November 10, 2009
NATIONSRENT, INC., PLAINTIFF,
METRO CONCRETE AND MASONRY, INC., WAL-MART REAL ESTATE TRUST A/K/A WAL-MART REAL ESTATE BUSINESS TRUST, MILRIC CONSTRUCTION CORP., AND MICHAEL SALIMBENE, DEFENDANTS, AND MILRIC CONSTRUCTION CORP., THIRD-PARTY PLAINTIFF-APPELLANT,
COASTAL STEEL CONSTRUCTION OF NEW JERSEY, L.L.C., THIRD-PARTY DEFENDANT-RESPONDENT, AND BAC LOCAL 4 PENSION AND ANNUITY FUNDS, NEW JERSEY BAC HEALTH FUND, NEW JERSEY BM&P APPRENTICE AND EDUCATION FUND, BRICK LAYERS AND TROWEL TRADES INTERNATIONAL PENSION, HEALTH AND ANNUITY FUNDS, THIRD-PARTY DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-4273-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 26, 2009
Before Judges Rodríguez and Reisner.
Milric Construction Corp. (Milric) appeals from a January 9, 2009 order of the trial court denying Milric's motion for reconsideration of an earlier order granting Coastal Steel Construction of New Jersey, L.L.C. (Coastal) prejudgment interest on an arbitration award. Because we conclude that the arbitration award was ambiguous, and the trial court had no independent authority to award prejudgment interest in this case, we vacate and remand this matter to the arbitrator.
This case arises from construction contract litigation. Coastal was a sub-sub-contractor on a job for which Milric was the general contractor. In the litigation, Coastal filed a counterclaim against Milric, contending that Milric had promised to make payments directly to Coastal and owed Coastal approximately $274,000. Notably, Coastal's counterclaim sought $273,980.87 "plus interest." On March 11, 2008, Milric and Coastal agreed to submit "all such claims" asserted by Coastal "to binding arbitration pursuant to the provisions of N.J.S.A. 2A:23B-1 et seq." The parties agreed that the trial court "shall retain jurisdiction with respect to issues and/or disputes which may hereafter arise and for which N.J.S.A. 2A:23B-1 et seq. provides this Court with jurisdiction, including the entry of judgment on the arbitration award pursuant to N.J.S.A. 2A:23B-25."
On September 15, 2008, the arbitrator issued his written award. At the beginning of that decision, he stated the issues before him as follows: "Coastal now alleges that it is owed $273,980.87 plus interest for work performed on the [construction] site." Based on the evidence, the arbitrator determined that Coastal relied on Milric's assurances of payment in staying on the job and in incurring substantial costs in the form of expanding its workforce and paying overtime in order to finish the job. He concluded: "I find in favor of Coastal in the full amount of their claim."
On September 22, 2008, Milric's attorney sent the arbitrator a five-page letter essentially attempting to re-argue the case and asking for reconsideration of the award. On September 23, 2008, Coastal's attorney sent the arbitrator a three-page letter objecting to Milric's reconsideration request and asking that if the arbitrator were inclined to reconsider anything, he should provide Coastal with prejudgment interest, "a claim which was not addressed in the arbitration decision." On September 24, 2008, the arbitrator sent the parties a letter noting the issue of interest, but only responding in substance to the issues Milric raised. He ended by indicating: "I decline counsel's invitation to revisit the issues here."
Coastal filed a motion with the trial court to confirm the award. By order dated October 30, 2008, the judge entered an order confirming the award and entering judgment for $273,980.87 "plus pre-judgment interest to be calculated at post-judgment interest rate as per Court Rules." In a handwritten statement of reasons, the trial judge indicated that she construed the arbitration award as including prejudgment interest because the "[a]rbitrator found in favor of Coastal in the full amount of their claim which at all times included claim [sic] for prejudgment interest." She also noted that the "arbitrator did not find Milric acted in good faith, despite clear obligation to pay Coastal for services rendered at its behest."
On November 12, 2008, the judge entered an order quantifying the prejudgment and post-judgment interest on the award and entering a "total judgment" of $318,740. However, on November 21, 2008, she entered an amended total judgment of $307,167. On January 9, 2009, the trial judge denied Milric's motion for reconsideration, but premised this ruling on a different rationale from her original decision. This time, she reasoned that Rule 4:42-11 gave the court discretion to award prejudgment interest, and she concluded that denying Coastal prejudgment interest would "unjustly enrich Milric." This appeal followed.
It is fundamental that the parties define the issues to be decided by an arbitrator, and the arbitrator's obligation is to decide those issues. See Martellio v. Burbank, 341 N.J. Super. 520, 525 (App. Div.), certif. denied sub nom, Martellio v. State Farm Ins. Co., 170 N.J. 387 (2001). Once the arbitrator renders his decision, the trial court cannot modify it by deciding issues the parties submitted to the arbitrator. Id. at 526. Pertinent to this case, the trial court cannot award prejudgment interest if the arbitrator did not award it. See Rivers v. General Acc. Group, 192 N.J. Super. 355, 359 (App. Div. 1983). If the award is ambiguous, or does not address all of the issues submitted to the arbitrator, the proper procedure is to remand the matter to the arbitrator. See Kimm v. Blissett, L.L.C., 388 N.J. Super. 14, 27 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). At oral argument, both counsel argued that the arbitration award was not ambiguous, but they both conceded that if it was ambiguous we had the authority to remand this matter to the arbitrator for clarification.
We conclude that the arbitration award is ambiguous; it simply does not clearly address the question whether the arbitrator awarded prejudgment interest. The arbitrator's subsequent decision on the reconsideration request does not clearly answer the question either. We therefore deem it the most appropriate course to remand this matter to the arbitrator to answer the question whether the award to Coastal includes prejudgment interest.
Accordingly, we vacate the prejudgment interest award set forth in the November 21, 2008 judgment issued by the trial court, pending the arbitrator's decision on remand. We do not contemplate the need for any further briefing, hearings or other proceedings on the remand unless the arbitrator in his sole discretion should require them. Since, in this case, Coastal is satisfied with the rate of interest set by the Court Rules for post-judgment interest, it is not necessary to decide whether a higher prejudgment interest rate is appropriate, and Coastal has indicated that it would accept the prejudgment interest amount quantified in the trial court's order. We do not retain jurisdiction.*fn1