Floors, Inc. v. B. G. Danis of New England, Inc.

• Decision Date: 06 March 1980
• Citation: 401 N.E.2d 839,380 Mass. 91
• Parties: FLOORS, INCORPORATED v. B. G. DANIS OF NEW ENGLAND, INC., et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 839

401 N.E.2d 839

380 Mass. 91

FLOORS, INCORPORATED v. B. G. DANIS OF NEW ENGLAND, INC., et al. ¹

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 7, 1979.

Decided March 6, 1980.

Richard W. MacAdams, Providence, for defendants.

Sally A. Corwin, Boston, for plaintiff.

Before HENNESSEY, C. J., and QUIRICO, KAPLAN, WILKINS and ABRAMS, JJ.

QUIRICO, Justice.

This case presents two questions: (1) whether a suit on a contractor's bond under G.L. c. 149, § 29 (as amended through St.1972, c. 774, § 5), may be used as a vehicle to confirm an arbitration award handed down pursuant to G.L. c. 251; and (2) whether in such a suit a subcontractor may recover legal fees incurred in arbitration proceedings which resolved the underlying contract dispute in his favor. We hold that (1) an arbitration award may be confirmed in the context of a preexisting action between the parties, and that (2) attorneys' fees may not be recovered for arbitration proceedings absent such an agreement between the parties.

The appellee, Floors, Incorporated (Floors), is a subcontractor which entered into two subcontracts with a general contractor, appellant B. G. Danis of New England, Inc. (Danis), one on December 27, 1972, to provide resilient flooring, and another on August 7, 1973, to provide special flooring and carpeting. Both contracts were in connection with Danis's general contract to build a public high school in Salem, and each included an "all disputes" arbitration clause, set forth below. ² Floors furnished labor and materials under the contracts, plus certain "extras" agreed to by the parties. Floors finished work on the first contract in November, 1975, and on the second contract in March, 1976, and demanded payment. Danis paid part of the price requested as to each contract, but refused to pay the balance. On May 14, 1976, Floors demanded arbitration under the contracts and on May 28, 1976, it filed an action in Superior Court seeking relief under G.L. c. 149, § 29, on a public construction bond which Danis had provided pursuant to that statute and on which appellant Seaboard Surety Company (Seaboard) was surety. The complaint stated that it was "filed as a provisional remedy under c. 149, § 29 and is without prejudice to, nor waiver of, the arbitration proceeding now pending," and further stated that "(t)his action is to be stayed pending the arbitration award." Danis and Seaboard (defendants) answered, alleging that Floors had failed to complete certain aspects of the contracts, and stating that they and Floors were in agreement that the action should be stayed pending arbitration. No other motion for a stay was filed, but the parties proceeded to arbitration.

On February 25, 1977, the arbitrators awarded $21,000, including interest, to Floors, and denied Danis's counterclaims relative to extra work due under the contract. Floors then filed in the pending c. 149, § 29, action a motion to confirm the arbitration award and a motion for attorneys' fees, as well as a motion for summary judgment against the surety. The defendants Danis and Seaboard filed objections to these motions and filed a motion to dismiss the action because an award had been rendered. After a hearing a judge of the Superior Court confirmed the arbitration award of $21,000 and, after holding a further hearing, he awarded an additional $6,300 in attorneys' fees to Floors. The defendants appealed to the Appeals Court, which upheld the hearing judge in his confirmation of the award, but reversed the award of attorneys' fees to the extent that it included payment for services rendered in the arbitration proceedings. The Appeals Court held that "so much of the legal fees as were attributable to the arbitration should not have been allowed." Floors, Inc. v. B. G. Danis of New England, Inc., --- Mass.App. ---, --- ^a, 387 N.E.2d 1166, 1168 (1979). We granted Floors' petition for further appellate review. For the reasons stated below, we agree with the result reached by the Appeals Court.

General Laws c. 149, § 29, requires contractors in public construction contracts to give performance and payment bonds to public authorities, and permits actions on such bonds by subcontractors and materialmen. As amended in 1972, the statute provides in part that "(a) decree in favor of any claimant under this section shall include reasonable legal fees," and set standards for the determination of their amount. St.1972, c. 774, § 5. Chapter 774 of the Acts of 1972 is entitled, "An Act expediting payments to general contractors and to subcontractors and improving the flow of funds in the construction industry." We had previously held that G.L. c. 149, § 29, "is a remedial statute which should be construed broadly to achieve the purpose of affording security to subcontractors and materialmen on public works." Manganaro Drywall, Inc. v. White Constr. Co., 372 Mass. 661, 664, 363 N.E.2d 669, 671 (1977), citing LaBonte v. White Constr. Co., 363 Mass. 41, 45, 292 N.E.2d 352 (1973). American Air Filter Co. v. Innamorati Bros., 358 Mass. 146, 148-151, 260 N.E.2d 718 (1970).

Commercial arbitration is governed by G.L. c. 251, which, as totally revised by St.1960, c. 374, is substantially similar to the Uniform Arbitration Act. ³ In any event, the differences between G.L. c. 251 and the Uniform Arbitration Act do not affect the result reached in this decision. Section 10 of c. 251 provides in relevant part: "Unless otherwise (agreed), the arbitrators' expenses and fees, together with other expenses, not including counsel fees, incurred in the conduct of the arbitration, shall be paid as provided in the award" (emphasis added). Section 11 provides for applications to confirm an award. Sections 12 and 13 provide for applications to vacate, modify, or correct an arbitration award, on certain specified grounds. ⁴ Section 15 states in relevant part that "an application to the court under this chapter shall be by motion and shall be heard in the manner and upon the notice provided by law or rule of court for the making and hearing of motions. . . . (N)otice of an initial application for an order (confirming, modifying, correcting, or vacating an award) shall be served in the manner provided by law for the service of an original writ of summons."

1. The defendants argue that §§ 11 and 15 require commencement of a new proceeding to confirm an arbitration award, and that to allow confirmation to occur in the context of a proceeding previously filed does violence to the statutory scheme. Floors contends that the service of process attendant to its original c. 149, § 29, complaint was sufficient "notice of an initial application for an order," since it had previously served on Danis a demand for arbitration, and a request for a stay of the action pending arbitration was included in the complaint. It argues that therefore it was proper for it to file a motion to confirm within that action. The defendants maintain that because the action was filed before the award was made, the earlier service of process cannot satisfy the statute. They do not allege, however, that they were inadequately notified of Floors' motion to confirm the arbitration award, or of its other motions.

The apparent purpose of G.L. c. 251, § 15, is to ensure that parties have adequate notice and opportunity to be heard in court proceedings following an arbitration award. In the present case, all parties to the arbitration are also parties to the action which covers the matters submitted to arbitration and which has been stayed pending arbitration. They have participated in and have been represented by counsel at the arbitration proceedings; and they have received proper notice "in the manner and upon the notice provided by law or rule of court for the making and hearing of motions (Mass.R.Civ.P. 5(a), 365 Mass. 745 (1974))." In these circumstances, we see no reason to require that an application to confirm the award be accompanied by the further formalities associated with the serving of a new complaint. We hold therefore that the judge's action in confirming the arbitration award was proper.

2. The second question before us is whether the language or the legislative purpose of § 29, as amended, permits a court to award legal fees incurred in commercial arbitration proceedings by Floors, a claimant under the section. The defendants argue that § 10 of c. 251 indicates an express legislative decision that attorneys' fees not be awarded for arbitration proceedings. Floors replies that § 10 applies only to arbitrators, and does not affect the power of a court to add attorneys' fees at or after the time it confirms the award. We do not believe that the language of § 10 is intended merely to expedite proceedings before arbitrators by removing from their nonjudicial consideration the potentially troublesome item of legal fees. It also discloses a principal purpose to further the speedy, efficient, and uncomplicated resolution of business disputes with very limited judicial intervention or participation. "(T)he court should not interject itself or its practice into arbitrations unless required to do so by statutory provision or necessity." Cavanaugh v. McDonnell & Co., 357 Mass. 452, 456, 258 N.E.2d 561, 564 (1970), quoting In re Schwartz, 127 Misc. 452, 454-455, 217 N.Y.S. 233, 234-235 (N.Y.Sup.Ct.1925).

The prefatory comment to the 1954 draft of the Uniform Arbitration Act, which included the present § 10, stated that "(c)ourt intervention (in arbitration) occurs primarily when a party refuses to arbitrate and when the court is asked to confirm, modify or vacate the award. The procedure serving these purposes must be prompt and simple or the values of arbitration will be largely dissipated through prolonged litigation." Handbook of the Nat'l Conf. of Comm'rs on Uniform State Laws 204 (1954).

We should not, and will not encumber the statutory arbitration procedure by appending to it any of the incidents...