Morrison-Knudsen Co., Inc. v. Makahuena Corp.

• Decision Date: 23 December 1983
• Docket Number: No. 8988,MORRISON-KNUDSEN,8988
• Citation: 675 P.2d 760,66 Haw. 663
• Parties: The Arbitration ofCOMPANY, INC., Appellant, v. The MAKAHUENA CORPORATION and Team Pacific, Inc. Appellees.
• Court: Hawaii Supreme Court

Page 760

675 P.2d 760

66 Haw. 663

The Arbitration of MORRISON-KNUDSEN COMPANY, INC., Appellant, v. The MAKAHUENA CORPORATION and Team Pacific, Inc. Appellees.

No. 8988.

Supreme Court of Hawai'i.

Dec. 23, 1983.

Syllabus by the Court

1. HRS Chapter 658 confines judicial review of an arbitrator's award to the strictest possible limits. An extensive review would frustrate the intent of the parties to avoid litigation and would also nullify the legislative purpose to further this objective.

2. An arbitrator's decision and award can only be vacated or modified in accord with HRS Chapter 658.

3. The legislative policy to further the objectives of arbitration and a desired consistency in applying the provisions of HRS Chapter 658 compel this court to confine judicial review pursuant to HRS § 658-10(1) to the strictest possible limits. Read in this light, "evident miscalculation of figures" can only mean "mathematical errors committed by arbitrators which would be patently clear to a reviewing court."

4. HRS Chapter 658 does not permit a court to weigh the evidence presented to an arbitrator against extrinsic evidence offered to the court by the party seeking to modify the arbitrator's award.

5. A purported miscalculation that can only be proved by resort to evidence foreign to the record of the arbitration proceeding is not a "patently clear mathematical error."

6. The fact that an arbitrator may err in applying the law, finding facts, or in construing the contract, or enters an award that is contrary to the evidence adduced, is insufficient grounds for judicial reversal of his award.

7. When the parties agree that the arbitrator's decision and award shall be final and binding, it is his judgment they have bargained for, not that of a court.

8. Nothing in HRS Chapter 658 intimates the merits of an arbitration award are judicially reviewable.

9. The judicial confirmation of an arbitrator's award that imposes a penalty designed to prevent the accrual of further damages cannot be equated with the assessment of interest "on any judgment recovered before any court in the State, in any civil suit."

10. HRS § 658-8 contemplates a judicial confirmation of the award as issued by the arbitrator, unless the award is vacated, modified, or corrected pursuant to HRS §§ 658-9 and 658-10.

11. It is fundamental that a party can have but one satisfaction of a judgment.

Howard K. Hoddick, Honolulu (Gilbert D. Butson and Emma A. Concepcion, Honolulu, with him on briefs; Hoddick, Reinwald O'Connor & Marrack, Honolulu, of counsel), for appellant.

James M. Sattler, Honolulu (Matthew J. Yingling, Honolulu, with him on brief), for appellee The Makahuena Corp.

Before LUM, C.J., NAKAMURA, PADGETT and HAYASHI, JJ., and TSUKIYAMA, Circuit Judge, in place of WAKATSUKI, J., disqualified.

NAKAMURA, Justice.

Morrison-Knudsen Company, Inc. (Morrison-Knudsen or the contractor) sought a substantial modification of an arbitrator's award favoring The Makahuena Corporation (Makahuena or the owner-developer) pursuant to Hawaii Revised Statutes (HRS) Chapter 658. The Circuit Court of the First Circuit, however, confirmed the award with only a slight modification, and the contractor appeals. It asserts the circuit court erred in rejecting an offer of proof that purportedly would have demonstrated the arbitrator's miscalculation of the damages sustained by the owner-developer and in several other respects. What the court rejected were self-serving exhibits consisting of detailed analyses of evidentiary matter presented to the arbitrator and related testimony. We think any alleged miscalculation that could only be established by such means could hardly be deemed "an evident miscalculation of figures." And as the other claims of arbitral mistake were addressed to the merits of the award, we affirm the circuit court's judgment.

I.

The disputes underlying the arbitration and the award at issue arose from the design by Team Pacific, Inc. (the architect) and the construction by Morrison-Knudsen of "The Makahuena," a condominium apartment building located at Poipu, Kauai. The Standard Form of Agreement Between Owner and Architect provided for the arbitration of all claims, demands, and disputes arising thereunder. The construction contract likewise called for the settlement of disputes through the arbitral process. At or near the completion of the construction, questions concerning the performance of both architect and contractor were raised by the owner-developer, who claimed defects in the design of the building as well as in its construction.

Although separate claims were advanced against the architect and the contractor by the owner-developer and the initial demand for arbitration was raised under the construction agreement, the parties after protracted discussions and several abortive attempts to expedite the resolution of the disputes finally executed a tri-partite arbitration agreement. The parties agreed Judge Masato Doi, a retired circuit judge, would "arbitrate all disputes between or among each other in a single arbitration proceeding" and that

[t]he Arbitrator's decision and award shall be final and binding on all parties to this Agreement and shall not be subject to appeal. A judgment shall be entered upon the decision and award in the appropriate Circuit Court or Courts of the State of Hawaii. Other than as provided in said Chapter 658, no appeal may be taken from a judgment entered upon an award.

The hearings before Judge Doi commenced on October 5, 1981 and extended through April 22, 1982. He issued his decision and awards favoring the owner-developer on July 30, 1982, the award against the architect amounting to $415,699 and that against the contractor adding up to the large sum of $3,412,628. Makahuena promptly sought judicial confirmation of the awards pursuant to HRS § 658-8, ¹ and Morrison-Knudsen quickly followed with its application for judicial relief from the arbiter's ruling. While the contractor initially cited HRS §§ 658-9 ² and 658-10 as grounds for vacating or modifying the award of $3,412,628, the attempt to vacate the award was abandoned later and modification pursuant to § 658-10 ³ was the relief ultimately requested.

When the competing motions for confirmation and for correction were heard, the foundation of Morrison-Knudsen's effort to establish the alleged miscalculation of figures consisted of evidence extrinsic of the record made before the arbitrator. The exhibits offered to the circuit court as proof of inaccurate computation were the product of certified public accountants who, at the behest of the contractor, had "performed certain agreed upon procedures with respect to award items" that were being challenged by the contractor. The proffered evidence consisted of the accountants' "analysis" of the contested award claims, the notes accompanying the "analysis," their conclusions regarding the challenged award items, and testimony related thereto.

But the court saw no reason to plunge into the extensive review implicit in the offer of such "proof." And it concluded after considering the written and oral arguments of the parties that the "evident miscalculation of figures" was limited to a sum of $590 in the award against the architect and $1,720 in that adverse to the contractor. The awards were confirmed with reductions in the foregoing amounts by the order and judgment entered below, and Morrison-Knudsen's appeal to this court followed.

II.

Though several issues are raised on appeal, the basic question is whether the policy on "Arbitration and Awards" declared by the legislature would countenance what was unsuccessfully urged upon the circuit court by Morrison-Knudsen.

A.

We have not hesitated to state our general view on the judicial consideration of arbitration awards in forthright terms--HRS Chapter 658 "confine[s] judicial review to the strictest possible limits. Richards v. Ontai, 20 Haw. 198 (1910); Thomas v. Lunalilo Estate, 5 Haw. 39 (1883)." Mars Constructors, Inc. v. Tropical Enterprises, Ltd., 51 Haw. 332, 335, 460 P.2d 317, 319 (1969). For "an extensive ... review of arbitration awards would frustrate the intent of the parties to avoid litigation and would also nullify the legislative objective in the enactment of the Arbitration and Awards statute." Id. at 335, 460 P.2d at 319. And we have often reiterated the obvious by stating an arbitrator's decision "can only be vacated or modified in accordance with HRS Chapter 658." Loyalty Development Co. v. Wholesale Motors, Inc., 61 Haw. 483, 488, 605 P.2d 925, 928 (1980). See also University of Hawaii Professional Assembly ex rel. Daeufer v. University of Hawaii, 66 Haw. 214, 224-25, 659 P.2d 720, 726-28 (1983); Kim v. Mel Cummins Building Contractor, Inc., 57 Haw. 186, 188, 552 P.2d 1117, 1118 (1976).

Morrison-Knudsen invoked HRS § 658-10 in seeking modification. The thrust of its argument was that there were duplications and overstatements of damage items. This, it averred, resulted in a miscalculation of the amount of the award. The applicable subsection, § 658-10(1), demands that a miscalculation subject to correction thereunder must be "an evident miscalculation of figures." We have yet to spell out exactly what is encompassed by the phrase. But a clear legislative policy to further the objectives of arbitration ⁴ and a desired consistency in applying the provisions of Chapter 658 compel us to read the phrase narrowly and confine judicial review pursuant to § 658-10(1) "to the strictest possible limits." Mars Constructors, Inc., 51 Haw. at 335, 460 P.2d at 319.

Read in this light, "evident miscalculation of figures" can only mean "mathematical errors committed by arbitrators which would be patently clear to a reviewing court." Carolina Virginia Fashion Exhibitors, Inc. v. Gunter, 41 N.C.App. 407, 413, 255 S.E.2d 414, 419 (1979). Cf. DeMello v. Souza, 36 Cal.App.3d 79, 86, 111 Cal.Rptr. 274, 279 (1973) ("it is manifest...