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In affirming a trial court's decision to modify an arbitration award, an appellate court in Ohio held that where a modification is based on a mathematical error apparent on the face of an award, it is within a court's power to modify the award in order to reflect the intention of the arbitrator.
In Telle v. Estate of Soroka, No. 08AP272, 2008 WL 4368567 (Ohio Ct. App. Sept. 25, 2008), Telle and Soroka each owned a fifty-percent interest in six corporations. After Soroka's death, the trial court issued an order compelling arbitration to resolve a disagreement over the value of the corporations.
The arbitrator found that each party was entitled to half of the value of the corporations. Consequently, the arbitrator ordered Telle to purchase all of the shares of the corporations for half of their total value from Soroka's estate.
In order to determine the value of the corporations, the arbitrator relied on the testimony of Beall, the accountant for the corporations. Beall had valued the corporations at $188,434, so he determined that each party owned a fifty percent interest worth $94,218. However, when the arbitrator calculated his final award, he used the $94,218 figure as the total net value of the corporations, split that number in half, and ordered Telle to pay Soroka's estate $47,109, which was only a twenty-five percent share of the value of the corporations.
In his award, the arbitrator expressly provided that "Beall's original calculations shall serve as the correct valuation under the Agreements." Soroka's estate asked the arbitrator to correct the award, but the arbitrator refused. Telle moved to confirm the award, and Soroka's estate moved to modify the award, arguing that the arbitrator only awarded it twenty-five percent of the book value of the companies when he intended to award it fifty percent. The trial court agreed with Soroka's estate and modified the award, holding that Telle had to pay the estate $94,218. Telle appealed.
On appeal, Telle did not dispute Beall's valuations. Rather, Telle argued that the trial court could only have arrived at that figure by conducting its own fact-finding and substituting its own judgment for that of the arbitrator. Consequently, even if the arbitrator's award contained a mathematical error, Telle argued that the trial court had no power to correct it because the error was not apparent from the face of the award.
The Court disagreed. The Court held that the case required no additional fact-finding because the arbitrator expressed his clear intent to apply Beall's original valuation and to award half of that valuation to Soroka's estate. It was undisputed that Beall's original valuation was $188,434, so it was evident that the arbitrator made a material miscalculation in awarding only $47,109 to the estate from the face of the award. Further, the Court held that the fact that the arbitrator declined to reconsider his award did not change the miscalculation evident from the face of the award: "What matters is what the arbitrator intended, as expressed in the award itself." Thus, the Court affirmed the trial court's modification of the award.
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