Westminster Const. Corp. v. PPG Industries, Inc., 76-9-A

• Decision Date: 15 August 1977
• Docket Number: No. 76-9-A,76-9-A
• Citation: 376 A.2d 708,119 R.I. 205
• Parties: WESTMINSTER CONSTRUCTION CORPORATION v. PPG INDUSTRIES, INC. ppeal.
• Court: Rhode Island Supreme Court

Page 708

376 A.2d 708

119 R.I. 205

WESTMINSTER CONSTRUCTION CORPORATION v. PPG INDUSTRIES, INC.

No. 76-9-Appeal.

Supreme Court of Rhode Island.

Aug. 15, 1977.

[119 R.I. 212] Temkin, Merolla & Zurier, Melvin L. Zurier, Providence, for appellant.

Edwards & Angell, Richard M. Borod, Anne L. Northrup, Providence, for appellee.

OPINION

JOSLIN, Justice.

This is an appeal from a Superior Court judgment denying the motion of Westminster Construction Corporation (Westminster) to vacate, modify, or correct an arbitration award, and granting the motion of PPG Industries, Inc. (PPG) to confirm that award.

The facts are not in dispute. Westminster was the general contractor for the erection of an office building in the city of Providence. On February 27, 1969 PPG entered into a subcontract with Westminster to furnish and install all the glass, glazing and architectural metal in that structure. During the course of construction, a dispute arose between Westminster and PPG as to whether the latter was fulfilling its obligations under the subcontract, and as a consequence Westminster refused to make any further payments on the contract. Nonetheless, PPG completed the work and in September 1971, in reliance on paragraph 16 of the subcontract ¹ and paragraph 7.10.1 of the General Conditions of the Contract for Construction, ² submitted a demand for arbitration of the controversy. Westminster answered denying liability and counterclaiming for damages based upon PPG's alleged failure to satisfy its obligations under the subcontract.

For reasons not disclosed by the record, hearings were not held until 1974. They were completed in October of that year, and an award was filed in February 1975 granting PPG's claim in full and denying Westminster's counterclaim. ³ Thereafter, as already observed, the trial justice denied Westminster's motion to vacate, modify or correct the award, ⁴ and granted PPG's to confirm. Westminster then appealed.

At the outset, Westminster asserts that the arbitrators' failure to disclose in the award either the facts upon which their ultimate conclusion was based or the reasons therefor rendered the award arbitrary and capricious and deprived it of any legal force and effect. There is, of course, no gainsaying that it might have been desirable had the award been factual rather than conclusory and had its underlying rationale been fully disclosed. Certainly, an award so articulated would engender confidence in the arbitration process. To impose the obligation to render such an award in every commercial arbitration, however, would be incompatible with preserving the parties' freedom to elect whether or not to remove their controversy from the jurisdiction of the courts, Lutz Eng'r. Co. v. Sterling Eng'r. & Constr. Co., 112 R.I. 605, 610-11, 314 A.2d 8, 11 (1974), and "would undermine the very purpose of arbitration, which is to provide a relatively quick, efficient and informal means of private dispute settlement." Sobel v. Hertz, Warner & Co., 469 F.2d 1211, 1214 (2d Cir. 1972). Presumably, those and similar considerations are responsible for the widely-held view that arbitrators of a commercial dispute, like a jury, are under no obligation to set out the reasons for their award or the findings of fact or conclusions of law on which that award is premised. United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424, 1428 (1960); Costello Constr. Corp. v. Teamsters Local 559, 167 Conn. 315, 319, 355 A.2d 279, 282 (1974); Aimcee Wholesale Corp. v. Tomar Prod., Inc., 21 N.Y.2d 621, 626, 289 N.Y.S.2d 968, 970, 237 N.E.2d 223, 225 (1968); City of Manitowoc v. Manitowoc Police Dep't, 70 Wis.2d 1006, 1016, 236 N.W.2d 231, 237 (1975); Harsen v. Board of Educ., 132 N.J.Super. 365, 374, 333 A.2d 580, 585 (1975); McKinney v. Allstate Ins. Co., 6 Ohio App.2d 136, 140, 216 N.E.2d 887, 890-91 (1966); Domke, The Law & Practice of Commercial Arbitration § 29.06 at 286-87 (1968). That general rule is, of course, subject to the exception that disclosure of findings and the reasons for them must be made if the applicable statute, the arbitration agreement or the submission so requires. See William H. Low Estate Co. v Lederer Realty Corp., 35 R.I. 352, 357-58, 86 A. 881, 883 (1913). ⁵

In this case, Westminster fails to point to anything specific in either the arbitration agreement or the submission that required the arbitrators to include findings or reasons. Moreover, the controlling statute, G.L. 1956 (1969 Reenactment) § 10-3-10, provides only that the award be in writing and be signed by the arbitrators or by a majority of them. Accordingly, the award cannot be faulted for failing to include detailed findings or a statement of reasons.

Westminster next argues that the architect did not certify PPG's work as qualifying for payment and that consequently the award in PPG's favor is so completely irrational that it is in manifest disregard of the law and should therefore be vacated. Although manifest disregard of the law is not included in the statutory enumeration of permissible grounds for upsetting arbitration awards, it has nonetheless crept into the law of arbitration as the result of the Supreme Court's opinion in Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953). Courts that have recognized that ground, however, have had difficulty in drawing a clear-cut distinction between a "mistake of law," which in this state, ⁶ as elsewhere, is not a ground for disturbing an award, and a "manifest disregard of the law," which under the Wilko case is a ground. Domke, supra, § 25.05 at 261-62. Certainly, as the court said in San Martine Compania De Navegacion, S.A. v. Saguenay Terminals Ltd., 293 F.2d 796, 801 (9th Cir. 1961)

"(M)anifest disregard of the law must be something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law. * * * (A) manifest disregard of the law * * * might be present when arbitrators understand and correctly state the law, but proceed to disregard the same."

That kind of situation, Domke says, will "rarely occur in practice." Section 25.06 at 262.

This case is no exception. Here we have neither a stenographic transcript of the arbitration proceedings nor a documented award disclosing why, if in fact the architect did not certify the work for payment, the arbitrators ignored or attached no weight to that omission. It is therefore impossible for us to say that the arbitrators understood the law but nonetheless intentionally disregarded it.

Finally, Westminster argues that the arbitrators exceeded their powers in adding interest to the amount of the award. That contention, however, ignores the general rule that arbitrators may award interest, even if not claimed, unless otherwise specifically provided by the parties in the agreement. In re Burke, 117 App.Div. 477, 479, 102 N.Y.S. 785, 787 (1907), aff'd, 191 N.Y. 437, 84 N.E. 405 (1908); Domke, supra, § 30.03 at 293. Here the General Conditions of the Contract for Construction, instead of negating such authority, specifically provides in paragraph 7.9.1 that "(a)ny monies not paid when due to either party under this Contract shall bear interest at the legal rate in force at the place of the Project." (Emphasis added.) That paragraph obviously refers to monies due and payable under the subcontract and not, as Westminster argues, to monies due under a judgment.

Moreover, the Construction Industry Arbitration Rules, which is one of the controlling contract documents, provides in section 42 that "(t)he Arbitrator may grant any remedy or relief which he deems just and equitable and within the terms of the agreement of the parties." (Emphasis added.) That provision clearly is sufficiently encompassing to justify an award of interest. And even independent of this contractual authorization is the rule granting interest " 'as an invariable legal incident of the principal debt, from the day of default, whenever the debtor knows precisely what he is to pay and when he is to pay it.' " O'Brien v. Slefkin, 88 R.I. 264, 271, 147 A.2d 183, 186 (1958) quoting Spencer v. Pierce, 5 R.I. 63, 71 (1857). Here, the arbitrators obviously concluded that Westminster improperly withheld sums due and payable...