Cent. Ceilings, Inc. v. Suffolk Constr. Co.

• Decision Date: 09 May 2018
• Docket Number: 17–P–184
• Court: Appeals Court of Massachusetts
• Parties: CENTRAL CEILINGS, INC. v. SUFFOLK CONSTRUCTION COMPANY, INC., & others.

93 Mass.App.Ct. 207

101 N.E.3d 937

CENTRAL CEILINGS, INC.

v.SUFFOLK CONSTRUCTION COMPANY, INC., & others.¹

17–P–184

Appeals Court of Massachusetts, Suffolk..

Argued January 10, 2018

Decided May 9, 2018

Paul R. Mordarski, Boston, (Margaret Capp also present) for the plaintiff.

Joel Lewin, Boston, (John P. Connelly, Boston, also present) for the defendants.

Present: Blake, Neyman, & Ditkoff, JJ.

DITKOFF, J.

The parties submitted a construction dispute, pending in litigation in the Superior Court, to arbitration under the Uniform Arbitration Act, G. L. c. 251, §§ 1 et seq. The arbitrator issued a substantial award in favor of the plaintiff, Central Ceilings, Inc., but purported to reserve the calculation of preaward interest to a Superior Court judge. The parties did not agree to this reservation. On the plaintiff's motion to confirm the arbitration award, the judge (remanding judge) remanded the matter to the arbitrator for the calculation of preaward interest. After the arbitrator awarded preaward interest well below that requested by the plaintiff, the plaintiff moved to correct or to vacate that award. The plaintiff now appeals from the order denying that motion. Concluding that an arbitrator may not reserve the calculation of preaward interest for a judge without the agreement of the parties, and finding no error in the failure to award attorney's fees, we affirm.

1. Background. The plaintiff was a subcontractor to defendant Suffolk Construction Company, Inc. (Suffolk), the general contractor, in a project for the renovation and construction converting the old Charles Street jail in Boston into the Liberty Hotel.² On January 31, 2008, the plaintiff commenced an action in Superior Court against the defendants, raising various claims arising out of its subcontract with Suffolk. After discovery and pretrial proceedings, the parties filed a joint motion to stay the case in favor of resolving the dispute through arbitration. On October 8, 2013, the parties entered into an arbitration agreement governed by the Uniform Arbitration Act, G. L. c. 251, §§ 1 et seq., expressly incorporating the Construction Industry Arbitration Rules of the American Arbitration Association. The arbitration agreement reached "all relevant issues appertaining" to the civil lawsuit and granted the arbitrator "full power and authority to award money damages and to grant such other relief, including without limitation reasonable attorney's fees and any other contractually authorized damages as he, in his sole discretion, shall deem just and proper" "[t]o the same extent as if he were a justice of the Massachusetts Superior Court." A judge allowed the motion and stayed the case during the pendency of the arbitration.

After extensive arbitration proceedings, the arbitrator issued an initial award on the merits in favor of the plaintiff in a decision dated February 20, 2015, in the amount of $1,324,819.24, "with interest thereon in the amount ultimately assessed by the Court," plus attorney's fees and costs as set out in the subcontract between the parties.³

The parties filed timely cross motions with the arbitrator requesting modification, correction, and clarification of the initial award. The arbitrator denied the defendants' motion and allowed the plaintiff's motion. The modified award, dated April 6, 2015, changed the award only to require an additional interest calculation. It continued to reserve the task of calculating interest on the $1,324,819.24 award to a judge, but also required that judge to calculate interest on a payment of $402,852 already made by Suffolk shortly after the parties agreed to arbitration and prior to any award.

On April 15, 2015, the defendants moved in Superior Court to vacate the arbitrator's award. The defendants soon reconsidered, paid the modified award plus postaward interest on June 24, 2015, and then withdrew their motion to vacate. Meanwhile, the parties were unable to agree on the attorney's fees and costs owed to the plaintiff. The arbitrator awarded attorney's fees and costs on July 20, 2015, which Suffolk paid within one month.

The parties, however, continued to dispute the issue of preaward (as opposed to postaward) interest, as neither the initial nor the modified award expressly stated that the interest to be calculated by a judge included preaward interest. The plaintiff maintained that the arbitrator either explicitly or implicitly awarded preaward interest from the commencement of the suit at the statutory rate of twelve percent, see G. L. c. 231, § 6C, and that the judge had the duty to calculate that interest. The defendants, in turn, asserted that only the arbitrator could calculate preaward interest.

On October 26, 2015, the plaintiff moved to confirm the modified award under G. L. c. 251, §§ 11, 14, 15, and to enter judgment against the defendants for the disputed preaward interest in the amount of $1,563,763.58 plus an additional $500.46 for every day after September 16 to the date of judgment. The defendants, conversely, asserted that the preaward interest had been submitted to the arbitrator and thus no additional preaward recovery was permissible.

After a hearing, the remanding judge concluded that, although the arbitrator implicitly awarded preaward interest, the lack of any explicit agreement between the parties on the issue precluded its reservation for a judge. Accordingly, the remanding judge remanded the matter to the arbitrator pursuant to G. L. c. 251, §§ 9, 13, for the calculation of preaward interest.

On remand, the arbitrator explained that he had "mistakenly believed" that he lacked the authority to calculate the preaward interest. The arbitrator acceded to the remanding judge's order and issued a postremand clarification dated August 9, 2016. The arbitrator awarded the plaintiff $287,036 in preaward interest, declining to adopt the statutory interest rate under G. L. c. 231, § 6C. Citing his broad discretion on the matter, the arbitrator instead considered "various factors" of the underlying dispute to award a "fair and equitable" amount based on the "totality of circumstances." Suffolk promptly paid that amount.

In response, on September 26, 2016, the plaintiff moved under G. L. c. 251, §§ 12, 13, to "correct" the arbitrator's postremand award to $1,462,600, based on the twelve percent interest rate in G. L. c. 231, § 6C, and additionally to award the plaintiff supplemental attorney's fees and costs for the postarbitration court proceedings. The defendants opposed the motion, contending that (1) the plaintiff's motion was untimely; (2) the arbitrator did not exceed his authority; and (3) the plaintiff was not entitled to further attorney's fees and costs because the defendants were the "prevailing party" in the postremand litigation. A third Superior Court judge denied the plaintiff's motion, citing the reasons set forth in the defendants' opposition.

2. Remand to the arbitrator to calculate preaward interest. We review de novo a judge's decision on a motion to confirm an arbitration award under G. L. c. 251, § 11, Bolman v. Plymouth Rock Assur. Corp., 82 Mass. App. Ct. 135, 142, 971 N.E.2d 300 (2012), recognizing "that ‘the entitlement of a party to preaward interest is a decision that is within the purview of the arbitrator[ ].’ " Id. at 139, 971 N.E.2d 300, quoting from Connecticut Valley Sanitary Waste Disposal, Inc. v. Zielinski, 436 Mass. 263, 271, 763 N.E.2d 1080 (2002). "Generally, in a proceeding to confirm an arbitration award, a judge may not alter an arbitrator's decision that allows, denies or fails to mention pre award interest." Talty, Talty, & Braunstein, Methods of Practice § 38.20 (4th ed. supp. 2017), quoting from Bolman, supra.⁴ If the award is simply silent as to preaward interest, the confirming court lacks the authority to add preaward interest. Reilly v. Metropolitan Property & Liab. Ins. Co., 412 Mass. 1006, 1007, 588 N.E.2d 628 (1992), citing Sansone v. Metropolitan Property & Liab. Ins. Co., 30 Mass. App. Ct. 660, 662–663, 572 N.E.2d 588 (1991).

The calculation of preaward interest, however, may properly be reserved for a confirming court in certain conditions. Talty, Talty, & Braunstein, supra, citing Bolman, 82 Mass. App. Ct. at 140–141, 971 N.E.2d 300. Specifically, in Bolman, supra at 141, 971 N.E.2d 300, we decided that the issue of preaward interest may be properly reserved for the confirming court where "the reservation unambiguously was agreed to by the parties and the arbitrator." Here, there is no suggestion in the record that the parties agreed to this reservation. Both the arbitration agreement and the parties' own conduct, in fact, demonstrate the opposite. The arbitration agreement was broad enough to include the calculation of preaward interest within the arbitrator's authority, and in no way expressly reserved the issue for the confirming court. The plaintiff, moreover, specifically requested that the arbitrator calculate a sum certain award of preaward interest, and the defendants took the position in the Superior Court that they agreed for only the arbitrator to calculate preaward interest.

We reject the suggestion that an arbitrator may reserve the calculation of preaward interest to a confirming court without the agreement of the parties. It is a "fundamental principle that the arbitrator's authority is defined by the parties' arbitration agreement." Lynn v. Council 93, Am. Fedn. of State, County, & Mun. Employees, Local 193, 51 Mass. App. Ct. 905, 905, 746 N.E.2d 558 (2001). See Bolman, 82 Mass. App. Ct. at 141, 971 N.E.2d 300 ("the issue of preaward interest properly was reserved because the reservation unambiguously was agreed to by the parties and the arbitrator"). Cf. Perlin & Blum, Procedural Forms Annotated § 116:1 (6th ed. supp. 2017), citing Sansone, 30 Mass. App. Ct. at 662–663, 572 N.E.2d 588 ("In the absence of an explicit agreement to the contrary, pre-award damage claims, including interest must be considered to...