Roy Martel v. Ensco Offshore Company ( 2011 )

REVISED November 3, 2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 11-30357 FILED
Summary Calendar November 2, 2011
Lyle W. Cayce
ROY DANA MARTEL, Clerk
Plaintiff
v.
ENSCO OFFSHORE COMPANY; TORCH OPERATING COMPANY,
Defendants–Third-Party Plaintiffs–Appellees
v.
INGERSOLL RAND COMPANY,
Third-Party Defendant–Appellant
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:00-CV-1864
Before BENAVIDES, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*
*
Pursuant to Fifth Circuit Rule 47.5, the court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in Fifth
Circuit Rule 47.5.4.
No. 11-30357
In this appeal, Third-Party Defendant–Appellant Ingersoll Rand Company
appeals a final judgment by the district court confirming a judgment in
arbitration against Ingersoll. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
On August 12, 2000, Plaintiff Roy Dana Martel (“Martel”) filed suit in the
United States District Court for the Western District of Louisiana, alleging that
he sustained injuries while a member of a casing crew on an Ensco Offshore
Company (“Ensco”) vessel. Ensco and Torch Operating Company (“Torch”) were
the named defendants in Martel’s suit. Ensco and Torch thereafter named
Ingersoll Rand Company (“Ingersoll”) as a third-party defendant in the suit.
Martel eventually settled his claims against Ensco and Torch, while they
maintained their third-party action against Ingersoll.
The district court ordered the third-party action to arbitration, and a
judgment in arbitration was delivered to the parties on February 18, 2010. The
arbitrator determined the allocation of fault among the five parties involved,
including 25% to Ensco, 15% to Ingersoll, and 50% to Martel for contributing to
his own injuries. The judgment in arbitration contained a clerical error,
however, computing damages based on a $300,000 (three hundred thousand
dollar ) total ad damnum, rather than the $3,000,000 (three million dollar ) total
ad damnum to which the parties had agreed. Thus, the arbitrator found that
Ingersoll owed Ensco $45,000 (15% of $300,000), while it should have owed
$450,000 (15% of $3,000,000). The arbitrator was informed that he had used an
incorrect total award figure, and he notified the parties that he intended to issue
an amended judgment. Counsel for both parties, however, requested that the
arbitrator refrain from issuing an amended judgment while they attempted to
work out other unresolved issues. As a result, the arbitrator issued an Order
Vacating Judgment in Arbitration on July 1, 2010, but did not immediately issue
an amended judgment.
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No. 11-30357
At a hearing on December 17, 2010, the arbitrator held that his previous
judgment had contained only a mathematical error, rather than a substantive
one, such that he had jurisdiction to correct it. He also noted that the parties
had agreed to the corrected $3,000,000 amount, and neither party had
challenged the substantive findings set forth in the original judgment.
Therefore, the arbitrator reinstated his judgment of February 17, 2010, except
that the monetary computations were amended to be based on a $3,000,000 total
award, rather than $300,000.
After the arbitrator issued his amended judgment, Ensco and Torch moved
to have the arbitration award confirmed by the district court. Ingersoll,
however, opposed confirmation of the amended award, and moved to vacate the
amended judgment, stay all pending arbitration proceedings, and confirm the
original judgment in arbitration. On March 15, 2011, the district judge held a
hearing regarding the parties’ motions in relation to the amended judgment in
arbitration. On March 31, 2011, the district court issued a judgment granting
Ensco and Torch’s motion to confirm the arbitration award of December 17,
2010, and denying Ingersoll’s motion to declare the arbitration proceedings
closed, motion to vacate, motion to stay, and motion to confirm the original
judgment in arbitration. This appeal timely followed.
STANDARD OF REVIEW
We review de novo a district court’s confirmation of an arbitration award.
Laws v. Morgan Stanley Dean Witter, 452 F.3d 398, 399-400 (5th Cir. 2006).
“Our review of the award itself, however, is exceedingly deferential.” Brabham
v. A.G. Edwards & Sons Inc., 376 F.3d 377, 380 (5th Cir. 2004) (citation
omitted). Vacatur of an arbitration award will be permitted “only on very
narrow grounds.” Id.3
No. 11-30357
ANALYSIS
Ingersoll makes three separate, but related, arguments. First, it claims
that once the arbitrator issued his original award, his jurisdiction over the
matter terminated pursuant to the functus officio doctrine. Ingersoll further
argues that because none of the prescribed procedures for vacating, amending,
or revising a judgment in arbitration were followed here, the district court erred
in confirming the amended judgment in arbitration. Therefore, the district court
also erred in denying Ingersoll’s motion to confirm the original judgment in
arbitration. Conversely, Ensco and Torch maintain that the arbitrator retained
the authority to issue an amended judgment, and that the district court properly
confirmed that amended award.
Under the Federal Arbitration Act (“FAA”), there are four statutory bases
upon which an arbitration award may be vacated:
(1) where the award was procured by corruption, fraud,
or undue means;
(2) where there was evident partiality or corruption in
the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior
by which the rights of any party have been prejudiced;
or
(4) 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). These are the exclusive grounds according to which a district
court may vacate an arbitration award. Hall St. Assoc., L.L.C. v. Mattel, Inc.,
552 U.S. 576, 584 (2008). Ingersoll contends that the arbitrator in this case
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No. 11-30357
exceeded his powers by vacating his original judgment, holding a subsequent
hearing, and issuing an amended judgment, because under the functus officio
doctrine, the arbitrator’s power and authority over the case terminated once he
issued his original judgment. Therefore, according to Ingersoll, the district court
should have vacated the amended award pursuant to the FAA, 9 U.S.C. §
10(a)(4), and it should have confirmed the original judgment in arbitration.
Functus officio means that an officer is “without further authority or legal
competence because the duties and functions of the original commission have
been fully accomplished.” Black’s Law Dictionary 743 (9th ed., 2009). “Once a
court of competent jurisdiction has confirmed that an arbitration decision is
unambiguous and binding on the parties, the arbitrator becomes functus officio
with respect to that portion of the arbitration award and lacks authority to
reconsider those aspects of his decision that are unambiguous and binding.”
Brown v. Witco Corp., 340 F.3d 209, 221 (5th Cir. 2003). Here, the arbitrator’s
original award was not confirmed by the district court prior to the arbitrator
vacating the award due to his mistake regarding the total award amount.
Furthermore, there are three recognized exceptions to the functus officio
doctrine: “An arbitrator can (1) correct a mistake which is apparent on the face
of his award; (2) decide an issue which has been submitted but which has not
been completely adjudicated by the original award; or (3) clarify or construe an
arbitration award that seems complete but proves to be ambiguous in its scope
and implementation.” Id. at 219. In this case, Ensco and Torch maintain that
the original judgment contained a “mistake which is apparent on the face of the
award,” while Ingersoll argues that the mathematical error is only apparent
through reference to other documents and statements. In the original judgment,
the arbitrator wrote that “the agreed ad damnum was established as
$300,000.00,” but the parties’ joint stipulation that served as an exhibit to the
arbitration hearing stated that the total ad damnum at issue was $3,000,000.
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No. 11-30357
Thus, the arbitrator’s judgment conflicted with the evidentiary documents on
which he based his calculations.
In addition, at the hearing before the district judge in which Ingersoll
requested that the original judgment in arbitration be confirmed, counsel for
Ingersoll admitted that the arbitrator’s use of the $ 300,000 award amount was
an error. Counsel for Ingersoll agreed that the arbitrator had made a calculation
error, and that the judgment contained a clerical error. As the Third Circuit
stated in Colonial Penn Insurance Co. v. Omaha Indemnity Co., a case quoted
extensively in Ingersoll’s brief, “[t]he exception for mistakes apparent on the face
of the award is applied to clerical mistakes or obvious errors in arithmetic
computation.” 943 F.2d 327, 332 (3d Cir. 1991). The Colonial Penn court also
recognized that “[p]ossibly, [the exception] could also be applied in a situation
where the award on its face is contrary to a fact so well known as to be subject
to judicial notice,” though the court refrained from taking a position on that
possibility. Id. We find that the arbitrator’s use of $ 300,000 as the total award,
rather than the agreed-upon $ 3,000,000, was a clerical error. Moreover, the
original award was contrary on its face to a well-known, undisputed fact
contained in a joint exhibit. Consequently, the mistake was subject to notice by
the arbitrator, as it directly contradicted the exhibits in evidence.
The doctrine of functus officio is intended to prevent an arbitrator from
changing his ruling due to outside influence. See, e.g., Colonial Penn, 943 F.2d
at 331-32 (“The policy underlying this general rule is an unwillingness to permit
one who is not a judicial officer and who acts informally and sporadically, to
re-examine a final decision which he has already rendered, because of the
potential evil of outside communication and unilateral influence which might
affect a new conclusion.” (internal quotation marks and citation omitted));
Teamsters Local 312 v. Matlack, Inc., 916 F. Supp. 482, 485 (E.D. Pa. 1996), aff’d
118 F.3d 985 (3d Cir. 1997) (“This principle of functus officio is predicated on the
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No. 11-30357
need for finality. It is also designed to prevent improper influences on an
arbitrator to change his or her mind once a final decision is rendered.”); Glass,
Molders, Pottery, Plastics and Allied Workers Int’l Union, AFL-CIO, CLC, Local
182B v. Excelsior Foundry Co., 56 F.3d 844, 847 (7th Cir. 1995) (“Once they
return to private life, arbitrators are less sheltered than sitting judges, and it is
feared that disappointed parties will bombard them with ex parte
communications and that the arbitrators, not being professional judges or
subject to the constraints of judicial ethics, will yield.”). The arbitrator in this
case did not revisit the merits of his decision, or change his substantive ruling;
he merely corrected a mistake on the face of the award that was recognized by
all parties. As such, the arbitrator did not exceed his authority by vacating the
original judgment and issuing an amended one.1
We also find that Ingersoll implicitly consented to the continuing
jurisdiction of the arbitrator over this matter. Once Ensco and Torch notified
the arbitrator that the original judgment contained a clerical error, the
arbitrator informed the parties that he intended to issue an amended judgment.
Both parties then requested that he refrain from doing so while they attempted
to work out other issues. This Court has recognized that, “[a]s a speedy and
informal alternative to litigation, arbitration resolves disputes without
confinement to many of the procedural and evidentiary strictures that protect
the integrity of formal trials.” Forsythe Int’l, S.A. v. Gibbs Oil Co. of Texas, 915
1
Ingersoll argues: “The Federal Arbitration Act (9 U.S.C. § 1, et seq.) prescribes the
manner and procedures for arbitrations in Federal Court actions,” including the procedure for
vacating, modifying, or correcting an award. However, the Act directs the manner in which
a district court may vacate, modify, or correct an award. Therefore, the Act–including any
limitations periods it places on a party’s right to make a motion to vacate, modify, or
correct–has no bearing on modification or clarification sought from an arbitrator, rather than
a district judge. See Witco, 340 F.3d at 218 n.8 (“[T]he FAA’s three month statute of
limitations period governs the period of time within which a party must file a lawsuit in federal
court asking the court to vacate, modify, or correct an arbitration award. See 9 U.S.C. § 12.
The FAA does not regulate the time in which the parties may request clarification of an
arbitration award from the arbitrator.”).
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No. 11-30357
F.2d 1017, 1022 (5th Cir. 1990). As a result, “the parties and the arbitrator have
full authority to establish the procedural rules of arbitration.” Local P-9, United
Food and Commercial Workers Int’l Union, AFL-CIO v. George A. Hormel & Co.,
776 F.2d 1393, 1394 (8th Cir. 1985). They should not, however, “superimpose
rigorous procedural limitations on the very process designed to avoid such
limitations.” Forsythe, 915 F.2d at 1022 (citation omitted). In the hearing before
the district judge, counsel for Ingersoll admitted that the arbitrator “ha[d]
jurisdiction to amend an error or vacate a judgment,” but that “it’s a procedural
thing on how it has to be done.” The parties in this case never entered into a
written arbitration agreement adopting any formal rules of arbitration, such as
those promulgated by the American Arbitration Association. Therefore, when
the parties asked the arbitrator to hold off on issuing an amended judgment,
they in essence set out the procedure they wished to follow. See Witco, 340 F.3d
at 219 (finding that, in the context of clarifying an award, “in the absence of any
contractual provision or formal arbitration rule expressly to the contrary, it
seems clear that an arbitrator may exercise his power to clarify the terms of an
award when he is asked to do so by parties mutually and without any party’s
objection within a reasonable period of time”). Furthermore, Ingersoll at that
time did not claim that the arbitrator lacked jurisdiction to amend his judgment.
“[B]ecause the advantages of arbitration are speed and informality, an arbitrator
should be expected to act affirmatively to simplify and expedite the proceedings
before him.” Forsythe, 915 F.2d at 1022 (internal quotation marks and citation
omitted). The arbitrator’s actions here were an effort to fulfill his obligations
appropriately and efficiently.
Finally, we agree with the district court that it is disingenuous for
Ingersoll to have asked the arbitrator to wait to issue an amended judgment, to
have admitted that the ad damnum used in the original award was a clerical
error, and to now claim that the arbitrator had no jurisdiction to amend his
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No. 11-30357
award and the original, incorrect judgment must stand. As noted supra,
arbitration is intended to be a quick and informal alternative to litigation.
Forsythe, 915 F.2d at 1022. By litigating this issue, Ingersoll has contravened
that policy. Moreover, Ingersoll seeks to employ rules designed to further justice
in order to confirm an award that would in fact be unjust, due to its basis on an
admitted clerical error. We will not condone such gamesmanship.
“The federal courts will defer to the arbitrators’ resolution of the dispute
whenever possible. The Congressional policy of promoting arbitration requires
that courts do not intrude unnecessarily into questions that have been settled
by an arbitration process agreed to by the parties, lest the efficiency of the
arbitration process be lost.” Anderman/Smith Operating Co. v. Tenn. Gas
Pipeline Co., 918 F.2d 1215, 1218 (5th Cir. 1990). We find that Ensco, Torch,
and Ingersoll consented to the arbitration that took place in this case. In
addition, by amending the original judgment, the arbitrator corrected a clerical
error, and his actions thus fell within the bounds of an exception to the functus
officio doctrine. We therefore agree with the district court that the arbitrator’s
amended award, utilizing the correct $3,000,000 (three million dollar) ad
damnum, should be confirmed.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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