Louisiana Strikes A Blow Against Judicial Review Of Arbitral Error

• Published date: 16 March 2023
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Construction & Planning
• Law Firm: Phelps Dunbar
• Author: Stuart Richeson

This article was written for The Dispute Resolver and was published February 28, 2023.

Continuing with the theme of last week's post, in a recent decision, the Louisiana First Circuit Court of Appeals upheld a trial court's confirmation of an arbitration award of over $500,000, even though the award contained two errors of undisputed fact that the dissenting opinion argued, if corrected, would have resulted in an award in favor of the non-prevailing party. Coastal Indus., LLC v. Arkel Constructors, LLC, 2021-0906 (La.App. 1 Cir. 9/1/22); 350 So.3d 912, writ denied sub nom. Coastal Indus., LLC v. Arkle Constructors, LLC, 2022-01489 (La. 11/22/22); 350 So.3d 500

The case involved an arbitration between a subcontractor and the general contractor on a project to construct a building at a petroleum refinery. The subcontractor brought a claim to recover for amounts it contended it was due under its subcontract. The general contractor asserted a counterclaim seeking to recover for, among other things, the excess cost of completing the subcontract because of the subcontractor's alleged abandonment of the project prior to completion.

After a nine-day arbitration hearing, the arbitrator issued an award in favor of the general contractor. In rendering the award, the arbitrator found that the general contractor was entitled to recover $44,755.98 on its counterclaim.

The arbitrator calculated the award by taking the subcontract amount and subtracting therefrom the amounts the arbitrator determined the general contractor was due for excess completion costs and back charges, as well as the amounts previously paid to the subcontractor, resulting in what the arbitrator determined to be an overpayment of $44,755.98 to the subcontractor.

The arbitrator also awarded the general contractor its attorneys' fees of $408,772.46 and various costs, for a total award of $530,574.02. The trial court affirmed the arbitrator's award.

On appeal, the subcontractor contended that the award should have been vacated because the arbitrator improperly calculated the award on the counterclaim by including back charges that were withdrawn by the general contractor and excess completion costs that the general contractor acknowledged should not have been included in its claim.

In affirming the trial court's confirmation of the arbitration award, the majority opinion held that errors in factual or legal conclusions will not invalidate an otherwise fair and honest arbitration award:

This was a...