Cotton States Mut. Ins. Co. v. Nunnally Lumber Co.
| Decision Date | 26 September 1985 |
| Docket Number | No. 70280,70280 |
| Citation | 335 S.E.2d 708,176 Ga.App. 232 |
| Parties | COTTON STATES MUTUAL INSURANCE COMPANY v. NUNNALLY LUMBER COMPANY. |
| Court | Georgia Court of Appeals |
E. Wycliffe Orr, Gainesville, for appellant.
H.A. Stephens, Jr., Decatur, William P. Rowe, Lawrenceville, Paul R. Koehler, Atlanta, for appellee.
Arbitration.
In July of 1980, the Hoffmans contracted with Nunnally to construct a house. The contract required that the Hoffmans purchase and maintain property insurance on the construction site to the full insurable value, to include the interests of Nunnally as well as the Hoffmans and any subcontractors and subsubcontractors.
In October, the Hoffmans applied to Cotton States for an insurance policy and forwarded a premium check for the policy. The house was nearly completed when it was destroyed by fire on January 13, 1981. No policy of insurance had ever been issued by Cotton States prior to the fire, but Cotton States paid the Hoffmans on February 25 for the loss. When the Hoffmans finally received the written policy, it was a "farm and ranch" policy and not a "builder's risk" policy, as had been initially applied for. Nunnally was not included as a payee on the draft. The contractor, believing it was still owed money from the Hoffmans for work performed before the fire, filed liens on the property and also made a demand for arbitration pursuant to the construction contract. The Hoffmans petitioned the court for a stay of arbitration and for removal of a cloud from the title. Nunnally responded with a motion to compel arbitration. The Hoffmans amended their complaint to add a claim for damages based on negligence in causing the fire. Cotton States moved and was permitted to intervene and align itself with the Hoffmans, asserting that it was subrogated to their rights against Nunnally. The insurer also successfully moved the court to compel arbitration, which the Hoffmans contested but Nunnally did not.
All claims of the parties were submitted to a panel of three arbitrators selected by the parties. After three days of hearings, the arbitrators awarded $12,232.50 to Nunnally on the construction contract and denied the "counterclaim" of Cotton States; the fees and expenses of the costs of arbitration were to be borne equally by the parties. Finally, the arbitrators provided: "This Award is in full settlement of all claims submitted to this arbitration."
Cotton States petitioned for rehearing, which was denied, and petitioned the court to vacate the award. Nunnally sought court confirmation of the award. Following a hearing and the submission of briefs, the trial court entered an extensive order and judgment. It confirmed the award, made it the judgment of the court, and foreclosed and declared Nunnally's lien as a special lien against the Hoffmans' property. Only Cotton States appealed. It contends that the court erred in denying its petition to vacate the arbitrators' award, in failing to enter judgment in its favor as a matter of law, in granting Nunnally's application to confirm the award, and in making such award the judgment of the court.
1. Cotton States maintains that the arbitrators' award reveals on its face such a total misapprehension by the arbitrators of the true nature of the claims, parties and issues as to deprive the award of any claim of fairness and propriety in the disposition of the claims.
The thrust of the insurer's argument here is that the language in the award denominating Cotton States' claim as a "counterclaim" shows total misunderstanding by the arbitrators about the alignment of the parties and their claims in the litigation, so as to invalidate the award.
The voluminous record conclusively demonstrates otherwise. The issues were clearly set out by the court in the order submitting the disputes to arbitration, the parties set out their positions before the arbitration hearings, and all was thoroughly aired during the hearings. Though terse, the award covers all of the claims. The mere denomination of the insurer's interest as a "counterclaim," absent any evidence of misunderstanding by the arbitrators, is of little significance. The arbitrators' use of the term was but a choice of vocabulary in a non-litigation setting rather than a designation of pleadings and thus of status in the context of the Civil Practice Act. See OCGA § 9-11-13. This is supported by the fact that upon the insurer's petition for rehearing, the arbitrators offered to change the objected-to terminology from "counterclaim" to "claim," but Cotton States declined. The use of "counterclaim" was not inappropriate because the dispute had originated with Nunnally's lien and demand for arbitration of the unpaid contract price and had been countered with the Hoffmans' assertion of negligence. Cotton States intervened to stand with the Hoffmans in that responsive position.
Arbitrators need not be lawyers. To arbitrate a construction contract, "the court shall seek to appoint persons having general knowledge and experience as to the type of dispute or controversy to be arbitrated." OCGA § 9-9-87(c). When such persons use language outside the framework of a lawsuit which may have a precise legal meaning, it is not robbed of its more generally understood meaning.
Moreover, the law provides for changing the award when "[t]here [is] ... a mistake in the description of any ... thing ... referred to in the award; ... or [t]he award is imperfect in a manner of form, not affecting the merits of the controversy." OCGA § 9-9-91(a)(1) and (3). Even in the more formal litigation setting, substance rather than nomenclature of legal pleadings determines their nature. Cotton v. Fed. Land Bank, 246 Ga. 188, 191, 269 S.E.2d 422 (1980). The "title" that the arbitrators gave Cotton States' claim would not have been binding on the trial court in its consideration of the propriety of the award. See Bank of Cumming v. Moseley, 243 Ga. 858, 859, 257 S.E.2d 278 (1979).
We find no error below based on misapprehension of the parties' claims on the part of the arbitrators due to the use of the word "counterclaim."
2. Cotton States contends that the arbitrators' award failed to answer or rule upon the issues submitted for determination. We do not agree.
The record shows that the arbitrators held a prehearing conference at which the parties were required to state their respective positions and the issues to be resolved. As Cotton States admits, "the issues to be resolved by the arbitrators were clearly defined."
The award on its face shows that the arbitrators made determinations about the dispositive issues; they were required to do no more. They determined that the Hoffmans had no valid claim for damages from Nunnally caused by the fire which could be set off against the sum found owed by the Hoffmans to Nunnally for construction. Thus the panel was compelled to deny the insurer's claims to subrogation here. Whether it had such a right or whether it had been waived was moot, once Nunnally was absolved of liability for the damage resulting from the fire.
OCGA § 9-9-90(a) provides in part that, "[t]he award shall be in writing and signed by the arbitrators joining in the award." There is no mandate that the award include specific findings or reasons, or that it expressly address each and every issue and collateral issue arising in an arbitration. Of course, the trial court may vacate an arbitrators' award for, inter alia, "such imperfect execution of it that a final and definite award upon the subject matter submitted was not made; ..." OCGA § 9-9-93(b)(3). (Emphasis supplied.) Here, the arbitrators made a final and definite award upon the submitted subject matter. There were four primary issues at the outset. First, was the dispute subject to arbitration pursuant to the contract? That was decided affirmatively by the court, leaving three issues for the arbitrators. Did the owners owe money to the contractor for construction? The arbitrators found that they did and awarded $12,232.50. Did the contractor cause the fire through negligence? The arbitrators were not persuaded that it did and thus found in favor of Nunnally on this issue, granting the Hoffmans nothing. Finally, was the insurer subrogated to the rights of the owner regarding any negligence for the fire? There was no need to reach this question because the contractor was found not to be liable for the fire. Deciding the issues between the original parties to the dispute rendered moot the...
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