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Rock Work, Inc. v. Pulaski Construction Co.

October 25, 2007

ROCK WORK, INC., PLAINTIFF,
v.
PULASKI CONSTRUCTION CO., INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT -CROSS-APPELLANT,
v.
THE NORWOOD COMPANY, THIRD-PARTY DEFENDANT-APPELLANT -CROSS-RESPONDENT, AND ST. PAUL FIRE AND MARINE INSURANCE COMPANY, THIRD-PARTY DEFENDANT.



On appeal from the Superior Court of New Jersey Law Division, Mercer County, L-2717-02.

The opinion of the court was delivered by: Coburn, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 2, 2007

Before Judges Coburn, Grall and Chambers.

When numerous controversies arose among companies involved in a commercial construction project, plaintiff Rock Work, Inc., filed suit in the Law Division against defendant Pulaski Construction Co., Inc. ("Pulaski"), which, in turn, impleaded defendant The Norwood Company ("Norwood"). By consent order, the judge stayed plaintiff's action while three arbitrators appointed by the American Arbitration Association ("AAA") resolved the Pulaski/Norwood dispute. After numerous hearings, which were not transcribed, the arbitrators made an award to Pulaski of $738,211.90, which included an award of "$148,004.00 as reimbursement for legal fees, expert fees and costs." In addition, the arbitrators determined that the "administrative fees of the [AAA] totaling $19,750.00 and the compensation and expenses of the neutrals totaling $79,554.68 shall be borne as follows: 35% by Claimant and 65% Norwood."

Pulaski asked the judge to confirm the award and grant additional attorney's fees for the post-arbitration, confirmation proceedings. Norwood asked the judge to vacate the award, arguing that the arbitrators (1) exceeded their jurisdiction when they directed Norwood to pay a portion of the attorney's fees incurred by Pulaski; and (2) substantially prejudiced Norwood's case by two procedural rulings. The Law Division judge confirmed the award, but refused Pulaski's request for additional attorney's fees. Norwood appealed and Pulaski cross-appealed. We affirm the judgment.

I.

Norwood, as contractor, and Pulaski, as subcontractor, entered into a written agreement for the work in question on October 25, 2000. The agreement described Norwood as a New Jersey corporation but stated its address as West Chester, Pennsylvania, and indicated that Pulaski was located in Mercerville, New Jersey. The construction project was in Princeton, New Jersey, and the agreement's choice-of-law provision stated, in pertinent part, that it "shall be governed by the laws of State in which the Work is located . . . ."

The agreement's arbitration provision read, in pertinent part, as follows:

24. CLAIMS AND DISPUTE RESOLUTION All claims, disputes and other matters in question arising out of or relating to this SUBCONTRACT, or the breach thereof, may, at the sole election of CONTRACTOR, be decided by arbitration. * * * The foregoing agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. Unless CONTRACTOR elects otherwise, any arbitration proceedings hereunder shall be held in Philadelphia, Pennsylvania. The award rendered by the arbitrators shall be final and judgment may be entered upon it in accordance with applicable law in any Court having jurisdiction thereof.

The agreement's only specific reference to attorney's fees appeared in another section, which read as follows:

15. BACKCHARGES In the event that it becomes necessary for CONTRACTOR to (1) supply labor, materials or equipment either by request of SUBCONTRACTOR or due to SUBCONTRACTOR'S nonperformance, (2) make payments to Subsubcontractors, suppliers or others on behalf of SUBCONTRACTOR for this SUBCONTRACT, or (3) engage counsel in any matter which involves SUBCONTRACTOR'S non-payments or nonperformance, all such items will be backcharged to SUBCONTRACTOR on the basis of actual costs and expenses incurred by CONTRACTOR plus 20%.

In February 2003, Pulaski submitted a demand for arbitration against Norwood with the AAA. Although the parties' arbitration agreement empowered Norwood to insist on litigation in the courts, or arbitration in Pennsylvania, Norwood chose to defend and offer its counterclaims in the AAA arbitration requested by Pulaski. The arbitration hearings, which the parties chose not to record, began in April 2005, apparently in New Jersey, and concluded in October 2005. At that time, the AAA's Construction Industry Arbitration Rules ("CIAR") stated in section 46(d) that an arbitration award may include an award of attorneys' fees if all parties have requested such an award or it is authorized by law or by their arbitration agreement.

During the arbitration, both parties asked for attorney's fees.

According to Norwood's certification to the trial judge, near the end of the arbitration, Pulaski's counsel asked the arbitrators to direct Norwood to speak first during closing argument. Norwood objected. After a caucus, the arbitrators ruled that Pulaski should close first, followed by Norwood, followed by a rebuttal from Pulaski. Norwood further certified that Pulaski's attorney summed up for about two-and-one-half hours; that Norwood's attorney then summed ...


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