Sverdrup Corp. v. WHC Constructors, Inc.
| Decision Date | 17 March 1992 |
| Docket Number | Civ. A. No. 4:88-3304-19. |
| Citation | 787 F. Supp. 542 |
| Court | U.S. District Court — District of South Carolina |
| Parties | SVERDRUP CORPORATION, Plaintiff, v. WHC CONSTRUCTORS, INC., and Century III, Inc., Defendants. |
John U. Bell, III, Columbia, S.C., Jerry J. Ronecker, Matthew Menhini, St. Louis, Mo., for plaintiff.
Paul A. Dominick, Daniel T. Brailsford, E. Meredith Manning, Columbia, S.C., Herman Fussell, Nicholas J. Patliacos, Ira J. Smotherman, Jr., Atlanta, Ga., for WHC Constructors.
Thomas H. Coker, Jr., Greenville, S.C., for Century III, Inc.
This matter is before the Court on Motion Of Plaintiff Sverdrup Corporation For Entry Of Arbitration Award As A Final Judgment And Rule 54(b) Certification Of Judgment As Final Judgment. Defendant WHC Constructors, Inc. ("WHC"), opposes plaintiff's motion arguing that the motion is untimely because it was filed more than one year after entry of the arbitration award.1 After carefully reviewing the record and the controlling legal authorities, the Court finds that the motion is untimely and should be denied. The Court also finds that Counts I-VII of the complaint should be dismissed with prejudice due to the completion of arbitration on those issues.
The relevant facts are not in dispute. Plaintiff and WHC are parties to a subcontract agreement ("the Subcontract") entered into on or about November 4, 1987. The Subcontract provided for WHC to do certain PVC System work on a project for which plaintiff contracted with Sonoco Products Company ("Sonoco") in Hartsville, South Carolina. The Subcontract contains the following arbitration clause:
1. All claims that cannot be resolved between the parties shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
The Subcontract also contains a procedure for implementing the arbitration process and other provisions relating to arbitration which are not relevant to the disposition of this case.
Following WHC's work on the Sonoco project, leaks developed in the PVC System. Plaintiff contacted WHC, which had already left the job site, about the leaks. WHC agreed with plaintiff that Century III, another contractor on site, could perform the repair work. After Century III had made the repairs, part of the PVC System exploded, causing a failure of the system. Plaintiff called upon WHC and Century III to replace the PVC System; WHC and Century III refused. Pursuant to its contract with Sonoco, plaintiff then replaced the PVC System.
On December 14, 1988, plaintiff instituted this diversity action alleging eight causes of action against defendants: breach of contract, breach of express warranty, breach of implied warranty, indemnity, common law indemnity, negligence, breach of oral contract (against Century III only), and indemnity (against WHC only).2 On May 26, 1989, WHC filed a motion to compel arbitration and to stay the action pending arbitration. In its memorandum in support of the motion, WHC argued that the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, required arbitration of the dispute. On July 20, 1989, the parties executed an agreement to submit their disputes to arbitration. The arbitration agreement ("the Agreement") provides:
The award rendered by the arbitrators will be final and judgment may be entered upon it in any court having jurisdiction thereof and will not be made subject to modification or appeal except to the extent permitted by Sections 10 and 11 of the Federal Arbitration Act....
On October 4, 1989, the Court, through former Magistrate Judge (now District Judge) Henry M. Herlong, Jr., to whom the case had been assigned, entered a Consent Order For Stay Pending Arbitration, which was signed by counsel for all parties. This Order provides that "all further proceedings in this case, except for motions and objections relating to discovery, are stayed pending entry of the arbitration award or further order of this court." Thereafter, the parties submitted their dispute concerning the cooling water system to an American Arbitration Association Construction Industry Arbitration Tribunal ("the Tribunal"). On August 31, 1990, the Tribunal issued an award ("the Award") in favor of plaintiff against WHC in the amount of $419,456.07. The arbitration proceeding conclusively resolved the cooling water system dispute. On October 8, 1991, plaintiff filed this motion for entry and certification of the Award as a final judgment.3 The issue relating to the temperature control system has not been submitted to arbitration or otherwise resolved.
WHC does not seek to vacate, modify, or otherwise challenge the validity of the Award. Instead, WHC argues that the Award is not enforceable as a final judgment because it is not self-executing as a judgment and plaintiff is now precluded from obtaining judgment on the Award due to its failure to have the Award confirmed within the applicable limitations period. In making this argument, WHC maintains that the appropriate limitations period is set forth in either Section 9 of the FAA, 9 U.S.C. § 9 (one year),4 or S.C.Code Ann. § 15-3-530 (three years), and that plaintiff's motion to confirm is untimely under both statutes. Plaintiff argues in support of its motion that the one-year provision in Section 9 is not a statute of limitations and that its motion is timely under Section 15-3-530 since this lawsuit (not motion) was filed within three years of the accrual of the underlying causes of action.
An arbitration award is not self executing as a judgment but, instead, must be enforced by a court. Sentry Life Ins. Co. v. Borad, 759 F.2d 695, 698 (9th Cir. 1985); Tamari v. Conrad, 552 F.2d 778, 781 (7th Cir.1977). Congress has created a mechanism for enforcement of arbitration awards in Section 9 of the FAA, which provides:
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then 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 award unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States District Court in and for the district within such award was made.
9 U.S.C. § 9. A confirmation proceeding under Section 9 of the FAA is intended to be summary: generally, confirmation can only be denied if an award has been corrected, vacated, or modified in accordance with the FAA. Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir.1986). The main issue before the Court is whether confirmation under Section 9 may be denied based on a party's failure to seek confirmation within one year from the date the arbitration award is made. The resolution of this issue depends upon whether the one-year provision of Section 9 is a statute of limitations. For the reasons stated below, the Court finds that the one-year period set forth in Section 9 is a statute of limitations and that it bars plaintiff from now seeking summary confirmation of the Award.
Initially, the Court notes that the case law on this point is scant. The parties have not cited, and the Court has not uncovered, any cases in which the Supreme Court or the Fourth Circuit have held that the one-year provision in Section 9 is or is not a limitations period. Likewise, the Court is not aware of any decisions from either of those two courts in which they have refused to confirm an arbitration award under Section 9 based on a statute of limitations. Plaintiff has cited three cases from other jurisdictions in which courts have recognized that the one-year period in Section 9 is not a limitations period. See Kentucky River Mills v. Jackson, 206 F.2d 111, 120 (6th Cir.), cert. denied, 346 U.S. 887, 74 S.Ct. 144, 98 L.Ed. 392 (1953) (): Brown v. Bridgeport Rolling Mills Co., 245 F.Supp. 41, 45 n. 7 (D.Conn. 1965) (); Paul Allison, Inc. v. Minikin Storage of Omaha, Inc., 452 F.Supp. 573, 575 (D.Neb.1978) ().5
The Court is convinced that the decisions in Kentucky River Mills, Brown, and Paul Allison, Inc. are based on an incorrect interpretation of Section 9. Therefore, the Court declines to follow those cases. The plain language of Section 9 reads "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...." (emphasis added).6 Each of the cases cited by plaintiff is premised on the foundation that this language is permissive rather than mandatory.7 Such a reading is based on the fact that Section 9 provides that any party to the arbitration "may" apply to the court for confirmation. The term "may" in a statute is generally construed as being...
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Sverdrup Corp. v. WHC Constructors, Inc.
...54(b) Fed.R.Civ.P. and the Arbitration Rules. The district court denied the motion and dismissed the arbitrated claims with prejudice. 787 F.Supp. 542. Sverdrup's motion was considered a motion to confirm under the FAA rather than an enforcement of the award at law. In reaching its decision......