Fisher v. Gibbs International, Inc.

THIS OPINION
HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN
ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

L. John Fisher,
III and T. Randolph Forshee, Appellants,

v.

Gibbs
International, Inc. and James I. (Jimmy) Gibbs, Respondents.

Appeal From Spartanburg County

 J. Mark Hayes, II, Circuit Court Judge

Unpublished Opinion No. 2010-UP-520

Submitted November 1, 2010 – Filed December
9, 2010

REVERSED AND REMANDED

Thomas L. Stephenson, of Greenville, for Appellants.

Donald C. Coggins, Jr., of Spartanburg and Stacy Kaplan Wood, of
Charlotte, for Respondents. 

PER CURIAM: L. John Fisher, III and T. Randolph Forshee
(Appellants) appeal the circuit court's refusal to confirm their arbitration
award against Gibbs International, Inc. (Gibbs International) and James I. Gibbs
individually.  On appeal, Appellants argue the circuit court erred by: (1)
refusing to confirm the arbitration award; (2) finding the arbitrator exhibited
partiality and a manifest disregard or perverse misconstruction of the law; and
(3) dismissing James I. Gibbs from the case.  We reverse and remand.[1] 

1. We find the circuit court erred in
refusing to confirm the arbitration award based on the finding that the
arbitrator was partial.  Gibbs International and James I. Gibbs have failed to
provide evidence that the arbitrator's alleged bias was actual, direct,
definite, and capable of demonstration.  The record does not indicate that the
arbitrator had any sort of interest in the proceedings or that he had any sort
of relationship with the Appellants in the matter.  While we do not condone the
alleged errors, courts are not free to vacate an arbitration award by an
arbitrator selected by the parties on mere legal error alone.  See Consol.
Coal Co. v. Local 1643, United Mine Workers of Am., 48 F.3d 125, 130 (4th
Cir. 1995) (acknowledging the bias of the arbitrator as a factual finding and
applying the clearly erroneous rule, "we hold that the Magistrate Judge
and district court's finding of per se bias was clearly erroneous . . .
. [Plaintiff] failed to demonstrate any partiality or improper motive on the
part of [the arbitrator] or that he and his brother had any interest in the
outcome of the dispute arbitrated."); see also Atl. Shores
Resort Joint Venture v. Martin, 731 F. Supp. 1279, 1283 (D.S.C. 1990)
("It is well settled, of course, that alleged bias on the part of an
arbitrator cannot be the basis for vacating an award unless the interest or
bias is direct, definite and capable of demonstration rather than remote,
uncertain, or speculative.") (internal quotation and citation omitted); Carpenter
v. Brooks, 139 N.C. App. 745, 755, 534 S.E.2d 641, 648 (N.C. Ct. App. 2000)
("[E]vident partiality . . . exists when an arbitrator's bias is direct,
definite and capable of demonstration rather than remote, uncertain, or
speculative.  There must exist specific facts that indicate improper motives on
the part of the arbitrator . . . .") (internal quotation and citation
omitted); Id. ("[A] disappointed party's perception of rudeness on
the part of an arbitrator is not the sort of evident partiality contemplated by
the Act as grounds for vacating an award.") (internal quotation and
citation omitted); Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492
F.3d 520, 530 (4th Cir. 2007) (applying the following four factors to determine
if a party has established evident bias: (1) the extent and character of the
arbitrator's personal interest in the proceedings; (2) the type of relationship
between the arbitrator and the party he is alleged to favor; (3) the connection
of that relationship to the arbitrator; and (4) the proximity in time between
the relationship and the arbitration proceeding). 

2. We
find the circuit court erred in setting aside the arbitration award due to the
arbitrator's alleged manifest disregard of the law.  See Harris v.
Bennett, 332 S.C. 238, 244, 503 S.E.2d 782, 786 (Ct. App. 1998) (stating in
addition to the five statutory grounds for vacating an arbitration award, an
award can also be vacated under the nonstatutory ground of "manifest
disregard or perverse misconstruction of the law") (internal quotation and
citation omitted); Trident Technical Coll. v. Lucas & Stubbs, Ltd.,
286 S.C. 98, 108, 333 S.E.2d 781, 787 (1985) (stating this ground is directed
at the conduct of the arbitrator and "presupposes something beyond a mere
error in construing or applying the law") (internal quotation and citation
omitted); Harris, 332 S.C. at 246, 503 S.E.2d at 787 (asserting a
manifest disregard of the law is not just an erroneous application of the law); Weimer v. Jones, 364 S.C. 78, 80, 610 S.E.2d 850, 852 (Ct. App. 2005)
("A manifest disregard of the law occurs when the arbitrator knew of a
governing legal principle yet refused to apply it, and the law
disregarded was well defined, explicit, and clearly applicable to the
case.") (internal quotation and citation omitted); Lauro v. Visnapuu,
351 S.C. 507, 519, 570 S.E.2d 551, 557 (Ct. App. 2002) (stating although courts
have not hesitated in certain cases to vacate an arbitration award when there
is a manifest disregard or perverse misconstruction of the law, those cases
have been exceedingly rare, requiring circumstances far more egregious than
mere errors in interpreting or applying the law).

3. We find the circuit court erred in
dismissing James I. Gibbs individually from the case.  Procedurally, we find
this issue was not properly before the circuit court.  This argument was not
raised by James I. Gibbs until his motion in opposition to Appellants' motion
to confirm the arbitration hearing. This issue was not ruled upon by the
arbitrator in his initial order or raised in the defendants' motion to reconsider. 
In fact, the motion to reconsider refers to the defendants in plural form,
suggesting that James I. Gibbs was not contesting his individual liability at
that time.  In their answer, Gibbs International and James I. Gibbs did not
dispute James I. Gibbs' individual liability nor ask that he be dismissed as a
defendant.  Here, there is nothing in the record to indicate that James I.
Gibbs tried to dismiss the case earlier and the defendants collectively
requested that the matter be sent to arbitration.  Moreover, this issue was
never addressed during arbitration.  See Gissel v. Hart, 382 S.C.
235, 243, 676 S.E.2d 320, 324 (2009) (holding that because defendants did not
contest their status as individual defendants when they filed their own motion
to dismiss and their own motion to have the matter sent to arbitration, they
could not later dispute their status as defendants and be permitted to be
dismissed as a party).  Thus, we find the circuit court improperly considered
this matter.

Accordingly, the judgment herein is reversed and this case is
remanded to the circuit court for entry of an order confirming the arbitration
award.

REVERSED AND REMANDED.

THOMAS, PIEPER, and GEATHERS, JJ., concur.

[1] We decide this case without oral argument pursuant to
Rule 215, SCACR.