it $74,875 for, among other things, unpaid work, unreimbursed expenses, "lost profits on unperformed work," and "lost opportunity to bid other work." Zachary Chapman, Esquire, represented Dr. Huff, and Joseph Katz, Esquire, represented M&J in the arbitration.

The AAA presented Dr. Huff and M&J with five candidates to serve as arbitrator. Laurence Schor, Esquire, a member of the District of Columbia law firm of Asmar, Schor & McKenna, PLLC ("ASM"), was one of the five candidates. Dr. Huff and M&J ranked the five candidates on separate lists, indicating their respective preference for arbitrator. The AAA subsequently notified Dr. Huff and M&J that Mr. Schor was appointed as the arbitrator.

On February 2, 2021, Mr. Schor completed the AAA's General Arbitrator Oath Form (the "Oath Form"). The first section of the Oath Form, entitled "Disclosure Obligations," provided:

It is most important that the parties have complete confidence in the arbitrator's impartiality. Therefore, please disclose any past or present relationship with the parties, their counsel, or potential witnesses, direct or indirect, whether financial, professional, social or of any other kind. This is a continuing obligation throughout your service on the case and should any additional direct or indirect contact arise during the course of the arbitration or if there is any change at any time in the biographical information that you have provided, it must also be disclosed. Any doubts should be resolved in favor of disclosure. If you are aware of direct or indirect contact with such individuals, please describe it below. Failure to make timely disclosures may forfeit your ability to collect compensation. All disclosures will be brought to the attention of the parties.

In the second section of the Oath Form, Mr. Schor answered 15 yes-or-no questions regarding potential conflicts of interest. Although Mr. Schor responded in the negative to 14 of the questions, he responded in the affirmative to question three, which asked: "Have you had any professional or social relationship with counsel for any party in this proceeding or the firms for which they work?" Regarding his affirmative response to question three, Mr. Schor commented that he had previously "met" Mr. Katz, counsel for M&J, "but it was years ago."

The third section of the Oath Form, entitled "Arbitrator's Oath," provided:

I attest that I have reviewed my biographical information provided to the parties on this case and confirm it is current, accurate and complete.

I attest that I have diligently conducted a conflicts check, including a thorough review of the information provided to me about this case to date, and that I have performed my obligations and duties to disclose in accordance with the Rules of the [AAA], Code of Ethics for Arbitrators in Commercial Disputes, the parties' agreement, and applicable law pertaining to arbitrator disclosures.

I further affirm that consistent with the applicable Rules of the American Arbitration Association, the Code of Ethics for Arbitrators in Commercial Disputes, the parties' agreement, and applicable law:

• That I am fit to serve on the above-referenced arbitration and able to fully execute my responsibilities during all phases of the case;

• That I will keep confidential all matters relating to the above-referenced arbitration;

• That I will maintain a professional demeanor and appearance of impartiality during all phases of this case;

• That I will endeavor to effectively manage all phases of this case with a commitment to speed, economy and just resolution in a manner consistent with the parties' expectations;

• That I will bill parties responsibly and ethically and will review my bills for reasonableness relative to the nature and scope of the activity performed prior to submitting them to the AAA.

Mr. Schor reviewed the Notice of Compensation Arrangements for the case, initialed the

Oath Form, and accepted the appointment as arbitrator.

III. Pre-Hearing Conference and Supplemental Disclosure

On the afternoon of February 22, 2021, the arbitrator, Dr. Huff, M&J, and their respective counsel participated in a pre-hearing telephone conference. During the conference call, Mr. Katz, counsel for M&J, noted that he was representing the plaintiff in a pending federal action, and another member of the arbitrator's law firm, ASM, was representing the defendant in that case. Mr. Katz indicated that he "was uncomfortable proceeding" because that might taint the arbitrator's impartiality towards him and his client. The arbitrator stated that "he had already consulted with ethics counsel who advised that it was not a conflict of interest, that he did not know details of the case and would not inquire thereof, and [he] advised that he could, and would, remain impartial." At that time, both Mr. Katz and Mr. Chapman indicated that they were amenable to proceeding with the arbitration. They never received from the AAA a written disclosure regarding the arbitrator and the involvement of his firm in the federal action.

Later that same day, February 22, 2021, the AAA sent to Mr. Katz and Mr. Chapman an email that contained a supplemental disclosure from the arbitrator. The email stated, in part: "I am the arbitrator in another case with Mr. Chapman serving as counsel for Respondent." The email requested that counsel notify the AAA of any objections by March 1, 2021. Neither Dr. Huff nor M&J objected to the supplemental disclosure.

IV. Evidentiary Hearing and the Award

On April 29, 2021, the arbitrator conducted an evidentiary hearing.^[2] Dr. Huff and M&J subsequently submitted to the arbitrator post-hearing memoranda.

On May 26, 2021, the arbitrator issued the award in favor of M&J and against Dr. Huff. The arbitrator found that "[t]here was a contract," noting that M&J identified its scope of work by email, with no objection, it supplied pricing information, and there...