Aguilera v. Palm Harbor Homes, Inc.

• Decision Date: 30 August 2001
• Docket Number: No. 20, No. 155., No. 665, No. 21
• Citation: 131 N.M. 228,34 P.3d 617,2001 NMCA 91
• Parties: Rosalina AGUILERA, Petitioner/Claimant-Appellee, v. PALM HARBOR HOMES, INC., d/b/a Masterpiece Housing, Newco Homes, L.P., d/b/a Palm Harbor Village, Newco Homes, d/b/a C & S Magnahomes, Palm Harbor Homes, L.P., Masterpiece Housing, and Newco Homes, Respondents-Appellants.
• Court: Court of Appeals of New Mexico

34 P.3d 617

131 N.M. 228

2001 NMCA 91

Rosalina AGUILERA, Petitioner/Claimant-Appellee, v. PALM HARBOR HOMES, INC., d/b/a Masterpiece Housing, Newco Homes, L.P., d/b/a Palm Harbor Village, Newco Homes, d/b/a C & S Magnahomes, Palm Harbor Homes, L.P., Masterpiece Housing, and Newco Homes, Respondents-Appellants.

Nos. 20,665, 21,155.

Court of Appeals of New Mexico.

August 30, 2001.

Certiorari Granted October 30, 2001.

J.C. Robinson, H.R. Quintero, Robinson, Quintero & Lopez, P.C., Silver City, NM, for Appellee.

Thomas L. Murphy, The Murphy Law Firm, LLC, Albuquerque, NM, for Appellants.

Certiorari Granted, No. 27,144, October 30, 2001.

OPINION

ARMIJO, Judge.

{1} These consolidated appeals present us with the opportunity to examine the arbitration process in the context of the increasing demand for and dependence on methods of alternative dispute resolution. Specifically, we address the extent of an arbitrator's authority under the Arbitration Act, NMSA 1978, §§ 44-7-1 to -22 (1971).¹ Respondents, Palm Harbor Homes, Inc., et al., appeal from both the district court judgment confirming an arbitration award that awarded punitive damages to the claimant and the order awarding Petitioner, Rosalina Aguilera, additional attorney's fees. We affirm the district court's confirmation of the arbitration award and remand the order awarding additional attorney's fees to be vacated by the district court.

BACKGROUND AND FACTS

{2} Shortly after the death of her husband, Aguilera bought a mobile home from Palm Harbor Homes, Inc., et al. (Palm Harbor) in March 1997. As a condition of this purchase, Aguilera signed an arbitration provision, under which she agreed to settle any claims relating to the purchase "solely by means of final and binding arbitration before the American Arbitration Association (AAA) in accordance with the rules and procedures of the AAA." Following a protracted dispute over this purchase, the parties eventually stipulated to a court order requiring them to resolve their differences through arbitration, pursuant to the rules of the AAA. At the end of the arbitration, which was held on February 22-23, 1999, the Commercial Arbitration Tribunal (Tribunal) (composed of former District Judge Rebecca Sitterley, the neutral arbitrator, former Justice Dan Sosa, designated by Aguilera, and Matthew P. Holt, Esq., designated by Palm Harbor) announced its decision. The Tribunal found that Aguilera had revoked acceptance of the mobile home and was entitled to a refund of the purchase price of the home plus interest. The Tribunal also ruled that Palm Harbor was to remove the mobile home from Aguilera's property, or it would be deemed abandoned. Aguilera was awarded compensatory damages for emotional distress and for out-of-pocket expenses. The Tribunal also awarded punitive damages of $100,000 and found that Aguilera was entitled to her reasonable attorney's fees and costs under the Manufactured Housing Act, the precise amount of which would be decided after Aguilera's attorneys submitted a bill of costs and affidavits supporting a request for attorney's fees. The Tribunal determined that Aguilera's son had not proven a claim against Palm Harbor and was not entitled to damages. The award stated that the decision of the arbitrators was unanimous, "with the exception of the amount of punitive damages, to which Matthew P. Holt, Esq., dissents."

{3} Aguilera filed the arbitration award with the district court on March 16, 1999. Shortly afterwards, Aguilera and her son filed an application with the district court regarding the arbitration award. Palm Harbor then filed a motion with the district court for appellate review of the award. Aguilera's application sought additional compensatory damages for out-of-pocket expenses and emotional distress, additional punitive damages, and an award of damages for her son. Palm Harbor's motion sought to vacate the awards of emotional distress damages and punitive damages, arguing that there was no basis for emotional distress damages and that, under New Mexico law, arbitrators were not authorized to award punitive damages. The district court entered an order on March 24, 1999, in which it found the parties were in agreement regarding the contract damages and the award of attorney's fees and costs, although the amounts of fees and costs were still to be determined.

{4} The court held a hearing on April 30, 1999 on the remaining disputed issues. On May 27, 1999, the court entered a judgment and order in which it found that (1) there was no indication that either party objected to the Tribunal's consideration of punitive damages; and (2) the award of punitive damages would be treated as advisory and adopted by the court. The court confirmed the award of attorney's fees awarded by the Tribunal. Aguilera then moved for additional attorney's fees for proceedings before the district court, which the court awarded under the Unfair Practices Act (UPA). Palm Harbor filed two separate appeals, one challenging the authority of the Tribunal to award punitive damages and the other challenging the additional award of attorney's fees. We consolidated these appeals.

DISCUSSION

{5} Palm Harbor appeals the award of punitive damages and the award of additional attorney's fees. Palm Harbor raises four issues in connection with punitive damages: (1) the district court erred in confirming the award when the Tribunal had no authority to award punitive damages; (2) the district court's finding that the Tribunal made a recommendation of punitive damages rather than an award is not supported by substantial evidence; (3) the district court erred in failing to find that Aguilera was barred from recovering punitive damages because she had agreed to arbitrate all claims and punitive damages could not be awarded by arbitrators; and (4) the district court erred in awarding punitive damages because Aguilera failed to invoke the jurisdiction of the trial court to make an award. In connection with the additional award of attorney's fees under the UPA, Palm Harbor raises four issues: (1) the district court lacked jurisdiction to award additional attorney's fees after the entry of a judgment on attorney's fees; (2) the recovery of attorney's fees was substantive and within the jurisdiction of the Tribunal; (3) Aguilera is judicially estopped from claiming additional attorney's fees, having previously conceded that the district court lacked jurisdiction to make such an award; and (4) no statute, rule, or agreement permits recovery of attorney's fees in post-arbitration proceedings in the district court and the Arbitration Act does not empower the district court to make an award of attorney's fees. We first address the punitive damages issue and second address the award of attorney's fees.

I. Punitive Damages

{6} As this Court stated in Casias v. Dairyland Ins. Co., 1999-NMCA-046, ¶ 7, 126 N.M. 772, 975 P.2d 385 (quoting Fernandez v. Farmers Ins. Co., 115 N.M. 622, 625, 857 P.2d 22, 25 (1993)), "[o]ur Supreme Court has `repeatedly reaffirmed the strong public policy in this state, expressed in the Arbitration Act [§§ 44-7-1 to -22], in favor of resolution of disputes through arbitration.'" Consistent with this policy, under Sections 44-7-12 and 44-7-13, "[i]n reviewing the confirmation of an arbitration award by the trial court, this Court is restricted to a determination of whether substantial evidence in the record supports the trial court's findings of fact and whether the trial court correctly applied the law to the facts when making its conclusions of law." Casias, 1999-NMCA-046, ¶ 8, 126 N.M. 772, 975 P.2d 385 (citing Town of Silver City v. Garcia, 115 N.M. 628, 632, 857 P.2d 28, 32 (1993)).

{7} Because New Mexico encourages resolving disputes through arbitration, the district court's fact finding is limited to the issues raised in the application to vacate or modify the award and is not a de novo review of the evidence before the arbitrators. Melton v. Lyon, 108 N.M. 420, 421, 773 P.2d 732, 733 (1989). In Casias, this Court emphasized that "[t]he Arbitration Act controls the scope of the trial court's review of an arbitration award." Casias, 1999 NMCA 046, ¶ 7, 126 N.M. 772, 975 P.2d 385. Thus, under Sections 44-7-12 and 44-7-13, the authority of the district court to vacate, modify, or correct an award is "generally limited to allegations of fraud, partiality, misconduct, excess of powers, or technical problems in the execution of the award." Id.

{8} In this case, the trial court found that Palm Harbor had not alerted the Tribunal to the issue of its lack of authority to award punitive damages and that it would consider the award to be advisory and would adopt it. Palm Harbor argues, however, that the trial court's finding that the award was advisory was not supported by substantial evidence and that the district court should not have confirmed the award because the arbitrators exceeded their powers when they awarded Aguilera $100,000 in punitive damages.

{9} Palm Harbor relies on Shaw v. Kuhnel & Assocs., Inc., 102 N.M. 607, 608-09, 698 P.2d 880, 881-82 (1985) to support its contention that arbitrators in New Mexico have no authority to award punitive damages. In Shaw, our Supreme Court held that the defendants in that case could not compel the plaintiffs to arbitrate their claims because the defendants were Texas corporations who were not authorized to do business, or to file suit, in New Mexico. Id. at 608, 698 P.2d at 882. The Court also stated that claims of fraud in the inducement and punitive damages were not "arbitrable under the language of the contract as written in this case." Id. The Court stated that because fraud in the inducement is a legal ground for revoking an arbitration agreement, such a claim cannot be resolved pursuant to that agreement. The Court then cited to Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 386 N.Y.S.2d 831, 353 N.E.2d 793, 796-97 (1976) for the principle that...