CAT CHARTER LLC PATRICIA RYAN DANIEL RYAN v. WALTER SCHURTENBERGER MULTIHULL TECHNOLOGIES INC MTI

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United States Court of Appeals, Eleventh Circuit.

CAT CHARTER, LLC, PATRICIA RYAN, DANIEL RYAN, Plaintiffs—Appellants, v. WALTER SCHURTENBERGER, MULTIHULL TECHNOLOGIES, INC. (MTI), a Florida corporation, Defendants—Appellees.

No. 10–11674 _ D.C. Docket No. 4:08–cv–10104–KMM

Decided: July 13, 2011

Before TJOFLAT and BARKETT, Circuit Judges, and STEELE,* District Judge.   TJOFLAT, Circuit Judge:  The Federal Arbitration Act (the “FAA” or the “Act”), 9 U.S.C. § 1 et seq., provides for expedited and limited judicial review of arbitration awards, id. §§ 9–11.   Section 10(a) of the Act delineates four grounds that permit a court to vacate an award.   The question here is whether arbitrators “exceeded their powers”—thereby justifying vacatur of their award under § 10(a)(4)—when they purportedly failed to provide a “reasoned award” as agreed to by the parties.   The district court held that they had and therefore vacated the award.   We respectfully disagree and reverse.   I. This case arises out of a dispute over the construction of a yacht.   Daniel and Patricia Ryan are Massachusetts citizens who, in anticipation of retirement and with an eye toward the construction of a vessel, formed a Delaware limited liability corporation, Cat Charter, LLC (“Cat Charter”).   The Ryans, through Cat Charter (collectively, the “Plaintiffs”), agreed to pay Mutihull Technologies, Inc. (“MTI”), a Florida business owned solely by Walter Schurtenberger (collectively, the “Defendants”), to construct a vessel to be known as the Magic.1  But relations between the parties soured, and the Defendants never delivered the Magic, despite receiving roughly $2 million from the Plaintiffs.   As a result, the parties entered into binding arbitration pursuant to their written agreement.2  The Plaintiffs filed their initial Statement of Claim with the American Arbitration Association (the “AAA”) on October 23, 2008.   On April 15, 2009, the Plaintiffs submitted an Amended Statement of Claim,3 in which they asserted six separate claims against the Defendants:  (1) deceptive and unfair trade practices under Fla. Stat. § 501.201 et seq.;  (2) rescission;  (3) breach of contract;  (4) fraud or alternative misrepresentation;  (5) breach of fiduciary duty;  and (6) civil remedy for criminal practices under Florida law.   The Defendants answered on April 30, 2009, denying the Plaintiffs' claims and arguing that the construction of the Magic had proceeded according to the terms of the “cost plus” contract entered into in 2005.4  Both the Plaintiffs and the Defendants requested an award of reasonable attorney's fees.   The arbitration proceeded under the Commercial Arbitration Rules of the AAA (the “Arbitration Rules”) before a panel of three arbitrators (the “Panel”).5  Pursuant to the Arbitration Rules, the Panel held a preliminary hearing on March 4, 2009.   The next day it issued a Report of Preliminary Hearing and Scheduling Order setting forth the schedule and procedures for the pending arbitration.   In relevant part, the Panel stated, “The form of the award also will be determined by agreement of the parties.” 6  On March 25, 2009, the Defendants' attorney sent a facsimile to the AAA case manager informing her that “the parties have agreed that the panel shall provide a reasoned award and that the panel shall determine who the prevailing party or parties are on the various claims between the parties.”   The Plaintiffs also reminded the Panel of this agreement in their post-trial brief, stating that “[t]he parties have agreed to ask the panel to issue a ‘reasoned award’ and determine which party is the ‘prevailing party’ on all claims.”   Following discovery, a five-day hearing, and post-trial briefing, the Panel issued a unanimous arbitration award (the “Award”) on December 7, 2009.   The Award stated, in pertinent part:  1. On the claim of the Claimants, CAT CHARTER, LLC;  DANIEL RYAN;  and PATRICIA RYAN (hereinafter collectively “Claimants”), for violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), we find that Claimants have proven their claim against Respondents, MULTIHULL TECHNOLOGIES, INC. (hereinafter “MTI”), and WALTER SCHURTENBERGER (“SCHURTENBERGER”), by the greater weight of the evidence;  2. On the claim of the Claimant, CAT CHARTER, LLC, for breach of contract by Respondent MTI, we find that Claimant, CAT CHARTER, LLC has proven its claim against MTI by the greater weight of the evidence;  3. All other claims of the Claimants are hereby denied.   All counter-claims of the Respondents, MTI and SCHURTENBERGER, are denied;  4. On the claim of the Claimants for entitlement to attorney's fees in this arbitration proceeding and entitlement to an award of arbitration expenses and costs, inclusive of the arbitrators' fees and costs, we find that Claimants are the substantially prevailing parties in this arbitration and are entitled to an award of such fees and costs against the Respondents, MTI and SCHURTENBERGER. 5. On the claim of the Respondents for entitlement to attorney's fees and costs in this arbitration, we find that Respondents are not the substantially prevailing parties in this arbitration, and said claim is denied;  6. On the claim by Claimants for civil theft which the Arbitrators have denied, the Arbitrators find that Claimants raised a claim that had substantial fact and legal support pursuant to Fla. Stat. § 772.104(3).   More specifically, we find that the issues relating to missing resin and the cost of the skiff presented substantial fact issues raised by Claimants, justifying denial of any attorney's fees for Respondents;․

SO ORDERED.