Fort Hill Builders v. National Grange Mut. Ins. Co.

• Decision Date: 29 February 1988
• Docket Number: Civ. A. No. 87-0046 P.
• Citation: 682 F. Supp. 145
• Parties: FORT HILL BUILDERS, INC. v. NATIONAL GRANGE MUTUAL INSURANCE COMPANY, et al.
• Court: U.S. District Court — District of Rhode Island

682 F. Supp. 145

FORT HILL BUILDERS, INC. v. NATIONAL GRANGE MUTUAL INSURANCE COMPANY, et al.

Civ. A. No. 87-0046 P.

United States District Court, D. Rhode Island.

February 29, 1988.

Girard R. Visconti, Mark Hagopian, Providence, R.I., for plaintiff.

Raymond A. LaFazia, Providence, R.I., Steven J. Comen, Boston, Mass., William R. Landry, Providence, R.I., for defendants.

MEMORANDUM

PETTINE, Senior District Judge.

Pursuant to 28 U.S.C. Section 636(b)(1)(B) this matter was referred to a Magistrate for recommended disposition of the motions filed by the plaintiff for summary judgment, and issuance of a writ for pre-judgment attachment, and motion by the defendant to vacate an arbitrator's award in favor of the plaintiff. The Magistrate's findings were appealed to this Court. After hearing and arguments the arbitrator's award was confirmed. The defendants now contests the plaintiff's motion for attorneys' fees and pre-judgment interest.

A dispute between the defendants, who are owners and developers of a construction project from which the original controversy stems and was heard by a panel of arbitrators, and the plaintiff, as a general contractor, was referred to arbitration on February 23, 1987; they awarded the plaintiff $1,124,105.00. On March 27, 1987 the plaintiff filed a complaint for confirmation of the arbitrator's award. G.L.R.I. § 10-3-16.¹

The query before the Court is whether or not Rhode Island permits this Court to assess judgment interest on an arbitrator's award. I hold that it does.

There are cases from other jurisdictions on the issue of pre-judgment interest which the plaintiff has cited in support of its position² and which the defendants contest as not being apposit "because the issue depends heavily on the types of arbitration and interest statutes in force in particular jurisdictions." I do not agree. At any rate, both parties concede, and I concur, that this controversy can be resolved by the application of Rhode Island law which I find affirms the plaintiff's case. I will also, infra, refer to federal law which the plaintiff contends is equally applicable.

To use a colloquialism, the defendants put all their "eggs in one basket"; this they must do since it is their only hope of surviving. They categorically state that this case deals with pre-judgment interest and that "the issue of pre-judgment interest is governed by State law, see Ernst, Inc. v. Manhattan Construction Co., 551 F.2d 1026 (5th Cir.1977), and the law of Rhode Island on the issue of adding pre-judgment interest is set forth in the Paola case...." Paola v. Commercial Union Assurance Companies, 461 A.2d 935 (R.I. 1983). More specifically, the defendants claim that G.L.R.I. 1956 (1969 Reenactment) §§ 9-21-10 and 10-3-16³ as interpreted by the Paola court controls.

In Paola, the plaintiff sustained personal injuries and property damages when he was involved in a motor vehicle accident; the claim was submitted to arbitration and he was awarded $2,934.80. He subsequently filed a petition for confirmation of the award in the trial court; at the same time, he asked that interest be added. The trial justice confirmed the award but denied the interest; an appeal ensued.

As the state appellate court stated:

The issues presented on appeal are (1) whether a Superior Court justice can add prejudgment interest to an arbitration award pursuant to § 9-21-10 at the time of confirmation; and (2) whether an arbitrator can award prejudgment interest to an arbitration award pursuant to § 9-21-10.

Id. at 936.

As to the first issue the plaintiff asked the court to modify the arbitrator's award by adding interest to the amount of damages from the date of the cause of action to the date of the confirmation. He contended that this added element fell within the rationale of G.L.R.I. § 9-21-10, supra.

The State Supreme Court rejected this reasoning; it held that the judiciary has a limited role in the arbitration process. And that a trial justice could vacate an arbitration award only if it fell within one of the statutory grounds set forth in G.L.R.I. 1956 (1969 Reenactment) § 10-3-12⁴ or if the trial justice determined that the specific award was irrational under the circumstances.

In concluding this first issue the Court specifically stated:

In the instant case, there were no allegations of statutory violations. Furthermore, neither party contested the award itself. Because the amount of the award was given in a lump sum, there is no indication of whether or not the arbitrator included interest in the first instance. We cannot speculate on the merits of arbitration awards and therefore do not find the award to be irrational under the circumstances.

We further find that the trial justice was correct when he refused to add interest to the award at the time of the confirmation. Rhode Island statutory law limits a Superior Court justice's role concerning arbitration to either vacating or confirming the awards. See §§ 10-3-11, -12. A trial justice has no power to modify an award unless there has been miscalculation of figures, or mistake in description of property or person; or where the award is imperfect in form only; or where the arbitrator made an award concerning a matter not before them unless such matter would not affect the merits of the decision regarding the submitted issues. Section 10-3-14. To allow a Superior Court justice to add interest to a proper award would be to grant a much broader authority than the Legislature intended. Thus, a Superior Court justice may not award interest at the time he confirms an award pursuant to § 9-21-10. (emphasis added).

Id. at 937.

From the foregoing it seems quite clear that a trial court must accept the arbitrator's award and that he cannot add to the damages interest for that period from the date of the accrual of the cause of action to the date of his confirmation.

It may appear that this entire recitation is unnecessary prolixity since this plaintiff is not seeking interest from the date of the accrual of the cause of action. It is asking this Court to award interest from the date of the award or "at the very least" from "the date of the filing of its complaint."

This now brings us to the second issue. Though the second issue centers around the authority of the arbitrator to award interest from the date of the accrual of the cause of action to the date of his award it reveals the answer at issue here. This pertinent portion of the opinion is succinct and so I quote the same in its entirety:

We turn now to the second issue of whether or not an arbitrator can add prejudgment interest to an award pursuant to § 9-21-10. We believe that he can.

The purpose of arbitration is to provide an expeditious and informal means of private dispute settlement. Westminister Construction Corporation v. PPG Industries, Inc., 119 R.I. 205, 209, 376 A.2d 708, 710 (1977). This does not, however, change the nature of the action. Rather, the nature and effect of an arbitration judgment is equivalent to a judgment in an action at law. Section 10-3-18 addresses the effect of an arbitration judgment and states, "The judgment so entered shall have the same force and effect, in all respects, as, and be subject to all the provisions of law relating to, a judgment in an action at law; and it may be enforced as if it has been rendered in an action at law in the court in which it is entered."

Our prejudgment-interest statute, § 9-21-10, provides that interest shall be added to the amount of damages in "any civil action in which a verdict is rendered or decision made for pecuniary damages * * *."

Our construction of the statutory language is controlled by the intent of the Legislature. This intent must be determined from an examination of the language and purpose of the statute. Berthiaume v. School Committee of Woonsocket, R.I. 121 R.I. 243 397 A.2d 889, 892 (1979). The legislative directive for prejudgment interest contains no conditions. Once a claim for damages is reduced to judgment, interest is added automatically. Roy v. Star Chopper, Inc. 584 F.2d 1124, 1136 (1st Cir.1979) (citing Kastal v. Hickory House, Inc. 95 R.I. 366, 369, 187 A.2d 262, 264 (1963)).

In the context of arbitration cases, this court previously held that "arbitrators may award interest, even if not claimed unless otherwise specifically provided by the parties in the agreement." Westminister Construction Corp. v. PPG Industries Inc. 119 R.I. 205, 211, 376 A.2d 708, 711 (1977).

We believe that a reading of § 9-21-10 and § 10-3-18 together with our prior decision leads to the conclusion that arbitrators should add prejudgment to their awards unless the parties specifically provide otherwise by agreement.

Accordingly, the plaintiff's appeal is denied and dismissed. The judgment appealed from is affirmed, and the case is remanded to the Superior Court. (emphasis added).

Id. at 937.

It follows: "The nature and effect of an arbitration judgment i.e. the award is equivalent to a judgment in an action at law;" such a judgment "may be enforced as if it has been rendered in an action at law in the court in which it is entered"; the arbitrator should apply G.L.R.I. § 9-21-10, to such a judgment since the statute "provides that interest shall be added to the amount of damages in any civil action in which a verdict is rendered or decision made for pecuniary damages ...".

In answering the second question the Court created no apparent contradiction in applying § 9-21-10; it established the award as being a judgment and reserved uniquely to the arbitrator the prerogative of adding interest from the date of the accrual of the action to the date of the award and reaffirmed the limited role of the judiciary in the arbitration process— that its interjection is circumscribed by the dictates of specific statutes. The logical progression of this reasoning is that the confirmation of the award by the court is a judgment retroactive to the date of the...