Monday, October 22, 2012

Limitations on Arbitrator’s Ability to Modify Judgment

Court of Appeals Addresses Limitations on
Arbitrator’s Ability to Modify Judgment

      In a recent decision of the Kentucky Court of Appeals, it considered the ability of the arbitrator, after the issuance of judgment, to make a modification in that judgment.  In this instance, the Court determined that the arbitrator did not have the authority to make the modification, and on that basis reversed the Circuit Court’s confirmation of the amended award.  Swetnam Design Construction, Inc. v. Saurer, __ S.W.3d __, 2012 WL 4838991 (Ky. App. Oct. 12, 2012).
      Swetnam Design Construction had been hired by Saurer to renovate some residential rental properties in Louisville.  Ultimately they came into dispute regarding change orders, additional costs and delays in completion.  The parties agreed to arbitrate the dispute.  The arbitration hearing was held on July 2, 2010, whereat documentary and testimony evidence was presented.  On July 16, the arbitrator issued an award to Swetnam in the amount of $27,078.40.  However, on August 6, the arbitrator modified the award, reducing Swetnam’s recovery to $18,448.59.  That award was ultimately confirmed by the Circuit Court, and it is from that award that Swetnam appealed. 
      Initially, the Court of Appeals reviewed the rules to the effect that the decision of the arbitrator is not, absent narrow statutory circumstances, subject to review by the Court.  In the course thereof, it identified KRS § 417.160(1)(c), which provides that an arbitration award may be vacated on the ground that “the arbitrators exceeded their powers.”  It then turned its attention to KRS § 417.130, setting forth the limitations upon an arbitrator’s ability to modify or correct an award made, noting that:
Thus, if an award is to be changed, both the arbitrator and court are restricted to doing so only in situations where there has been an evident miscalculation of figures, an evident mistake in the description of a person, thing or property, or if the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted.  2012 WL 4838991, *3.
      In this instance, the Court of Appeals determined that the arbitrator acted outside the grounds in which an award may be modified, and on that basis reversed the trial court’s order confirming the modified award, directing that the original award of July 16, 2012 be reinstated.

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