Gissel v. Hart

• Decision Date: 20 April 2009
• Docket Number: No. 26639.,26639.
• Citation: 676 S.E.2d 320
• Parties: Kevin GISSEL and Christina Gissel (Formerly Christina Eckley), Petitioners, v. Charles HART and Gene Hart, Respondents. Wade A. McEachern, Petitioner, v. Charles Hart and Gene Hart, Respondents.
• Court: South Carolina Supreme Court

676 S.E.2d 320

Kevin GISSEL and Christina Gissel (Formerly Christina Eckley), Petitioners, v. Charles HART and Gene Hart, Respondents.

Wade A. McEachern, Petitioner, v. Charles Hart and Gene Hart, Respondents.

No. 26639.

Supreme Court of South Carolina.

Decided April 20, 2009.

Heard February 18, 2009.

Donald H. Howe, of Howe and Wyndham, and Walter Bilbro, Jr., both of Charleston, for Petitioner.

Steven L. Smith, of Smith & Koontz, of North Charleston, for Respondents.

Justice WALLER:

We granted a writ of certiorari to review the Court of Appeals' opinion in Gissel v. Hart, 373 S.C. 281, 644 S.E.2d 772 (Ct.App. 2007). We reverse.

FACTS

In the summer of 2003, Petitioners, the Gissels and McEachern, filed separate complaints against Homes America Inc., Southern Showcase Housing, Inc, Charles Hart, Gene Hart, and Amery English.¹ The complaints alleged Charles Hart and Gene Hart were agents, servants, and employees of Homes America, Inc, and that Homes America had sold them both mobile homes in early 2001.² Petitioners alleged they were advised by the Harts that they could finance land/home packages with concrete footings included in the purchase price. However, upon delivery, the mobile homes were improperly installed and had numerous deficiencies which were never remedied. The complaints alleged causes of action for negligence, fraud, and breach of contract with fraudulent intent against Homes America, Southern Showcase Housing, Charles Hart, Gene Hart, and Amery English. Each of the complaints alleged the deficiencies were the result of the negligence and recklessness of the defendants "jointly, severally or in the alternative." The complaints sought actual and punitive damages.

Southern Homes moved to dismiss the complaint and refer the matter to arbitration as required by the parties' contract. Thereafter, Charles Hart and Gene Hart, who were individually named in the complaints, filed a separate motion to dismiss and moved to refer the matter to arbitration.

By orders dated January 13, 2004, the motions to compel arbitration were granted. Judge Jefferson found the contract's arbitration provision, which was contained on the top of the first page of the contract (Form 500) in bold type, underlined capital letters, binding. It states:

NOTICE OF ARBITRATION PROVISION: THIS CONTRACT CONTAINS A BINDING AGREEMENT TO ARBRITRATE ALL CLAIMS, DISPUTES AND CONTROVERSIES ARISING OUT OF OR IN CONNECTION WITH THIS CONTRACT.

After an arbitration hearing, Southern Homes settled with the Gissels and McEachern, leaving the Harts as sole defendants. The arbitrator then entered awards in favor of the Gissels and McEachern against the Harts. The Gissels were awarded $55,000.00 actual, consequential and incidental damages against Charles Hart and Gene Hart, jointly and severally; they were awarded $45,000.00 punitive damages against Charles Hart, individually, and $45,000.00 punitive damages against Gene Hart individually. McEachern was awarded $53,000.00 actual, consequential and incidental damages against Charles Hart and Gene Hart, jointly and severally, and $45,000.00 punitive damages against Charles Hart, individually, and $45,000.00 punitive damages against Gene Hart individually.

The Harts appealed to the circuit court and moved to vacate the arbitrator's award, contending there was no evidence presented to the arbitrator that they had acted outside the scope of their employment for Homes America. The circuit court denied the Hart's motion to vacate and confirmed the arbitrator's award.

The Court of Appeals vacated the arbitrator's award against the Harts; it found the complaints did not clearly assert claims against the Harts in their individual capacities, such that there was no basis on which to predicate an award of punitive damages. The Court affirmed the awards to the extent they imposed damages against the Harts in their representative capacities as agents, servants and employees of Homes America. The Court of Appeals denied rehearing, and this Court granted certiorari.

ISSUE

Did the Court of Appeals err in ruling there was no basis upon which to impose individual liability against the Harts?

SCOPE OF REVIEW

The determination of whether a claim is subject to arbitration is subject to de novo review. Nevertheless, a circuit court's factual findings will not be reversed on appeal if any evidence reasonably supports the findings. Aiken v. World Finance Corp. of South Carolina, 373 S.C. 144, 644 S.E.2d 705 (2007).

DISCUSSION

Arbitration is a favored method of settling disputes in South Carolina. Unless a court can say with positive assurance that an arbitration clause is not susceptible to any interpretation that covers the dispute, arbitration should generally be ordered. Aiken v. World Finance Corp., infra; Zabinski v. Bright Acres Assocs., 346 S.C. 580, 596-97, 553 S.E.2d 110, 118-19 (2001). However, arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit. Id. at 596, 553 S.E.2d at 118. Courts generally hold broadly-worded arbitration agreements apply to disputes in which a "significant relationship" exists between the asserted claims and the contract in which the arbitration clause is contained. Id. at 598, 553 S.E.2d at 119 (quoting Long v. Silver, 248 F.3d 309 (4th Cir.2001)).

When a dispute is submitted to arbitration, the arbitrator determines questions of both law and fact. Generally, an arbitration award is conclusive and courts will refuse to review the merits of an award. An award will be vacated only under narrow, limited circumstances. Pittman Mortgage Co. v. Edwards, 327 S.C. 72, 75-76, 488 S.E.2d 335, 337 (1997). An arbitrator's award may be vacated when the arbitrator exceeds his or her powers and/or manifestly disregards or perversely misconstrues the law. Technical College v. Lucas and Stubbs, 286 S.C. 98, 333 S.E.2d 781 (1985); S.C.Code Ann. § 15-48-130(a).

However, for a court to vacate an arbitration award based upon an arbitrator's manifest disregard of the law, the governing law ignored by the arbitrator must be well defined, explicit, and clearly applicable. Id.; Trident Technical College v. Lucas and Stubbs, 286 S.C. 98, 333 S.E.2d 781 (1985). Case law presupposes something beyond a mere error in construing or applying the law. Even a "clearly erroneous interpretation of the contract" cannot be disturbed. Id. at 108, 333 S.E.2d at 787. The focus is on the conduct of the arbitrator and presupposes something beyond a mere error in construing or applying the law. Id. at 108, 333 S.E.2d at 787. (Emphasis supplied). Accord Harris v. Bennett, 332 S.C. 238, 503 S.E.2d 782 (Ct.App.1998). An arbitrator's "manifest disregard of the law," as a basis for vacating an arbitration award occurs when the arbitrator knew of a governing legal principle yet refused to apply it. Weimer v. Jones, 364 S.C. 78, 610 S.E.2d 850 (Ct.App.2005). Factual and legal errors by arbitrators do not constitute an abuse of powers, and a court is not required to review the merits of a decision so long as the arbitrators do not exceed their powers. Pittman, supra.

Here, the Court of Appeals recognized the four statutory grounds on which an arbitrator's award may be vacated, to wit:

(1) where the award was procured by corruption, fraud, or undue means;

(2) where there was evident partiality or corruption in the arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and...