Reinsurance Focus

The Sixth Circuit affirmed the district court’s denial of a motion for attorneys’ fees and enhancement of fees resulting from post-arbitration confirmation proceedings. The issue before the court was whether the agreement between Crossville Medical Oncology and Glenwood Systems permitted the court to award the additional attorneys’ fees.

Crossville Medical Oncology and its single shareholder Dr. Tabor sued Glenwood Systems for breach of contract. The agreement was determined to have an enforceable arbitration clause, and following arbitration, Dr. Tabor was found to have signed the agreement in his individual capacity and to have breached. After an interlocutory appeal regarding Dr. Tabor’s personal consent to arbitration, the district court entered a judgment confirming the arbitration award. Glenwood moved for attorneys’ fees resulting from the post-arbitration litigation proceedings, which the district court denied for lack of authority.

The appellate court affirmed, finding that neither the Federal Arbitration Act nor the parties’ agreement authorized the court to grant attorneys’ fees for post-arbitration confirmation proceedings. The court reasoned that it could only award attorneys’ fees if it was authorized by statute or by the specific language of the parties’ agreement. While the agreement subjected “[a]ny dispute arising out of or in connection with” the agreement to arbitration and provided for attorneys’ fees for the prevailing party, the only jurisdiction given to the courts in the agreement was to “enter [the award] as a judgment.” The court construed the agreement to authorize “an arbitrator to award attorneys’ fees and costs during arbitration,” but merely authorized “the district court to enter the award as a judgment.” The court distinguished the case from others in which parties’ broad agreements contemplated fees for the prevailing party in “any action at law or in equity,” emphasizing that this agreement included attorneys’ fees from arbitration in the “award” to be entered as a judgment by the court, thereby limiting the court’s authority to award any additional attorneys’ fees.

The appellate court similarly rejected a bad-faith argument for additional attorneys’ fees, but remanded the case to the district court on the issue of prejudgment interest, finding the lower court’s short, handwritten opinion devoid of analysis relevant to the appropriateness of that interest. Crossville Med. Oncology, P.C. v. Glenwood Sys., LLC, No. 14-5444 (6th Cir. May 1, 2015).

This post written by Rollie Goss.

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