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Southeast Construction, L.L.C. v. War Construction, Inc

Supreme Court of Alabama

June 26, 2015

Southeast Construction, L.L.C.
v.
WAR Construction, Inc.

Appeal from Tuscaloosa Circuit Court (CV-09-900101).

STUART, Justice.

Southeast Construction, L.L.C. ("SEC"), appeals the order of the Tuscaloosa Circuit Court finding that WAR Construction, Inc. ("WAR"), had provided SEC with certain releases as previously ordered by the circuit court and that SEC was accordingly now required to pay the outstanding $263, 939 remaining on a $373, 939 judgment previously entered on a February 16, 2011, arbitration award obtained by WAR against SEC, along with interest accruing from February 16, 2011.[1] We affirm in part and reverse in part.

I.

On June 12, 2007, SEC and WAR entered into a construction contract pursuant to which WAR was to serve as the general contractor for SEC on a condominium development in Tuscaloosa known as The Chimes. As the development neared completion, a dispute arose in which WAR claimed that it had not been paid the total amount it was due for the work it had performed, while SEC claimed that WAR had not completed its work and that portions of its allegedly completed work were defective. Pursuant to the terms of the June 12, 2007, contract, the dispute was submitted to arbitration and, on February 16, 2011, a three-arbitrator panel ruled in favor of both parties on their respective claims, with the net result being an award in favor of WAR for $373, 939. The panel further stated that "[p]ost-award interest shall accrue at the rate of 3.25% per annum from the date of the award until it is paid in full" and that "[t]he above sums are to be paid on or before 30 days from the date of this award."

Thereafter, SEC moved the arbitration panel to modify its award inasmuch as the panel had not addressed SEC's request for relief with respect to certain liens that had been filed by WAR and some of its subcontractors and suppliers. The panel found SEC's request to be well taken and, on March 16, 2011, modified the sentence in the award concerning the time in which SEC should make payment, quoted supra, to read:

"The above sums are to be paid upon [SEC's] receipt of reasonably appropriate and adequate releases of liens and claims against [SEC], its surety and the project involved in this proceeding from [WAR] and all of [WAR's] subcontractors/suppliers that filed a lien on the project; provided that, in lieu of a release from such subcontractor/supplier, [WAR] may provide an adequate bond or other adequate security. This shall occur no later than May 13, 2011."

The panel stated that the February 16, 2011, award was reaffirmed in all other respects. Neither SEC nor WAR pursued an appeal of the arbitration award with the Tuscaloosa Circuit Court as allowed by Rule 71B, Ala. R. Civ. P.

On April 22, 2011, WAR moved the circuit court to enter a judgment enforcing the arbitration award pursuant to Rule 71C, Ala. R. Civ. P. SEC opposed the motion, arguing that WAR had not yet provided it with the releases required by the modified arbitration award. The circuit court initially declined to enter the requested judgment, reasoning that the arbitration award was not yet final based on WAR's failure to provide the required releases, as well as the need for the arbitration panel to determine whether those releases were adequate. A hearing was subsequently held at which WAR acknowledged that SEC was entitled to the required releases but also stated that it was hesitant to release any liens before receiving payment because the liens were its only way of ensuring payment. On May 9, 2011, the circuit court entered an order directing the circuit clerk to enter the February 16, 2011, arbitration award, as modified on March 16, 2011, as a final judgment pursuant to Rule 71C(f), Ala. R. Civ. P., but also noting that no certificate of judgment was to be issued unless that certificate "complie[d] with the arbitrators' award." The circuit court further noted that any concerns the parties had regarding the interpretation of the arbitration award needed to be presented to the arbitration panel.[2]

On May 13, 2011 –– the deadline the arbitration panel had set for WAR to provide SEC with the required releases –– WAR filed a notice with the circuit court stating that it had supplied SEC with all of WAR's subcontractors' releases and that it would provide its own release when SEC put forth the funds required to fulfill the terms of the arbitration award. SEC thereafter notified the circuit court that it had not received adequate releases from two of WAR's subcontractors and, as WAR had admitted, from WAR itself. The circuit court scheduled a hearing to further consider the matter; however, on June 7, 2011, before that hearing was held, SEC filed an appeal with this Court, arguing that the circuit court's May 9, 2011, order directing the circuit clerk to enter a judgment on the arbitration award was erroneous because, it stated, WAR had not provided the required releases. WAR subsequently filed a cross-appeal, treated by this Court as a petition for a writ of mandamus, effectively arguing that the circuit court was exceeding its discretion by not acting to enforce the judgment entered on the arbitration award.

In Southeast Construction, L.L.C. v. War Construction, Inc., 110 So.3d 371, 376 (Ala. 2012) ("SEC I"), this Court ruled on the dispute, holding that the circuit court had acted properly in ordering the circuit clerk to enter a final judgment based on the arbitration award because that final judgment "adjudicate[d] the rights and responsibilities of the parties." Nevertheless, we noted that the final judgment required further acts by the parties and, accordingly, further acts and supervision by the circuit court:

"Given the nature of the award made by the arbitrators in this case and the nature of the resulting judgment the circuit court properly ordered the clerk to enter, it is apparent that the circuit court must take some additional responsibility for enforcing that award and the resulting judgment. To the extent WAR complains in its petition of the circuit court's reluctance to do so, we agree with WAR and, accordingly, order the circuit court to take appropriate action to enforce the judgment it has entered based upon the arbitrators' award."

110 So.3d at 377-78. Justice Murdock, in his opinion concurring specially, suggested that, on remand, the circuit court might facilitate the matter by accepting SEC's payment and the releases submitted by WAR and then transferring them to the other party once all obligations had been fulfilled. 110 So.3d at 378 (Murdock, J., concurring specially).

The circuit court thereafter conducted a hearing and ordered briefing from the parties to determine how to best comply with this Court's directive in SEC I and to enforce the May 9, 2011, judgment entered on the arbitration award. During this process, WAR appears to have offered proposals concerning how to best give effect to the arbitration award, while SEC took the position that, because WAR had not provided all the required releases by the May 13, 2011, deadline set by the arbitration panel, its obligation to pay the sum ordered in the arbitration award was extinguished. On January 9, 2013, the circuit court entered an order rejecting SEC's ...


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