Sansone v. Metropolitan Property & Liability Ins. Co.

• Decision Date: 30 July 1991
• Docket Number: No. 90-P-357,90-P-357
• Court: Appeals Court of Massachusetts
• Parties: Francis H. SANSONE v. METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY.

Page 588

572 N.E.2d 588

30 Mass.App.Ct. 660

Francis H. SANSONE v. METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY.

No. 90-P-357.

Appeals Court of Massachusetts Middlesex.

Argued April 11, 1991.

Decided June 12, 1991.

Further AppellateReview Denied

July 30, 1991.

Douglas L. Fox, Worcester, for defendant.

Jeffrey A. Gorlick, Boston, for plaintiff.

Before WARNER, C.J., and DREBEN and IRELAND, JJ.

DREBEN, Justice.

This case raises the propriety of a judge's addition of pre-award interest to an arbitrator's award. We hold that such an addition is improper and that interest runs only from the date of the award.

The plaintiff was injured in a motor vehicle accident on August 10, 1984. After receiving $110,000 from the operators' insurance carriers, he brought, on July 18, 1988, an action in the Superior Court against the defendant seeking arbitration of his claim for underinsurance benefits. By agreement ¹ the matter went to arbitration, and on May 19, 1989, the arbitrator awarded the plaintiff $33,000 "in addition to all other monies he has received to date." Neither the arbitration agreement nor the award mentioned interest. ² The award was paid on June 1, 1989.

Thereafter, on June 21, 1989, the plaintiff filed a motion in the Superior Court to confirm the award and to enter judgment with costs and with interest from July 18, 1988, the date of the filing of the complaint seeking appointment of an arbitrator. A judgment entered confirming the award, allowing interest from July 18, 1988, to June 1, 1989, the date the award was paid, and also allowing costs except for the plaintiff's portion of the arbitrator's fee.

In this appeal the defendant challenges the portion of the judgment which awards interest. There are two periods involved: the pre-award period, July 18, 1988--May 18, 1989, and the period between the award and payment, May 19, 1989, to June 1, 1989. The motion judge, relying on G.L. c. 251, § 14, ³ and G.L. c. 231, § 6C, ⁴ confirmed the award and ordered contractual interest to be paid for both periods.

1. Pre-award interest. As pointed out in Blue Hills Regional Dist. Sch. Comm. v. Flight, 10 Mass.App.Ct. 459, 472, 409 N.E.2d 226 (1980), S.C., 383 Mass. 642, 421 N.E.2d 755 (1981):

"Provisions of law applicable to judicial actions and proceedings do not necessarily apply to arbitrations. Parties who submit their controversies to arbitration forgo those provisions and leave all questions of law and fact to the arbitrators. The right to interest involves questions of fact and law that are within the purview of the arbitrators." [ ⁵ See Penco Fabrics, Inc. v. Bogopulsky, 1 A.D.2d 659 (N.Y.1955).

In the Blue Hills case we held that an arbitrator's award of interest "is not subject to the statutory provisions which apply to court awarded interest on contract claims." Ibid. In Coughlan Constr. Co. v. Rockport, 23 Mass.App.Ct. 994, 997, 505 N.E.2d 203 (1987), citing the Blue Hills case, we rejected the plaintiff's claim to pre-award interest under G.L. c. 231, § 6C, where an arbitrator's award for damages under a contract made no award of interest.

There is sound reason for differentiating between arbitration awards and judicial proceedings with respect to interest:

"The parties selected arbitrators, rather than a court, as the body that would, in the first instance, determine the amount due. This they had a right to do; this the law encourages them to do. It should be the rule, rather than the exception, that when arbitrators hand down an award the parties will comply with it, without the necessity of court proceedings, just as it is (or should be) the normal or usual result that parties comply with a judgment, without the necessity of resort to process or appeal." (Emphasis supplied.) Lundgren v. Freeman, 307 F.2d 104, 112 (9th Cir.1962). ⁶

If the silence of an arbitrator's award as to interest entitles the party obtaining a monetary award to claim interest under the interest provisions of G.L. c. 231, §§ 6B, 6C, or 6H, by coming into court to confirm an award--in this case one already paid--the purpose of avoiding court proceedings is vitiated. That important purpose is better served by considering, in the absence of an explicit agreement to the contrary, pre-award damage claims, including interest, to have been submitted to arbitration.

Authority elsewhere supports our view that pre-award interest should not be ordered by a court. See, e.g., Creative Builders, Inc. v. Avenue Devs., Inc., 148 Ariz. 452, 456, 715 P.2d 308 (Ct.App.1986); Wanschura v. Western Natl. Mut. Ins. Co., 389 N.W.2d 927, 928 (Minn.Ct.App.1986); Rivers v. General Acc. Group, 192 N.J.Super. 355, 359-360, 470 A.2d 19 (App.Div.1983); Penco Fabrics, Inc. v. Bogopulsky, 1 A.D.2d at 659, 146 N.Y.S.2d 514; Paola v. Commercial Union Assur. Co., 461 A.2d 935, 937 (R.I.1983); Kermacy v. First Unitarian Church, 361 S.W.2d 734, 735 (Tex.Civ.App.1962); R.E. Bean Constr. Co. v. Middlebury Assoc., 139 Vt. 200, 213, 428 A.2d 306 (1980); Eager, The Arbitration Contract and Proceedings § 132 (1971). Contra Waldrop v. Rodery, 34 Mich.App. 1, 5-6, 190 N.W.2d 691 (1971), a case criticized in a concurring opinion in Old Orchard By The Bay Assocs. v. Hamilton Mut. Ins. Co., 434 Mich. 244, 270 & n. 9, 454 N.W.2d 73 (1990) (Levin, J., concurring).

2. Post-award interest. To encourage "swift obedience" to the award without the necessity of court proceedings, the rule in Massachusetts is that post-award interest runs from the date of the award. ⁷ Watertown Firefighters, Local 1347 v. Watertown, 376 Mass. 706, 717-719, 383 N.E.2d 494 (1978). Coughlan Constr. Co. v. Rockport, 23 Mass.App.Ct. at 998, 505 N.E.2d 203. See also Marlborough Firefighters, Local 1714 v. Marlborough, 375 Mass. 593, 601 n. 7, 378 N.E.2d 437 (1978), and Reilly v. Local 589, Amalgamated Transit Union, 22 Mass.App.Ct. 558, 577, 495 N.E.2d 856 (1986), comparing Glenn Acres, Inc. v. Cliffwood Corp., 353 Mass. 150, 156, 228 N.E.2d 835 (1967).

Accordingly, the judgment entered on October 31, 1989, is modified by striking all provision for interest other than that applicable to the post-award period, May 19, 1989, to June 1, 1989, the date the award was paid; and, as so modified, the judgment is affirmed.

So ordered.

1 The agreement stated "whereas the Claimant and the Insurer are in disagreement as to liability and/or damages for which the Insurer may be liable," they agree that Paul G. Garrity shall act as the hearing officer, and "his decision shall be binding upon the parties in all respects."

2 The record contains a letter addressed to the parties from the arbitrator in response to the defendant's request, subsequent to the award, for a supplemental finding. In the letter, the arbitrator wrote that "it is not the intent of the Arbitration Agreement that costs and interest be awarded by a court unless the...