Massachusetts Supreme Judicial Court Reverses Vacatur of Arbitration Award for Columbia Construction
The Massachusetts Supreme Judicial Court today issued a decision in favor of Columbia Construction Co., reversing a Superior Court order vacating an arbitration award in Columbia’s favor arising from a dispute brought by J.C. Cannistraro, LLC.
“We are pleased that the Supreme Judicial Court confirmed Columbia’s award. In doing so, it protected the sanctity of arbitration and the high standard for overturning awards. This decision provides additional certainty to an industry that routinely relies upon arbitration to resolve disputes.” said Jeff D. Bernarducci of Hinckley Allen, who argued the appeal for Columbia. “The decision reinforces the strong public policy favoring arbitration and provides important guidance for construction industry participants navigating Prompt Pay Act disputes.”
The Supreme Judicial Court held that the arbitrator acted within his authority in allowing Columbia to recoup certain payments made on Cannistraro’s disputed invoices that had been “deemed approved” under the Massachusetts Prompt Pay Act. The Court reversed the Superior Court’s order vacating Columbia’s arbitration award and remanded with direction to confirm the award.
The case arose from a construction and renovation project in Walpole, Massachusetts, for which Columbia entered into a prime contract and later entered into two subcontracts with Cannistraro. The dispute centered on Cannistraro’s change order invoices, Columbia’s rejection of those invoices, and Columbia’s later recoupment claim in arbitration.
In the arbitration, the arbitrator initially ordered Columbia to pay $951,855.05 in unpaid invoice amounts after concluding that the invoices were “deemed approved” under the Prompt Pay Act. Columbia complied with that order and then pursued a recoupment counterclaim, which the arbitrator allowed to proceed. Following a three-day evidentiary proceeding, the arbitrator awarded Columbia $576,855.05 plus interest on the recoupment claim.
The Supreme Judicial Court concluded that the arbitration award did not require a result contrary to an express statutory provision and did not violate public policy. The Court emphasized the narrow scope of judicial review of arbitration awards and distinguished between an arbitrator’s potential error of law and an award that is prohibited by law.
Columbia was represented before the Supreme Judicial Court by Hinckley Allen, with Jeff D. Bernarducci arguing for Columbia and Seth M. Pasakarnis and Lindsey Peterson Black also appearing on the brief.
Matter: J.C. Cannistraro, LLC v. Columbia Construction Co. & another, SJC-13819