Originally from Dispute Resolution Journal

CONSTRUCTION

Sanctions for Frivolous Appeals

The 11th Circuit held that sanctions in the form of attorney’s fees could be awarded in vacatur or confirmation proceedings where attorneys seek to vacate an arbitration award for manifest disregard of the law but there is no evidence of such conduct.

B.L. Harbert International, a general contractor, entered into a subcontract with Hercules Steel. The subcontract provided that Harbert would issue a “progress schedule” to each subcontractor, pursuant to which all work must be completed. The subcontract stated that Hercules would be liable for failing to timely perform its tasks pursuant to the “project schedule.” However, the quoted term was not defined in the subcontract. This became a problem when Harbert developed two schedules for completion of the project and Hercules only met the time frame in the schedule with a later date. Deeming Hercules’s work untimely, Harbert withheld payments and demanded delay damages. Hercules responded by filing for arbitration. The parties’ briefs and oral arguments in the arbitration provided the only evidence of their positions. After an initial award in favor of Hercules, issued without any explanation, the arbitrator explained himself pursuant to the parties’ request for specificity. He also corrected a mathematical error in the award. The award concluded that the schedule with the later date governed so Hercules’s performance was timely.