How Final Is a Final Award? Turns Out, It Is Difficult to “Escapes!” a Final Arbitration Award in a Construction Conflict
How final is a final arbitration award? In Escapes! To the Shores Condominium Association, Inc., et al. v. Hoar Construction, LLC, and Architectural Surfaces, Inc., the plaintiff condo association argued that an arbitration award that didn’t resolve all claims against all parties in the trial court was not final enough to be appealed. The Alabama Supreme Court did not agree.
In this case, the condo association sued the architect who designed and the contractor and stucco subcontractor that built the condo tower, alleging construction and design defects. The association’s claims against the contractor and stucco subcontractor proceeded to arbitration, while the case against the architect remained pending in the trial court. After a hearing, a panel of arbitrators issued an award in favor of the contractor and subcontractor, concluding that the association’s damages resulted from a design defect, not a construction defect.
The condo association sought to appeal the award and filed its notice of appeal in the trial court pursuant to Alabama Rule of Civil Procedure 71B. The trial court entered the award as a final judgment. The association then filed a Rule 59 motion to vacate the judgment, which the trial court denied. The association appealed that decision to the Alabama Supreme Court.
In an unusual twist, the association argued that its own appeal should be denied as unripe. The arbitration award did not dispose of all claims against all parties, as the association’s claims against the architect still lingered in the trial court. For that reason, the association argued that the judgment was not appealable. It further argued that the trial court needed to certify the judgment pursuant to Rule 54(b) to make the judgment final and appealable. The association offered Umana v. Swindler & Berlin, Chartered, 669 A.2d 717 (D.C. 1995) and Hartzler v. Bosarge, ___ So.2d ____ (Miss. Ct. App. April 11, 2022) in support of this argument, but the Alabama Supreme Court found it unavailing.
Unlike many other jurisdictions, Alabama has not adopted the Uniform Arbitration Act. Instead, Rule 71B governs the appeal of arbitration awards. Rule 71B states that when a party files its notice of appeal, the trial court “shall promptly enter the award as the final judgment of the circuit court.” The party must then file a Rule 59 motion, the grant or denial of which may be appealed. The Alabama Supreme Court concluded that “promptly” meant that the award would “immediately” be entered as a final judgment. The court further noted that Rule 4(e) of the Ala. R. App. P. makes “[a]n order granting or denying a motion to set aside or vacate an arbitration award filed in accordance with Rule 59 … appealable as a matter of right pursuant to Rule 71B.” Because neither rule references Rule 54(b), the court concluded they unambiguously did not require Rule 54(b) certification of an arbitration award for an appeal to lie.
In concluding there is no interplay between Rule 54(b) and Rule 71B, the court also noted that, even if a conflict between the two rules did exist, Rule 71B’s specificity would prevail over the broad nature of Rule 54(b). Thus, Rule 71B is an exception to Rule 54(b), and — at least in Alabama — a final arbitration award is officially final enough to be appealed, regardless of claims pending in the trial court.
Because the court determined the appeal was ripe, it next looked at the association’s substantive claim to vacate the award. But Escapes! To the Shores provides another example of how difficult it can be to challenge a final arbitration award. The association claimed that the arbitration award should be vacated under 9 U.S.C. § 10(a)(3) of the Federal Arbitration Act because the arbitrators failed to allow the association to reopen discovery after the evidentiary hearing to search for construction progress photos showing a particular condition on the south elevation of the building at issue. The arbitrators agreed to allow the association to submit new photos that were not offered as evidence during the hearing, but they refused to allow the association to conduct additional discovery. The court noted that judicial review of arbitration awards is “extremely limited” and that arbitrators have “broad discretion” regarding evidentiary rulings. The court concluded that the arbitrators heard from 18 witnesses and received more than 300 exhibits over the course of the hearing and that the association had been provided with an adequate opportunity to present its evidence and arguments. Therefore, the court affirmed the trial court’s entry of judgment on the award.