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McShane v. Pilepro Steel, LP

United States District Court, W.D. Texas, Austin Division

April 19, 2017

GERRY MCSHANE
v.
PILEPRO STEEL, LP, et al.

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          ANDREW W. AUSTIN, UNITED STATES MAGISTRATE JUDGE

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before the Court are Plaintiff's Petition to Confirm Arbitration Award (Dkt. No. 1); Respondent PilePro Steel, LLC's Answer and Counter-Petition for Partial Vacatur or Modification of Arbitration Award (Dkt. No. 12); Plaintiffs' Memorandum in Support of Petition to Confirm Arbitration Award (Dkt. No. 23); Defendants' Response to Plaintiff's Brief (Dkt. No. 24); and Plaintiffs' Reply (Dkt. No. 25). The District Court referred the above motion to the undersigned Magistrate Judge for report and recommendation pursuant to 28 U.S.C. §636(b)(1)(A), Fed.R.Civ.P. 72, and Rule 1(c) of Appendix C of the Local Rules.

         I. GENERAL BACKGROUND

         This case arises from an arbitration between Plaintiff Gerry McShane and Defendant PilePro Steel, LP.[1] The arbitration centered on a contract between McShane and PilePro, which each party alleges the other breached. The arbitrator, Philip Durst, held a hearing on the matter on April 4-5, 2016, and issued his interim opinion on the merits of the parties' claims on May 18, 2016. The arbitrator found that McShane was due $118, 000.00 under the contract between PilePro and McShane. He further issued a final award on June 14, 2016, awarding McShane an additional $110, 852.14 for attorney's fees and costs for the arbitration, bringing the total due to $228, 852.14. The arbitrator additionally stated that the awards “shall bear pre-award and post-award interest at 5% per annum.” Dkt. No. 1 at 3. McShane brings this petition to confirm the arbitration award and enter judgment against PilePro and F. Sempe. PilePro counter-petitions to partially vacate or modify the award under the Texas Arbitration Act and the Federal Arbitration Act.

         II. LEGAL STANDARD

         The Federal Arbitration Act (FAA) was enacted to codify “the national policy favoring arbitration and place[] arbitration agreements on equal footing with all other contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). Thus, a court's review of an arbitration award is limited. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995). The FAA provides that a court may vacate an award:

(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); see also Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 586 (2008) (holding that Sections 10 and 11 of the FAA are the exclusive methods to review an arbitration award). On the other hand, “[j]udicial deference to arbitration . . . does not grant carte blanche approval to any decision an arbitrator might make.” Piggly Wiggly Operators' Warehouse, Inc. v. Piggly Wiggly Operators' Warehouse Indep. Truck Drivers Union, Local No. 1, 611 F.2d 580, 583 (5th Cir. 1980). “Arbitration is ‘simply a matter of contract between the parties.'” ConocoPhillips, Inc. v. Local 13-0555 United Steelworkers Int'l Union, 741 F.3d 627, 630 (5th Cir. 2014) (quoting First Options, 514 U.S. at 943). “[A] party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration.” First Options, 514 U.S. at 945. The arbitrator “can bind the parties only on issues that they have agreed to submit to him.” Piggly Wiggly, 611 F.2d at 583. Thus, “[i]f an arbitral panel exceeds its authority, it provides grounds for a court to vacate that aspect of its decision.” Smith v. Transp. Workers Union of Am., AFL-CIO Air Transp. Local 556, 374 F.3d 372, 375 (5th Cir. 2004).

         III. ANALYSIS

         McShane moves to confirm the arbitration award. PilePro counter-petitions to partially vacate or modify the arbitration award on three bases. First, PilePro argues that the arbitrator exceeded his powers in awarding attorney's fees. Second, it argues that the arbitrator manifestly disregarded the law on PilePro's breach of contract claims and the arbitrator's award of attorney's fees. Lastly, PilePro moves to modify the award of attorney's fees under both the FAA and the Texas Arbitration Act (TAA).

         A. Scope of the Arbitration Agreement

         To decide whether an issue is arbitrable, there are “two considerations: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement.” Webb v. Investacorp, Inc., 89 F.3d 252, 58 (5th Cir. 1996). Here, neither party disputes that a valid arbitration clause exists. However, ...


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