United Technology and Resources, Inc. v. Dar Al Islam
| Decision Date | 12 January 1993 |
| Docket Number | No. 20312,20312 |
| Citation | 846 P.2d 307,115 N.M. 1,1993 NMSC 5 |
| Parties | UNITED TECHNOLOGY AND RESOURCES, INC., a New Mexico corporation, Plaintiff-Appellant, v. DAR AL ISLAM, a New Mexico corporation, and Crescent Leasing & Development Corp., Defendants-Appellees. |
| Court | New Mexico Supreme Court |
United Technology and Resources, Inc. ("U.T.R."), plaintiff below, appeals from a judgment of the district court confirming an arbitration award in its favor. The award provided that U.T.R. should recover from defendants, Dar Al Islam and Crescent Leasing & Development Corporation (collectively, "Crescent"), the entire amount of compensatory damages sought by U.T.R. for Crescent's breach of a construction contract, plus costs of the arbitration, but denied U.T.R.'s request for attorney's fees and recommended that no punitive damages be assessed in U.T.R.'s favor. U.T.R.'s appeal is based on its assertions that the court should have awarded attorney's fees under NMSA 1978, Section 48-2-14 (Repl.Pamp.1987), and that the court should have conducted a jury trial on U.T.R.'s claim for punitive damages, notwithstanding the arbitrators' recommendation that the claim not be allowed. We hold that U.T.R. failed to contest the arbitrators' award regarding attorney's fees in a timely manner and that the district court acted properly in adopting the arbitrators' recommendation on punitive damages. We therefore affirm the court's judgment.
On August 30, 1984, U.T.R. contracted with Crescent to build a motel, retail shopping facility, and restaurant complex in Abiquiu, New Mexico. U.T.R. agreed to construct the project for approximately $722,000. Work began on the construction contract in September 1984 and continued until June 1985, at which time U.T.R. considered the project to be substantially completed. Upon completion of the work, U.T.R. claimed that Crescent owed it $163,976.40 for the balance due on the original contract plus amounts for additional work provided and materials delivered and incorporated into the project. U.T.R. filed a mechanic's lien for this amount in September 1985 and sued to foreclose on the lien in October. The suit also stated a claim for punitive damages, based on Crescent's alleged bad faith breach of contract.
In March 1989, in accordance with the procedure for settlement of disputes agreed to in the construction contract, Crescent filed a motion to compel arbitration under Section 44-7-2 of the Uniform Arbitration Act as adopted in New Mexico, NMSA 1978, Sections 44-7-1 to -22 (Orig.Pamp. & Cum.Supp.1992), and to stay the action pending arbitration. The district court granted the motion in June of that year and entered findings of fact and conclusions of law finding generally that, despite Crescent's inactivity since filing of the lawsuit three and one-half years before, Crescent had not waived its right to demand arbitration of disputes arising under the contract. The court's order reserved "jurisdiction over those matters not subject to arbitration, including but not limited to the issue of punitive damages, if any, ... which shall be resolved in a trial on the merits, with those issues triable by jury presented to a jury for resolution."
In August 1990, the parties conducted an arbitration administered by the American Arbitration Association, and in October 1990 the three-member panel issued its award. The panel awarded U.T.R. compensatory damages in the amount of $170,000.00 and required Crescent to pay an additional $11,476.74 as the costs of the arbitration proceeding. Crescent paid both amounts in full shortly after the award was issued.
On the subject of attorney's fees, the arbitrators stated: "We can find no legal basis in New Mexico for the award of attorney's fees in this arbitration, which proceeded upon a claim of 'bad faith breach of contract'." Accordingly, the award provided: "Any request for an award of attorney's fees is denied."
With respect to punitive damages, the arbitrators held: "We are not authorized to rule on Claimant's request for an award of punitive damages, however, it is recommended to the court that no punitive damages be assessed in this matter."
On July 22, 1991, Crescent applied for confirmation of the award pursuant to Section 44-7-11. In its response to the application, U.T.R. stated that it had "no problem with confirmation of the arbitration award," but claimed that the issue of punitive damages remained to be resolved by a jury trial. On November 7, 1991, the district court issued its judgment confirming the award and adopting the recommendation of the arbitration panel that no punitive damages be assessed against Crescent. At the hearing on presentment of the judgment earlier that day, U.T.R. raised, for the first time in over a year since the arbitrators' entry of their award, the issue of attorney's fees.
U.T.R. appeals, raising two points. First, it argues that it is entitled to an award of reasonable attorney's fees under Section 48-2-14 for its enforcement of the mechanic's lien against Crescent. Second, U.T.R. argues that it is entitled to a jury trial on the issue of punitive damages for bad faith breach of contract because the issue was not susceptible to resolution by arbitration.
U.T.R. contends that the district court abused its discretion by failing to award it attorney's fees incurred in enforcing its mechanic's lien. The general rule in New Mexico, of course, is that absent statutory or other authority each party to litigation is responsible for its own attorney's fees. Montoya v. Villa Linda Mall, Ltd., 110 N.M. 128, 129, 793 P.2d 258, 259 (1990). U.T.R. finds statutory authority for an award of attorney's fees in the New Mexico statutes governing mechanics' and materialmen's liens, NMSA 1978, Sections 48-2-1 to -17 (Repl.Pamp.1987 & Cum.Supp.1992). Section 48-2-14 provides that in actions to enforce a mechanic's lien, "[t]he court may also allow ... reasonable attorney's fees in the district and supreme courts." See Measday v. Sweazea, 78 N.M. 781, 786, 438 P.2d 525, 530-31 (Ct.App.1968) (). U.T.R. maintains that since it won its action to enforce its mechanic's lien in full and Crescent's counterclaim was denied in its entirety, U.T.R. is entitled to its attorney's fees incurred in enforcing the lien.
Crescent raises two arguments in response to U.T.R.'s claim, one of which we find dispositive of this issue.1 That argument is that U.T.R. failed to make a timely motion to vacate, modify, or correct the award and is thereby barred from challenging the arbitrators' refusal to award attorney's fees.
Under the Uniform Arbitration Act, a written agreement to submit a controversy to arbitration is valid, enforceable, and irrevocable, except on such grounds as may exist for revocation of the contract. Section 44-7-1. The legislature and the courts of New Mexico "have expressed a strong policy preference for resolution of disputes by arbitration." Dairyland Ins. Co. v. Rose, 92 N.M. 527, 530, 591 P.2d 281, 284 (1979). The legislative intent in establishing the Arbitration Act, and the policy of the courts in enforcing it, is to reduce caseloads in the courts. Daniels Ins. Agency, Inc. v. Jordan, 99 N.M. 297, 299, 657 P.2d 624, 626 (1982). In the interest of judicial economy, challenges to arbitration awards are severely limited by the Act. Guaranty Nat'l Ins. Co. v. Valdez, 107 N.M. 764, 767, 764 P.2d 1322, 1325 (1988). Once an arbitration panel has entered an award, "the finality of arbitration weighs heavily in its favor and cannot be upset except under exceptional circumstances." Melton v. Lyon, 108 N.M. 420, 422, 773 P.2d 732, 734 (1989) (citing Ormsbee Dev. Co. v. Grace, 668 F.2d 1140, 1146-47 (10th Cir.), cert. denied, 459 U.S. 838, 103 S.Ct. 84, 74 L.Ed.2d 79 (1982)).
The district court's review of an arbitration award is narrowly limited by the statutory grounds established in the Act. State ex rel. Hooten Constr. Co. Inc. v. Borsberry Constr. Co. Inc., 108 N.M. 192, 193, 769 P.2d 726, 727 (1989). Section 44-7-11 of the Act provides:
Upon application of a party, the court shall confirm an award, unless within the time limits hereinafter imposed grounds are urged for vacating or modifying or correcting the award, in which case the court shall proceed as provided in Sections 12 [44-7-12 NMSA 1978] and 13 [44-7-13 NMSA 1978].
Thus, the district court's review of an arbitration award is limited to the statutory grounds for vacating, modifying, or correcting it as specified in Sections 44-7-12 and 44-7-13. Hooten Constr. Co., 108 N.M. at 193, 769 P.2d at 727. The language of the Act mandates that, in the absence of any of these statutory grounds, "the court shall confirm an award." Section 44-7-11.
Under Section 44-7-13, an award may be modified or corrected if the dissatisfied party applies to the appropriate court for such relief within a specified time period and establishes the grounds outlined in the section, which provides in relevant part:
A. Upon application made within ninety days after delivery of a copy of the award to the applicant, the court shall modify or correct the award where:
(1) there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
(2) the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or
(3) the award is imperfect in a matter of form, not affecting the merits of the controversy.
Any challenge to an award made by an arbitration panel must be made under the grounds...
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