Tuesday, May 19, 2015

Update: Be Careful What You Ask For: Missouri Court of Appeals Also Upholds Arbitrator’s Attorneys’ Fee Award Based on AAA Construction Industry Rule 45 When Both Parties Requested an Award of Fees

In our January 15, 2015, post, linked here, we noted the decision in Lasco Inc. v. Inman Construction Corp., et al., 2015 WL 129024 (Tenn. App. 2015), in which the Tennessee Court of Appeals reversed the trial court and upheld an arbitrator’s attorneys’ fee award. The court found that, while the contract at issue did not explicitly provide for the award of attorneys’ fees,  the parties incorporated the AAA’s Construction Industry Rules into their agreement - particularly Rule 45, which authorizes arbitrators to include an attorneys’ fees in an award when both parties request attorneys’ fees. Because both parties had requested attorneys’ fees, the court held that the arbitrator had not exceeded his authority in awarding attorneys’ fees to the prevailing party.

Recently, in City of Chesterfield v. Frederich Constr., Inc., 2015 WL 1814471 (Mo. Ct. App. 2015), the Missouri Court of Appeals held similarly. The contracts at issue provided that all disputes were to be resolved under the AAA’s Construction Industry Rules, but the contracts did not contain explicit attorneys’ fee provisions. There was also no statutory authority for an attorneys’ fee award. The arbitrators noted those points in their final award, but the panel nevertheless awarded fees against the City of Chesterfield under Rule 45 of the AAA’s Construction Industry Rules. Despite the City’s urging that its prior requests for attorneys’ fees were merely “boilerplate” requests, the Court of Appeals found that both parties had indeed requested attorneys’ fees. Therefore, the court held that the panel’s award of fees was proper.

For your reference, a copy of the unpublished decision is linked here

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