Parsons, Brinckerhoff, Quade & Douglas v. Palmetto, Civil Action No. RDB-09-633.

• Decision Date: 25 August 2009
• Docket Number: Civil Action No. RDB-09-633.
• Citation: 647 F.Supp.2d 587
• Parties: PARSONS, BRINCKERHOFF, QUADE & DOUGLAS, INC., Petitioner, v. PALMETTO BRIDGE CONSTRUCTORS, Respondent.
• Court: U.S. District Court — District of Maryland

647 F.Supp.2d 587

PARSONS, BRINCKERHOFF, QUADE & DOUGLAS, INC., Petitioner, v. PALMETTO BRIDGE CONSTRUCTORS, Respondent.

Civil Action No. RDB-09-633.

United States District Court, D. Maryland.

August 25, 2009.

Linda S. Woolf, Christopher M. Corchiarino, Kamil Ismail, Goodell Devries Leech and Dann LLP, Baltimore, MD, David Anthony Dial, John Thomas Flynn, Ross D. Ginsberg, Weinberg Wheeler Huydgiins Gunn and Dial LLC, Atlanta, GA, for Petitioner.

David W. Lannetti, James Richard Harvey, III, Patrick A. Genzler, William E. Franczek, Vandeventer Black LLP, Norfolk, VA, Philip M. Andrews, Kramon and Graham PA, Baltimore, MD, for Respondent.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

After the completion of a six-month long arbitration proceeding regarding a disputed contract between Petitioner Parsons Brinckerhoff Quade & Douglas, Inc. ("Parsons" or "Petitioner") and Respondent Palmetto Bridge Constructors ("Palmetto" or "Respondent"), the parties have brought the litigation to this Court. Parsons filed its complaint in this case, styled as a Petition and Motion for Order Confirming the Award, seeking to have the arbitration award confirmed pursuant to 9 U.S.C. § 9 (stating that "at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title"). Palmetto then filed a counterclaim, seeking a declaratory judgment that it had no obligation to pay costs and attorneys' fees to Parsons pursuant to a fee-shifting contract provision.

In addition to the Petition and Motion for Order Confirming the Award, there are four pending motions, all of which were addressed at the motions hearing conducted on July 8, 2009. Two of the four motions—Palmetto's Motion to Modify or Correct Arbitration Award (Paper No. 7) and Parsons's Motion to Vacate and Remand to Arbitration Panel (Paper No. 13)—seek to have the arbitral award modified in various ways. Because this Court concludes that both motions are time-barred, they will both be DENIED. As such, Parsons's Petition and Motion for Order Confirming the Award (Paper No. 1) will be GRANTED, and the December 1, 2008 arbitral award, as amended on January 19, 2009, will remain intact.

The other two motions—Palmetto's Motion for Summary Judgment (Paper No. 30) and Parsons's Cross Motion for Summary Judgment (Paper No. 32)—pertain to whether or not the final arbitral award triggered a fee-shifting agreement entered into between the parties. For the reasons stated below, the fee-shifting provision was not triggered. Consequently, Palmetto's Motion for Summary Judgment (Paper No. 30) will be GRANTED, and Parsons's Motion for Summary Judgment (Paper No. 32) will be DENIED.

BACKGROUND

Respondent Palmetto is a joint venture between Skanska Civil USA, Inc. and HBG Constructors, two companies that are experienced constructors of major infrastructure projects. Palmetto entered into a subcontracting agreement with Parsons relating to the design and engineering of the Cooper River Bridge in Charleston, South Carolina. The underlying arbitration involved Palmetto's allegations of professional negligence against Parsons relating to the timely and acceptable design for the Cooper River Bridge.¹

The subcontract agreement between the parties contained a mandatory arbitration provision. (See Pet.'s Petition Ex. A., Section 13.) On February 14, 2005, Palmetto filed a demand for Arbitration with the American Arbitration Association, alleging approximately fifty discrete acts of negligence. The demand was later amended on July 15, 2005 to include a request for $70,000,000 in damages (an amount later reduced to somewhere in the $50 million dollar range). On November 2, 2005, Parsons filed a counterclaim against the Palmetto alleging, among other things, that Palmetto owed Parsons for additional services performed.

On November 1, 2006, Parsons and Palmetto entered into an Early Neutral Evaluation Agreement ("ENE Agreement"), pursuant to which the parties agreed to engage a "Neutral Evaluator" to produce an initial and a final evaluation setting forth the relative strength of the parties' claims, including the amount, if any, that the neutral evaluator would award each party if tasked as the arbitrator on the dispute. The precise terms of this agreement, as well as the details of the proceedings, are contained in this Court's discussion of the parties' cross motions for summary judgment.

From January 16, 2008 through July 15, 2008, the parties litigated their claims before a panel of arbitrators—namely, Roger Peters, J. Snowden Stanley, and John Wolf—in Baltimore, Md.² On December 1, 2008, the arbitration panel issued its 181-page decision, titled as a "Final Award." The arbitration panel awarded $1,275,728.25 to Palmetto and $36,160.00 to Parsons. After offsetting these amounts, the net award to Palmetto was $1,239,568.25. Parsons was also required to reimburse Palmetto in the amount of $6,625.07 for fees and expenses, and the parties split $35,750 in administrative filing fees and $890,049.81 in fees and expenses of the arbitrators. On January 19, 2009, the arbitration panel corrected one computational error in the award, but declined to address the remaining requests because it determined that it lacked jurisdiction to resolve them.

On March 12, 2009, Parsons filed its Petition and Motion for Order Confirming the Award (Paper No. 1). Palmetto filed a Motion to Modify or Correct Arbitration Award (Paper No. 7) on April 7, 2009, and Parsons filed a Motion to Vacate and Remand to Arbitration Panel (Paper No. 13) on April 15, 2009. Parsons then filed its Motion for Summary Judgment (Paper No. 30) on June 10, 2009, and Palmetto filed its Cross Motion for Summary Judgment (Paper No. 32) on June 26, 2009. This Court conducted a hearing on these motions on July 8, 2009.

DISCUSSION

I. Motions to Modify the Arbitral Award

Palmetto's Motion to Modify or Correct Arbitration Award (Paper No. 7) requests that this Court vacate the $36,160 awarded by the arbitration panel to Parsons. Palmetto contends that, prior to the arbitration hearing, the parties agreed that certain work performed by Parsons pursuant to Supplemental Agreement 27 ("SA 27") would not be subject to the arbitration panel's authority, and that Palmetto actually paid Parsons $36,160 for the work outside of the arbitration process. Despite the agreement, and despite the actual payment of the money due, the arbitration panel awarded Parsons $36,160 for work performed pursuant to SA 27. This part of the arbitral award, Palmetto submits, was in error and must be vacated.

Although Parsons contends in the alternative that the arbitration panel did not err in awarding it $36,160 for work performed pursuant to SA 27, it argues first and foremost that this Court cannot vacate any part of the award because the limitations period to raise such a claim lapsed. Parsons fully acknowledges that, if this Court finds that Palmetto's Motion to Modify or Correct Arbitration Award is untimely, its own Motion to Vacate and Remand to Arbitration Panel (Paper No. 13) is also untimely. Nonetheless, Parsons argues in its Motion to Vacate and Remand to Arbitration Panel that, if the limitations period has not lapsed, the arbitration panel erred by reaching conflicting results with respect to two claims by Palmetto involving lateral bearings, and that arbitration panel awarded profit to Palmetto in manifest disregard of the contract between the parties.

The parties are in agreement that the three-month limitations period contained in the Federal Arbitration Act is applicable. See 9 U.S.C. § 12 ("Notice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered."). The dispute between the parties is when the three-month window was triggered, which requires a closer inspection of the statutory language providing that such a motion must be served within three months of the date "the award is filed or delivered." Id.

The relevant dates in addressing the limitations period are as follows:

• On December 1, 2008, the arbitration panel issued its 181-page "Final Award."

• On December 15, 2008, Parsons timely moved to modify the award pursuant to the American Arbitration Association ("AAA") Construction Industry Arbitration Rules.³

• On January 19, 2009, the arbitration panel corrected a computational error in a nine-page document titled "Order in Response to Requests for Modification of Final Award and Amendment of Final Award by Interlineation." The arbitration panel declined to modify the Final Order further because, as Palmetto has argued, the arbitration panel only had jurisdiction to correct computational errors. See AAA CSIR R-4 ("The arbitrator is not empowered to redetermine the merits of any claim already decided."). Thus, the arbitration panel left intact its decision to award Parsons $36,160 for work performed pursuant to SA 27.

• On April 7, 2009, Palmetto filed its Motion to Modify or Correct Arbitration Award (Paper No. 7), and on April 15, 2009, Parsons filed its Motion to Vacate and Remand to Arbitration Panel (Paper No. 13).

Parsons argues that the three-month limitations period began to run on December 1, 2008, the date of the "Final Award," and consequently the motions filed in April 2009 were untimely. Palmetto argues, however, that the three-month limitations period began to run on January 19, 2009, the date of the "Order in Response to Requests for Modification of Final Award and Amendment of Final Award by Interlineation," and consequently the motions filed in April 2009 were timely.

There is no direct Supreme Court or Fourth Circuit authority on this issue, and parties have acknowledged that...