                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-18-2004

Coastal Gen Constr v. VI Housing Auth
Precedential or Non-Precedential: Non-Precedential

Docket No. 03-1300




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                                                                          NOT PRECEDENTIAL

                           UNITED STATES COURT OF APPEALS
                                FOR THE THIRD CIRCUIT


                                          No. 03-1300


       COASTAL GENERAL CONSTRUCTION SERVICES CORPORATION,

                                                             Appellant

                                                v.

                       VIRGIN ISLANDS HOUSING AUTHORITY



                      Appeal from the District Court of the Virgin Islands
                             Division of St. Thomas and St. John
                             (D.C. Civil Action No. 99-cv-00134)
                         District Judge: Honorable Thomas K. Moore


                           Submitted Under Third Circuit LAR 34.1(a)
                                         May 6, 2004

                     Before: BARRY, AMBRO, and SMITH, Circuit Judges

                                  (Opinion filed May 18, 2004)



                                            OPINION


AMBRO, Circuit Judge:

       Coastal General Construction Services Corporation (“Coastal”) challenges the decision of

the Appellate Division of the District Court of the Virgin Islands, which affirmed the Virgin

Islands Territorial Court’s vacation of an arbitration award in favor of Coastal. For the reasons
set forth below, we affirm.

                              I. Factual and Procedural Background

        The facts of this case date back to 1988 and have been reviewed numerous times by

several courts. See United States v. Koenig, 281 F.3d 225 (3d Cir. 2001) (Koenig I); V.I. Hous.

Auth. v. Coastal Gen. Constr. Servs. Corp., 27 F.3d 911 (3d Cir. 1994) (Coastal I); United States

ex rel. V.I. Hous. Auth. v. Coastal Gen. Constr. Servs. Corp., 299 F. Supp. 2d 483 (D.V.I. 2004);

Coastal Gen. Constr. Servs., Inc. v. V.I. Hous. Auth., 238 F. Supp. 2d 707 (D.V.I. App. Div.

2002) (Coastal II)1; United States v. Koenig, 53 F. Supp. 2d 803 (D.V.I. 1999). Accordingly, we

recite only those details essential to the resolution of this case.

        In September 1988, Coastal and the Virgin Islands Housing Authority (VIHA) executed a

contract for the renovation and modernization of a housing project. The total value of the

contract was $2,209,587. Due to the parties’ inability to perform, VIHA terminated the

agreement in June 1999, prior to Coastal beginning work on the project. In February 1992,

Coastal filed a claim against VIHA in the amount of $1,114,799 for start-up expenses, but

supplied no documentation to support its claim. VIHA rejected Coastal’s claim, and Coastal

requested arbitration. The day before the arbitration hearing was to begin, however, Coastal

presented VIHA an amended claim in the amount of $2,242,933 and provided VIHA numerous

volumes of supporting documentation.

        VIHA objected to the amended claim and requested a continuance. The arbitrator




  1
   There is some confusion as to whether Coastal’s official name is Coastal General
Construction Services Corporation or Coastal General Construction Services, Inc. We
understand that Coastal’s official name is the former, and will treat it as such.

                                                   2
reserved ruling and proceeded with the arbitration. VIHA renewed its objection and request for

continuance at the close of the arbitration. Nevertheless, the arbitrator awarded Coastal

$1,262,049 and allowed Coastal to retain certain tools and equipment.

       VIHA’s subsequent investigation of Coastal’s amended claim revealed it to be

fraudulent.2 VIHA then filed an action to vacate the arbitration award in the Virgin Islands

Territorial Court. After an improvidently granted removal, the District Court for the District of

the Virgin Islands vacated the arbitration award. On appeal, we vacated the judgment of the

District Court, instructing it to remand the matter to the Territorial Court for resolution. Coastal

I, 27 F.3d at 917.

       Upon remand, the Territorial Court vacated the arbitration award in February 1999. It

found that the arbitrator committed misconduct in violation of 9 U.S.C. § 10(c)(3) by refusing to

postpone the hearing to allow for investigation of Coastal’s amended claim. The Territorial

Court also found that the arbitrator’s award was procured by fraud in violation of 9 U.S.C.

§ 10(c)(1).

       Coastal appealed the Territorial Court’s decision to the Appellate Division of the District

Court of the Virgin Islands. See 4 V.I.C. § 33 (conferring jurisdiction on the Appellate Division

to review final judgments and orders of the Territorial Court in civil cases). The Appellate

Division affirmed the Territorial Court’s decision to vacate the arbitration award. Coastal II, 238

F. Supp. 2d at 711.

       Before us, Coastal argues that: (1) the arbitrator did not commit misconduct in violation


  2
   As discussed in Koenig I, supra, this discovery ultimately led to the conviction of
William Koenig, one of Coastal’s principals.

                                                  3
of 9 U.S.C. § 10(c)(3); (2) the arbitrator’s award was not procured by fraudulent evidence; and

(3) the Territorial Court erred by admitting trial transcripts from related criminal proceedings

instead of requiring VIHA to produce live witnesses at trial.

                            II. Jurisdiction and Standard of Review

       We have jurisdiction to review the Appellate Division’s decision under 28 U.S.C. § 1291

and § 23A(c) of the United States Virgin Islands Revised Organic Act of 1954, as amended (48

U.S.C. § 1613a(c)). We exercise the same standard of review applied by the Appellate Division.

B.A. Properties, Inc. v. Gov’t of United States V.I., 299 F.3d 207, 211 (3d Cir. 2002); Semper v.

Santos, 845 F.2d 1233, 1236 (3d Cir. 1988). The Appellate Division properly exercised plenary

review over the legal conclusions of the Territorial Court and applied the clearly erroneous

standard to the Territorial Court’s factual findings. Coastal II, 238 F. Supp. 2d at 709.

                                           III. Analysis

       Courts may vacate an arbitration award “where the arbitrators were guilty of misconduct

in refusing to postpone the hearing, upon sufficient cause shown.” 9 U.S.C. § 10(a)(3). We

define “misconduct” under 9 U.S.C. § 10(a)(3) as conduct “which so affects the rights of a party

that it may be said that he was deprived of a fair hearing.” Newark Stereotypers’ Union v.

Newark Morning Ledger Co., 397 F.2d 594, 599 (3d Cir. 1968), 393 U.S. 954 (1968). Similar to

the Appellate Division, we perceive no error in the Territorial Court’s finding that the arbitrator

committed misconduct by refusing to postpone the November 1993 arbitration hearing. We also

agree that this misconduct warranted vacation of the arbitration award.

       On appeal, Coastal essentially argues that VIHA was at fault for failing to prepare for the

arbitration. Coastal also states that the record fails to establish VIHA’s due diligence.


                                                 4
Unfortunately, this argument misses the mark. The Territorial Court found that Coastal refused

to supply supporting documentation for its original claim and, less than twenty-four hours before

the arbitration hearing was set to begin, presented hundreds of pages of documents in support of

an amended claim for almost double the amount of the original claim. Coastal fails to cite any

evidence to dispute this version of events. In fact, Coastal fails to discuss or explain its eleventh-

hour tactics at all. Further, we agree with the Appellate Division that VIHA did not waive any

right to object to the failure to postpone the arbitration because the American Arbitration

Association (“AAA”) rules, even if controlling, do not require that requests for postponements be

in writing. See Coastal II, 238 F. Supp. 2d at 710 (stating that an arbitrator may postpone any

hearing “upon request of a party for good cause shown” (quoting AAA Rule 30)). As such, we

agree with the Territorial Court’s conclusions in regard to misconduct and vacation of the

arbitration award.3

                                              *****

       In this context, we affirm the Appellate Division’s decision affirming the Territorial

Court’s vacation of the arbitration award.




  3
    Accordingly, we need not reach Coastal’s arguments that the Territorial Court erred in
finding that the arbitration award was procured by fraud and in admitting transcripts from
related criminal proceedings.

                                                  5
