In an interesting case that went on for many years, a homeowner obtained judgment against an individual who claimed only his corporate entity should have been subject to arbitration. The primary reason this occurred is that the homeowner suit named as the defendant, “Randy Bosarge, d/b/a Superior Builders and Developers.” The defendant then replied to the complaint using the same nomenclature. When the arbitrator awarded judgment against the individual that individual appealed to circuit court – arguing that only the company could be a proper defendant. The court agreed, but this was reversed on appeal, with the appellate court concluding that the appeal from the arbitrator’s award was untimely made, and that in any even, arbitration awards should only rarely be reversed or amended by courts. Hartzler v. Bosarge, 2021 WL 973069 (Ct. Appeals Mississippi (2021).
This case is a good demonstration of why not to agree to arbitration in lieu of litigation. The homeowner first filed suit in this case in about 2010. The complaint alleged breach of contract, breach of warranty, and negligent construction. The defendant filed a motion to send the case to arbitration as apparently required by the contract. The motion was made in the name of the Individual d/b/a the corporate name. In 2017 the arbitrator made a decision in favor of the homeowner. The decision against the defendant was in the name of the Individual d/b/a corporate name.
The homeowner in 2018 obtained a court order confirming the arbitration decision. A year after than in 2019, the homeowner filed a suggestion for a writ of garnishment on the judgment. One full year after the judgment was entered against the individual, he filed a motion to quash the garnishment – arguing that he should not be bound individually to the arbitration award or the court’s affirmation of that award. The court agreed, and granted the motion, thereby amending the judgment to be solely against the corporate entity and not the individual.
That court decision was appealed, and the appellate court concluded that reversed. In doing so, it concluded that a circuit has no authority to modify a construction related arbitration award unless the exceptions outlined under the arbitration statute apply. Arbitration proceeds “are so final and binding, trial courts must be careful to ‘review, confirm, or modify’ all arbitration awards through an ‘extremely limited lens.’” The court here held that the identity of the defendant was not an “evident mistake” warranting modification.
Risk Management Comment: My office reviews well over 2,000 contracts a year for various clients and we routinely strike out arbitration clauses and replace them with litigation as the preferred means to resolve disputes that fail to resolve through mediation. Litigation can be quicker and less expensive that arbitration. Decisions can be appealed much more readily than can be arbitration awards which are almost impossible to successfully appeal.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 23, No. 6 (October 2021).
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