Russell Constr. of Ala., Inc. v. Peat

• Decision Date: 22 May 2020
• Docket Number: 1180979
• Citation: 310 So.3d 341
• Parties: RUSSELL CONSTRUCTION OF ALABAMA, INC. v. Christopher PEAT
• Court: Alabama Supreme Court

310 So.3d 341

RUSSELL CONSTRUCTION OF ALABAMA, INC.

v.Christopher PEAT

1180979

Supreme Court of Alabama.

May 22, 2020

Marvin H. Campbell, Montgomery, for appellant.

Brandon J. Wooten of Wooten Law Firm, LLC, Selma, for appellee.

SHAW, Justice.

Russell Construction of Alabama, Inc. ("Russell"), appeals from an order of the Montgomery Circuit Court vacating a judgment entered on an arbitration award in favor of Russell and against Christopher Peat. We affirm in part, reverse in part, and remand.

Facts and Procedural History

In 2015, Russell and Peat entered into a contract pursuant to which Russell agreed to construct a residence for Peat on "a cost plus a fee basis." The documents executed in connection with the contract provided, in the event of a controversy or dispute, first for mediation and then for arbitration in accordance with the rules of the American Arbitration Association. The arbitration agreement further provided that "[t]he award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof."

Upon completion of the residence, a dispute arose between Russell and Peat regarding Russell's performance and the balance due Russell under the contract. In January 2018, Russell filed a formal demand for arbitration, seeking $295,408 allegedly due from Peat for the construction of the residence. Peat counterclaimed, alleging breach of fiduciary duty and breach of contract and disputing his consent to costs incurred by Russell; Peat sought specific performance and an award of $255,000 on his counterclaims. Thereafter, in May 2018, the parties reached, as a result of mediation, a settlement agreement. In essence, the settlement agreement required Russell to make certain repairs to the residence; required Peat to pay Russell $245,408 on or before June 15, 2018, at which time Russell agreed to release its recorded lien; and required Peat to deposit into escrow an additional $50,000 to ensure completion, by the end of August 2018, of a "punch-list" to the satisfaction of a third-party "Construction Consultant."

In July 2018, Russell, on the ground that Peat had failed to comply with the settlement agreement, moved that the arbitrator enter an award based on the terms of the settlement agreement. Peat moved either to reform or to rescind the settlement agreement based on disagreement with some of Russell's charged costs, on mistake and/or fraud, and on his own purported "economic duress." On July 25, 2018, the parties proceeded to an arbitration hearing to consider whether Peat was entitled to rescind or reform the settlement agreement, whether Peat had breached that agreement, and damages, if any.

On August 22, 2018, subsequent to the parties' submission of post-hearing filings, the arbitrator issued a "Partial Final Award" in which he concluded:

"The [settlement agreement] is enforceable. Peat breached the agreement by failing to pay Russell $245,408.00 on June 15, 2018. Russell is entitled to an award in that amount plus interest at the agreed rate of 8%. While Peat also failed to pay $50,000 into escrow, Russell is not damaged because it has not performed the completion/punch list work against which the $50,000 was to be escrowed."

Noting that Peat's arguments for either rescission or reformation of the settlement agreement were legally unsupportable, the arbitrator's award further provided that "both parties, with advice of counsel, stipulated that they wanted the remaining provisions of the settlement agreement to remain in effect and binding on the parties" with the extension of certain deadlines provided in the agreement. That included Russell's completion of the remaining remedial work identified on the punch list and the related distribution of the funds to be placed in escrow. On September 5, 2018, the arbitrator entered a "Modified Partial Final Award" in which he identified a miscalculation in the Partial Final Award and revised the amount awarded to Russell to $258,959.89, which amount included interest.

On December 19, 2018 –- well over 30 days after the issuance of the arbitrator's Modified Partial Final Award -- Russell filed in the Montgomery Circuit Court, pursuant to Rule 71C, Ala. R. Civ. P.,¹ a motion seeking entry of a judgment in the amount of $258,959.89 in accordance with the arbitrator's Modified Partial Final Award (case no. CV-18-902291). Russell submitted copies of the settlement agreement, the Partial Final Award, and the Modified Partial Final Award and further indicated that Peat had failed to pay the awarded amount. Russell specifically requested enforcement of the Modified Partial Final Award.

In February 2019, the parties attended a second arbitration hearing at which the arbitrator considered whether the parties' failure to perform remaining obligations under the settlement agreement amounted to another breach of the agreement and, if so, whether another award of damages was warranted. On March 7, 2019, the arbitrator entered what it called a "Final Award." In it, the arbitrator found that neither Russell nor Peat had performed their remaining obligations under the settlement agreement and, accordingly, "[made] an equitable allocation of the contract balance of $50,000.00," which, based upon his findings as to the respective fault of each, he awarded as follows: $33,500 to Russell, which had been reduced by $7,000 based on Russell's failure to make repairs to the concrete at Peat's residence, and $16,500 to Peat. The Final Award "reaffirmed" the earlier Modified Partial Final Award, resulting in a total monetary judgment to Russell in the amount of $295,305.80, which amount included interest.

On March 13, 2019, Peat filed an "answer" in the circuit court to Russell's prior Rule 71C motion seeking a judgment on the Modified Partial Final Award. In it, Peat both denied the allegations in the motion and asserted various affirmative defenses, including fraud. Peat's answer included no attachments.

The circuit court set the matter for a "bench trial." Russell then filed an "Amended Rule 71C Motion for Entry of Judgment by Clerk on Arbitration Award," notifying the circuit court of the arbitrator's Final Award, of Peat's failure to pay the amount required by either the Modified Partial Final Award or the Final Award, and of Peat's purported failure to appeal from the Final Award within the 30-day time frame provided in Rule 71B, Ala. R. Civ. P.² Russell sought entry of a judgment against Peat in the amount of $295,305.80. The Final Award was included as an exhibit to the motion.

Thereafter, Russell filed a "Motion for Instructions to the Clerk of Court to Enter Judgment on Arbitration Award" in which it again cited Peat's alleged failure to pay or to appeal the Final Award within 30 days and requested that the circuit court "instruct the Clerk of the Court to immediately enter judgment on the Final Award pursuant to [Rule] 71C in the amount of $295,305.80." On April 30, 2019, the circuit court granted that motion and instructed its clerk to enter judgment accordingly. On that same date, the clerk entered a "Final Judgment Pursuant to Rule 71C" in favor of Russell and against Peat in the amount of $295,305.80.

On May 1, 2019, Peat filed, presumably pursuant to Rule 59, Ala. R. Civ. P., a "Motion to Set Aside and/or Vacate Order Done on April 30, 2019." Although conceding, as Russell alleged in its amended Rule 71C motion, that the arbitrator had, in fact, entered the Final Award on March 7, 2019,³ Peat argued that his March 13 answer to Russell's Rule 71C motion on the Modified Partial Final Award had asserted various grounds as to why an award should not be enforced. More specifically, Peat alleged:

"[I]t is a long-standing principle of this court that substance shall prevail over form and that it is the true intent of the Answer and the defenses asserted to challenge the sufficiency of the arbitration award.

"... That the Answer was filed on March 13, 2019 and it was within 30 days of the Arbitration award, but it was not filed consistent with other sections of Rule 71B of the Ala.R.Civ.P.

"... [That he] was served with [Russell's] Rule 71C petition the same day of the final arbitration hearing, and thus ... was not given 30 days to properly file his Rule 71B motion before [Russell] filed its 71C petition to enforce the arbitration award."

Based on the foregoing, Peat sought a hearing in the circuit court "to determine if the arbitration award should be upheld." As discussed below, Peat contends that the March 13, 2019, answer was, in effect, a notice of appeal of the arbitration award.

After a hearing, the circuit court entered an order, on July 25, 2019, granting Peat's motion to set aside the April 30, 2019, judgment. In its order, the circuit court explained that, pursuant to Peat's motion, it had been called on "to determine if the arbitration award should be upheld, and/or [whether to] allow [Peat] to cure defects in his answer and properly submit a Rule 71B Notice of Appeal from the arbitration award." On August 6, 2019, Peat filed a purported notice of appeal in which he alleged that the Final Award was "legally unjust" and requested that it be overturned. That notice was assigned a separate case number in the trial court (CV-19-901484); however, on Russell's motion, the two actions were consolidated under case number CV-18-902291. Russell filed its notice of appeal to this Court on August 27, 2019. See Rule 71B(g) ("An appeal may be taken from the grant or denial of any Rule 59 [, Ala. R. Civ. P.,] motion challenging [an arbitration] award by filing a notice of appeal to the appropriate appellate court pursuant to Rule 4, Alabama Rules of Appellate Procedure.").

Standard of Review

" ‘In R.P. Industries, Inc. v. S & M Equipment Co., 896 So. 2d 460 (2004), this Court reviewed the trial court's order granting a motion to confirm an arbitration award and denying the opposing party's

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