Metzler Contracting Co. LLC v. Paul Stephens; Elle Stephens

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
METZLER CONTRACTING CO. LLC,
Petitioner-cross-respondent -
Appellee,
v.
PAUL STEPHENS; ELLE STEPHENS,
Respondents-cross-petitioners
- Appellants.
No. 11-15749
D.C. No. 1:10-cv-00516-ACK-
BMK
MEMORANDUM*
METZLER CONTRACTING CO. LLC,
Petitioner-cross-respondent -
Appellant,
v.
PAUL STEPHENS; ELLE STEPHENS,
Respondents-cross-petitioners
- Appellees.
No. 11-15833
D.C. No. 1:10-cv-00516-ACK-
BMK
Appeal from the United States District Court
for the District of Hawaii
FILED
JUL 20 2012
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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Alan C. Kay, Senior District Judge, Presiding
Argued and Submitted June 13, 2012
Honolulu, Hawaii
Before: SCHROEDER, CALLAHAN, and N.R. SMITH, Circuit Judges.
Paul and Elle Stephens (“the Stephens”) appeal from the district court’s
order denying their motion to vacate an arbitration award, and confirming the
award. Metzler Contracting Co. (“Metzler”) appeals from the district court’s order
denying its request for attorney fees. We affirm.
The Stephens sought vacatur on the ground that the arbitrator exceeded his
powers in interpreting the contract. See 9 U.S.C. § 10(a)(4). An award may not be
vacated, however, so long as the arbitrator’s interpretation of the contract was
“plausible.” Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 634,
643 (9th Cir. 2010) (citations omitted). The issue here involved the parties
intended basis of payment. The arbitrator determined that the parties had entered
into a cost-plus contract and concluded that the parties, through their acts and
conduct, had waived the Change Order requirement of Supplemental Condition
§ 7.1.3.1. See Wilart Associates v. Kapiolani Plaza, Ltd., 766 P.2d 1207, 1210–11
(Haw. Ct. App. 1988). We have held that waiver is possible even where there is a
contract provision purporting to limit the parties ability to waive contract

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provisions. See Certified Corp. v. Haw. Teamsters & Allied Workers, Local 996,
597 F.2d 1269, 1271 (9th Cir. 1979). The arbitrator’s interpretation of the contract
was, at the least, plausible. Metzler was entitled to be compensated for the cost of
work the Stephens requested. Hawaiian law has long recognized this principle.
See Stewart v. Spalding, 23 Haw. 502, 511 (Terr. 1916).
This case is not like Polimaster Ltd. v. RAE Systems, Inc., 623 F.3d 832, 840
(9th Cir. 2010), where the arbitrator was held to have violated the conditions under
which the arbitration was to take place. The arbitrator here was interpreting the
contract itself in light of the parties’ acts and conduct. He acted within his powers,
and his interpretation was plausible. The district court therefore properly denied
the Stephens’ motion to vacate and granted Metzler’s motion to confirm. See
Lagstein, 607 F.3d at 643; 9 U.S.C. § 9.
Metzler cross appeals the district court’s denial of its request for attorney
fees for the confirmation proceedings. We have said there is a “strong default
presumption that [federal law], not state law, supplies the rules for arbitration,” but
that this can be overturned by a showing of the parties’ “clear intent to incorporate
state law rules for arbitration.” Johnson v. Gruma Corp., 614 F.3d 1062, 1066–67
(9th Cir. 2010) (citations omitted). Metzler argues for the first time on appeal that
both parties’ conduct showed a clear intent to apply the Hawaiian rule that gives a

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court discretion to grant attorney fees in a contested confirmation proceeding. See
Haw. Rev. Stat. § 658A-25(c). Metzler made no such argument in district court
and therefore waived the position it now seeks to maintain. The district court
correctly denied the fee request under the applicable federal law.
AFFIRMED.

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