RE Bean Const. v. MIDDLEBURY, ETC.

428 A.2d 306
CourtSupreme Court of Vermont
DecidedNovember 24, 1980
Docket8-80
StatusPublished

This text of 428 A.2d 306 (RE Bean Const. v. MIDDLEBURY, ETC.) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
RE Bean Const. v. MIDDLEBURY, ETC., 428 A.2d 306 (Vt. 1980).

Opinion

428 A.2d 306 (1980)

R. E. BEAN CONSTRUCTION CO.
v.
MIDDLEBURY ASSOCIATES and Middlebury Developers, Inc.

No. 8-80.

Supreme Court of Vermont.

November 24, 1980.
Motion for Reargument Denied January 30, 1981.

*307 John H. Carnahan and J. Eric Anderson of Fitts, Olson, Carnahan, Anderson & Bump, Brattleboro, for plaintiff.

Karl W. Neuse, Middlebury, for amicus curiae Pitcher Associates.

John A. Kelley, Middlebury, and Peter S. Gilfillan and Philip Abramowitz of Gross, Shuman, Brizdle, Laub & Gilfillan, P. C., Buffalo, N. Y., for defendants.

Before BARNEY, C. J., and DALEY, LARROW, BILLINGS and HILL, JJ.

*308 BARNEY, Chief Justice.

This case involves the same construction project that was the subject of Pike Industries, Inc. v. Middlebury Associates, 136 Vt. 588, 398 A.2d 280 (1979), aff'd after remand (1980) (Docket No. 427-79) (decided this day). R. E. Bean Construction Co. was the general contractor retained by Middlebury Associates and Middlebury Developers, Inc., here treated as a single entity (Middlebury), to build a shopping center on Route 7 in the Town of Middlebury. Basically, their contract provided that, for a fee, Bean would provide for the building of the shopping center at a specified maximum cost to Middlebury. Any savings on that cost were to be shared. Changes in the development were permitted at cost plus ten per cent. The contract further provided for the arbitration of disputes arising from it under the American Arbitration Association Construction Industry Rules. Bean in turn entered into numerous subcontracts for completion of the work. In the fall of 1974 a dispute arose between Bean and Middlebury relating to their contractual obligations. Basically, Bean contended that Middlebury had breached its obligation to make progress payments and Middlebury asserted that Bean had failed to make adequate progress reports.

Bean first commenced litigation against Middlebury, and then filed a demand for arbitration with the American Arbitration Association. Middlebury counterclaimed.

At about this time the subcontractors filed litigation asserting contract claims against both Bean and Middlebury. Bean, Middlebury, and all of the subcontractors, except Pike Industries, Inc., agreed to seek resolution of their dispute through arbitration. See Pike Industries, Inc. v. Middlebury Associates, supra. Those parties entered stipulations submitting their disputes to arbitration, arbitrators were appointed, hearings held, and an award rendered. The award found Middlebury liable to Bean for $333,261.53 and Bean liable to the subcontractors for lesser amounts.

Middlebury challenged the award in superior court, relying on four basic grounds: (i) that two of the three arbitrators failed to disclose relationships with the parties and their attorneys, (ii) that the award was rendered after the arbitrators' jurisdiction over the case had expired, (iii) that the arbitrators failed to dispose of all the issues submitted, and (iv) that Bean submitted evidence after the close of the hearings. After hearings the court entered findings of fact and conclusions of law. As amended, the findings generally rejected Middlebury's contentions with one exception; the court found error in the arbitrators' express refusal to include in the award any amount "for any sum which might be due to Bean from Middlebury on account of work performed by Pike." This language is taken from the arbitration award. The court stated its view that an appropriate release by Bean would cure this defect. Bean executed a release and the court confirmed the award. Middlebury appeals, urging that each of the contentions it advanced in the superior court required that the award be vacated, and arguing some new grounds.

The parties in their stipulations for submission to arbitration agreed:

that any party hereto may apply to the court for an order vacating[,] ... modifying[,] or correcting the award as prescribed in the United States Arbitration Act of 1925, 9 U.S.C. Sections 1-14. The procedure as to such application and the order of the Court shall be as set forth in the United States Arbitration Act including but not limited to Sections 9, 10, 11, 12, and 13.

The superior court noted expressly in its conclusions of law that it considered itself bound by the Act. To the extent that the Act is part of the contract, the court was correct. However, the Act applies of its own force only to arbitration agreements relating to maritime transactions or involving interstate or foreign commerce. Cook v. Kuljian Corp., 201 F.Supp. 531, 535 (E.D. Pa.1962), aff'd sub nom., Cook v. Damodar Valley Corp., 317 F.2d 412 (3d Cir. 1963). Neither circumstance has been alleged or proved in this case. Therefore, the Act applies not as supreme federal law, but by *309 consent of the parties. We are prepared to turn to it as we would to the rest of their contract. The decisions of other jurisdictions under the Act are persuasive statements of its meaning. However, if in conflict with our own state public policy, the Act in this context is without effect.

Vermont has a strong tradition of upholding arbitration awards whenever possible. See French v. Raymond, 82 Vt. 156, 72 A. 324 (1909) (award upheld despite assertion that it was based on perjured testimony). Awards are liberally construed and every possible intendment is made in their support. Batchelder v. Reynolds, 107 Vt. 439, 440, 180 A. 884, 885 (1935) (citing Rixford v. Nye, 20 Vt. 132, 138-39 (1848)). In reviewing awards, the Court is mindful of the importance of arbitration as an alternative to the courts for the speedy and relatively inexpensive resolution of disputes and of arbitration's long history in Vermont law. "These domestic tribunals are in the interest of peace, and the State has an interest that controversy should end. Such courts sometimes get aside of technical law, but ordinarily reach substantial justice." Morse v. Bishop, 55 Vt. 231, 234-35 (1882). Burgeoning litigation in recent years emphasizes the need to encourage such alternatives. To the extent that justified confidence in arbitration is established, it can only aid the courts in meeting the public's need for speedy, inexpensive and fair dispute resolution. The courts must respect an arbitrator's determinations; otherwise, those determinations will merely add another expensive and time consuming layer to the already complex litigation process. If the courts merely rubber-stamp arbitrators' decisions, however, litigants will hesitate to entrust their affairs to arbitration. It is this delicate balance which courts reviewing arbitration decisions must strive to attain.

I.

Middlebury points out that the superior court judgment denying Middlebury's motion to vacate the arbitration award and granting Bean's motion to confirm the award was entered on September 21, 1979. The award held that Middlebury had breached its contract with Bean. Later, on October 26, 1979, a superior court found that Bean, not Middlebury, had breached the contract. The parties concede that the subject of the two claims is the same.

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Related

Pike Industries, Inc. v. Middlebury Associates
398 A.2d 280 (Supreme Court of Vermont, 1979)
Cook v. Kuljian Corporation
201 F. Supp. 531 (E.D. Pennsylvania, 1962)
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376 A.2d 28 (Supreme Court of Vermont, 1977)
Ukrainian Nat. Urban Renewal Corp. v. Joseph L. Muscarelle, Inc.
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189 Cal. App. 2d 71 (California Court of Appeal, 1961)
In Re the Arbitration Between Cross Properties, Inc. & Gimbel Bros.
187 N.E.2d 129 (New York Court of Appeals, 1962)
Batchelder Brown v. Reynolds Admx.
180 A. 884 (Supreme Court of Vermont, 1935)
Cootey v. Remington
189 A. 151 (Supreme Court of Vermont, 1937)
Firestone Tire & Rubber Co. v. Hart's Estate
158 A. 92 (Supreme Court of Vermont, 1932)
In re the Arbitration between Cross Properties, Inc. & Gimbel Bros.
15 A.D.2d 913 (Appellate Division of the Supreme Court of New York, 1962)
Johnson v. Crawford
61 A. 1103 (Supreme Court of Pennsylvania, 1905)
Rixford v. Nye
20 Vt. 132 (Supreme Court of Vermont, 1848)
Smith v. Potter
27 Vt. 304 (Supreme Court of Vermont, 1855)

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