In Lasco Inc. v.
Inman Construction Corp., et al.,
2015 WL 129024 (Tenn. App. 2015), the
trial court had vacated an arbitrator’s award of attorneys’ fees in favor of
the defendant general contractor and its surety, concluding that the award
exceeded the arbitrator’s power. On
January 9, 2015, the Tennessee Court of Appeals reversed the trial court and
upheld the arbitrator’s attorneys’ fee award.
The dispute involved non-payment claims by a
subcontractor, Lasco Inc., against the general contractor, Inman Construction Corp., and Inman’s surety,
Travelers Casualty and Surety Company of America. After a four-day arbitration hearing, the
arbitrator denied Lasco’s payment claim and awarded Inman $162,333.44 in
attorneys’ fees, plus costs of $12,112.20, which represented the portion of the
arbitration fees and expenses incurred by Inman that exceeded the American
Arbitration Association’s previous apportionment.
Inman moved to confirm the award, and Lasco moved to
vacate the attorneys’ fee award. Lasco
claimed that the arbitrator exceeded his authority because the parties’
contract did not authorize an award of attorneys’ fees. The trial court agreed with Lasco and vacated
the award. Inman appealed.
The Court of Appeals did not dispute that the contract at issue
did not expressly provide for an award of attorneys’ fees. But, as Inman argued, the parties’ contract
incorporated the AAA’s Construction Industry Rules as the rules governing an
arbitration under the contract. Rule 45(d)(ii) provides that an arbitration
may “include . . . an award of attorneys’ fees if all parties have requested
such an award or it is authorized by law or their arbitration agreement.” Therefore, the Court of Appeals found that,
by virtue of the parties’ incorporation of the AAA’s Construction Industry
Rules into their agreement, the parties’ contract did provide for an award of
attorneys’ fees if both parties’ requested such an award.
Inman requested an attorneys’ fee award, and so did Lasco. In fact, Lasco’s attorneys’ fee request was based
in part on Rule 45. Accordingly, the Court
of Appeals ruled that the arbitrator had not exceeded his authority by awarding
attorneys’ fees to Inman.
For your reference, a copy of the decision is linked here:
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