Aponik v. Lauricella

• Decision Date: 29 March 2004
• Docket Number: No. 2003-150-Appeal.,2003-150-Appeal.
• Citation: 844 A.2d 698
• Parties: Alexander E. APONIK, Jr. v. Joseph A. LAURICELLA et al.
• Court: Rhode Island Supreme Court

844 A.2d 698

Alexander E. APONIK, Jr. v. Joseph A. LAURICELLA et al.

No. 2003-150-Appeal.

Supreme Court of Rhode Island.

March 29, 2004.

Raymond Pezza, Esq., Providence, for Plaintiff.

Douglas A. Giron, Esq., Providence, for Defendant.

Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, FLAHERTY, and SUTTELL, JJ.

OPINION

PER CURIAM.

The defendants, Joseph A. Lauricella and Charlene J. Thiel (defendants), appeal a Superior Court order confirming an arbitration award in favor of the plaintiff, Alexander E. Aponik, Jr. (Aponik or plaintiff), and granting costs and attorneys' fees to the plaintiff. The defendants contend that the hearing justice erred in denying their motion to vacate, failing to stay the enforcement proceedings, and awarding attorneys' fees and prejudgment interest to the plaintiff. In addition, the defendants argue that the hearing justice erred in confirming the award because the arbitrator ignored substantial evidence when he rendered the award.

This case came before the Supreme Court for oral argument pursuant to an order directing the parties to show cause why the issues raised in this appeal should not summarily be decided. After hearing the arguments of the litigants and examining the record and the memoranda filed by the parties, we are of the opinion that cause has not been shown, and we summarily affirm the order confirming the arbitration award, but reverse the award of costs and attorneys' fees.

Facts and Travel

The defendants signed a purchase and sale agreement for a vacant lot on Widow Sweets Road in Exeter, Rhode Island, in February 1996. On March 18, 1996, defendants entered into a contract with Aponik for the construction of a house on the lot for the total sum of $146,900. The contract provided that Aponik would begin work "as soon as practical," and that the construction shall be completed "as expeditiously as possible." The defendants closed on the property in May 1996, and construction began in July 1996.

The quality of the workmanship, timeliness, and payments due under the contract are the source of this dispute. Aponik alleged that there were many changes and that extras were added to the contract, none of which were in writing, as required by the contract terms. He further asserted that defendants never complained about the quality or timeliness of his work until they provided him with a punch list in February 1997. The defendants maintained that, among other defects, the walls were erected in the wrong place, the house was not properly oriented, the road was in the wrong location, and some trees and fill should have been removed.

On or about April 10, 1997, Aponik requested final payment because, in his opinion, construction on the house was 99 percent complete. The defendants, asserting that the project was only 75 to 80 percent complete, withheld a balance of $36,496.53 from the total contract price.¹ The defendants assert that, after a meeting with Aponik to resolve pending issues proved unsuccessful, Aponik abandoned the job. The arbitrator, however, found that he had been discharged.

The previous day, on April 9, 1997, with opportune clairvoyance, Aponik filed a notice of intention to claim a lien on the property, pursuant to G.L.1956 § 34-28-4, for work and materials totaling $47,800. He then filed a notice of lis pendens in the land evidence records in the town of Exeter, and a petition to enforce a mechanics' lien in the Washington County Superior Court on August 1, 1997.

On September 19, 1997, defendants filed a "Statement of Claim, Affirmative Defenses, and Other Defenses" wherein they counterclaimed that plaintiff breached the construction contract by failing to construct the residence in a timely fashion, failing to employ professional methods, causing defects in the work, and failing to adhere to plans and specifications. The parties then engaged in discovery in anticipation of a December 1998 trial.

Before trial, however, the parties entered into a stipulation submitting their case to binding arbitration. The stipulation identified the parties' mutually selected arbitrator and specified that "[e]ach party shall pay one-half of the arbitrator's fees for services rendered." Because of discovery disputes and requests for continuances, testimony in the arbitration did not commence until January 5, 2001. After numerous hearing dates and the submission of memoranda, the arbitrator issued a decision on October 23, 2002. The arbitrator determined that when Aponik was discharged, the house was 85 to 95 percent complete. Finding that defendants' expert witness lacked credibility, the arbitrator denied their counterclaims for alleged defects and code violations. The witness, a social friend, had never served as an expert witness in a construction case and had not estimated a job since 1989. After crediting defendants for expenses incurred for costs in debris removal, cleanup, interior painting, purchasing materials, and mortgage penalties assessed as a result of delays for which he held both parties responsible, the arbitrator awarded plaintiff "$27,984.00 plus interest and costs."

On November 4, 2002, Aponik filed a motion to enforce the arbitration award. In addition, he requested that the Superior Court award costs and attorneys' fees pursuant to § 34-28-19² of the mechanics' lien statute. Section 34-28-19 allows the court, in its discretion, to award "[t]he costs of the proceedings" and "attorneys' fees to the prevailing party." Along with his motion to confirm the arbitration award, Aponik filed an affidavit detailing attorneys' fees and expenses totaling $15,894.35. In response, defendants filed motions seeking to vacate or modify the arbitrator's award, and requesting a stay of the proceedings. In addition, they filed a motion addressed to the arbitrator to vacate, modify, and/or clarify the interest award.

The various motions were heard in the Superior Court on November 15, 2002, as a result of which the matter was referred back to the arbitrator for "consideration and ruling on defendants' motion addressed to the Arbitrator to vacate, modify, or clarify the interest award." Both plaintiff's motion to confirm and defendants' motion to vacate the arbitration award were denied without prejudice.

In a "Supplemental Decision and Award" dated December 20, 2002, the arbitrator awarded Aponik prejudgment interest, stating, "[w]hether this decision was rendered pursuant to the mechanic's lien statutes or the arbitration statutes, it is within the discretion of the Arbitrator to award interest." The arbitrator cited this Court's decision in Paola v. Commercial Union Assurance Companies, 461 A.2d 935 (R.I.1983), to support the proposition that "arbitrators should add prejudgment interest to their awards unless the parties specifically provide otherwise by agreement." As a result, the arbitrator awarded interest accruing from January 5, 2001, the commencement of the arbitration hearing, "at the rate of 12% per year or 24% interest." The award of interest "modified" the original award from $27,984 to reflect prejudgment interest in the sum of $6,716.16, for a total of $34,700.16. The supplemental award was silent about costs.

Pursuant to the modified award, Aponik renewed his motion to confirm the arbitration award and his request for costs and attorneys' fees. Likewise, defendants again moved to vacate or modify the award and to stay enforcement of the award.

At the hearing on the motions, the parties disputed whether this case was governed by the mechanics' lien statute or by the Arbitration Act. The hearing justice noted that "this is not a court ordered arbitration. This is where the parties agreed * * * [to] an independent arbitrator and binding arbitration." The hearing justice affirmed the arbitrator's award and granted plaintiff's motion for costs and attorneys' fees. On February 12, 2003, he entered an order confirming the arbitrator's award of $27,984, plus prejudgment interest of $6,716.16. In addition, he awarded costs and expenses of $13,194.35,³ bringing the total award to $47,894.51 for plaintiff. The defendants timely appealed.

Discussion

The threshold issue to be resolved is whether this case is governed by The Rhode Island Arbitration Act, G.L.1956 chapter 3 of title 10, or by the mechanics' lien statute, chapter 28 of title 34. The defendants, on appeal, argue the former, maintaining that the stipulation submitting the case to "binding arbitration" removed the case from the nature of a mechanics' lien proceeding and converted it into a simple "garden variety binding agreement to arbitrate the underlying claims of the parties" in connection with a contract dispute. Thus, they assert, the hearing justice erred by failing to consider their motion to vacate and to stay enforcement of the award; by confirming the award without accepting additional submissions or conducting further hearings; and by awarding attorneys' fees to plaintiff.

Aponik counters by stating that at no time did he ever agree to waive his rights under the mechanics' lien statute, or waive his rights to fees and costs. He notes that before the stipulation agreeing to arbitrate was executed, his counsel advised the arbitrator that "this is a Mechanic's Lien case involving a contract for Plaintiff to construct the residence for Defendant." This was not an arbitration pursuant to a contractural provision, he argues; rather, the parties agreed to arbitrate the matter in lieu of a trial. The award of costs and attorneys' fees, therefore, was within the court's discretion under the mechanics' lien statute, according to Aponik.

Generally, "the role of the judiciary in the arbitration process is `extremely limited.'" Purvis Systems, Inc. v. American Systems Corp., 788 A.2d 1112, 1114 (R.I.2002) (quoting Romano v. Allstate Insurance Co., 458 A.2d 339, 341 (R.I.1983)). An arbitration award may be overturned only if the award was "irrational or if the arbitrator manifestly...