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Sayers Construction, LLC v. Accordant Communications, LLC

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

November 21, 2019

SAYERS CONSTRUCTION, LLC, Plaintiff
v.
ACCORDANT COMMUNICATIONS, LLC, Defendant

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER, UNITED STATES MAGISTRATE JUDGE

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before this Court are Plaintiff's Motion to Vacate Final Arbitration Award, filed August 7, 2019 (Dkt. No. 5); Accordant Communications, LLC's Opposition to Sayers Construction, LLC's Motion to Vacate Final Arbitration Award, filed August 29, 2019 (Dkt. No. 8); and Plaintiff's Reply, filed September 12, 2019 (Dkt. No. 13).

         On October 31, 2019, 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), Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas.[1]

         I. GENERAL BACKGROUND

         A. The Arbitration Proceeding

         Accordant Communications, LLC (“Accordant”) is a limited liability company organized under the laws of Georgia with its principal place of business in Seminole County, Florida. Sayers Construction, LLC (“Sayers”) is a limited liability company organized under the laws of Texas with its principal place of business in Travis County, Texas. Pursuant to the parties' Master Service Agreement (“MSA”), [2] Accordant performed work as an electric utility subcontractor for Sayers, the general contractor, in South Florida between 2016 and 2017.

         The MSA contained an arbitration clause requiring the parties to submit “all disputes to arbitration in accordance with the prevailing rules of the American Arbitration Association for the Construction Industry.” Dkt. No. 1-1 at ¶ 38 (“Arbitration Clause”). The MSA also provided that the prevailing party would be entitled to reimbursement for all reasonable costs and expenses, including attorney's fees. Id. at ¶ 39. The MSA further provided that the arbitrator's decision “shall be final and judgment may be entered upon it in accordance with the applicable law in any Court having jurisdiction thereof.” Id. at ¶ 38.

         Accordant alleges that Sayers failed to pay Accordant for its work performed under the MSA. Accordingly, on December 6, 2017, Accordant filed an arbitration proceeding with the American Arbitration Association against Sayers, asserting claims for breach of contract, quantum meruit, and fraud. See Dkt. No. 1-2 at p. 4 (the “Arbitration Proceeding”). In response, Sayers asserted counterclaims for breach of contract and requested attorney's fees.

         On March 22, 2019, after conducting a 19-day hearing on the matter, the Arbitrator issued his “Partial Award” finding that Accordant was the prevailing party in the proceeding and awarded Accordant $459, 392.09 in monetary damages, “plus an amount to be determined by the Arbitrator for interest, reasonable costs, expenses and attorney's fees.” Id. at p. 41, 43. The Arbitrator also found that Sayers should recover nothing on its counterclaims. He ordered the parties to submit briefing on the issue of attorney's fees, costs, expenses, and interest. Id. at p. 41-42.

         Accordant filed its Application for Fees requesting $825, 165.00 in attorney's fees, as well as other costs and expenses. See Dkt. No. 5-6. Sayers objected to the fee request, arguing that Accordant should not be awarded attorney's fees under the Agreement because the MSA only permits the reimbursement of attorney's fees. Because Accordant had a contingency fee arrangement with its attorneys, Sayers argued, it could not be reimbursed for attorney's fees it never paid. Dkt. No. 5-7 at p. 2-3. The Arbitrator rejected this argument, finding that Accordant was entitled to the recovery of fees under the MSA and Texas law. Dkt. No. 1-2 at p. 4. Thus, on May 9, 2019, the Arbitrator issued his Final Award, awarding Accordant $793, 565 in attorney's fees, $12, 989.04 in litigation costs, $72, 250 in arbitration expenses, and $59, 240.58 in prejudgment interest. Id. at p. 6. The Final Award also stated that: “This Award is in full settlement of all claims and counterclaims submitted to this Arbitration. All claims not expressly granted herein are hereby denied.” Id. at p. 6.

         B. Accordant's Lawsuit

         On April 10, 2019, before the Arbitrator issued his Final Award, Accordant filed its lawsuit against Sayers seeking to confirm the Partial Arbitration Award. See Accordant Communications, LLC v. Sayers Construction, LLC, 1:19-CV-401 LY (W.D. Tex. Apr. 10, 2019) (“Accordant's Lawsuit”). Accordant's “Application to Confirm Arbitration Award” sought to confirm the Partial Award and notified the Court that it “will amend this application upon entry of an award for attorney's fees, costs, expenses, and interest.” Id. at Dkt. No. 1 at ¶ 10. On May 9, 2019, Accordant filed its Amended Application to Confirm Arbitration Award, asking the Court to affirm the Final Award in favor of Accordant in the amount of “$1, 397, 436.71, plus post-judgment interest and post-award interest to be determined by the Court.” Id. at Dkt. No. 7 at p. 3.

         On May 23, 2019, Sayers filed a motion to dismiss Accordant's Lawsuit under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. On September 18, 2019, the undersigned issued a Report and Recommendation recommending that the District Court deny Sayers' motion to dismiss and grant Accordant's Amended Application to Confirm the Final Arbitration Award. See Id. at Dkt. No. 19. The District Court has not yet ruled on the Report and Recommendation.

         C. The Instant Lawsuit

         Four months after Accordant filed its lawsuit, Sayers filed the instant lawsuit against Accordant seeking to vacate the Final Award. Sayers argues that the Final Award must be vacated “because the Arbitrator exceeded his powers by awarding nearly $800, 000 in attorneys' fees that were neither incurred nor paid by Accordant.” Dkt. No. 5 at p. 3. As Sayers argued before the Arbitrator, it contends that Accordant is not entitled to the recovery of any attorney's fees because the MSA permits only the reimbursement of attorney's fees, and Accordant cannot be reimbursed for fees it never paid. Accordingly, Sayers argues that the Arbitrator exceeded his powers in awarding attorney's fees in this case and the Arbitration Award must be vacated.

         In response, Accordant argues that attorney's fees are permitted under the MSA, the Arbitrator expressly rejected Sayers' arguments regarding attorney's fees, and Sayers is attempting to have the Court review the ...


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