Clinton Water Ass'n v. Farmers Const. Co., 13979

• Decision Date: 15 May 1979
• Docket Number: No. 13979,13979
• Citation: 254 S.E.2d 692,163 W.Va. 85
• Court: West Virginia Supreme Court
• Parties: CLINTON WATER ASSOCIATION v. FARMERS CONSTRUCTION COMPANY.

Page 692

254 S.E.2d 692

163 W.Va. 85

CLINTON WATER ASSOCIATION v. FARMERS CONSTRUCTION COMPANY.

No. 13979.

Supreme Court of Appeals of West Virginia.

May 15, 1979.

Syllabus by the Court

1. "Where, in the absence of fraud, an arbitration award has been made by arbitrators pursuant to a bargained-for arbitration provision, the award is enforceable by a motion for summary judgment upon a complaint setting forth the contract, the arbitration provision, and the award of the arbitrators." Syllabus Point 2, Board of Education v. W. Harley Miller, Inc., W.Va., 236 S.E.2d 439 (1977).

2. A majority award is sufficient in an arbitration proceeding unless the agreement directing arbitration expressly requires that the award be unanimous.

James C. West, Jr., Jones, Williams, West & Jones, Clarksburg, for appellant.

Roderick A. Devison, Fairmont, for appellee.

MILLER, Justice:

Farmers Construction Company (hereinafter Farmers) urges that its motion to dismiss should have been granted in a declaratory judgment action brought by the Clinton Water Association (hereinafter Clinton) against Farmers. The declaratory judgment action sought to settle the question of whether Clinton was entitled to liquidated damages because of Farmers' delay in completing a construction contract which contained a penalty clause for late performance.

Farmers moved to dismiss the complaint, asserting the suit was foreclosed because the same issue had been previously submitted to arbitration by the parties pursuant to the arbitration clause in the construction contract, and a majority of the three arbitrators had found Clinton not entitled to liquidated damages.

The trial court overruled Farmers' motion to dismiss and proceeded to hear the case De novo. The court concluded that the arbitrators had reached an incorrect decision and by an order of March 8, 1976, awarded damages against Farmers based on the penalty clause. On appeal, Farmers urges as the primary ground for reversal that the court erred in overruling its motion to dismiss. Clinton's principal argument is that the arbitration award was not enforceable because it was not unanimous.

It has long been the rule in this State that where parties have undertaken arbitration, their award is binding and may only be attacked in the courts on the basis of fraud or on those grounds set out in W.Va. Code, 55-10-4. ¹ These principles are more fully set out in Syllabus Points 1 and 2 of Boomer Coal & Coke Co. v. Osenton, 101 W.Va. 683, 133 S.E. 381 (1926):

"Where the matters in controversy in an action at law are submitted by the parties to arbitration, under the provisions of the statute, and all parties thereto are afforded an opportunity to be heard and present all their evidence to the arbitration tribunal, the court will not thereafter, on an application to set aside the award made therein, review the evidence submitted for the purpose of determining the correctness of said award, in the absence of corruption or partiality in the arbitrators, or fraud practiced by one of the parties to the arbitration."

"In such case, where the strict rules of legal procedure are waived under the terms of the arbitration, the award will not be set aside for a mistake of law, unless it is so glaring as to shock the conscience and warrant the conclusion that the arbitrators were biased, prejudiced, or influenced by some ulterior motive."

As we stated in our first decision in the case of Board of Education v. W. Harley Miller, Inc., W.Va., 221 S.E.2d 882 (1975), our arbitration statute supplements the common law rules on arbitration. We conceive that the grounds for attack on an arbitration award, as set out in W.Va. Code, 55-10-4, essentially parallel the same grounds that existed at common law. Brodhead-Garrett Co. v. Davis Lumber Co., 97 W.Va. 165, 124 S.E. 600 (1924); Mathews v. Miller, 25 W.Va. 817 (1885); Wheeling Gas Co. v. City of Wheeling, 5 W.Va. 448 (1872).

The essential point as expressed in our second W. Harley Miller, Inc. case, is that once an arbitration award has been rendered, it is not easily impeached. Board of Education v. W. Harley Miller, Inc., W.Va., 236 S.E.2d 439 (1977). The reasons for its virtual impregnability have been expressed in Boomer Coal & Coke Co., supra :

"An arbitration, while it partakes of the nature of a Quasi judicial proceeding, it is not such a proceeding in a technical sense. It is a domestic tribunal as distinguished from a regular organized court. The very existence of the tribunal depends upon the voluntary actions of the disputants. They select their own judges. Its object and aim is to arrive at a just determination of the matters in dispute, and finally dispose of the same in a speedy and inexpensive way. The arbitrators are usually laymen, inexperienced in the technical rules of law, selected because of their intelligence and integrity, and with the belief that they will do substantial justice between the parties. To require an arbitrator to follow the fixed rules of law in arriving at his award would operate to defeat the object of the proceeding. The courts of this country have adhered with great steadiness to the general rule that awards will not be set aside for errors of law or fact on the part of the arbitrators. 2 R.C.L. 386. . . ." (101 W.Va. at 693, 133 S.E. at 385)

Boomer Coal & Coke Co. dealt with a procedural attack on an arbitration award in which the losing party attempted to assail the award in the circuit court, contending the arbitrators were guilty of certain acts of misconduct, were not impartial and had made mistakes of law. The trial court sustained a demurrer to the plaintiff's bill in equity on the basis that there was no allegation of fraud on the part of the arbitrators. This Court affirmed the dismissal.

While the second case of W. Harley Miller, Inc. involved the enforcement of the award in the circuit court by the winning party, the same substantive rule is applicable here. There, we held in the second syllabus point that in the absence of the assertion of the defense of fraud, the plaintiff was entitled to summary judgment. ²

"Where, in the absence of fraud, arbitration award has been made pursuant to a bargained-for arbitration provision, award is enforceable by a motion for summary judgment upon a complaint setting forth the contract, the arbitration provision, and the award of the arbitrators."

Here, the trial court should have granted the defendant's motion to dismiss, since the plaintiff's complaint contained no allegation of fraud on the part of the arbitrators. In fact, the entire hearing proceeded on the theory that the arbitrators made certain mistakes as to the facts and law. As we have already seen, however, under our cases these grounds are not sufficient to overturn an arbitration award. Our position is not unique. See 5 Am.Jur.2d Arbitration and Award § 167; 6 C.J.S. Arbitration § 150.

The basis on which the trial court overruled Farmers' motion to dismiss is not clear from the record. Clinton urges here that the award was void because it was not unanimous. We are cited Stewart v. County Court, 99 W.Va. 640, 130 S.E. 271 (1925), and Wheeling Gas Co. v. City of Wheeling, 5 W.Va. 448 (1872), for the proposition that at common law an arbitration award must be unanimous, but our common law rule has never been that absolute. A more accurate statement of the rule is found in the third syllabus of Stewart, supra :

"In such case, in the absence of an express or implied provision in the submission that a majority award may be made, all three of the arbitrators must join in the award to make it valid."

See 6 C.J.S. Arbitration § 90; Annot., 83 A.L.R.3d 996 (1978).

Moreover, in construing the language of arbitration clauses, this Court has been rather liberal in interpreting that language to mean that a majority vote was intended. This is perhaps because of our policy to foster and encourage arbitration agreements, as emphasized in both of the W. Harley Miller, Inc. decisions and in Boomer Coal & Coke Co., supra.

Much of the absolute language as to the necessity of a unanimous award found in Wheeling Gas Co. v. City of Wheeling, supra, is qualified by this Court's later opinion in the same case, Gas Company v. Wheeling, 8 W.Va. 320 (1875), where the Court upheld a divided arbitration award. ³

In Stiringer v. Toy, 33 W.Va. 86, 10 S.E. 26 (1889), the arbitration clause provided that the two parties would each select an arbitrator and that the two so chosen would appoint a third person, designated as an umpire....