Opinion
2:22-cv-04698-RMG
06-09-2023
Design Gaps, Inc., David Glover, and Eva Glover, Petitioners, v. Shelter, LLC, Jason Highsmith, and Kacie M. Highsmith, Respondents.
ORDER AND OPINION
Richard Mark Gergel, United States District Judge
This matter is before the Court on Respondents' motion for attorneys' fees for time expended in enforcing the arbitrator's award before the district court. (Dkt. No. 9). Petitioners oppose the motion. (Dkt. No. 11). For the reasons set forth below, the Court grants Respondents' motion for attorneys' fees.
I. Background
This dispute arises from the renovation of Jason Highsmith and Kacie Highsmith's (the “Highsmiths”) home in Daniel Island, South Carolina. (Dkt. No. 14 at 1). In August and September 2020, the Highsmiths entered into two contracts with Design Gaps, Inc. (“Design Gaps”) to design and install cabinets and closets for their home. (Id.). Both contracts included a mandatory arbitration clause. (Dkt. Nos. 1-4, 1-5). When a dispute arose, the Highsmiths terminated the contracts and filed a demand for arbitration. (Dkt. No. 14 at 2). The Arbitrator ultimately found for the Highsmiths and awarded $152,884.00 in damages, $17,411.83 in “costs of the arbitration,” and $126,113.34 in attorneys' fees. (Dkt. No. 1-10 at 10).
Petitioners thereafter filed an action in this Court to vacate the arbitration award, arguing that the Arbitrator was evidently partial, manifestly disregarded the law, and imperfectly executed his duties. (Dkt. No. 1). On May 19, 2023, the Court denied Design Gaps' motion for vacatur and granted the Highsmiths' application to confirm the arbitration award. (Dkt. No. 14). The Highsmiths' now seek the attorneys' fees they incurred in enforcing the arbitration award in the district court. (Dkt. No. 9).
II. Legal Standard and Discussion
“The recovery of attorney's fees is governed by the American Rule: Each litigant pays his own attorney's fees, win or lose, unless a statute or contract provides otherwise.” SIB Dev. & Consulting, Inc. v. Save Mart Supermarkets, 271 F.Supp.3d 832, 833 (D.S.C. 2017) (internal quotations and citations omitted).
“Arbitration is ‘a matter of contract,' and courts ‘must rigorously enforce arbitration agreements according to their terms.'” Weckesser v. Knight Enters. S.E., LLC, 735 Fed.Appx. 816, 819 (4th Cir. 2018) (quoting Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013)). “Under South Carolina law, courts must, to whatever extent possible, enforce a contract as written.” Id. “The cardinal rule of contract interpretation is to ascertain and give legal effect to the parties' intentions as determined by the contract language . . . If the contract's language is clear and unambiguous, the language alone determines the contract's force and effect.” Schulmeyer v. State Farm Fire and Cas. Co., 353 S.C. 491, 579 (2003).
The contracts between Design Gaps and the Highsmiths provide:
17. ARBITRATION. All disputes arising out of or in connection with this Agreement or any transaction thereunder shall be finally settled under the Commercial Arbitration Rules of the American Arbitration Association . . . by an arbitrator appointed in accord with these Rules. The arbitrator's award shall be final and binding. Judgment upon the award rendered may be entered in any court having jurisdiction over the party against which the award is rendered. The parties expressly consent to the jurisdiction of the federal and state courts situated in Charleston, South Carolina for the purpose of enforcing any arbitration award . . . The arbitration shall include (i) a provision that the prevailing party in such arbitration shall recover its costs of the arbitration and reasonable attorneys' fees from the other party or parties . . .
The plain language of the contract describes the arbitration process to include any proceeding before an arbitrator as well as any court proceeding to enforce the arbitrator's award. The contract further provides for the prevailing party to be awarded reasonable attorney fees against the opposing party or parties. Courts have widely held that similar attorney fee provisions in arbitration contracts apply both to attorney fees incurred by the prevailing party in the proceeding before the arbitrator as well as any subsequent court proceeding to enforce the arbitrator's award. E.g., Star Dev. Grp., LLC v. Darwin Nat'l Ins. Co., 813 Fed.Appx. 76, 89 (4th Cir. 2020) (“Maryland courts have broadly interpreted the [Maryland Uniform Arbitration Act] to permit awards of attorneys' fees for all actions necessary to enforce an arbitration award.”); SCIE LLC v. XL Reinsurance Am., Inc., 397 Fed.Appx. 348, 351 (9th Cir. 2010) (“The district court did not err in awarding plaintiffs the attorney's fees and expense incurred in arbitrating against producers [and] confirming the arbitration award . . .”); James Montgomery Scott LLC v. Tobin, 571 F.3d 162, 165 (1st Cir. 2009) ([W]e think that the Massachusetts courts would allow attorneys' fees to be awarded to a party who successfully defends a petition to vacate a chapter 93A arbitration award at the trial court level.”).
Moreover, even if a court were to view the language of the contract as ambiguous, the “basic contract law principle contra proferentem counsels that we construe any ambiguities in the contract against its draftsman.” Maersk Line, Ltd. v. United States, 513 F.3d 418, 423 (4th Cir. 2008). “Ambiguity imposes costs on the parties to a contract: one party may rely on an errant interpretation, or find its original intent flouted if a dispute arises. Contra proferentem shifts the cost of ambiguity to the party best positioned to avoid and bear it.” Carolina Care Plan Inc. v. McKenzie, 467 F.3d 383, 389 (4th Cir. 2006), overruled on other grounds by Carden v. Aetna Life Ins. Co., 559 F.3d 256 (4th Cir. 2009). Here, to the extent a court were to read any ambiguity into the contractual language regarding the award of attorney fees for court proceedings to enforce an arbitration award (which this Court does not), any ambiguity must be construed against Design Gaps, the drafter of the mandatory arbitration clause with its attorneys' fee provision.
On May 19, 2023, the Court denied Design Gaps' motion for vacatur and granted the Highsmiths' application to confirm the arbitration award. (Dkt. No. 14). Thus, the Court finds that the Highsmiths are the prevailing party in this federal court proceeding and finds that they are entitled to a reasonable amount for their attorneys' fees in this action for their work in enforcing the arbitrator's award.
III. Conclusion
For the reasons set forth above, the Court grants Respondents' motion for attorneys' fees. (Dkt. No. 9). The Court orders Respondents to provide documentation and evidence supporting their claim for attorneys' fees within 10 days of this order, and Petitioners may file a response if they so desire concerning the fee award requested within 10 days thereafter.
AND IT IS SO ORDERED.