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2008-UP-296 - Osborne Electric, Inc. v. KCC Contractor, Inc.

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Osborne Electric, Inc., Respondent,

v.

KCC Contractor, Inc., John Q. Hammons Hotels, LP., John Q. Hammons Revocable Trust, City of North Charleston, and Metropolitan National Bank, Defendants,

of whom KCC Contractor, Inc. is the Appellant.


Appeal From Charleston County
 R. Markley Dennis, Jr., Circuit Court Judge


Unpublished Opinion No. 2008-UP-296
Submitted June 2, 2008 – Filed June 5, 2008   


AFFIRMED


Stephen L. Brown, Joseph E. DaPore, Russell G. Hines, of Charleston, for Appellant.

Andrew K. Epting, Jr., of Charleston, for Respondent.

PER CURIAM:  KCC Contractor Inc. appeals the circuit court’s order affirming an arbitration award.  We affirm.[1] 

FACTUAL/PROCEDURAL BACKGROUND

KCC was the general contractor for the construction of the All Suites Hotel on property leased by John Q. Hammons Revocable Trust from the City of North Charleston.  Osborne Electric entered into a subcontract agreement with KCC to provide the electrical work on the project.  After a disagreement arose between the parties, Osborne filed a notice and certificate of mechanic’s lien stating the value of the labor and materials furnished was $253,630.82.  It subsequently filed an action to foreclose the mechanic’s lien.  Osborne also asserted claims for breach of contract and quasi-contract.  KCC answered and counterclaimed for breach of contract and negligence.  The matter was sent to arbitration. 

The arbitrator held Osborne was “entitled to $165,406.81 for its contract balances including change orders after reduction for the appropriate back charges in favor of KCC.”  Finding Osborne the prevailing party, the arbitrator also awarded Osborne $22,521.20 in pre-judgment interest and attorney’s fees and costs in the amount of $57,592.93. 

KCC filed an application for a change of arbitration award alleging an “evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award” and/or “the award is imperfect in a matter of form not affecting the merits of the controversy.”  It asserted that inherent in the arbitrator’s ruling that KCC was entitled to a credit for “appropriate back charges” was a finding that Osborne breached the subcontract agreement.  Thus, KCC claimed, it was entitled to recover attorney’s fees and expenses pursuant to the subcontract agreement. 

The arbitrator held there was no miscalculation or mistake in the award and that KCC was simply rearguing its claim that it was entitled to attorney’s fees based on the contract, which was denied in the arbitration award.  The arbitrator thus denied the application for a change of arbitration award. 

KCC filed in circuit court a motion for modification or correction of arbitration award while Osborne filed a motion seeking to have the arbitration award affirmed.  The circuit court affirmed the arbitration award.  This appeal followed. 

LAW/ANALYSIS

KCC argues the circuit erred by confirming the arbitrator’s award and failing to grant KCC’s motion to modify or vacate the award.  We disagree. 

As a general rule, an arbitration award is conclusive and courts will refuse to review the merits of an award.  Batten v. Howell, 300 S.C. 545, 547, 389 S.E.2d 170, 171 (Ct. App. 1990).  “Review of an arbitration award is limited and the decision of the arbitrator will be vacated only under certain grounds as provided by statute, or upon the non-statutory ground of manifest disregard or perverse misconstruction of the law.”  Lauro v. Visnapuu, 351 S.C. 507, 516, 570 S.E.2d 551, 556 (Ct. App. 2002). 

KCC seeks modification of the arbitration award on the following statutory grounds:

(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;

. . .

(3) The award is imperfect in a matter of form, not affecting the merits of the controversy.

S.C. Code Ann.§ 15-48-140 (a) (2005). 

KCC argues that under the subcontract agreement, it was entitled to attorney’s fees.  The agreement provided KCC could recover attorney’s fees and expenses incurred in the prosecution or defense of any action or suit “by reason of any other breach or failure by [Osborne].”  KCC asserts the arbitrator’s award of back charges in favor of KCC established Osborne breached the subcontract agreement by failing to perform its obligations under that agreement.  Thus, because of the arbitrator’s refusal to award attorney’s fees, the award contains an error in the calculation of the amount owed to Osborne and is imperfect in its form. 

We find this court’s opinion in Lauro v. Visnapuu instructive for the present case.  In Lauro the circuit court modified the arbitrator’s award finding the arbitrator’s failure to award Lauro the difference between the full maximum sum of the contract and the amount Visnapuus paid was a “miscalculation.”  Lauro, 351 S.C. at 517, 570 S.E.2d at 556.  This court noted that the arbitrator had “repeatedly expressed that he had not overlooked the matter, but had simply concluded that Lauro was not entitled to the difference between the original contract sum and the amount paid, because Lauro had not completed the contract.”  Id.

We explained:

Even if the arbitrator’s decision in this regard were erroneous, it does not constitute an evident miscalculation of figures as envisioned under § 15-48-140. That is, the arbitrator did not commit a mathematical error in computing the total amount of the award. Rather, the arbitrator consciously declined to award Lauro the full amount of the contract.

Lauro, 351 S.C. at 517, 570 S.E.2d at 556.

Similarly, in the order denying KCC’s application for a change in the arbitration award, the arbitrator emphasized that he had not made a miscalculation or mistake in the original arbitration award.  He clarified, “The credit provided to KCC in the Award was for various items including credits agreed to by the parties and work not performed by Osborne after KCC’s material breach of the Agreement.  KCC’s failure to pay Osborne is the reason that KCC incurred legal fees defending the mechanic’s lien action, not because of any breach or failure by Osborne.”  (Emphasis added). 

The arbitrator never found Osborne had breached the subcontractor agreement or failed to perform its obligations under that agreement other than due to KCC’s breach.  The arbitrator’s refusal to award attorney’s fees was not a miscalculation of figures as provided in section 15-48-140 (a) (1).  Rather it was based on his determination that KCC was not entitled to attorney’s fees under the agreement.  Similarly, section 14-48-140 (a) (3) is inapplicable to grant KCC the relief it seeks.  This section allows modification when the award is imperfect in a matter of form, not affecting the merits of the controversy.  (Emphasis added).  The arbitrator’s decision that KCC was not entitled to attorney’s fees clearly involves the merits of the controversy. 

We find the circuit court did not err in affirming the arbitration award.  Accordingly, the order of the circuit court is

AFFIRMED.

ANDERSON, HUFF, and KITTREDGE, JJ., concur.


[1] We decide this case without oral argument pursuant to Rule 215, SCACR.