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2010-UP-520 - Fisher v. Gibbs International, 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 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

L. John Fisher, III and T. Randolph Forshee, Appellants,

v.

Gibbs International, Inc. and James I. (Jimmy) Gibbs, Respondents.


Appeal From Spartanburg County
 J. Mark Hayes, II, Circuit Court Judge


Unpublished Opinion No. 2010-UP-520
Submitted November 1, 2010 – Filed December 9, 2010


REVERSED AND REMANDED


Thomas L. Stephenson, of Greenville, for Appellants.

Donald C. Coggins, Jr., of Spartanburg and Stacy Kaplan Wood, of Charlotte, for Respondents. 

PER CURIAM: L. John Fisher, III and T. Randolph Forshee (Appellants) appeal the circuit court's refusal to confirm their arbitration award against Gibbs International, Inc. (Gibbs International) and James I. Gibbs individually.  On appeal, Appellants argue the circuit court erred by: (1) refusing to confirm the arbitration award; (2) finding the arbitrator exhibited partiality and a manifest disregard or perverse misconstruction of the law; and (3) dismissing James I. Gibbs from the case.  We reverse and remand.[1] 

1. We find the circuit court erred in refusing to confirm the arbitration award based on the finding that the arbitrator was partial.  Gibbs International and James I. Gibbs have failed to provide evidence that the arbitrator's alleged bias was actual, direct, definite, and capable of demonstration.  The record does not indicate that the arbitrator had any sort of interest in the proceedings or that he had any sort of relationship with the Appellants in the matter.  While we do not condone the alleged errors, courts are not free to vacate an arbitration award by an arbitrator selected by the parties on mere legal error alone.  See Consol. Coal Co. v. Local 1643, United Mine Workers of Am., 48 F.3d 125, 130 (4th Cir. 1995) (acknowledging the bias of the arbitrator as a factual finding and applying the clearly erroneous rule, "we hold that the Magistrate Judge and district court's finding of per se bias was clearly erroneous . . . . [Plaintiff] failed to demonstrate any partiality or improper motive on the part of [the arbitrator] or that he and his brother had any interest in the outcome of the dispute arbitrated."); see also Atl. Shores Resort Joint Venture v. Martin, 731 F. Supp. 1279, 1283 (D.S.C. 1990) ("It is well settled, of course, that alleged bias on the part of an arbitrator cannot be the basis for vacating an award unless the interest or bias is direct, definite and capable of demonstration rather than remote, uncertain, or speculative.") (internal quotation and citation omitted); Carpenter v. Brooks, 139 N.C. App. 745, 755, 534 S.E.2d 641, 648 (N.C. Ct. App. 2000) ("[E]vident partiality . . . exists when an arbitrator's bias is direct, definite and capable of demonstration rather than remote, uncertain, or speculative.  There must exist specific facts that indicate improper motives on the part of the arbitrator . . . .") (internal quotation and citation omitted); Id. ("[A] disappointed party's perception of rudeness on the part of an arbitrator is not the sort of evident partiality contemplated by the Act as grounds for vacating an award.") (internal quotation and citation omitted); Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 530 (4th Cir. 2007) (applying the following four factors to determine if a party has established evident bias: (1) the extent and character of the arbitrator's personal interest in the proceedings; (2) the type of relationship between the arbitrator and the party he is alleged to favor; (3) the connection of that relationship to the arbitrator; and (4) the proximity in time between the relationship and the arbitration proceeding). 

2. We find the circuit court erred in setting aside the arbitration award due to the arbitrator's alleged manifest disregard of the law.  See Harris v. Bennett, 332 S.C. 238, 244, 503 S.E.2d 782, 786 (Ct. App. 1998) (stating in addition to the five statutory grounds for vacating an arbitration award, an award can also be vacated under the nonstatutory ground of "manifest disregard or perverse misconstruction of the law") (internal quotation and citation omitted); Trident Technical Coll. v. Lucas & Stubbs, Ltd., 286 S.C. 98, 108, 333 S.E.2d 781, 787 (1985) (stating this ground is directed at the conduct of the arbitrator and "presupposes something beyond a mere error in construing or applying the law") (internal quotation and citation omitted); Harris, 332 S.C. at 246, 503 S.E.2d at 787 (asserting a manifest disregard of the law is not just an erroneous application of the law); Weimer v. Jones, 364 S.C. 78, 80, 610 S.E.2d 850, 852 (Ct. App. 2005) ("A manifest disregard of the law occurs when the arbitrator knew of a governing legal principle yet refused to apply it, and the law disregarded was well defined, explicit, and clearly applicable to the case.") (internal quotation and citation omitted); Lauro v. Visnapuu, 351 S.C. 507, 519, 570 S.E.2d 551, 557 (Ct. App. 2002) (stating although courts have not hesitated in certain cases to vacate an arbitration award when there is a manifest disregard or perverse misconstruction of the law, those cases have been exceedingly rare, requiring circumstances far more egregious than mere errors in interpreting or applying the law).

3. We find the circuit court erred in dismissing James I. Gibbs individually from the case.  Procedurally, we find this issue was not properly before the circuit court.  This argument was not raised by James I. Gibbs until his motion in opposition to Appellants' motion to confirm the arbitration hearing. This issue was not ruled upon by the arbitrator in his initial order or raised in the defendants' motion to reconsider.  In fact, the motion to reconsider refers to the defendants in plural form, suggesting that James I. Gibbs was not contesting his individual liability at that time.  In their answer, Gibbs International and James I. Gibbs did not dispute James I. Gibbs' individual liability nor ask that he be dismissed as a defendant.  Here, there is nothing in the record to indicate that James I. Gibbs tried to dismiss the case earlier and the defendants collectively requested that the matter be sent to arbitration.  Moreover, this issue was never addressed during arbitration.  See Gissel v. Hart, 382 S.C. 235, 243, 676 S.E.2d 320, 324 (2009) (holding that because defendants did not contest their status as individual defendants when they filed their own motion to dismiss and their own motion to have the matter sent to arbitration, they could not later dispute their status as defendants and be permitted to be dismissed as a party).  Thus, we find the circuit court improperly considered this matter.

Accordingly, the judgment herein is reversed and this case is remanded to the circuit court for entry of an order confirming the arbitration award.

REVERSED AND REMANDED.

THOMAS, PIEPER, and GEATHERS, JJ., concur.


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