91 A.3d 830
R.I.2014Background
- Berkshire (general contractor) and Bilray (subcontractor) disputed work on a Bristol, RI project after Berkshire terminated Bilray in April 2010; the parties agreed to binding arbitration.
- Bilray sought the contract balance (~$112,240) and payment for additional work; Berkshire asserted Bilray had executed a March 25, 2010 release waiving claims for labor/materials/work through that date.
- The release contained provisions (paras. 3–5) waiving claims and indemnifying the owner; a referenced requisition was not in the record.
- The arbitrator concluded the release did not clearly extinguish Bilray’s claims (partly because the requisition wasn’t produced), held Berkshire’s termination wrongful, and awarded Bilray a net sum.
- Berkshire moved in Superior Court to vacate under § 10-3-12, arguing the arbitrator manifestly disregarded Max Fish and the plain release language; the trial justice granted the motion and vacated the award.
- On appeal, the Rhode Island Supreme Court reversed the Superior Court, holding the arbitrator’s interpretation was within permissible bounds and did not manifestly disregard the law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitrator manifestly disregarded law by failing to treat the release as unambiguous waiver | Release unambiguously waived all claims through Mar. 25, 2010; Max Fish supports enforcement | Arbitrator reasonably distinguished Max Fish and analyzed the release language | Arbitrator did not manifestly disregard law; deference applies, vacancy improper |
| Whether the release barred Bilray’s arbitration claims | Release more stringent than Max Fish and thus bars Bilray’s claims | Release ambiguous as to whom it benefits and what the requisition covered; lack of requisition precludes finding waiver | Court upheld arbitrator’s finding that evidence was insufficient to conclude release extinguished claims |
| Whether a trial court may reweigh arbitrator’s contract interpretation | Berkshire: yes, when arbitrator misreads an unambiguous release | Bilray: no, courts’ review is extremely limited; only manifest disregard permits vacatur | Court affirmed limited review; mere disagreement with arbitrator’s interpretation is insufficient to vacate |
| Proper remedy under § 10-3-12 when arbitrator errs on law | Berkshire: vacatur appropriate because arbitrator erred as a matter of law | Bilray: error of law alone does not meet statutory vacatur grounds absent manifest disregard | Vacatur requires more than error; arbitrator’s decision stood and Superior Court’s vacatur reversed |
Key Cases Cited
- Gustafson v. Max Fish Plumbing & Heating Co., 622 A.2d 450 (R.I. 1993) (holding a subcontractor’s release unambiguously waived claims for labor and materials)
- Prudential Property & Casualty Ins. Co. v. Flynn, 687 A.2d 440 (R.I. 1996) (arbitration awards insulated from ordinary appellate review; manifest disregard standard explained)
- North Providence School Committee v. North Providence Federation of Teachers, 945 A.2d 339 (R.I. 2008) (strong public policy favoring finality of arbitration awards)
- Bradford Dyeing Assn., Inc. v. J. Stog Tech GMBH, 765 A.2d 1226 (R.I. 2001) (noting mistake of law is not a statutory ground for vacating an arbitration award)