WEST RAC CONTRACTING CORP. v. SAPTHAGIRI, LLC (L-7918-20, BERGEN COUNTY AND STATEWIDE), A-2355-20

Background

West Rac was the construction manager for a hotel under multiple Contract Agreements and a December 21, 2017 GMP Rider that set a Guaranteed Maximum Price (GMP) and provided that if the construction phase was delayed through no fault of West Rac, it was entitled to additional/extended general conditions it incurred.
The agreements allowed change orders to adjust the GMP and contract time; several change orders extended completion dates and raised the GMP. The project substantially completed April 30, 2020 (original completion date May 8, 2019).
West Rac demanded arbitration for roughly seven months of delay-related increased costs; AAA rules applied. No verbatim arbitration transcript exists. The arbitrator awarded West Rac a net $551,518.71 after crediting earlier protested payments and disallowing some claims under the consequential-damages waiver.
Sapthagiri asked the arbitrator to reserve defendant’s rights to pursue indemnity and certain related‑party claims; the arbitrator declined to include a reservation. Sapthagiri then filed in state court to vacate the award under the FAA.
The Law Division confirmed the award, denying vacatur (finding the arbitrator construed the contract, did not manifestly disregard the law, permissibly excluded certain live testimony, and showed no evident partiality). The Appellate Division affirmed.

Issues

Issue	West Rac (Plaintiff) Argument	Sapthagiri (Defendant) Argument	Held
Whether the arbitrator manifestly disregarded the law or exceeded authority by awarding delay-related costs	Arbitrator interpreted the GMP Rider and change‑order provisions as allowing recovery for general conditions when delay was not West Rac’s fault; award rests on contract construction	Award misinterprets GMP, change orders, and exclusions (off‑site/home office costs and consequential damages waiver), so arbitrator exceeded power or manifestly disregarded law	Denied vacatur — arbitrator arguably construed the contract; deference under Oxford Health means courts do not reweigh contract interpretation errors
Whether arbitrator committed misconduct under 9 U.S.C. § 10(a)(3) by refusing to hear live testimony (architects, delay expert)	Arbitrator accepted defendant’s expert report and allowed argument; he excluded cumulative/irrelevant live testimony because he concluded fault was a legal question under the contract	Exclusion of witnesses denied defendant the chance to prove West Rac caused delays and thus to bar recovery	Denied vacatur — exclusion within arbitrator’s discretion; acceptance of expert report and opportunity to brief preserved a fundamentally fair hearing
Whether arbitrator showed evident partiality under 9 U.S.C. § 10(a)(2)	Rulings adverse to defendant reflect contract interpretation, not bias	Multiple adverse rulings demonstrate evident partiality	Denied vacatur — no circumstances sufficiently suggestive of bias; unfavorable rulings alone do not prove evident partiality
Whether arbitrator exceeded power by declining a reservation of rights and thereby precluding future indemnity/related‑party claims	Nothing in the award or confirmation precludes defendant from litigating those claims later; arbitrator did not decide them on the merits	Arbitrator’s refusal to reserve rights could bar or prejudice future claims	Denied vacatur — the award’s language was dicta and does not preclude litigating indemnity or related‑party claims in other proceedings

Key Cases Cited

Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (arbitral contract construction is highly deferential; courts enforce awards so long as arbitrator arguably construed the contract)
Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (statutory FAA vacatur grounds are exclusive; calls into question manifest‑disregard as independent ground)
Stolt‑Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (arbitrators exceeded authority by deciding class arbitration without agreement)
E. Associated Coal Corp. v. Mine Workers, 531 U.S. 57 (2000) (courts should not overrule arbitrator’s contract constructions)
United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29 (1987) (arbitral errors of fact or law do not justify vacatur absent exceeding powers)
Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504 (2001) (courts should not refuse enforcement for improvident arbitral factfinding)
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (standards for judicial review of arbitration)
Wilko v. Swan, 346 U.S. 427 (1953) (earlier suggestion that manifest disregard might be a vacatur ground)