Fleet Const. Co., Inc. v. Town of North Smithfield

• Decision Date: 22 May 1998
• Docket Number: No. 97-178-A,97-178-A
• Citation: 713 A.2d 1241
• Parties: FLEET CONSTRUCTION CO., INC. v. TOWN OF NORTH SMITHFIELD. ppeal.
• Court: Rhode Island Supreme Court

Page 1241

713 A.2d 1241

FLEET CONSTRUCTION CO., INC. v. TOWN OF NORTH SMITHFIELD.

No. 97-178-Appeal.

Supreme Court of Rhode Island.

May 22, 1998.

John A. Toro, Warwick, for Plaintiff.

Fred A. Kelly, Jr., Jeffrey S. Brenner, Louis V. Jackvony, III, Randall L. Souza, Providence, for Defendant.

Before LEDERBERG, FLANDERS and GOLDBERG, JJ.

OPINION

PER CURIAM.

This appeal concerns the propriety of an arbitration award in a dispute between a municipality and a contractor over a construction project. The defendant, the town of North Smithfield (town), appeals from a Superior Court order granting the motion of the plaintiff, Fleet Construction Co., Inc. (Fleet), to confirm an arbitration award and denying the defendant's motion to vacate the award. We directed both parties to show cause before a panel of this Court why the issues raised in this appeal should not be summarily decided. No such cause having been shown, we proceed to decide the appeal at this time.

The essential facts are undisputed. Fleet and the town entered into a contract whereby Fleet was to construct a recreational facility for the town. Pursuant to the contract Fleet was to complete its work substantially within 90 days for so-called nonplanting items and within 120 days for planting items. The contract also provided that the town would be entitled to liquidated damages if the contract was not completed in a timely fashion. Fleet began construction in November of 1993. However, owing to certain delays and to the onset of winter, the project was not completed until September of 1994. Contending that the project should have been completed by the previous fall, the town demanded liquidated damages in the amount of $148,500.

However, according to Fleet, the town later agreed to waive its liquidated-damages claim if Fleet completed four remaining items of work on the project in a timely fashion. The town countered that it did not waive its right to liquidated damages. A three-member arbitration panel heard this dispute pursuant to the Public Works Arbitration Act, G.L.1956, chapter 16 of title 37. On July 22, 1996, a majority of the arbitrators awarded the sum of $92,932.58 to Fleet in satisfaction of all of its claims against the town. In doing so, the majority of the panel found that the town had waived its right to liquidated damages:

"[T]he Town in fact agreed to waive any liquidated damages if Fleet promptly completed the four items of work which had been identified by the parties. In reasonable reliance, Fleet did complete those four items of work and is entitled therefore to payment. The agreement to waive the liquidated damages was confirmed by the conduct of the parties after August 16, 1994. The statement of the Town Administrator purporting to reserve some unidentified claim(s) was insufficient to negate the four (4) items/payment understanding."

Fleet moved to confirm the arbitration award, and the town filed a motion to vacate the award. A hearing justice granted plaintiff's motion to confirm the arbitration award and denied defendant's motion to vacate it. A final decree entered, and defendant filed a timely notice of appeal.

On appeal the town argues that the arbitration award should be set aside because it violated public policy and also constituted a manifest disregard of the law. First, the town contends that the award allows a municipality to be bound by the actions of an agent or employee who was not specifically empowered with the authority to approve contracts or to waive any conditions thereof. The town argues that the award strips away the power of duly elected public officials--and by extension the citizens of the town--to operate and manage the municipality. According to the town, only the town council could modify, alter, or waive the provisions of the contract, and the town council never knowingly waived its right to liquidated damages.

Next the town maintains that the arbitration award was not based upon the evidence presented at the arbitration hearing, claiming that the arbitration record reveals no evidence in support of a waiver. It also argues that the award manifestly disregarded the law of estoppel, which the town claims is not applicable against a municipality. Finally, the town contends that in the event this Court affirms the Superior Court's confirmation of the arbitration award, the interest portion of the award should be vacated. It posits that since the contract did not provide for interest and since interest is not permitted pursuant to statute, the award is erroneous as a matter of law.

Fleet first contends that the town's appeal is improper because the town did not timely file its motion to vacate the arbitration award pursuant to § 37-16-21, which provides in pertinent part:

"Notice of a motion to vacate * * * an award must be served upon all adverse parties, or their attorneys, within sixty (60) days after the award is filed or delivered, as prescribed by law for service of notice of a motion upon an attorney in an action; except that in opposition to a motion to confirm an award, any of the grounds specified in § 37-16-18 may be set up." (Emphasis added.)

Section 37-16-18 ¹ provides:

"In any of the following cases, the court must make an order vacating the award, upon the application of any party to the controversy which was arbitrated.

(1) When the award was procured by fraud.

(2) Where the arbitrator or arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final, and definite award upon the subject matter submitted was not made.

(3) If there was no valid contract, and the objection has been raised under the conditions set forth in § 37-16-13."

Here the town properly filed an objection to plaintiff's motion to confirm the arbitration award. Pursuant to § 37-16-21, the town could challenge the appropriateness of the award by objecting thereto without abiding by the sixty-day period for serving a motion to vacate the award. Therefore, we conclude that the town's appeal is not barred by its failure to move to vacate within sixty days after the award was filed or delivered. However, for the reasons discussed below, we nonetheless conclude that the appeal lacks merit.

A reviewing court's authority to vacate arbitration awards is limited. The court has no authority to vacate the arbitrator's award absent a manifest disregard of a contractual provision, a completely irrational result, a decision that is contrary to public policy, or an award that determined a matter that was not arbitrable in the first place. See Rhode Island Brotherhood of Correctional Officers v. State Department of Corrections, 707 A.2d at 1234 (R.I.1998); Rhode Island Council 94, AFSCME, Local 314 v. State, 456 A.2d 771, 773 (R.I.1983); Jacinto v. Egan, 120 R.I. 907-914, 391 A.2d 1173, 1175-76 (1978).

The hearing justice in the instant matter concluded that the arbitrators had not manifestly disregarded the applicable law, noting that--contrary to the town's assertions--the doctrine of equitable estoppel may be applied to municipal governments in appropriate circumstances. In support of this contention the hearing justice relied upon the case Town of Glocester v. Olivo's Mobile Home Court, Inc., 111 R.I. 120, 300 A.2d 465 (1973). In that case this Court stated "Although it has been...