Paige Elec. Co. v. Davis & Feder, P.A.

• Decision Date: 11 April 2017
• Docket Number: NO. 2015–CA–01658–COA,2015–CA–01658–COA
• Citation: 231 So.3d 201
• Court: Mississippi Court of Appeals
• Parties: PAIGE ELECTRIC COMPANY, Appellant v. DAVIS & FEDER, P.A., Appellee

231 So.3d 201

PAIGE ELECTRIC COMPANY, Appellant

v.DAVIS & FEDER, P.A., Appellee

NO. 2015–CA–01658–COA

Court of Appeals of Mississippi.

April 11, 2017

Rehearing Denied August 1, 2017

Certiorari Denied October 19, 2017

ATTORNEY FOR APPELLANT: BLEWETT W. THOMAS

ATTORNEYS FOR APPELLEE: JAMES GRADY WYLY III, KYLE STUART MORAN, ADAM BLAKE HARRIS

BEFORE LEE, C.J., BARNES AND FAIR, JJ.

BARNES, J., FOR THE COURT:

¶ 1. Paige Electric Company (Paige Electric) filed a malpractice suit against Davis & Feder P.A., claiming the firm mishandled its legal claims and committed malpractice. Because the retainer agreement between the parties contained an arbitration clause, the case was submitted to an arbitrator, who issued an award in favor of Davis & Feder and denied Paige Electric any relief.

¶ 2. Paige Electric filed motions in the First Judicial District of Harrison County Circuit Court to declare the arbitration clause void and to vacate the arbitration award. The circuit court denied the motions, dismissing Paige Electric's claims with prejudice. Paige Electric now appeals, claiming the circuit court erred in finding that Paige Electric waived any objection to the arbitration clause by voluntarily participating in the arbitration. Paige Electric also asserts that the arbitration award in favor of Davis & Feder should be vacated, as the arbitrator exceeded his authority in violation of Mississippi Code Annotated section 11–15–23(d) (Rev. 2004) and 9 United States Code section 10(a)(4) (2012).

¶ 3. Finding no error, we affirm.

FACTS AND PROCEDURAL HISTORY

¶ 4. After Hurricane Katrina hit the Mississippi Gulf Coast in 2005, Southern Construction Services Inc. (SCS) hired Paige Electric as a subcontractor to provide electrical contracting on all of SCS's projects. Paige Electric's owner, Jerry Paige, was also hired by SCS as its general supervisor due to his certification in building construction and electrical contracting.

¶ 5. When SCS failed to pay Paige Electric for its services on its last project, Studio Inn, Paige Electric hired Davis & Feder to handle its claim to collect the unpaid balance of $271,364.22. The Retainer Agreement, entered into on March 19, 2007, contained an arbitration clause, which stated:

This provision regarding arbitration of disputes shall apply to any dispute between the parties which arises from, or is related to, a claimed breach of this agreement, the professional legal services rendered by Davis & Feder, P.A. or any claim for legal and or professional malpractice, or any claim or disagreement between the parties of any kind, nature, type or description regardless of the facts or the legal theories which may be involved or asserted .... You are specifically agreeing to waive your right to a trial by jury regarding any claims or disputes you may have arising from this Agreement.

The associate attorney who worked on the case, David Brisolara, pursued two separate claims against SCS on Paige Electric's behalf: (1) the collection of the unpaid balance; and (2) a lien pursuant to Mississippi Code Annotated section 85–7–181 (Rev. 1999) against Studio Inn's owner, Hancock Hotels.¹ Although Brisolara filed a notice of construction lien with the Harrison County Chancery Clerk on March 21, 2007, no suit was filed regarding the construction lien. Brisolara was successful in obtaining a default judgment of $271,364.22 against SCS on November 7, 2007, but as SCS was insolvent at this point, efforts to collect the judgment were unsuccessful. Brisolara left Davis & Feder at the end of 2008, and the law firm terminated its representation of Paige Electric in January 2009.

¶ 6. It was not until March 2013 that Jerry Paige discovered that no lien had been placed on Hancock Hotels' property. On January 16, 2014, Paige Electric filed a malpractice suit against Davis & Feder, asserting that the firm should have "done more" to collect the company's claims against SCS. Davis & Feder moved to dismiss the complaint. On June 9, 2014, the circuit court entered an agreed order referring the case to arbitration.

¶ 7. The parties agreed to the appointment of William Larry Latham as both arbitrator and special master for purposes of presiding over third-party discovery. Following discovery, a three-day arbitration hearing was held on May 27–29, 2015, with both parties presenting expert testimony. On July 23, 2015, the arbitrator published his award, dismissing with prejudice all claims against Davis & Feder. As the parties agreed to a short form order, there were no findings of fact or conclusions of law.

¶ 8. Davis & Feder subsequently filed a motion with the circuit court to confirm the award and enter a final judgment. Aggrieved, Paige Electric moved the circuit court to vacate the award as beyond the scope of the arbitration agreement and for "grounds enumerated in both Miss. Code Ann. § 11–15–23(a–d) and 9 U.S.C. § 10(a)(1–4)." Paige Electric also filed a motion to declare the arbitration clause invalid, or in the alternative, to sever the claims involving the lien from the agreement and set those claims for trial. On October 30, 2015, the circuit court held a hearing on the parties' motions. Finding that Paige Electric "waived any objection [it] may have had with regard to the arbitration of the lien claims," and that a "[c]hallenge to the arbitration clause ...should have been made ... prior to the referral for arbitration," the court denied Paige Electric's motion to invalidate the arbitration clause, or alternatively, to sever the statutory lien claims for trial. The circuit judge also denied Paige Electric's motion to vacate the award, finding nothing in the record to indicate the arbitrator "exceeded his powers or ... flouted the law." The court granted Davis & Feder's motion for entry of judgment, entered an order confirming the arbitrator's award, and dismissed Paige Electric's claims with prejudice.

¶ 9. On appeal, we find no error and affirm.

STANDARD OF REVIEW

¶ 10. "In arbitration cases, ... the scope of review is extremely limited." Wilson v. Greyhound Bus Lines Inc. , 830 So.2d 1151, 1155 (¶ 9) (Miss. 2002). "The scope of judicial review of an arbitration award is quite narrow, and every reasonable presumption will be indulged in favor of the validity of arbitration proceedings." Id . (quoting Craig v. Barber, 524 So.2d 974, 977 (Miss. 1988) ).

DISCUSSION

I. Whether the circuit court erred in denying Paige Electric's motion to declare the arbitration clause invalid, or alternatively, to sever the lien claims from the arbitration award and set those claims for trial .²

¶ 11. Addressing Paige Electric's claim that the arbitration clause in the retainer agreement was unconscionable, and its alternative claim the malpractice claims involving the lien should be severed from the arbitration award and set for trial, the circuit court concluded that the company had waived any objection, as it had voluntarily consented to the arbitration.

¶ 12. Mississippi has not addressed the precise issue of whether a challenge to the validity of an arbitration clause may be brought post-arbitration. But other jurisdictions have held that participation in arbitration proceedings waives the right to object to an arbitrator's authority. "A party cannot ‘sit silent, wait until an adverse award is issued, and then first argue that the arbitrator did not have the authority even to hear the claim.’ " Advocate Fin. Grp. v. Poulos , 380 Ill.Dec. 428, 8 N.E.3d 598, 609 (¶ 53) (Ill. App. Ct. 2014) (quoting First Health Grp. v. Ruddick , 393 Ill.App.3d 40, 331 Ill.Dec. 971, 911 N.E.2d 1201, 1213 (2009) ); see also Ahluwalia v. QFA Royalties LLC , 226 P.3d 1093, 1098 (Colo. App. 2009) ("If a party willingly allows an issue to be submitted to arbitration, it cannot await the outcome and later argue that the arbitrator lacked authority to decide the matter."). "[W]illing participation is consent to the arbitrator's power to resolve the dispute." Unite Here Local 23 v. I.L. Creations of Maryland Inc. , 148 F.Supp.3d 12, 19 (D.D.C. 2015). "Given that arbitration is an optional alternative to judicial resolution of disputes[,] ... when the parties have agreed to arbitration, the law discourages the loser from seeking a second de novo (or even quasi-de novo) shot at obtaining its desired result[.]" Id . at 18–19.

¶ 13. Paige Electric argues that because there was a "separate contract prepared for lien claims against the hotel" produced on February 25, 2015, during discovery, "Paige Electric cannot be considered to have consented to arbitration," and it "cannot be bound to any agreement to arbitrate the dispute over the lien claims[.]"³ The circuit court judge declined to make any findings "whether there was a second contract or not," because the lien claims were submitted for arbitration and had been decided by the arbitrator. But the court did observe that the "second contract ... was known to Paige Electric in February by [its] own pleadings, and at that time [it] had fully the ability to say ... these liens aren't included." The judge concluded:

[It] didn't do that. What [it] did do, however, was go through the entire arbitration process, two and a half days of arbitration hearings, and then submit a post-hearing memorandum ... [that] very clearly indicates the lien claims were considered and are part of the arbitration.

....

And, therefore, the court finds [Paige Electric] waived any objection [it] may have had with regard to the arbitration of the lien claims. Whether the court agrees they would have been included or not, the parties agreed to include them, the arbitrator was presented those.

¶ 14. At no point prior to or during the arbitration hearing did Paige Electric object to arbitrating the lien claims. Paige Electric was represented by counsel throughout this process, and the parties agreed to arbitration; it was not court-ordered. In a letter to Davis & Feder, dated June 12, 2013, counsel for Paige Electric stated that "[t]here is no objection to this [...