[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
FILED
No. 10-14532 U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
OCTOBER 17, 2011
D.C. Docket No. 3:07-cv-00752-HLA-JRK JOHN LEY
CLERK
WHITE SPRINGS AGRICULTURAL CHEMICALS, INC.,
d.b.a. PCS Phosphate-White Springs,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellant,
versus
GLAWSON INVESTMENTS CORP.,
individually and as successor to Bienville
Forest Investments, Inc.,
llllllllllllllllllllllllllllllllllllllll Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(October 17, 2011)
Before MARCUS, WILSON, and HILL, Circuit Judges.
WILSON, Circuit Judge:
White Springs Agricultural Chemicals, Inc. (White Springs) appeals the
district court’s confirmation of an arbitration award in favor of Glawson
Investments Corp. (Glawson). White Springs challenges the grant of attorneys’
fees, expert fees, and prejudgment interest and seeks to vacate or modify the
arbitration award under the Federal Arbitration Act (FAA). We conclude that the
district court properly confirmed the award of fees and interest.
Although this case has ultimately become a challenge to the appropriateness
of an arbitration panel’s award, it stems from a property dispute between the
parties. White Springs operates phosphate mining, production, and processing
facilities in Hamilton County, Florida. Some of its mining activities take place
beneath land owned by Glawson, which conducts hunting, fishing, and
recreational activities on the surface. Years before this particular dispute arose,
the parties entered into an Operating Agreement and a Settlement Agreement to
resolve prior litigation and harmonize their business operations. Each agreement
contained an identical clause requiring arbitration of future legal claims.
When the property dispute underlying this appeal arose, Glawson filed a
demand for arbitration with the American Arbitration Association (AAA). In its
amended demand, served on White Springs on March 9, 2007, Glawson requested
“an award of compensatory damages, together with costs of [the] action,” as well
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as the “amount and procedure determining the parties[’] ad valorem tax
obligations.” White Springs initially sought to enjoin the arbitration in federal
district court. When that claim was denied, the parties proceeded to arbitrate their
disputes.
Glawson and White Springs stipulated that the arbitration would be divided
into two parts. During the first part (Phase I), the arbitration panel would decide
nonmonetary claims of injunctive and declaratory relief. The second part (Phase
II) was reserved for determining “all other disputes of the parties, claims and
counterclaims, as amended, including damages.”
On August 18, 2008, the panel ruled in Glawson’s favor on the Phase I
claims, enjoining White Springs from discharging industrial water that disrupted
Glawson’s business operations. The panel further provided that “[a]ll claims not
heard during [Phase I] are preserved as per the parties’ stipulation.” On
September 29, 2008, the district court partially confirmed the Phase I award,
recommitting any issues of compliance with the award back to the arbitration
panel.
In preparation for Phase II, the parties filed various motions with the
arbitration panel. Glawson and White Springs jointly submitted a list of proposed
issues to be heard during Phase II, and each party individually submitted issues it
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wanted resolved but to which the other party would not consent. On December 5,
2008, Glawson moved to amend its original demand for arbitration to add issues it
individually submitted to the panel. On December 24, Glawson filed a
supplemental motion seeking to clarify that, through its December 5 motion, it
sought “attorneys[’] fees as part of its damages in the Phase II proceedings,”
including “attorneys’ fees associated with related administrative proceedings” and
“an award of prevailing party attorneys’ fees.” Glawson based an award of
attorneys’ fees on the arbitration clause of the Operating Agreement and
Settlement Agreement, which provides:
Any dispute or claim . . . shall be settled by binding arbitration
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (“AAA”) . . . . The arbitrators shall
determine the rights and obligations of the parties according to the
substantive laws of the State of Florida, excluding conflict of law
principles, and shall give effect to the contract terms and applicable
statutes of limitation. . . . The arbitrators may make final, interim,
interlocutory, and partial awards, and may grant any remedy or relief
which they deem just and equitable and within the scope of the
agreement of the parties, excluding punitive damages but including
by way of example specific performance, declaratory decrees and the
awarding of attorneys fees and costs.
(emphasis added).
White Springs filed briefs in opposition to the possible award, and the panel
held argument on the Phase II–related motions, which included the claim for
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attorneys’ fees.1 On February 24, 2009, the panel decided these motions. It
explicitly deferred ruling on the issue of attorneys’ fees until the conclusion of the
arbitration but permitted the parties “to offer evidence of attorney fees,
professional expenses and costs as damage elements to an existing claim.”
The panel then heard the Phase II claims, and on September 8, 2009, it
entered a final arbitration award. The panel determined that Glawson was entitled
to attorneys’ fees for Phase I, expert costs associated with Phase I, and ad valorem
taxes—including prejudgment interest on the principal amount—paid on certain
lands. The panel ruled that the district court would determine the amount of the
attorneys’ and expert fees.
White Springs then moved to vacate or modify the arbitration award,
asserting that the grant of attorneys’ fees, expert fees, and prejudgment interest on
the ad valorem taxes was improper. On Glawson’s motion, the district court
confirmed the award and denied White Springs’s motion to vacate or modify.
1
Although White Springs maintains that it had the opportunity to brief but not argue the
issue, the arbitration panel’s ruling on the Phase II motions stated that it was decided “[a]fter
notice and argument,” and the district court below noted that “the [arbitration panel] held a
hearing on this issue [of attorneys’ fees] before finding that Glawson was entitled to fees for a
portion of the arbitration.” Based on the record, we cannot say that the district court’s factual
conclusion was clear error. See Frazier v. CitiFinancial Corp., 604 F.3d 1313, 1321 (11th Cir.
2010).
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White Springs now appeals the district court’s confirmation of the award in favor
of Glawson.
I. STANDARD OF REVIEW
We review the district court’s confirmation of an arbitration award and its
denial of a motion to vacate or modify the award de novo. Frazier v. CitiFinancial
Corp., 604 F.3d 1313, 1321 (11th Cir. 2010). We review its factual findings for
clear error. Id.
II. DISCUSSION
Sections 10 and 11 of the FAA, 9 U.S.C. §§ 10, 11, provide the exclusive
means by which a federal court may upset an arbitration panel’s award. See Hall
St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586, 128 S. Ct. 1396, 1404–05
(2008); Frazier, 604 F.3d at 1323–24. Section 10 empowers the court to vacate an
arbitration award “where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the subject matter
submitted was not made.” 9 U.S.C. § 10(a)(4). Section 11 allows for modification
of an award “[w]here the arbitrators have awarded upon a matter not submitted to
them.” Id. § 11(b). Because these Sections are the exclusive means for upsetting
an arbitration award, a panel’s incorrect legal conclusion is not grounds for
vacating or modifying the award. See Frazier, 604 F.3d at 1323–24 (finding that
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judicially created grounds for vacating an arbitration award did not survive the
Supreme Court’s Hall Street decision); see also Citigroup Global Mkts., Inc. v.
Bacon, 562 F.3d 349, 358 (5th Cir. 2009) (“[M]anifest disregard of the law as an
independent, nonstatutory ground for setting aside an [arbitration] award must be
abandoned and rejected.”).
A.
White Springs contests the panel’s award of attorneys’ fees. First, it
contends that the award must be vacated because it exceeded the powers of the
arbitration panel. Because “arbitrators derive their powers from the parties’
agreement,” we look to the terms of the governing arbitration clause to determine
the powers of the arbitration panel. Cat Charter, LLC v. Schurtenberger, 646 F.3d
836, 843 (11th Cir. 2011). Here, the governing clause broadly provides: “The
arbitrators . . . may grant any remedy or relief which they deem just and equitable
and within the scope of the agreement of the parties, . . . including by way of
example . . . the awarding of attorneys[’] fees and costs.” (emphasis added).
The Supreme Court recently stated, in the context of vacating an arbitration
award under § 10(a)(4), that “[i]t is only when [an] arbitrator strays from
interpretation and application of the agreement and effectively dispense[s] his own
brand of industrial justice that his decision may be unenforceable.” Stolt-Nielsen
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S.A. v. AnimalFeeds Int’l Corp., 559 U.S. ___, 130 S. Ct. 1758, 1767 (2010)
(second and third alterations in original) (quotation marks and citation omitted).
Looking at the language of the arbitration clause, it is difficult to understand how
the panel could effectively “dispense[] [its] own brand of industrial justice” by
granting Glawson an award that the arbitration clause itself uses as an example.
White Springs cannot overcome the “high hurdle” necessary for vacating an
arbitration award when there is a plain basis for the panel’s award in the parties’
agreement. See id.; Frazier, 604 F.3d at 1321 (“There is a presumption under the
FAA that arbitration awards will be confirmed, and ‘federal courts should defer to
an arbitrator’s decision whenever possible.’” (quoting B.L. Harbert Int’l, LLC v.
Hercules Steel Co., 441 F.3d 905, 909 (11th Cir. 2006))). The arbitration panel
thus had the power to award attorneys’ fees. To the extent White Springs contests
the panel’s interpretation of Florida law, the FAA does not empower us to review
these allegations of legal error. See Frazier, 604 F.3d at 1323–24.
White Springs next avers that the issue of attorneys’ fees was not properly
submitted to the panel and that, as a result, the award must be modified to exclude
them. Unarguably, Glawson presented the arbitration panel with the issue of
attorneys’ fees with its December 24, 2008 motion. The issue lies in whether this
motion effectively submitted that claim to the panel.
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Upon review of the record, we conclude that the issue of attorneys’ fees was
submitted to arbitration. First, it is evident from the final award that the
arbitration panel “plainly believed” the issue was submitted for their decision. See
Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314, 1321–22 (5th Cir. 1994) (noting
that the arbitrator’s plain belief of submission is relevant to determine whether it
has indeed been submitted). More importantly, the panel received briefing and
allowed argument on the issue of attorneys’ fees that established White Springs’s
legal position. White Springs was thus able to—and did—contest the submission
of that issue to the panel before the final award. And even though the panel
initially deferred ruling on the issue of fees, it ultimately decided the issue at the
conclusion of Phase II (notably, after inviting the parties to present evidence of
those fees as damage elements to an existing claim).
The timing of Glawson’s request for attorneys’ fees is also not
determinative of proper submission here. Although it is true that Glawson did not
demand attorneys’ fees in its initial complaint, the panel could still consider fees
once the issue was raised. Rule 6 of the AAA Commercial Arbitration Rules,
which governed the arbitration here, allows a party to submit new or different
claims with consent of the arbitrator. See American Arbitration Association,
Commercial Arbitration Rules, www.adr.org/sp.asp?id=22440 (last visited Sept.
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29, 2011). Although the panel never explicitly ruled that the claim could proceed,
it did grant the relief sought therein—a strong indication that the panel indeed
consented to that claim. As a result, the timing of Glawson’s request does not
preclude attorneys’ fees from being considered a properly submitted claim.
White Springs also argues that the division into Phases I and II required that
any claim for Phase I attorneys’ fees be made during Phase I.2 We find this
distinction artificial. The parties stipulated that “all other disputes” would be
resolved during Phase II. (emphasis added). The proceeding was intended as one
arbitration broken into two parts, where all unresolved issues from Phase I were
reserved for Phase II. No authority supports the position—and White Springs
points to none to illustrate—that a bifurcated arbitration proceeding deferring all
unheard issues fails to preserve a claim for attorneys’ fees arising from the first
proceeding. The arbitration was continuous, and the parties’ agreement to conduct
the arbitration in two distinct phases did not restrict the rights of either party to
assert monetary claims in Phase II.
2
White Springs also argues that Glawson is not entitled to fees because Glawson failed to
move for those fees within fourteen days of confirmation of the Phase I award. See Fed. R. Civ.
P. 54(d)(2). The Federal Rules of Civil Procedure, however, did not govern the award at issue
here. The issue of attorneys’ fees was a substantive claim made pursuant to the parties’
arbitration agreement and not relief sought after judgment of the district court. To the extent that
White Springs also bases its challenge to the panel’s award of expert fees on Rule 54 and the
related federal statutes, the same reasoning applies and federal law does not control.
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Finally, White Springs relies on this court’s ruling in Davis v. Prudential
Sec., Inc., 59 F.3d 1186 (11th Cir. 1995), for the proposition that a general demand
for “costs” does not properly submit the issue of attorneys’ fees to an arbitration
panel. See id. at 1195. While this may be true, we are unable to disregard crucial
facts of this case that render Davis inapposite. Here, Glawson specifically
identified in its December 24, 2008 motion that it sought attorneys’ fees.
Moreover, the arbitration panel received briefing on the permissibility of
attorneys’ fees; heard argument on pending Phase II motions, one of which was
the claim for attorneys’ fees; and issued a ruling on February 24, 2009 permitting
the parties “to offer evidence of attorney fees, professional expenses and costs as
damage elements to an existing claim.” Unlike Davis, the parties here engaged the
panel on the issue of attorneys’ fees through briefing and argument. See id.
(noting that the arbitration demand “ma[de] no request for attorneys’ fees” and
that “neither party presented evidence or argument on the issue”). Davis therefore
does not control the outcome here, where the issue of attorneys’ fees was
presented and argued to the arbitration panel.
B.
White Springs also appeals the arbitration panel’s award of expert fees and
prejudgment interest on ad valorem taxes. It contends that the award of expert
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fees exceeded the panel’s powers because federal law, which would prohibit full
recovery of expert fees here, controls all procedural issues in federal court.
Similarly, it argues that the panel exceeded its powers to award prejudgment
interest because Florida law prohibits that recovery. These points on appeal
essentially involve the same argument: the panel exceeded its powers by acting
contrary to the law. We cannot, however, review the panel’s award for underlying
legal error. See Hall St., 552 U.S. at 586, 128 S. Ct. at 1404–05; Frazier, 604 F.3d
at 1323–24. Even though White Springs presents its argument in terms of the
FAA, it asks us to do what we may not—look to the legal merits of the underlying
award.
III. CONCLUSION
We find that the arbitration panel had the power to decide Glawson’s claim
for attorneys’ fees and that Glawson properly submitted the issue to the panel. We
are unable to grant White Springs’s request that we review the legality of the
award of expert fees and prejudgment interest on the ad valorem taxes, as the FAA
does not permit us to do so. We therefore find no basis to overturn any portion of
the panel’s final arbitration award.
AFFIRMED.
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