Decided: January 29, 1990.
MCHUGH INCORPORATED, PLAINTIFF,
SOLDO CONSTRUCTION CO., INC., DEFENDANT-APPELLANT, AND WARREN COUNTY BOARD OF CHOSEN FREEHOLDERS, DEFENDANT-RESPONDENT, AND INSURANCE COMPANY OF NORTH AMERICA-AETNA INSURANCE COMPANY, DEFENDANT
On appeal from Superior Court of New Jersey, Law Division, Warren County.
J.h. Coleman,*fn1 Muir and Skillman. The opinion of the court was delivered by Skillman, J.A.D.
[238 NJSuper Page 143]
Defendant Warren County Board of Chosen Freeholders (the County) awarded defendant Soldo Construction Co., Inc. (Soldo) one of a number of prime contracts for the construction of the Warren County Detention Center. Soldo's subcontractors on the project included Rose Construction Company (Rose). After the project was completed, Soldo presented various claims for arbitration including a claim which Rose had presented to Soldo.*fn1
The arbitrators conducted lengthy hearings regarding the Soldo's claims as well as the claims of other contractors on the project.*fn2 At the conclusion of the hearings, the arbitrators made an award which included a provision that:
THE WARREN COUNTY BOARD OF CHOSEN FREEHOLDERS shall pay to SOLDO CONSTRUCTION CO., INC., the sum of SEVEN HUNDRED SIXTY-SEVEN THOUSAND SIX DOLLARS AND SEVENTY-FIVE CENTS ($767,006.75), which sum includes the following amounts which SOLDO CONSTRUCTION
[238 NJSuper Page 144]
CO., INC., upon receipt of the foregoing sum, shall pay to its subcontractors as follows:
(B) ROSE CONSTRUCTION CO., ONE HUNDRED TWENTY-EIGHT THOUSAND NINE HUNDRED THIRTY-FIVE DOLLARS ($128,935.00)
The County paid the entire arbitration award except the part Soldo is obligated to transmit to Rose. The parties' dispute as to this part of the award was presented to the trial court by Soldo's motion to confirm and the County's cross motion to vacate the award.
The trial court found that no evidence was presented to the arbitrators to support an award with respect to the Rose subcontract and consequently entered judgment vacating this part of the award. We affirm.
The threshold issue on this appeal is whether an arbitration award is subject to attack on the ground that no evidence was presented to the arbitrators to support the award.
It is "generally recognized that the role of the courts in reviewing arbitration awards is extremely limited." Local 153, Office & Professional Employees Int'l Union v. Trust Co. of N.J., 105 N.J. 442, 448, 522 A.2d 992 (1987). Consequently, "every intendment is indulged in favor of the award and it is subject to impeachment only in a clear case." Barcon Associates v. Tri-County Asphalt Corp., 86 N.J. 179, 187, 430 A.2d 214 (1981), quoting Carpenter v. Bloomer, 54 N.J. Super. 157, 168, 148 A.2d 497 (App.Div.1959); see also Cty. College of Morris Staff Ass'n v. Cty. College of Morris, 100 N.J. 383, 390,
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495 A.2d 865 (1985) ("judicial interference with the role of the arbitrator is to be strictly limited.").
However, there are "limitations to the deference given an arbitrator's decision." Cty. College of Morris Staff Ass'n v. Cty. College of Morris, supra, 100 N.J. at 391, 495 A.2d 865. An arbitrator's interpretation of a contractual provision will not be sustained unless it is "reasonably debatable." State v. State Troopers Fraternal Ass'n, 91 N.J. 464, 472, 453 A.2d 176 (1982); see also Belardinelli v. Werner Continental, Inc., 128 N.J. Super. 1, 318 A.2d 777 (App.Div.1974); Ukrainian Nat'l Urban Renewal Corp. v. Muscarelle, Inc., 151 N.J. Super. 386, 398, 376 A.2d 1299 (App.Div.1977), certif. den. 75 N.J. 529, 384 A.2d 509 (1977). And because it is a court's duty to sustain an award only if there are "legal and factual conclusions to support it," State v. State Troopers Fraternal Ass'n, supra, 91 N.J. at 470 n. 2, 453 A.2d 176, "[i]t frequently may be necessary to consider evidence extrinsic to the award to decide whether any of the statutory grounds for vacating the award exists." Kearny P.B.A. Local # 21 v. Town of Kearny, 81 N.J. 208, 219, 405 A.2d 393 (1979); see also Fred. W. Donnelly, Inc. v. Unit One Lawrence, 171 N.J. Super. 30, 33-34, 407 A.2d 1251 (App.Div.1979), certif. den. 82 N.J. 298, 412 A.2d 803 (1980). Moreover, the Supreme Court has seemingly endorsed the view that an arbitration award must be vacated if it is shown to have been based on a "clearly mistaken view of fact." See Local 153, Office & Professional Employees Int'l Union v. Trust Co. of N.J., supra, 105 N.J. at 450 n. 1, 522 A.2d 992 ("while 'undue means' has been interpreted as including a 'clearly mistaken view of fact or law,' [ Local Union 560 v. Eazor Express, Inc., 95 N.J. Super. 219, 228, 230 A.2d 521 (App.Div.1967)], it does not include situations such as this, where the arbitrator bases his decision on one's party's version of the facts, finding that version to be credible."). Thus, although there is no New Jersey case directly on point, our cases suggest that an arbitration award may be vacated if it is shown not to be supported by any evidence in the record.
[238 NJSuper Page 146]
This conclusion is firmly supported by federal case law. For example, in NF & M Corp. v. United Steelworkers of America, 524 F.2d 756 (3rd Cir.1975), the court stated:
An arbitrator is not required to list his reasons for the award, nor should an ambiguity in his opinion be seized upon to support an inference that he exceeded his authority. Further, a court is precluded from overturning an award for errors in assessing the credibility of witnesses, in the weight accorded their testimony, or in the determination of factual issues.
Nonetheless, if an examination of the record before the arbitrator reveals no support whatever for his determinations, his award must be vacated. [524 F.2d at 759-760 (emphasis added; citations omitted)].
See also United Electrical, Radio & Machine Workers of America, Local 1139 v. Litton Microwave Cooking Products, Litton Systems, Inc., 704 F.2d 393, 396-397 (8th Cir.1983).
Other federal decisions have reached the same conclusion based on their interpretation of the United States Arbitration Act, 9 U.S.C. § 10 (1988), which contains language essentially identical to the New Jersey Arbitration and Award Act, N.J.S.A. 2A:24-8.*fn3 Thus, in Storer Broadcasting Corp. v. American
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Federation of Television and Radio Artists, 600 F.2d 45 (6th Cir.1979), the court stated:
It is very well settled that the courts are generally required to refrain from reviewing the merits of an arbitrator's award due to the policy favoring arbitration as a means of resolving labor disputes. . . . But there are at least two important exceptions to this general rule. First, "the arbitrator is confined to the interpretation and application of the collective bargaining agreement, and although he may construe ambiguous contract language he is without authority to disregard or modify plain and unambiguous provisions." . . . Second, "although a court is precluded from overturning an award for errors in the determination of factual issues, '[n]evertheless, if an examination of the record before the arbitrator reveals no support whatever for his determinations, his award must be vacated.'" [600 F.2d at 47 (emphasis added; citations omitted)].
Similarly, in National Post Office v. United States Postal Service, 751 F.2d 834 (6th Cir.1985), the court observed:
Although it is sometimes said that arbitration awards cannot be upset "on grounds of erroneous findings of fact," the reported cases demonstrate that this aphorism is properly applied to an arbitrator's factual determinations based on disputed or ambiguous evidence (i.e., his findings), rather than to clear misstatements of undisputed historical fact.
See also Detroit Coil Co. v. Int'l Ass'n of Machinists & Aerospace Workers Lodge # 82, 594 F.2d 575, 580-581 (6th Cir.1979), cert. den. 444 U.S. 840, 100 S. Ct. 79, 62 L. Ed. 2d 52 (1979); cf. Benjamin F. Shaw Co. v. Cincinnati Gas & Elect. Co., 633 F. Supp. 841, 843 (S.D.Oh.1986) ("Monetary awards will be upheld as long as such awards bear a logical relationship to the evidence or as long as there is a rational basis therefor.").
We conclude for the reasons expressed in the foregoing federal cases that where there is no evidence in the record to support an arbitration award, it should be vacated on the
[238 NJSuper Page 148]
ground that the arbitrators "exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter was not made," N.J.S.A. 2A:24-8(d).
We therefore must decide whether the trial court was correct in finding that there is no evidence to support the portion of the arbitration award attributable to Rose's claim against Soldo. Rose, a defunct corporation whose charter was revoked by the Secretary of State, did not appear at the arbitration hearing. Indeed, Soldo has not had any contact with Rose for several years and does not know the whereabouts of the principals of the former corporation. The only references to Rose's claim made at the arbitration hearing were by an officer of Soldo, Joseph Lucarelli, and Soldo's expert witness, Richard Donnelly. However, neither of these witnesses purported to have any personal knowledge of the basis of Rose's claim. All they knew was that Rose had made a claim against Soldo for delay damages of $247,976.82, which was reduced through negotiations to $128,935 but never paid. These witnesses did not have any information regarding how the $128,935 was calculated, what it was composed of (i.e., labor, material, equipment rental, or other such costs), or even who calculated the figure and when. In short, while Soldo presented the bare fact that Rose had made a claim for $128,935, it did not present any evidence to the arbitrators to support that claim. Therefore, the trial court properly vacated that portion of the award.*fn4