Ministrelli Construction Co., Inc. v. Sullivan Bros. Excavating, Inc.

279 N.W.2d 593, 89 Mich. App. 111, 1979 Mich. App. LEXIS 2050

• Court: Michigan Court of Appeals
• Decided: March 19, 1979
• Docket: Docket 77-4466
• Status: Published

Opinions

R. B. Burns, J.

An arbitration panel awarded Sullivan Brothers Excavating, Inc. (hereinafter Sullivan) $214,000 against Ministrelli Construction Co., Inc. (hereinafter Ministrelli). Upon Ministrelli’s application, the trial court vacated the award and ordered the matter be rearbitrated before a new panel. Sullivan appeals. We affirm.

Ministrelli, general contractor on a Michigan State Highway Department construction project, brought suit in circuit court against Sullivan, a subcontractor on the project. Sullivan counterclaimed for money earned but not paid. Pursuant to the terms of the subcontract, the matter was submitted to arbitration. Hearings before the arbitrators were concluded June 3, 1976, the award was made June 30, 1976, and the parties were promptly notified of the award. Sullivan made a motion to affirm the award in circuit court on July 21, 1976. On August 4, 1976, Ministrelli answered and made a motion to vacate the award.

Facts established in circuit court indicate that between June 3, 1976, and June 30, 1976, each arbitrator made an ex parte telephone contact with a witness. One arbitrator called Ministrelli’s office, another arbitrator called Sullivan’s office, and the third arbitrator called the Michigan State Highway Department. The arbitrator who called Ministrelli’s office spoke to a Ministrelli employee, who answered questions outside his field of expertise concerning calculation of damages. The employee did not inform his employer until one or two weeks after the third week of July, 1976.

The circuit court judge determined that Ministrelli had timely raised an issue of misconduct by the arbitrators, inferred that the ex parte contracts were of a prejudicial nature, and ruled that the award must be vacated.

An arbitration award may be vacated upon the grounds stated in GCR 1963, 769.9(1), which provides in part:

"Upon application of a party, the court shall vacate an award where:

"(a) The award was procured by corruption, fraud or other undue means;

"(b) There was evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party;

"(c) The arbitrators exceeded their powers; or

"(d) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing as to prejudice substantially the rights of a party.”

The time within which the application may be brought is limited by GCR 1963, 769.9(2), which provides:

"An application under this Rule shall be made within 20 days after delivery of a copy of the award to the applicant, except that, if predicated upon corruption, fraud or other undue means, it shall be made within 20 days after such grounds are known or should have been known.”

5 Honigman & Hawkins, Michigan Court Rules Annotated (2d ed), p 449, states:

"A party seeking to vacate an award must apply by motion within twenty days after delivery to him of a copy of the award if the grounds he advances in support of his motion appear on the face of the award, or occurred overtly in the proceeding (i.e., the arbitrators exceeded their powers, sub-rule 769.9(1)(c); or refused postponement for good cause, refused material evidence, or otherwise indulged in prejudicial conduct, sub-rule 769.9(1)(d); or showed evident partiality, sub-rule 769.9(1)(b)). Applications to vacate awards for the other causes listed in the sub-rule (fraud, corruption, or other misconduct) must be made within twenty days after such grounds become known, or should have been known. Sub-rule 769.9(2).” (Emphasis supplied.)

We agree that the actions of the arbitrators constituted misconduct. Ministrelli applied to vacate the award within 20 days of the date such conduct became known and therefore applied in a timely manner.

Affirmed. Costs to plaintiff.

Cynar, P.J., concurred.