St. George Fire Prot. Dist. No. 2 v. J. Reed Constructors, Inc. 2018, La. App. LEXIS 262 (February 20, 2018)
J. Reed Constructors, Inc. (“J. Reed”) and St. George Fire Protection District No. 2 (“St. George”) entered into two construction contracts under which disputes were subject to binding arbitration. A dispute arose in which J. Reed contested St. George’s assessment of liquidated damages and claims for breach of warranty. The matter was submitted to arbitration and the arbitrator awarded St. George $58,865.00.
St. George petitioned the trial court to confirm the arbitration award, pointing out that the three month deadline for the parties to request that the award be vacated, modified, or corrected had lapsed. J. Reed answered the petition by objecting to the confirmation of $41,660.00 for architect and attorney fees. J. Reed acknowledged that it did not file a motion to modify within three months of the award, as required by the Louisiana Binding Arbitration Law (the “Act”), but argued that it was not prohibited from raising its objection as an affirmative defense in its answer to the petition.
The trial court rejected J. Reed’s argument and confirmed the award. The Court of Appeals affirmed, holding that J. Reed’s right to challenge the award had been waived and could not be revived by characterizing the challenge as an affirmative defense to the petition to confirm.
On appeal, J. Reed did not dispute that it failed to challenge the arbitration award within the statutory three month period but nevertheless argued that it could raise its challenge as an affirmative defense to the confirmation of the award. The Court of Appeals rejected this argument, reasoning that under the Act the only way to vacate, modify, or correct an arbitration award is by a notice of motion served within three months of the award’s rendition, without any exceptions. Additionally, the Court of Appeals relied on policy arguments in its decision. Specifically, the Court reasoned that confirmation of an arbitration award is not necessary for the award to be valid and is merely a summary proceeding in which the court adopts the award as a judgment. Furthermore, based on arbitration’s role as a mechanism for quick dispute resolution, a party should bring a motion to vacate within the allotted time.
The Court also noted that although J. Reed presented its challenge as an affirmative defense, the result sought was to vacate, modify or correct the arbitration award, which was prohibited beyond the Act’s three month deadline. Thus, by failing to challenge the award within the three months, J. Reed’s challenges asserted as affirmative defenses were waived.