Mci Constructors LLC v. City Of Greensboro

Decision Date01 July 2010
Docket Number09-1606.,No. 09-1600,09-1600
Citation610 F.3d 849
PartiesMCI CONSTRUCTORS, LLC, Plaintiff-Appellant,v.CITY OF GREENSBORO, a municipality, organized under the laws of the State of North Carolina, Defendant-Appellee,andHazen and Sawyer, P.C., a New York Corporation, Defendant,v.National Union Fire Insurance Company of Pittsburgh, PA, a Pennsylvania Corporation, Third Party Defendant.MCI Constructors, LLC, Plaintiff,v.City of Greensboro, a municipality, organized under the laws of the State of North Carolina, Defendant-Appellee,andHazen and Sawyer, P.C., a New York Corporation, Defendant,v.National Union Fire Insurance Company of Pittsburgh, PA, a Pennsylvania Corporation, Third Party Defendant-Appellant.
CourtU.S. Court of Appeals — Fourth Circuit

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ARGUED: C. Allen Foster, Greenberg Traurig, LLP, Washington, D.C., for MCI Constructors, LLC. William P.H. Cary, George W. House, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, North Carolina, for City of Greensboro. ON BRIEF: Eric C. Rowe, David Samuel Panzer, Greenberg Traurig, LLP, Washington, D.C., for MCI Constructors, LLC; John M. Gillum, Manier & Herod, Nashville, Tennessee, for National Union Fire Insurance Company of Pittsburgh, PA. Michael D. Meeker, Joseph A. Ponzi, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, North Carolina, for City of Greensboro.

Before TRAXLER, Chief Judge, and DUNCAN and DAVIS, Circuit Judges.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Chief Judge TRAXLER and Judge DAVIS joined.

OPINION

DUNCAN, Circuit Judge:

This appeal arises from a contract dispute concerning the construction of a wastewater treatment plant. This dispute has been before us once before. See MCI Constructors, Inc. v. City of Greensboro, 125 Fed.Appx. 471 (4th Cir.2005). Following that decision, all concerned parties agreed to submit the outstanding issues to arbitration. Arbitration yielded an award to Appellee City of Greensboro (the City) of $14,939,004. The district court then granted the City's motion to confirm that award. This appeal followed. For the reasons that follow, we affirm.

I.
A.

On January 16, 1996, the City entered into a contract with Appellant MCI Constructors, LLC (MCI) for the expansion and upgrade of a wastewater treatment plant in Greensboro, North Carolina, for a cost of roughly $29 million. The contract explains that [t]o prevent disputes and litigations, the City Manager shall ... decide every question which may arise relative to the fulfillment of the Contract on the part of the Contractor.” J.A. 227. As required by North Carolina law, after signing the contract, MCI obtained a performance bond from National Union Fire Insurance Company (National Union) of Pittsburgh, Pennsylvania, which incorporated the terms of the contract between the City and MCI and guaranteed that MCI would perform the contract.

When construction of the wastewater plant became substantially delayed, the City terminated the contract. MCI then commenced this diversity action in the Middle District of North Carolina against the City and Hazen and Sawyer, P.C. (Hazen and Sawyer), the engineering firm that designed the project. The complaint alleged, inter alia, claims for breach of contract, negligent misrepresentation, and wrongful termination. In response, the City filed a counterclaim for breach of contract, and a third-party complaint against National Union on its bond. The district court declined to entertain most of these claims, concluding that the contract required that all disputes regarding the fulfillment of the contract be resolved by the City Manager. Accordingly, the parties submitted their claims to the City Manager.

After a two-day hearing, on April 16, 2002, the City Manager issued an order. In that order, the City Manager held that the City had properly terminated MCI for cause, and denied MCI's wrongful termination claim. Thereafter, a hearing was held to determine the City's damages. After that proceeding, on February 5, 2003, the City Manager issued an order finding that MCI owed the City $13,377,842.73.

The City then filed a motion for summary judgment, seeking to enforce the City Manager's decision. National Union filed a cross-motion for summary judgment seeking to avoid liability as the surety for payment of the $13,377,842.73. On March 10, 2004, after finding that the City Manager's decision was not “influenced by fraud, bad faith, or gross mistake,” the district court issued an order granting summary judgment in favor of the City on all of MCI's claims. J.A. 2510. The district court determined that “the City Manager's award [was] a complete defense to [MCI's] claims.” 1 Id. Further, having found the City Manager's award binding and enforceable, the district court awarded judgment to the City on its counterclaim. Thus, the district court held that the City was to recover from MCI the sum of $13,377,842.73. In a separate order, the district court held that the City Manager's award was enforceable against National Union.

MCI and National Union appealed the district court's rulings. On appeal, we “affirm[ed] all the rulings of the district court except its application of the ‘fraud, bad faith, or gross mistake’ standard, which [the district court] applied to review the decision of the City Manager.” MCI Constructors, 125 Fed.Appx. at 474. Specifically, we held that

since the City Manager signed the contract for the City and in essence was adjudicating his own performance, rights, and liabilities under the contract, North Carolina law requires that the City Manager's performance be measured by a standard of objective reasonableness “based upon good faith and fair play”-a standard that must be read into the contract so as to prevent the contract from being rendered illusory.

Id. Thus, we reversed and vacated the judgment insofar as the judgment depended on application of this standard.

B.

Trial was then set for February 6, 2006. On January 26, 2006, however, the City, MCI, and National Union advised the district court that they had “entered into a binding Arbitration Agreement to resolve all issues between them” arising from the contract and that [u]pon conclusion of the arbitration, all matters currently set for trial w[ould] be moot.” J.A. 2621. In that agreement, the parties stipulated that an arbitration panel would be selected by the parties, that the “rules would be standard AAA Complex Commercial or JAMS rules,” J.A. 2634, and that the [p]roceedings [would] be bifurcated between liability and damages,” J.A. 2635. Further, the parties agreed that [a]t the conclusion of the arbitration, the award [would] be confirmed and a judgment [would be] entered,” and that [u]pon confirmation, MCI [would] take a voluntary dismissal with prejudice of all claims and proceedings against the City ... and the City [would] take a voluntary dismissal with prejudice of all claims against MCI.” J.A. 2637. Accordingly, as requested by the parties, the district court stayed the case pending arbitration.

On September 26, 2006, the parties presented their liability arguments to a panel of three arbitrators. On June 20, 2007, the arbitration panel issued an award finding that [t]he City's termination of MCI's performance under [the] contract ... for expansion of a waste water treatment plant ... was for cause.” J.A. 4113. In response, on September 17, 2007, MCI filed a motion with the district court seeking to vacate the award. Specifically, MCI argued, inter alia, that “the Panel refused to hear material evidence [,] ... repeatedly ... refus[ed] to consider [its] submissions and [did] not allow[ ][it] to respond to the City's Closing Arguments in the Liability Phase of the Arbitration.” J.A. 4120. Further, MCI argued that “the City obtained the ‘Award’ by undue means by misrepresenting facts outside the record during Closing Arguments and acting to prevent MCI from being able to respond.” Id. At MCI's request, however, the district court issued an order explaining that it would not entertain MCI's motion until thirty days after the arbitration was complete.

The parties then presented their damages arguments to the arbitration panel. On April 17, 2008, the arbitration panel found that “the City [was] entitled to recover from MCI” $14,939,004. J.A. 7403. Contending that the award was unclear, on April 24, 2008, MCI sent an email to the arbitration panel, requesting the panel to modify it. Specifically, MCI argued that the arbitration panel failed to deduct the contract balance from the award, and that the arbitration panel was required to provide a reasoned award that addressed the disposition of all the claims submitted. On May 8, 2008, the panel issued an order denying MCI's request. The panel explained that because none of the parties requested a reasoned award prior to the panel's appointment, it was not obligated to provide one. Further, the panel noted that [t]he Damages Award did not contain any errors.” J.A. 7416.

Thereafter, the City moved to have the liability and damages awards confirmed by the district court. MCI and National Union moved to vacate the arbitration awards. In the alternative, MCI also moved to remand the damages award. On the substantive motions, the district court received a total of twenty-two briefs and held oral arguments. After reviewing all these materials, on March 9, 2009, the district court issued two opinions denying MCI's and National Union's motions. Thereafter, on April 28, 2009, the district court entered an order confirming the arbitration awards. The court also entered final judgment pursuant to Federal Rule of Civil Procedure 54(b). MCI and National Union then appealed.

II.

On appeal, MCI and National Union present three main arguments. First, they argue that the district court erred in certifying the judgment as final under Rule 54(b). Second, they maintain the district court should...

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