ABC Building Corporation d/b/a Advanced Building Concepts v. Ropolo Family, LLC
ABC Building Corporation d/b/a Advanced Building Concepts v. Ropolo Family, LLC
Opinion of the Court
The defendant, Ropolo Family, LLC, appeals from an order of the Superior Court that confirmed an arbitration award in favor of the plaintiff, ABC Building Corporation, and from a corresponding judgment of the Superior Court in favor of ABC and against Ropolo in the amount of $72,415, plus statutory interest in the amount of $7,086.24 through the date of the arbitration award, and post-award interest thereafter. Ropolo contends on appeal that the arbitrator exceeded his authority by (1) manifestly disregarding clear and unambiguous *703contractual language that should have precluded any award in favor of ABC, and (2) manifestly disregarding well-settled law by awarding ABC recovery in quasi-contract when a valid and enforceable contract was in existence. This case came before the Supreme Court pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not summarily be decided. After considering the parties' written and oral arguments, and after reviewing the record, we conclude that cause has not been shown and that this case may be decided without further briefing or argument. For the reasons set forth below, we affirm the order and judgment of the Superior Court.
I
Facts and Travel
ABC and Ropolo entered into a contract for the construction of a restaurant in Newport. Sometime thereafter, a dispute arose regarding payment that Ropolo owed to ABC. It is uncontroverted that, when it failed to receive full payment on the bills it submitted to Ropolo, ABC ceased work on the project.
"3. I find that under the factual circumstances of this matter, the Agreement and its General Conditions require payment by [Ropolo] to [ABC] of the fair and reasonable value of labor and materials supplied on the project.
"4. I find that [ABC's] testimony, taken as a whole, was sufficient and credible as to the fair and reasonable cost of work, the reasonable necessity of the work, payment by [ABC] for the work, and [ABC's] communication of the same to [Ropolo].
" * * *
"8. I find that [ABC] did not materially breach the Agreement."
In rendering his award, the arbitrator decided that "[ABC] is entitled to recover from [Ropolo] under the contract and alternatively in quantum meruit * * *."
ABC moved to confirm the arbitration award in the Superior Court. Ropolo objected to ABC's motion to confirm and simultaneously moved to vacate the arbitration award. Ropolo argued that the arbitrator manifestly disregarded clear and unambiguous contractual language-specifically, § 7.1.4:
"With each Application for Payment, the Construction Manager shall submit payrolls, petty cash accounts, receipted invoices or invoices with check vouchers attached, and any other evidence required by the Owner or Architect to demonstrate that cash disbursements already made by the Construction Manager on account of the Cost of the Work equal or exceed progress payments already received by the Construction Manager, less that portion of those payments attributable to the Construction Manager's Fee, plus payrolls for the period covered by the present Application for Payment."
This language, according to Ropolo, "required that ABC submit specific items with each [a]pplication for [p]ayment to *704substantiate each line item billed[,]" including documentation of payroll, receipted invoices, and evidence of prior payments made by the owner. This, Ropolo claimed, ABC failed to do. Ropolo asserted that much of the work for which ABC was seeking compensation related to intangible supervisory and management labor and that, because ABC had not submitted time sheets or other documentation, it was impossible for Ropolo to know if the work had actually been performed. Ropolo further averred that it had not received the requisite backup documentation for that work from ABC until after ABC initiated arbitration, and thus Ropolo considered itself justified in withholding payment to ABC. Furthermore, Ropolo argued, the arbitrator manifestly disregarded applicable law when he awarded ABC recovery in quantum meruit despite the existence of a valid, legally enforceable contract. Subsequently, ABC filed an objection to Ropolo's motion to vacate the arbitration award, maintaining that it had provided sufficient substantiation for the bills it submitted to Ropolo, and that the arbitrator had so found.
On July 1, 2016, a hearing was held on the parties' cross-motions to confirm and vacate the arbitration award. ABC explained that it was a general contractor hired by Ropolo "to do a construction build-out of a new restaurant location in Newport." However, ABC posited, a disagreement arose between the parties because Ropolo "was complaining about the progress and was disputing the invoices"; in response, ABC notified Ropolo that it was terminating their agreement. Thereafter, according to ABC, the arbitrator found that the documentation provided by ABC to Ropolo with the applications for payment was sufficient to substantiate those invoices, and, as such, ABC had not breached the contract by stopping work.
ABC next addressed the two arguments that had been raised by Ropolo as grounds for vacating the arbitration award. First, with respect to whether the arbitrator had disregarded the contract, ABC emphasized that the arbitrator, who had significant experience in this area of the law, had held multiple days of hearings, heard from witnesses involved in the dispute, and accepted lengthy post-arbitration memoranda from the parties addressing the very issues Ropolo was raising before the Superior Court. According to ABC, the arbitrator conducted a thorough review of the evidence before him and "clearly found that there [were] clear and unambiguous terms of the contract that supported [ABC's] claim for breach of contract, that [ABC] had supplied sufficient evidence of those damages and was entitled to recover." Second, with respect to whether the arbitrator had disregarded the law when providing for recovery in quantum meruit as an alternative to a contract-based recovery, ABC asserted that the arbitrator did not misapply the law or make a mistake of law. But even if he had ruled that the elements of quasi-contract were satisfied, ABC argued, mere error of law is an insufficient basis for vacating an arbitration award. In light of the Superior Court's limited review of arbitration awards pursuant to G.L. 1956 § 10-3-12, and given that the arbitrator had already examined and rejected the arguments raised by Ropolo, ABC maintained that the award should be confirmed.
Ropolo disagreed. It first recognized the heavy burden it had to overcome in asking the Superior Court to vacate the arbitrator's award. Nonetheless, Ropolo argued-as it had at arbitration-that ABC had not complied with § 7.1.4 of the contract by failing to submit backup documentation, in the form of payrolls or receipts, with its invoices to Ropolo. According to Ropolo, the arbitrator did not find that, under the contract, ABC had submitted sufficient *705documentation to Ropolo with each application for payment; in fact, the arbitrator did not find that substantiating documentation had been submitted to Ropolo at all. Rather, as Ropolo saw it, the arbitrator simply found "that [ABC's] testimony, * * * taken as a whole, was sufficient and credible as to the fair and reasonable cost of the work"-language Ropolo characterized as sounding in quantum meruit. Ropolo thus maintained that the arbitrator based his award solely on the testimony at arbitration, and not on a finding that ABC had complied with § 7.1.4 before terminating the contract and initiating arbitration.
ABC countered that, in fact, the arbitrator had based his decision on the applications for payment and the corresponding time sheets, which ABC introduced into evidence at arbitration and which Ropolo had exhaustively examined. ABC conceded that the actual time sheets had not been submitted to Ropolo with the applications for payment during the course of the project.
Following the parties' arguments, the hearing justice rendered his decision. He, too, was impressed by the experience of the arbitrator in the field of contract law, and the hearing justice noted that it was the parties who selected that arbitrator to perform that role. The hearing justice expressed his reluctance to set aside the arbitrator's award, especially where it had not been shown to be "clearly ambiguous, totally arbitrary, [or] otherwise unreasonable." In addition, the hearing justice found that the arbitrator had performed his function by making findings of fact, "and based on that [the hearing justice would] sustain the arbitrator[']s award." Accordingly, the hearing justice confirmed the arbitration award and entered a judgment for the awarded amount of $72,415, plus statutory interest in the amount of $7,086.24 through the date of the arbitration award, as well as interest thereafter. Ropolo timely appealed.
II
Standard of Review
"Rhode Island has a strong public policy in favor of the finality of arbitration awards." Berkshire Wilton Partners, LLC v. Bilray Demolition Co., Inc. ,
In reviewing an arbitrator's award, this Court, like the Superior Court, follows the Arbitration Act, codified at G.L. 1956 chapter 3 of title 10. " Section 10-3-12 sets forth the narrow conditions *706pursuant to which an arbitration award must be vacated[.]" Atwood Health Properties, LLC v. Calson Construction Co. ,
At the same time, the General Assembly has also provided that "any party to the arbitration may apply to the [Superior Court] for an order confirming the award, and thereupon the court must grant the order confirming the award unless the award is vacated, * * * as prescribed in § [ ] 10-3-12 * * *." Section 10-3-11. Thus, if none of the "narrow conditions" delineated in § 10-3-12-as this Court has interpreted them-are present, and if there has been no manifest disregard of the law, "[t]he statutory directive is clear: a reviewing justice must confirm the award * * *." Wheeler v. Encompass Insurance Co. ,
III
Discussion
There is no question that one who seeks to vacate an arbitration award shoulders a heavy load. Because "[p]ublic policy favors the finality of arbitration awards, * * * such awards enjoy a presumption of validity." Lemerise v. Commerce Insurance Co. ,
*707Id. at 835 (quoting Prudential Property and Casualty Insurance Co. ,
In our considered opinion, Ropolo is attempting to do just that. The company disagrees with the manner in which the arbitrator viewed and applied the contract between the parties, and it disagrees with the basis on which the arbitrator awarded recovery to ABC. However, neither avenue by which Ropolo has sought to vacate the arbitration award-first in the Superior Court, and now before this Court-can afford Ropolo any relief.
First, we note that "review of an arbitration award does not permit 'judicial re-examination' of the relevant contractual language." Berkshire Wilton Partners, LLC ,
In its argument to this Court, Ropolo relies on Nappa Construction Management, LLC v. Flynn ,
Second, "[t]he deference due to the arbitrator is such that an arbitrator's mere error of law is insufficient grounds to vacate his award." Berkshire Wilton Partners, LLC ,
It bears emphasizing that, "[i]n general, courts look with disfavor on efforts to overturn arbitration awards and thereby frustrate the arbitration process. Only in cases in which an award is so tainted by impropriety or irrationality that the integrity of the process is compromised should courts intervene." Prudential Property and Casualty Insurance Co. ,
IV
Conclusion
For the reasons set forth above, we affirm the order and judgment of the Superior Court. The record shall be remanded to the Superior Court.
Justice Goldberg participated on the basis of the briefs.
ABC characterizes its cessation of work on the project as its electing to terminate the contract pursuant to article 10 of the contract due to lack of payment by Ropolo. Ropolo characterizes ABC's stoppage as a material breach of the contract.
In response to questioning by the hearing justice, Ropolo acknowledged that it had raised these very issues in its post-arbitration memorandum to the arbitrator.
The time sheets were produced during pre-arbitration discovery.
Dissenting Opinion
I respectfully dissent from the majority's opinion affirming the grant of ABC Building Corporation's (ABC) motion to confirm the arbitration award in this case. In my view, this Court should vacate that award. In ruminating on this case, I have been guided by the following eloquent statement of Justice William O. Douglas, writing for the United States Supreme Court in the case of United Steelworkers of America v. Enterprise Wheel & Car Corp. ,
"[An arbitrator] does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the [contract]. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award."1
*709In my judgment, Justice Douglas's statement is entirely consistent with Rhode Island's law with respect to arbitration awards. We have stated that an arbitrator is "confined to interpret the terms of the agreement [between the parties] so as to effectuate the intentions of the parties to the contract." Rhode Island Council 94, AFSCME, AFL-CIO v. State ,
I candidly recognize at the outset that our review of arbitration awards is "extremely limited." Nappa Construction Management, LLC ,
The arbitration award at issue in the instant case states that the contract required payment of the "fair and reasonable value of labor and materials supplied on the project" and that ABC's testimony was "sufficient and credible" as to "the fair and reasonable cost" of the work done by ABC and as to ABC's "communication of the same to [Ropolo Family, LLC]." However, the words "fair and reasonable" do not appear at all in the contract between the parties-neither literally nor in paraphrase. In my opinion, it strains credulity to suggest that the arbitration award in this case properly drew its essence from the contract between the parties when the standard which the arbitrator asserted was required by the contract, and which he ultimately employed, does not exist in the contract at all. This Court has stated that, in Rhode Island, "[a]rbitration is a creature of the contract between the parties * * *." Rhode Island Brotherhood of Correctional Officers ,
Moreover, the arbitrator was asked to resolve the debate between the parties over what documentation ABC was required to include with its bills when those *710bills were presented to Ropolo Family, LLC. Specifically, the application of § 7.1.4 of the agreement between the parties was at issue. Shockingly, however, nowhere in the arbitration award does the arbitrator even mention § 7.1.4, nor does he resolve the question of what backup documentation was required; the arbitrator simply states in an utterly conclusory manner that ABC did not materially breach the contract. That fact serves to confirm my view that, even viewing it through a generous and liberal lens, the arbitration award in this case was not based even loosely on the contract between the parties. See Rhode Island Council 94 ,
I would further comment that, unlike the majority, I view this case as an even more egregious instance of an arbitrator exceeding his or her authority than we were quite recently called upon to deal with in Nappa Construction Management, LLC . As the majority opinion in the instant case reflects, in Nappa Construction Management, LLC ,
Consequently, while I acknowledge that there are understandable policy reasons for this Court's practice of engaging in limited review of arbitration awards, it is nonetheless my view that this case represents one of the relatively rare situations where an arbitrator has exceeded his authority; for that reason, I am convinced that the arbitration award should be vacated. See State v. Rhode Island Employment Security Alliance, Local 401, SEIU, AFL-CIO ,
In conclusion, I must respectfully but adamantly dissent from the majority's opinion.
See also Rhode Island Council 94, AFSCME, AFL-CIO v. State ,
Case-law data current through December 31, 2025. Source: CourtListener bulk data.