*1
This appeal may concerns the extent to which a court invali- panel’s an date allegedly award that was based on a mistaken determination of law. The issue arises the context construction-management contract for City an Atlantic hotel and principal casino. The errors of law asserted are that (1) the arbitrators principles failed observe settled of con- by awarding damages tract law contempla- were not in the tion of (2) at the date of the contract and awarded damages profits for lost after the date on project which the was substantially completed. We find that the asserted errors of gross, unmistakable, law were so disregard or manifest applicable judicial law as to warrant invalidation of the award.
I The matter arises out of a construction-management contract into plaintiff, entered Corporation (Perini), Perini defendant, Bay Casino, Inc., Greate Hotel & trading as (Sands). Sands Hotel & purposes Casino For of this appeal, we adopt generally the version of the facts set forth in Perini’s supplemental brief to this Court.
In parent company purchased Sands’s Brighton Brighton experienced Hotel. The had steadily-declining reve- nues for years several purchased before Sands Sands, it. however, trend, was able to making $8,000,000 reverse that an profit during year its operation. Brighton’s first finan- cial troubles had (1) stemmed from several factors: the hotel full boardwalk; (2) block from the there nowas entrance boardwalk; (3) visible from the company poor had a marketing strategy. Sands realized that in order to increase its revenues, it had significant to draw a patrons number from the boardwalk. goal,
To achieve that Sands major decided to undertake July 21, 1983, renovations. On it entered into a construction- *6 partial a of management with Perini for renovation agreement agreement, the of the the hotel and casino. Under terms manager to coor- responsibilities as construction were Perini’s architect, supervise the the and the owner’s dinate with owner contractors, guaranteed price maximum for the and set a trade $600,000 exchange $16,800,000)in for a fee project (originally expenses. If the cost of the for actual plus reimbursement $20,000,000, entitled to four Perini would be project exceeded $20,000,000in the addition the percent project of costs over continuously open The casino were agreed upon fee. hotel and throughout partial-renovation project. operating the and (1) component parts: expansion of project The had several area; (2) existing gaming of a new food casino creation the court; (3) and of the nineteenth and twentieth floors renovation twenty-first of a new house an executive the addition floor suites; (4) luxury “high-roller” of and creation plaza club seven building of at the southeast corner the an additional entrance $400,000 entrance); (5) (the park and the creation a new ornamental, glass non-functional facade located outside wall, which faces the Sands described east boardwalk. glass side of the glitzy a facade on the east latter as “new category of building might magnet as a to lure a new which act and walk might leave boardwalk customers —strollers who from to the Sands.” long block the beach completion no date and no “time-of- contained contract parties entered into the At the time the the-essence” clause. contract, completed plans, architect had the owner’s concedes that would drawings, specifications. and Sands impossible completion fix date at the date a have been thus, time a provided that contracting; the contract “[a]t * * * established, [p]rice [mjaximum [guaranteed [d]ate [pjroject also be estab- [completion shall [substantial lished.” completion” as “the date defines “substantial The contract * * * sufficiently complete so the
when construction [o]wner designated portion occupy [p]roject can or utilize the thereof for it is for use which intended.” Perini asserts that completion” is “substantial a term art in the construction industry significance uniformly-understood per- with related to formance, warranties, payment, damages. signifi- Most cantly, prevailing under damages it asserts that law no delay may completion. awarded after substantial be
As did previously, completion noted the contract not contain a date because that date was to fixed at the time that guaranteed However, price maximum was established. when guaranteed price (originally $16,800,- maximum was set $24,000,000), completion later increased to a substantial *7 placed date had been in not the contract. agree
Sands ultimately May contends that the did to 31, 1984, completion as the for project. substantial date the The record comple- before the Court shows that the contractual Jersey tion dates submitted to the New Casino Control Commis- required completion sion of the project’s substantial three main (the components casino, expansion of the the construction suites, “high-roller” park entrance) seven and the new on or 1, Significantly, before June 1984. Sands informed Perini that postpone would project the until 1985 Perini were unable complete project the before the of the start summer season.
Perini argues project that the entire portions and various completion, thereof reached substantial as defined the con- tract, court, 17, as April 1984; follows: casino and food new facade, 31, park 1984; suites, August entrance and September 14, 1984; 14, project, September and the entire 1984. Perini disputes no contends that one that the revenue-producing por- expanded gaming tions the work—the casino area and open operational food courts—were and Day before Memorial and that Perini was entitled an excusable extension completion “high-roller” 22, date for the August suites until Therefore, practical purposes, argues 1984. all Perini only delay alleged Sands’s claim delay, related to an four-month 1984, comple- through August in the substantial May from project had reached glass After the entire tion of facade. completion Perini claims September on substantial meaning of substantial keeping with the term-of-art “punch warranty list” work remained completion, only However, sought to terminate completed at the site. Sands 21, 1984, an despite by letter dated December the contract could not terminate provision contractual that it asserted completion. substantial contract after contract, Perini purported After Sands’s termination Court, Chancery County, Superior Atlantic brought suit in sought declaratory judgment Sands Perini Division. project the contract after the renovation could terminate cross-action, completion. On Sands’s had reached substantial issue, any as well as that the termination the court determined matters, subject arbitration under disputed were other contract. to the arbitrators: three issues
Perini and Sands submitted (2) alleged Sands; (1) contract balances profit damages lost Perini; (3) wrongful the contract termination due vote, attorney-arbitrator dis- By a two-to-one with Sands. $14,500,000 damages over senting, panel Sands awarded explicitly the profits. failed to decide for lost The arbitrators power to terminate Perini’s had the issue of whether Sands During the arbitration completion. contract after substantial *8 stipulated Perini receive that would proceedings the $300,000 plus as its contract balance. interest in the Chan- judicial confirmation of the award sought
Sands Perini Division, sought to the award. Perini vacate cery while Division, Chancery not all variety issues to the presented a of subject appeal. this Because made the of of have been which of primarily question grant certification to the limited our of we briefly Chancery law, to the Division of we advert but mistake competent argued had been no proceeding. Perini that there However, to sustain the award. before the arbitrators evidence award, respect damage court there the found with the competent evidence “which was before the arbitrators from they reasonably they could have concluded as did.”
Next, Chancery the Division addressed the issue of lost Although profits. expressing damages concern about the September through awarded from end December Chancery judge concluded the arbitrators had not gross committed kind of clear disregard “the mistake or applicable required law that is to overturn an award.” unreported decision,
In an the Appellate Division affirmed. clearly It held that the arbitrators had not been as a mistaken matter of thus law and refused vacate the award. The court enough presented found that evidence had been to the arbitra- tors to profits allow them conclude that lost were reason- ably-foreseeable event of the breach of the Further- contract. more, presented the evidence was sufficient to ensure that the damages profit speculative lost were not nature. Appellate Division looked at a number factors reaching First, a decision on the completion substantial issue. it reviewed evidence of construction conditions around the during precluded casino entrance fall 1984 that access to prevented the casino and “beneficial use” of the entrance. Second, steps leading it noted that the concrete to the new repoured during entrance had to be the fall. Based on those factors the court found that “there is from evidence which the complete job arbitrators could conclude Perini did not as required the contract until beyond December well projected completion May time of the end of 1984.”
The court found also was manifestly award unjust, noting price $24,000,000, that the actual contract $14,500,000 profits thus disproportionate lost was not price. to the actual contract granted certification, (1991),
We
127 N.J.
489 equivalent principle that mistakes of law are the validity of the (3) means; disproportionality of the arbitra- of undue Appellate judgment of the We now affirm the tion award. Division.
II A. changed significant arbitration have
Judicial attitudes about of the arbitral Although originally there was mistrust ly. replaced by strong judicial has process, that attitude been Corp. Keating, In v. to arbitration. Southland commitment 852, 859-60, 1, 13-14, 79 13-14 104 L.Ed.2d 465 U.S. S.Ct. (1984), historic reluctance of Burger traced the Chief Justice antipathy be support to the ancient the courts to agree specific performance of arbitration equity and tween swept away by judicial all but ments. That reluctance has been English courts for recognition jealousy the mindless yield to the needs of a modern jurisdiction must their own litigation. Our society develop desirable alternatives strengthen systems that encour principles should guiding litigation, not weaken them. See age those alternatives Stamato, Com Dispute M. Linda Resolution: Sanford Jaffe & 1983) (Jan. (unpub and the Courts plementary Programs Office of the paper from the Administrative lished available Courts). adoption of the hostile Jersey realized that
The New courts detri- English courts could have been displayed attitude Thus, long our courts have judicial system. mental to our proceedings as an alternative encouraged the use of arbitration Boskey, History B. A Commercial forum. See James (1976). I, Jersey Part 8 Rut.-Cam.L.J. in New Arbitration a statute that codified Jersey enacted early As as New statute at 8. That arbitration English common law. Id. today. is still in existence See in 1923 and was reformed 2A:24-1 to -11. N.J.S.A. *10 “ ‘(1)
Arbitration has defined as follows: It is the been (2) voluntary dispute by parties of a reference the an parties (3) agree by arbitrator or chosen the the arbitrators who ” Co., will and binding.’ decision be final Levine v. & 97 Wiss 242, 257, (O’Hern, (1984) J., .2d dissenting) 478 A 397 N.J. Jr., (quoting Simpson, Arthur J. Judicial Arbitration Whither (Mar. 1982) Jersey (unpublished manuscript 12 New avail Library)). from the able State Associates,
In Barcon
Tri-County Asphalt Corp.,
Inc. v.
86
(1981),
430 2d 214
explained
N.J.
A.
we
“[arbitration
substitution,
‘a
by
parties,
consent of the
of another tribunal
law,’
provided by
ordinary processes
for the tribunal
the
and
object
disposition,
final
speedy, inexpensive,
its
‘the
a
manner,
expeditious
perhaps
and
less formal
of the contro
”
parties.’
versial differences
between
Id. at
430 A.2d
(quoting
Eng’g
City
City,
Eastern
v.
Co.
Ocean
508, 510-11,
(Sup.Ct.1933)).
N.J.Misc.
Any party can submit a matter to arbitration. Our provides: persons Arbitration Act by agree “Two or more their writing may controversy ment submit to a exist * * ing them at agreement between time of the agree procedures 2A:24-2. Parties can N.J.S.A. follow the by (AAA), established the American Arbitration Association format, which contain trial-type they agree the usual or can any type procedure other dispute. to resolve the In this case, agreed to Industry follow Construction rules, Arbitration rules the AAA. Under those a national panel of construction arbitrators is established and maintained. Also, those rules a pre-hearing prelimi allow conference nary hearing, prescribe qualifications of the arbitrators and thereof, the number and establish the order and tenor of the proceedings. specific do require rules format They only award. state award in writing shall be “[t]he signed and shall be either the sole arbitrator or at least a if majority there more than Most significantly, one.” grant provide may any remedy rules arbitrator “[t]he the terms of the just equitable relief which is within parties.” agreement of the entered, any party an arbitration award has been
Once may confirmation of the award with the to the arbitration seek decision. court within three months of the arbitrators’ N.J.S.A. “the award is 2A:24-7. The award will be confirmed unless law, vacated, As at common modified or corrected.” Ibid. permitting an narrowly statute defines the circumstances arbi are as tration award to be vacated. Those reasons follows: fraud or undue means; a. Where the award was by corruption, procured *11 in the Where there was either evident or arbitrators, b. partiality corruption or thereof; any guilty refusing c. the arbitrators were of misconduct Where postpone being refusing hearing, or in to hear therefor, the sufficient cause shown upon of other and material to the or misbehav- evidence, controversy, any pertinent rights prejudicial iors any party; exceeded or so executed their d. Where arbitrators imperfectly powers subject matter submitted was that a final and definite award mutual, upon not made. [N.J.S.A. 2A:24-8.] shall refer to them as a and d are relevant here and we Sections powers” provisions, and the “exceeded their the “undue means” respectively.
B.
Obviously a
of law is not one of the stated
mistake
Nor, indeed,
vacating
sufficiency
grounds for
an award.
given
content must
to those statu
the evidence. But some
Thus,
may not make an
tory-review provisions.
arbitrators
wholly
support. McHugh Inc.
that is
bereft of evidential
award
147-48,
141,
Co.,
N.J.Super.
Our case law
Associates,
errors of law. In Barcón
judicial review of arbitral
“
decide both the facts and the
the Court said that
‘[arbitrators
”
law,’
(quoting Daly
430
214
v. Komline-
86 N.J. at
A.2d
175, 178,
(1963)).
37
Eng’g Corp., 40
191 A.2d
N.J.
Sanderson
However, Between Grover and Universal
In re Arbitration
221, 230-31,
Co.,
the statement of the
where the arbitrator
arbitrator;
or it is
itself,
and the mistake is
on the face
the award
fact,
apparent
57 A. 2d
[Id.
admitted
the arbitrator
himself.
641-42,
20.]
“[o]rdinarily,
explained
Heher
further that
a mistake
Justice
resulting
or fact is not fatal unless there is a
error
law
gross
suggest
as to
fraud or
failure of intent or the error
so
misconduct." Id. at
Although
phrase
court decisions have used the
“undue
lower
law,
only
Jersey
means” to connote a mistake of
New
Supreme
equating a mistake of law with undue
Court case
Co.,
means is Perez American Bankers Insurance
81 N.J.
v.
*12
415,
(1979).
Grover,
opinion,
citing
in
Later,
99,
Faherty,
in
97
493
Jersey
follow New
the arbitrator had failed to
section because
granting alimony to the wife after she had remarried.
law in
Co.,
Ins.
179
Risks Ins. Co. v. Allstate
See also Selected
(vacating
(App.Div.)
arbitrators’
N.J.Super.
There is statutory sections. Suffice it to observe under either of those interpret parties intend that their contract be “[w]hen law, authority is ed in accordance with the arbitrator’s] [the being carrying out that intent.” circumscribed limited to 208, 217, Kearny Kearny, Local #21 v. Town 81 N.J. Pba case, (1979). disagree that In this Sands does not 405 A.2d remedy interpret intended to the contract the arbitrators Specifically, stated in accordance with law. Sands breach * * * apply the law and arbitrators did intend to “[t]he legal princi firmly supported by applicable their award is intend, however, that the arbitrators be ples.” We do not appellate judges subject or that their decisions be to the same judges. supervision as those question scope judicial is the review. Even
The real
sector,
latitude to resolve
public
in the
have broad
arbitrators
public-sector
interpreting
In
questions of law when
contracts.
“is limited to determin
scope
judicial
review
arbitration
lan
ing
interpretation
or not the
of the contractual
whether
#21,
reasonably
Kearny PBA Local
guage is
debatable.”
Surely,
private
in the
supra, 81
Social N.J. private may explicitly sector authorize the arbitrator issues”). legal decide having
Whether arbitrators viewed as acted means,” having powers,” with “undue “exceeded their go judicial inquiry beyond must for mere search mistakes of otherwise, simply law. Were we to decide arbitration would private, non-jury scope become another form of trial. A an review allows arbitration decision to stand when the interpretation reasonably of law is debatable is consistent with Held, the earlier formulation set forth in supra, 136 N.J.L. requires 2d 20. 57 A. That formulation the arbitrators clearly according law, must have intended to decide must rule, clearly legal mistaken the and that mistake must addition, appear error, on the In face the award. to be fatal, gross must result a failure of intent or so as to suggest fraud or misconduct. scope
That
of review is consistent with formulations found in
jurisdictions.1
example,
other
For
under New York law an
though
award “will
be vacated even
the court
interpretation
concludes
agreement
[the arbitrator’s]
* * * misapplies
law,
substantive rules
unless it is violative
strong
irrational,
public policy,
totally
or is
or exceeds a
specifically
power.”
enumerated limitation on [the arbitrator’s]
Coats,
In re Arbitration Between Silverman and Benmor
Inc.,
774, 779,
61 N.Y.2d
461
N.Y.S.2d
N.E.2d
(1984).
Illinois,
“[g]ross
In
judgment
even
errors of
in law
gross
grounds
or a
mistake of fact are not
vacating
an
Act,
1 Although
Jersey
adopted
New
has not
the Uniform Arbitration
see
Act,
Jurisdictions,
(1956) (UAA),
Arbitration
Table of
7 U.L.A.
Uniform
provisions pertinent
setting
here for
aside an award under our law are similar
Thus,
to those under the UAA.
we look to the decisions of
UAA
several
jurisdictions
UAA,
jurisdictions,
adopted
as well as
that have not
reaching our decision.
*14
award unless the mistakes or
are apparent upon
errors
the face
377,
Corp.,
award.” Rauh v.
143
Prods.
III.2d
Rockford
523, 531,
636,
(1991).
158 Ill.Dec.
574 N.E.2d
644
California,
binding
In
an
where
arbitrator’s award is “made
*
**
by the
legal
contract
and the
issue
its
concerns
construc
tion, only
egregious enough
a
of
mistake
law
to amount
an
arbitrary remaking
cognizable.”
of
judicially
that contract is
Superior
Gas and Elec.
v.Co.
Court
Sutter Coun
Pacific
of
428,
Cal.App.3d
694, 701,
234
ty,
Cal.Rptr.
granted,
277
cert.
765,
(1991).
Cal.Rptr.
Celtech,
281
Although
ground
the bounds of this
have never
defined,
been
means
clearly
Siegel
misunderstanding
v. Titan
than
or
moré
error
with
law.
respect
(2d Cir.1985);
Indus.
F.2d
v.
572 F.2d
779
Krasner,
891,
892-93
Corp.,
Drayer
496
denied,
(2d Cir.),
791
98 S.Ct.
56 L.Ed.2d
cert.
U.S.
2855,
436
948,
352
348,
Converters, Inc.,
(2d
Stavborg
500 F.2d 424,
432
Metal
(1978);
v. National
I/S
being
Cir.1974).
obvious and capable
readily
The error must have been
average
to serve as an arbitrator.
person qualified
instantly perceived by
“disregard”
the arbitrator appreciates
the term
Moreover,
implies
ignore
legal
governing
no
but decides
pay
of a
principle
existence
clearly
Textron,
Company
Aerospace
Inc. Local
Division
v.
to it. Bell
attention
grounds,
516,
F.Supp.
(W.D.N.Y.1973),
rev’d on other
500 F.2d
356
356
354,
judicial
(2d Cir.1974).
review would be to
a less strict standard
921
To adopt
method of
to arbitration as a favored
undermine our well established deference
United Steelworkers v.
settling
agreed
when
parties.
disputes
Co.,
Manufacturing
80 S.Ct.
American
U.S.
1343,
363
Co.,
Navigation
363 U.S.
(1960);
&
United Steelworkers v. Warrior Gulf
Enterprise Wheel
(1960);
United Steelworkers v.
S.Ct.
L.Ed.2d
*15
(1960);
Corp.,
Saxis
4
1424
363 U.S.
S.Ct.
80
L.Ed.2d
& Car
593,
1358,
Traders, Inc.,
(2d
Steamship
375 F.
2d 577
Co. v.
International
Multifacs
Cir.1967).
disregard”
“manifest
standard is there
Judicial
under the
inquiry
ignored
governing
alleged to
been
limited. The
law
fore extremely
We are not at
defined,
clearly
arbitrators must be well
explicit,
applicable.
arguable
of an
an arbitration
award because
to set aside
panel’s
liberty
urged
regarding
meaning
of laws
it.
upon
difference
applicability
Bobker,
Pierce,
Smith,
Lynch,
v.
808 F.2d
Fenner &
Inc.
933-34
930,
[Merrill
(2d Cir.1986).]
reviewing
short,
the courts in
arbitration
In
“the role of
153,
limited.” Local
&
extremely
awards
Office Profession
Jersey,
Trust
New
N.J.
Employees
al
Int’l Union v.
Co. of
105
448,
(1987).
appellate
442,
We sit not as an
court
Rather, process strength we believe that the arbitration by having judicial ened a limited reservoir of Faherty, review. supra, good 477 A. 2d example. N.J. is a To let would, alimony face, stand an award of on its violate New Jersey’s statutory policy public law and would undermine confi dence in system arbitration as a of complementary credible dispute resolution. judicial We confident that the limited contemplate strengthen, review that we will rather than weak en, such litigation. surprising, alternatives to It is not in view very large money sums of involved this case and the theory damages accepted by unusual panel, this arbitration party judicial that the arbitral would seek review.
Ill turn application principles We now to the of those to the facts alleges this case. Perini that several mistakes of law in this clear, substantial, arbitration were highly prejudicial. We shall address each. *16 damages profits
1. Was it a mistake to award for lost in contemplation parties were not of the at the date of contract? Baxendale, 341, Hadley
Since v. 9 Ex. 156 Eng.Rep. 145 (1854),lawyers judges pondered have the difficult issue of harnessing concept expectation damages. Should the delay in transit of a grist crankshaft needed to drive a mill have caused a common carrier to profits be liable for the lost of the consequential damages mill? The rule of is said to have been rapidly-expanding devised to meet the demands a market 498 part of origins, it is a settled the doctrine’s
society. Whatever landscape. legal our good designed injured damages in as ‘to party put “Compensatory rendered as had if had been promised.’ as he would have performance
position
(1951).”
Contracts
upon
5
What
Corbin,
992,
position
depends
5
§
p.
the defendant
is not
It follows that
reasonably expected.
what
parties
chargeable
as
result
did not
reason to foresee
a probable
for loss that he
have
9 Ex.
Baxendale,
v.
341,
was made.
Hadley
when the contract
breach
(E.
Binninger,
(1854);
Eng.Rep.
v.
33 N.J.L.
513
& A.
accord Crater
145
156
1869).
language
in
for this
is:
Hadley
proposition
oft-quoted
of them has broken,
made a
which one
contract,
two
have
Where
parties
ought
damages
in
of such
receive,
the other
to
respect
which
party
arising
considered either
naturally,
should be such as
breach,
may fairly
things,
according
breach of contract
course of
from such
i.e.,
to the usual
to have been in the contempla
or such as
be supposed
itself,
may reasonably
as the
result
contract,
time
made the
probable
tion of both
at the
they
parties
v.
Eng.Rep.
151] [Donovan
Ex. at
156
354,
of the breach of it.
[9
omitted)
(1982) (footnote
160
Bachstadt,
N.J.
453 A.2d
434, 444-45,
(citations omitted).]
category
consequential
profits fall under the
Lost
Corp., 166 N.J.Su
v.
States Steel
Seaman United
damages.
denied,
N.J.
per.
400 A.2d (App.Div.),
certif.
Farnsworth,
Contracts
(1979);
E. Allan
Perini that lost significantly of contract most because at the time precise remedies [cjontract in their parties “specified by the side.” Perini of a other the event breach available (construction manager agrees points contract clauses 12.1.1 owner), (owner required purchase property 12.4 indemnify insurance), (owner may good obligations on con make 13.2.1 (where perform), and construc manager 13.2.2 struction fails perform under the circumstances manager fails to duties tion construction described, may employment terminate owner argument. party Had either contem manager) support of its argues, provision damages profits, Perini plated for lost example, For Sands included in the contract. have been would liquidated damages clause the contract placed a would have As included a “time-of-the-essence” clause. or it would *17 noted, one liquidated damages commentator has clauses included in construction “predetermined contracts as a assess- damages ment of compensatory substantially failure to complete the project construction the within contract time.” Siegfried, Steven M-. Introduction to Construction Law 8.03(d) (1987) (hereinafter Siegfried). §
Furthermore, Perini argues accepted that it not would have Thus, great $600,000. such a risk for the minimal fee of Perini argues parties profits that because the did not mention lost as a remedy completion, profits in the case of late lost be cannot awarded, profits and therefore award the of lost not in Also, accordance with the terms of the contract. Perini con- anticipated tends that the not could that the failure non-functional, complete facade lead ornamental could damages profits of millions of Finally, dollars. even if lost contemplated by parties, were they the to allo- did intend cate the risk loss to Perini.
However, testimony personnel clearly Sands’s estab- profits attracting lished that intended to Sands increase its more patrons Certainly, from the boardwalk. Perini had aware of Sands’s motive at time it entered into the contract. Also, importance timely Sands completion stressed of the project. On numerous occasions Sands informed Perini that it completed project prior beginning wished to have the to the season, industry’s summer busiest Peri- casino season. ni projected completion aware was well date. In an 26, memorandum, September inter-office dated Perini’s project manager projected completion wrote: “The is June date 15,1984, days is 12 beyond required completion which work May Furthermore, date on 1984.” Perini Sands knew that delay project completed would construction if could not be by May Thus, appears 1984. that the arbitrators had more enough than evidence to conclude that Perini was that its aware complete failure project timely in a lead to fashion could significant fact, loss of In income. a letter written on June Weidner, 1984, by president, specifically William Sands’s *18 damages. Perini that intended to seek Certain- informed Sands them, the arbitrators ly, on the evidence submitted to based damages reasonably were fore- could have concluded that the Thus, alleged law fail. first mistake of must seeable. Perini’s profits damages 2. for lost after Was it a mistake to award substantially project completed? the date when the A. profits Septem- from argues
Perini that if the award lost stand, through 1984 is allowed to the well- ber December damages comple- established rule that limits after substantial parties agreed that tion will be violated because the substantial completion project September of the occurred on 1984. meaning a in the completion has definite Substantial Amicus, industry. Associated General Contrac construction (AGCA), into tors of America tells us the contract entered substantially the same as Doc Perini and Sands is AGCA on forms ument No. which in turn modeled distributed (AIA). AIA by the American Institute of Architects Those industry. widely forms in the Justin used construction Sweet, Industry Major on Contracts: Sweet Construction Sweet). AIA (1987) (hereinafter Documents § 1.1 The defini appears in the completion tion substantial contract reads [completion as “The of the follows: date of [substantial designated [p]roject portion or a thereof is date when complete significantly construction is in accordance with the [d]rawings [specifications occupy so can or the [o]wner portion [p]roject designated utilize the thereof for the use for According Sweet, is intended.” the AIA which it Professor bargains as completion defines substantial “what the owner for, completed required mostly project a within the time.” Sweet, supra, gener 16.15. Professor Sweet also notes that § contractor, ally requires clause AIA contracts contain a completion, comprehensive on to submit “a list of substantial completed generally items to be or corrected.” That is known list.” Ibid. “punch Although clause specific as described here, was not included in the contract by Professor Sweet completion link to punch list and its substantial definition list helpful analysis. Generally, punch our will completion the final includes those items that restrict ¶ Law 7.09 Stein, at 7-78 Construction project. Steven G.M. Stein). (1991) (hereinafter completion is factor that is indicative of substantial
Another occupancy by municipality, the issuance of a certificate Id. at 7-77. When an normally by building department. its *19 attempts liquidated damages, a “certificate of owner to assess occupancy arguably should determine the date of substantial completion.” Ibid. brief, its amicus argues
In that substantial AGCA doctrine of completion in construction law and common-law different, clearly stating performance are without substantial purported appears difference. It consequence of that in the construction indus completion is a term used substantial the contract. try portion the time commitment measure case, Sweet, supra, any 17.4. In the definition of substantial § completion by is similar to the definition used Es See Jardine by the courts. performance used substantial tates, N.J.Super. 332, 337, Corp., Inc. v. Donna Brook 42 126 papers the case law (App.Div.1956). 372 Perini its A.2d Construction-industry authori interchangeably. use the terms interchangeably. agree courts use the terms ties Stein, supra, 116.07[3] & n. 13 at 6-18.
B. previously, Perini contends that substantial As noted by mid-September and therefore ly completed project profits from that date to the date of for lost should be liable Perini, According the award 1984. termination December approximately period amounted to profits of lost for 502
$4,000,000.2 industry Construction agree treatises with Perini. Siegfried states: The doctrine of substantial can be used as a defense to a breach performance project of contract action for failure to within the contract time. In complete agreed, damages fact, otherwise is not specifically liquidated unless provision [Sieg- enforceable of substantial period beyond point completion. supra,
fried, § 8.05.] out, points As Williston commonly, most the courts have applied the performance doctrine of substantial to cases that building involve contracts. The doctrine interpreted has been to allow a builder substantially performed who has a contract to price recover the full under the contract any damages less suffered the owner due to the builder’s breach. 6 Williston on Contracts (3d 1962). 842 ed. generally That rule § followed in most 3A Corbin on Con- jurisdictions. American tracts (1960). § Estates,
The case supra, Jardine law is in accord. In court stated that performance there is substantial of a contract “ ‘where all the essentials necessary to the accomplishment full purposes thing for which the contracted for has been performed constructed are approximation with such an to com- plete performance that the substantially owner obtains what is ” called for 42 N.J.Super. the contract.’ 126 A.2d (quoting Am.Jur., Building and Construction Con- *20 tracts § 42).
In Feeney Bardsley, v. 239, 66 N.J.L. (E. 443 A. 49 & A. 1901), the Court found no error in the charge lower court’s to jury where it stated: though contractor has [I]f his even he has substantially performed contract, failed to do so in some minor he is entitled to recover particulars, the contract good less what will a fair
price, allowance to the to owner make the defects in of the contract. 240, A. at 49 [Id. performance 443.] agrees 2 Sands that the award for that $4,000,000. period approximately That estimate is based on the of Sands’s The amount testimony cannot expert. be determined with because the arbitrators failed to specificity delineate how during much of the total award covered lost profits period.
503
Supplies,
In
v. Terminal Con
Van Dusen
Inc.
Aircraft
(1949),
Court, citing
321,
2d 65
this
Corp., 3 N.J.
70 A.
struction
damages
in
that the “rule of
Feeney approvingly, stated
dicta
substantially completed,
is defective
building
but
where
making good the omitted or
particulars,
is the cost of
some
329,
C. amicus, AGCA, argue that Perini because arbitrators alleg- damages beyond completion date awarded the substantial parties, they departed public from both by the edly admitted (the contract) decisions) private parties’ law (judicial imperfectly their reaching decision and thus executed their 2A:24-8d. powers, in violation N.J.S.A. completion of a assessing damages after substantial
When damages in a manner liquidated have treated project, courts Thus, profits. included to lost we have several similar that of analysis. found liquidated damages cases in our Courts have damages after the owner liquidated may imposed not be the owner has project its beneficial use or put “is able ¶ Stein, at 6-18. The ratio occupancy.” supra, taken 6.07[3] liquidated damages policy otherwise nale behind that damages designed to penalty those become a because would occupancy. Id. at 6-19. approximate an owner’s loss before succinctly limiting damages was liquidated for reason Arcola, Ill.App.3d City v. stated Stone (Ill.App.Ct.1989): N.E.2d 1329 Ill.Dec. on 1983. October Since
The trial court found substantial
completion
project
time to
for the
at the
be used
complete
purpose
was sufficiently
construe
then it
seem
intended,
liquidated
which was
would
appropriate
though
damages
close at
time of substantial
even
compliance,
provision
*21
adjustments,
finishing
remaining.
there
be minor
may
work
After
repairs,
get
if the
logical
all,
contractor can
at substantial
is the
paid
compliance,
damages
time to discontinue the
of the
applicability
clause.
If the
liquidated
contractor
fails to
the additional
work,
owner’s
is to
complete
remedy
someone else
it and sue the contractor
[Id.
to recover the
complete
expense.
1338.]
applied
That rule was
Engineering
Monsen
v.Co. Tami
Githens, Inc.,
241,
N.J.Super.
(App.Div.1987),
Also, in Utica Mutual
DiDonato,
Insurance Co. v.
N.J.Super.
(App.Div.1982),
505
Constr.,
2d
577 So.
County v. Romart
Health Trust
Dade
for six
(Fla.Dist.Ct.App.1991) (liquidated damages awarded
636
complete the
day delay
failing
substantially
ty-eight
Areola, supra,
1329
v.
536 N.E.2d
project);
City
Stone
damages
substantial
only
can
be awarded until
(liquidated
date);
Druggists
Henry
v.
Con
completion
American
Ins. Co.
denied,
Inc.,
(La.Ct.App.) (same), cert.
tracting,
there was evidence for the arbitrators to decide that completion substantial had not September occurred before 1984. The court stated that is not a case from which it “[t]his *23 can be concluded the clearly arbitrators were mistaken as a matter of or law fact on Perini’s failure to substantially com-
plete project by May 31,1984, the or the failure to substantially complete by it December 1984.” finding
Tftat present would not problem otherwise except appeared that Sands agree, although stipulate it did not during the proceeding, completion substantial project of the September 15, had occurred on 1984. For exam- ple, Sands Appellate stated its Division brief: Although a certificate temporary issued for the occupancy suites on * * * being
September 15, work was still done on some of the suites after * * * that date. At the time Perini was there was still terminated, much list” work to “punch be done. Perini never did the list. complete punch It also stated: (and admitted)
While it is true Greate has Bay substantial completion the construction was achieved this did by September 15, 1984, not preclude terminating Greate from Perini. Bay language suggests That that Sands conceded generally that most of the completed 15, work had been by September 1984. language suggest, however, does not fully that Sands conceded either that an consequential award of damages was precluded 15, 1984, after September or that it give intended to expression the completion” “substantial its construction-indus- try meaning. “term-of-art” Obviously, Chancery judge was greatly troubled profits award of September lost after 15, 1984, stating that “the contract was substantially complete problems all the which were applying related as to the summer season were reduced.” transcript that refer references the various
We have verified
15,
For
September
1984.
property after
to the condition
Thanksgiving
that as of
Weidner testified
example, William
Also,
hands.”
full-fledged
on
“had a
disaster
Sands
[its]
elevator,
visible from
glass-enclosed
which was
lighted,
entrance,
park
was
part
of the new
boardwalk
Similarly,
November 1984.
operational until late
completed and
entrance on
glass
at the vehicle
on the
facade
Perini’s work
Perini often had
through the fall.
continued
Indiana Avenue
adjacent to
parked on Indiana Avenue
and/or cranes
trucks
argues,
Thus,
appears,
it
as Sands
new entrance.
park entrance
the fall
occupy
the new
although it was able
continued,
from
greatly
detracted
the renovation work
while
access, disrupt-
building’s appearance, obstructed customer
loss
business.
and contributed
Sands’s
operations,
ed
“rests on
root,
performance
the doctrine of substantial
At its
Corp., supra,
Amerada Hess
of fairness.”
principles
It is intended to avoid
Sands facade, was intended to draw which of an ornamental struction against Sands apply the doctrine casino. To people to the received what it Sands never might inequitable because glass that would attract facade bargained for—an ornamental entirely not appearance was its Such an clientele to casino. could have found 15. The arbitrators by September achieved or unim- not a “mere technical uncompleted work was that the on the doctrine rests Because portant or defect[ ].” ] omissionf it fair award fairness, may have considered the arbitrators in its uncom- be used though the entrance could damages even Bank Minne- Cooley v. First Nat’l Birch pleted state. See 789, (1902)(Rule apolis, 86 Minn. 90 N. W. of substan- performance tial does apply “where deviations from the contract are such that an allowance out of the price contract give would not party essentially other what contracted [it] for.”). argument
Perini’s
also fails to take
possibili
into account the
ty
public’s perception
that the
building during
the Sands
critical summer
significant
months could have
impact
had á
on
operations
Sands’s
in the fall. There was
evidence
the record
concerning
importance
introducing
facility
the renovated
public during
to the
peak
summer season. A Sands execu
tive
image
testified that the
created
City
an Atlantic
casino
in the summer carries
following
Thus,
over into the
months.
directly analogous
the situation is not
to that of a theater
profits
owner whose
project
resume when the
substantially
completed,
Brooner, supra,
Herbert &
499 S. W.2d
or the
retail store owner
operations
who
able to transfer
from one
another,
store to
Hemenway, supra,
Here,
509 appear depart any holding consequential from clear that damages cannot be awarded if the residual effécts of non- period into a performance of contract are carried over when building operational. damages lost to a 3. Was it a mistake award for profits new business? argues project
Perini
that the renovation
amounted to a
Ass’n,
Building
In
and Loan
new business. Weiss v. Revenue
(E.
1936),
116
However,
profits
were
to consider
from the 1984
even
we
business,
as
of a new
the trend
recent cases has
season
those
profits
they
lost
for a new business when
can be
been
award
Dunn,
certainty.
Recovery
Robert L.
proved with reasonable
1987);
(3d
Profits,
4.2
ed.
see also
Damages
Lost
Sea
§
474-75,
(evidence
man,
supra,
N.J.Super.
at
4. Was it a mistake damages to award greatly dispropor-
tionate to Perini’s fee?
An
inadequate
excessive or
arbitration award is not
grounds in and of itself
judicial
to warrant
interference. Gen
erally, there
showing
must be a
good
“misconduct or want of
faith
part
Held,
on the
of the arbitrator.”
supra,
Perini damage $14,000,000 that a award of over is grossly disproportionate $600,000 to the management fee3 it $24,000,000 was to receive under is, therefore, contract and in direct violation of this Court’s recent decision in Dixon Joseph Co., v. Venture Dixon Crucible 122 N.J. 584 A .2d (1991). Perini states that in Dixon this Court was con damage cerned with a award that was price of the contract 16% (in Dixon the contract price same), and the “fee” were the damages whereas the awarded to Sands were of the fee 2400% received Perini.4 differently, Put damage award to Sands twenty-four was times Perini’s damage fee and the award in Dixon was .16 price. times the seller’s liability
Dixon involved
cleanup
of property under the
Environmental Cleanup Responsibility
(ECRA),
Act
N.J.S.A.
13:lK-6 to -13. Generally, under ECRA the seller “will be
subject to absolute liability
regard
without
to fault.” Id. at
232, 584 A
(citing
13:lK-13a).
.2d 797
N.J.S.A.
Because the
seller was not aware of
requirements
ECRA’s
when it entered
argues
$771,000
3 Sands
that Perini’s actual fee was
because it was to receive
price
$20,000,000.
price
However,
4% of the contract
if the
exceeded
in its
Appellate
$600,000.
Division brief Sands states that Perini’s fee for services was
4 Perini’ssituation is somewhat different from those found in the cases that
disproportionate
cases,
damages.
address
In most
the fee received is the same
Here,
price.
$600,-
as
construction-management
the contract
Perini's
fee was
$24,000,000.
price
000 and the contract
might
contract,
concerned that the seller
the Court was
into the
stating
cleanup,
cost of
entire
required
to shoulder the
court resolution
“unqualified adoption of either
trial
that an
might
“unjust
produce an
Appellate Division resolution”
or the
agreed
Appel-
797. We
with the
Id. at
584 A.2d
result.”
under
private right
that a
of action could stand
Division
late
option
ECRA; however,
problem
we
that the
with
found
not been taken
understanding
had
was that
*27
Id. at
into the contract.
they
at the time
entered
into account
party
economic
neither
made an
This case is ECRA, not and thus was aware of its duties under was not Also, liability cleanup. for subject it was the aware clearly Dixon, buyer held facts the could under the agreed purchase property The had buyer either. liable Act, closing occurred effective but the date before Here, hand, the arbitra- effective on other after the date. that Perini enough competent evidence to determine had tors exposure liability profits for at the time its lost aware of contracting. of testimony concerning Sands’s witnesses business; seasonal nature the casino finish need to season; the project before the start of the summer and the fact postponed project that Sands would have until Perini 1985 if complete were unable to it before the start the summer inescapable led to season conclusion that Perini would be for complete timely liable failure to in a fashion. disproportionality argument Perini’s second is based on the (Second) (1979) 351(3) (hereinafter Restatement Contracts § 351(3)). section, Unforeseeability That entitled and Related § Damages, Limitations on states: (3) damages excluding court A limit for foreseeable loss for may recovery allowing
loss of profits, loss incurred in only reliance, recovery justice if it that in concludes the circumstances so in order to otherwise requires 351(3).] avoid disproportionate compensation. [§ section, on Based Perini contends that the doctrine of “disproportionality” allows “a court to avoid extreme unfair- injustice, by limiting consequential ness or damages, awards of particularly profits, lost in a breach contract case even where they argues though Perini that even a conse- foreseeable.” quence may contracting, have been foreseeable at the time of necessarily does not mean intended to allocate *28 the risk of loss one of parties. argument to the That tracks f pertinent comment to which part in states: § justice It is in not the interest of to in always the breach to party require pay damages for all of the foreseeable loss that he has caused. There are unusual in instances which it from the circumstances either that appears the parties assumed that one of them would not bear the risk of loss particular that, although unjust there such was no it would be to the risk on assumption, put that One such an circumstance is extreme party. between the disproportion charged loss and the the whose for that is in price loss party liability suggests The fact that the is small question. price relatively that it was not intended to cover the risk of such liability. [********] (Second) (hereinafter [Restatement (1979) Contracts 351 cmt.f § comment
f)-] argues Perini highly disproportionate that because the award is received, fee the the did intend allocate the risk limit Thus, urges us the Restatement it. Perini to follow damages. merit, f forth
Although argument has comment sets damagé First, states that limitations. the comment several in with likely imposed connection are “more to be limitations Second, setting.” arise in a commercial contracts that do not itself; in and of although appear it does not to be a limitation it, through that follow suggests, the illustrations comment damages likely applied is more that a limitation on where of a “informality dealing, including an absence there is contract, no indicates that there was detailed written which second attempt of the risks.” That to allocate all careful appear applicable here because does not to be limitation containing written contract parties entered into an extensive under cir- damages certain provisions that addressed several dispro- envisions an “extreme Finally, section cumstances. party price charged by the portion between the loss and the added). (Emphasis liability question.” loss for that whose 351(3) dicta; fewer still cases have mentioned Few § damages. those limiting Of actually relied on that section 351(3), disproportion was have mentioned courts that § greater found in this case. We note substantially than that applied section. Jersey court has that no New 351(3) actually on cases that relied One of the few § Corp. v. SGS Control Servic- Ore & Fertilizer International es, Inc., (S.D.N.Y.1990). That court looked at F.Supp. f in comment and concluded factors mentioned the several 16,000 by the were times damages sought plaintiff, which price, disproportionate. fee were greater than contract damages sought were and the charged by defendant $150 conclusion, reaching the court Id. at 257. $2,400,000.5 In its First, parties had reached factors. also relied on the other pleadings damage on the and that award was based court noted that the 5 The *29 damages might be much lower. the actual 514 agreement telephone
their over the and the conversation was any a confirmed telex that was devoid of statement of liability. Second, parties' dealings Ibid. the informal price attempt low contract no indicated that there had been However, all allocate of risks. Ibid. the court did allow recovery fifty percent profits theory of of the lost on a of negligent misrepresentation. Id. at 258-60. disproportionality
Perini contends that the
doctrine has been
“implicitly
explicitly”
Jersey
discussed
the New
courts.6
Seaman,
467,
90,
supra,
In
N.J.Super.
166
400
the court
A.2d
damage
greater
refused to allow a
that
award
was 207 times
charge
plating.
than
defendant’s
for steel
rea-
court
resulting
profits
soned that the loss of
from breach
had not
foreseeable, explaining
been
that
anticipated
had
defendant
loss,
sought
they
this
it would
“some
assurance that
responsible beyond stipulated
472,
would not be
a
sum.” Id. at
argues
Hajjar Agency,
N.J.Super.
174
(App.Div.
A.2d 436
1980),
denied,
454,
(1981).
85 N.J.
515
real
times the
$58,900
damages.
damages were 200
Those
A .2d 436. Perini
at
416
agent’s fee of
Id.
$300.
estate
case
distinguished
case
a
that
that the Paris court
asserts
from
stating:
setting,
in a strict commercial
might
that
arise
the
in a commercial context,
disproportional
If this case were strictly
perhaps
might
tilt the scales
and their
defendants’
exposure
between
compensation
ity
just
damages.
are not
against
But defendants
an award
consequential
regulated profes
of a trained and carefully
are members
They
businessmen.
[Id.
A.2d
320-21,
436.]
416
affected with
interest.
sion
public
also
meet that measure. See
Perini does not
To be sure
(1991)
500, 518,
Although that would Perini’s forceful, it was well minimal fee is great risk for a such City in the Atlantic casino- high involved stakes aware Sands, of contracting Perini By with industry. construction time Perini risky At the expertise in this endeavor. fered its contract, managed a Perini had Sands entered into City. Considering Atlantic projects in of construction number might bargained for a project, of this Perini the nature clause, Broadway Maintenance damages delay” see “no (1982), .2d or a 447 A Rutgers, N.J. Corp. v. plausible only The damages in the contract. clause liquidated dispute of a conclusion, then, Perini left the resolution is that We cannot third-party non-performance to arbitrators. over manifestly the arbitrators those circumstances say that under New Jer principle of disregarded any applicable unmistakable sey law. decide an fail to for the arbitrators
5. it a mistake Was question wrongful termi- of Sands’s important issue—the to them was submitted of Perini —that nation parties? arbitrators failed to argues that
Finally, Perini wrongfully termi- had question of whether Sands address original proceeding nated Perini. Chancery Division time, Chancery was related judge to that issue. At that found issue was arbitrable under the contract and specifically ordered the arbitrators to address it. The clause required the arbitrators interpret were states: If after substantial of the work final thereof material- completion completion the owner delayed, shall, certification ly and without upon [architect
termination make the contract, of balance due for that [of] payment portion of the work and fully completed accepted. Perini contends that an arbitration award must be set aside if the arbitrators fail presented to address one of the issues to Drinker, them, citing v. Richards 6 N.J.L. 307 (Sup.Ct.1796). question The in that case was whether the issue of costs previous a proceeding had been submitted to a and, panel, so, successive arbitration if whether to had decide the issue. The court stated: according That the award must be to the and must submission, comprehend all matters is contained, therein a rule laid down as all the law, authoritative by * * * * * * subject. writers reason for the is upon [The rule] [to fulfill] object making object] of the in a [t]he submission, is to have a [that final settlement of matter within its every terms, and this comprehended purpose defeated when the arbitrators exclude from their consideration and decision any between the [Id.
portion at questions parties. 319.] Addis, Accord v. Hazen N.J.L. 14 (Sup.Ct.1834). 336-37 argues Perini the arbitrators failed to address the issue expressly termination either or impliedly. Chancery The award; Division implicit found that it was in Appellate Division did not specifically address the issue. is authority suggest
There do arbitrators not have to reasoning set forth their expressly every on each and issue submitted. finding need be an [T]here not on each if express all particular point, included either for the expressly by necessary implication, duty arbitrators generally satisfied if find ordinarily such a as they way substantially cover all embraced in the questions submission which have been presented Am.Jur.2d, them and not withdrawn Arbitration parties. [5 (1962) (footnote omitted).]
Award 136 § Comm’n, Accord Building Horne v. 222 Miss. 76 So.2d (1954). damages profit lost Sands. Here the arbitrators awarded have found that Perini had satisfacto- The arbitrators could not finding performed wrong- A that Sands had rily the contract. the award. fully discharged Perini would have contradicted properly impliedly determined that Sands had arbitrators discharged Perini.
IV below, magnitude As the courts we are troubled were arbitration, theory particularly this One award. corps of arbitra industry, sophisticated is that a construction just reach result. through the clutter and tors can cut “ disposi ‘final genuinely Parties seek arbitration want a who tion, perhaps less speedy, inexpensive, expeditious manner, of the controversial differences between formal ” Assocs., A. 2d 214 supra, 86 N.J. at Barcon [them].’ 510-11, 167 supra, 11 A. (quoting Eng’g, Eastern N.J.Misc. 522). They want three They simply judges. want three do *32 For who want a all that that connotes. those arbitrators with necessary many-tiered preserve it is those process, review challenging rights. persistence Perini’s bitter in common-law something in the bespeaks less than confidence this award process. arbitral agreement left
Projects magnitude this to the better theory of parties in their The lost by the contract. reached profits used unusual. its profits here was most Sands (when declining industry trend in the an it bucked otherwise have earned over same City) to show what would Atlantic delay dissent- Our period in 1984 but for the caused Perini. below, are members, dissenting ing like the arbitrator however, issue, per- not whether we are The persuaded. per- so could have been suaded whether the arbitrators but any statutory restraints on of the transgressing suaded without powers. statutory arbitral N.J.S.A. 2A:24-8. We find no basis vacate the award. judgment Appellate The Division affirmed. C.J., WILENTZ, concurring. Jersey’s judiciary recently given recogni-
New was national for its in the of complementary dispute tion work field resolu- court-designed tion—the name used in state this for alterna- litigation. given by tives to The award the Center for plan Public Resources for our comprehensive statewide for a justice every designed center in county, to make alternatives litigation disputes. available for the resolution of Center See Resources, 23, 1992) (January Public Press Release at 1. Jersey’s judiciary praise, however, New deserves no for its treatment of most effective and most used extensively litigation alternative to arbitration. Unfortunate- —commercial demonstrates, ly, as the record this judiciary’s case our modern history of anti-arbitration bias continues. Jersey,
In ending dispute, New instead of the arbitration just state, award is beginning; this arbitration is not an litigation alternative to step but rather the first the lawsuit. The in this went through sixty-four days hearings, involving witnesses, twenty-one 10,978 resulting in pages transcripts before arbitrators issued the award Instead, supposed dispute. that was to end their what followed years litigation, level, was three-and-a-half first at the trial Division, Appellate then before the before now this Court. produced The arbitration one decision that could fit two on pages. litigation The produced has judicial opinions, five ex- cluding concurrence, totaling this over fifty pages. one hundred litigation produced has finality, also with this Court’s today, decision years some three-and-a-half after the when date arbitration should produced finality. same Those *33 years spent three-and-a-half trying were to ensure that Jersey arbitrators’ award to conformed New law despite agreement require- such contained no fact that the arbitration Indeed, expressly were authorized to the arbitrators ment. “just equitable.” any remedy or relief that and grant in- precedents, our clear opinion today The follows Court’s improve problem The is that those attempts it to them. deed Their effect wrong. They should overruled. precedents are litigation by subjecting to to arbitration into is convert just legal if the made review to see arbitrators judicial errors — judges arbitration a lawsuit. if were and the as the arbitrators rule, to arbitration statute. one that true our We need new they always intended be what were Arbitration awards should fraud, final, corrup- subject judicial to review absent to be: not tion, part of wrongdoing on the the arbitrators. or similar through a put should not be Parties who choose arbitration the arbitrators commit errors litigation wringer. Whether totally only of fact should be irrelevant. law errors honest, they stay and did are: questions were arbitrators agreement? the bounds of the arbitration within many speed, People generally reasons: choose arbitration they They process and trust economy, finality. and trust reasons, the combination of Whatever the arbitrators. they they because line is the same: choose arbitration bottom simply do want the courts to litigation. They not do want arbitration, parties choose anything to do with it. When at have no role at all. judiciary should aim is to the role that the Instead, has implicit in our treatment been It justice be assured outside courts. notion that cannot intent of those who totally war with the basic is a notion They justice, but disputes to arbitrators. too want their submit process of arbitra- they solely to the look arbitrators right, the courts have no it. That their tion achieve them. right away take it from That is not for us to they get justice from them?
Will better make, theirs alone. When their decision decide. That’s business, they experienced in decide that knowledgeable people, *34 520 judges, they
want arbitrators rather than want arbitrators customs, familiar with their just business and its arbitrators as are, experienced they judges may as rather than who have no all, experience business they when tell us that brand justice ours, is better for them than absolutely right we have no they to tell them that wrong.
(cid:127) advocating precedents overruled, In our this field be nothing this concurrence seeks Jersey radical. New not majority jurisdictions judicial with its rule of review arbitration awards to assure their conformance with state law. If overrule precedents, join we these will we those states that finality accord in fact to the awards of arbitrators. We will judicial abolish a rule and a review that is inconsistent with our statute, public with policy, sound and with the intent of the parties.
I
“Undue Means”
Our state’s modern tradition of overly-intrusive review of
apparently
origin
awards
has its
in Held v. Comfort
Bus, Inc.,
(Sup.Ct.1948).
N.J.L.
. in stark contrast with Held stands *35 decisions, among were which history. The earliest arbitration courts, firmly estab- reported decisions of our state’s the first would, excep- with few awards lished the rule that arbitration Boskey, A B. tions, by the courts. See James upheld I, 8 Jersey, Part Arbitration in New History Commercial of 1, (1976) Arbitration in New 7 Rut.-Cam.L.J. [hereinafter v. Kinsey wrote Moore As Chief Justice Jersey, Part /]. Bowen, (Sup.Ct.1792): 1 169 Ewing & N.J.L. great I them to be arbitrations; I friend to believe frequently I own that am advantage, or and are not to be hastily inconsiderably of real they
productive highest of the with which courts in the manner, liberality set aside. I approve, * * justice proceedings, in modem times *. have reviewed their particularly (cid:127) part on the of the Historically, prejudice and misconduct void which courts would only bases on arbitrators were I, Jersey, New Part Arbitration in awards. See arbitration legislation although Generally, modern arbitration supra, at 7. award, it vacating an arbitration grounds limited does allow aside or will not be set established that an award is well Arbitration Ass’n of law. American for mistakes vacated and the Law Report, Arbitration Annual General Counsel’s explicitly fact, Jersey cases (1988). early In New 32 1987-88 not serve to invalidate arbitra of law would held that mistakes Leslie, N.J.Eq. 50 107-08 v. E.g., awards. Leslie tion (Ch.1872); Ransom, 120 N.J.Eq. (Ch.1892); v. 23 Ruckman recog Those cases Minor, (Sup.Ct.1790). 1 19 v. N.J.L. Smith that arbitrators are nized judges judges of the law as well as chosen they parties, but do so law, on mere may and are not bound to award facts, dry principles good according Nor will courts and conscience. of equity to principles * * * cogent reasons. made, very their decisions when except upon disturb at 120.] N.J.Eq. [Ruckman, supra, overriding
The duty allegiance arbitrator’s is not strict points law, goal producing but the just a fair and decision. long uprightly So as he acts and and within the limits of his impartially, keeps hearing, and neither of a full and fair authority, arbitra- deprives party [the judgments are tor’s] irreversible. He do what no other unimpeachable may judge right has a he decide do; may to law and still intentionally contrary judgment have his stand. [Leslie, supra, at N.J.Eq. 107.] approach permitting judicial reversals for mistakes of grew law out of what was meant to exception be a minor these against judicial otherwise firm rules intervention in the process. according arbitrators mean to [I]f decide to law but mistake the in a law, material and their mistake on the face of respect, appears award, they admit it, award will be set aside because it does not their real express
judgment;
govern
but
in cases where
do not intend to let the law
they
their
judgment,
according
just
right,
but to decide
to their own notions of what is
the courts will not
interfere, but allow their award to stand.
[Id.
108.]
Held,
Unfortunately, following
courts have broadened this
otherwise narrow
exception, leading
“mistake of law”
to a
steady deterioration of the deference
paid
which should be
arbitration decisions.
apparently began
This erosion
with
*36
Pennsylvania
Brooks v.
Co.,
Ass’n Insurance
Manufacturers’
51,
121 N.J.Super.
(App.Div.1972),
296
2d 72
A.
on
modified
583,
grounds,
(1973).
other
62
Brooks,
N.J.
Subsequent relying Brooks, on compounded error, opened floodgates and have judicial review of E.g., arbitration awards. Selected Risks Ins. Co. v. Allstate
523
Co.,
444, 451,
N.J.Super.
Ins.
(App.Div.)
179
where
arbitrator was
is res nova in this
attempting
legal
and the
law,
to,
State,
applicable
question
reviewing
legal
the court
the award is to entertain and decide the merits of the
legitimacy against
and evaluate the award’s
the resolution
involved
question
thereof).
today,
directly
Until
our Court had not
addressed this issue.
While it is true that Brooks this Court modified the
Appellate
judgment,
propriety Division
it did not address the
the lower
exception.
mistake-of-law
The same is true for our
court’s
In re Arbitration Between Grover and Universal
reversal
Co.,
(1979).
Underwriters Insurance
N.J.
award because arbitrator exceeded his
law,
agreement
parties’
Jersey
grant-
New
arbitrator
follow
alimony
remarriage).
ed wife
after
Although
policy
may compel
other
reasons
a different result
arbitration,
public sector
for
matter before us falls within
sector,
private
and we therefore do not
desira
address the
bility
exception
public
of a mistake-of-law
sector arbitration.
County
Communication
Am. v.
See
Workers
Monmouth
Seros.,
450-51,
Bd.
Social
96 N.J.
442,
(1984);
476 .2dA
777
Kearney
Kearney,
PBA Local #21 v. Town
208,
81 N.J.
217,
(1979).
special policy
II Other Jurisdictions According plurality, to the an arbitrator’s “determination of a legal “reasonably issue” is to be sustained it is debatable.” if Ante at 493, Determining A.2d at 371. whether such an legal “reasonably arbitrator’s conclusion is debatable” is a three-step process: (1) according (2) the arbitrators must have intended to decide clearly law; legal must have mistaken the rule and that mistake clearly must on the appear (3) face of the award; to be must result in a error, fatal, failure of gross suggest [Ante intent or be so as to fraud or misconduct. at 493-495,
A.2d at 371-372.] Contrary plurality’s to the assertion that it is in the main stream, 494, ante 610 A .2d at majority the vast jurisdictions adopted have not standards of permis review as three-step as process sive described above. The New York Appeals Court of expressly “[ajbsent provision has stated that contrary agreement, to the in the arbitrators are not * * by principles bound of substantive law *.” Lentine v. Fundaro, 418, 420, 29 N.Y.2d 328 N.Y.S.2d 278 N.E.2d (citations (1972) omitted). That the arbitrators intend according ed to decide may to law and have mistaken the law is
525 irrelevant; an award will not be if vacated even the arbitrator law.” In re Arbitration be “misapplies substantive rules Coats, Inc., 299, tween Silverman & Benmor 61 N.Y.2d 473 774, 1261,1266 (1984)(cited N.E.2d plurali 461 N.Y.S.2d 494, 371). ante ty, put, Simply 610 A. 2d at unless the expressly agreement, state otherwise in their mis arbitration review, judicial takes of law do not serve as a valid basis for regardless of any produced by the arbitrator’s intent or error Lentine, supra, 328 N. 420, failure of that intent. 2d at 278 Y.S. N.E.2d at 635. Court, Superior Gas & Electric v. In Co. Cal.A 234 Pacific
pp.3d Cal.Rptr. 428, 694, granted, review (Ct.App.), 277 712 Cal.Rptr. 765, (1991), 281 810 set P.2d 997 court forth the law, general appearing rule that errors of on even those award, overturning of an justify face arbitration do not Instead, legal only “utterly award. irrational” conclusions will cognizable; appropriate these circumstances the stan “[i]n dard of review is whether the construction of the contract presents egregious such an mistake that it amounts to an remaking arbitrary parties.” of the contract between the 277 Cal.Rptr. at 714. jurisdictions applied upset
Other stricter standards for plurality. E.g., Depart ting adopted by an award than that Inc., Managers, Parks ment & Tourism v. Resort Ark. 294 255, 389, (1988)(reviewing 743 391-92 Uniform Arbitra S.W.2d holding Act and to overturn tion mistakes law insufficient an Group, Jackson Trak Inc. corruption); award absent fraud or Auth., v. Mid Port Kan. 122, 242 States 751 P.2d 127 (1988) law, (holding accompanying fraud that errors without misconduct, award); enough or to set aside arbitration Co., 189,191- Keystone Runewicz v. Ins. 476 Pa. 383 A.2d (1978)(recognizing general rule that arbitrators’ mistakes grounds “showing vacating law not award absent of denial fraud, misconduct, hearing, corruption, irregular or similar of a award”); ity leading unjust, inequitable, an unconscionable Bailey Westfall, & v. 727 S.W (Tex.Ct.App. Williams .2d 1987) setting (stating every error of aside that not law warrants award, “only
an those errors but which result great wrong injustice”). fraud or some and manifest plurality’s analyz result also conflicts federal cases with ing the Federal Arbitration Act. To the extent that federal precedent permits upsetting of an of a award because *39 law,” “mistake of extremely exception it is an narrow to the strong policy against reviewing otherwise federal awards. United Steelworkers Am. v. Warrior & Gulf Nav. Co., 574, 1347, (1960). 363 4 U.S. 80 S.Ct. L.Ed.2d 1409
Apparently,
disregard
the federal “manifest
of the law”
exception,
495-497,
plurality,
cited
at
ante
While “manifest has exception, evolved into an least two federal circuits adopt have declined to it. Robbins v. Day, (11th Cir.1992); 954 F. 2d 683-84 Marshall v. Green Co., (8th Cir.1991); Sec., Giant 942 F.2d O.R. Inc. v. Assocs., Inc., (11th Planning 857 F.2d Professional Cir.1988). among recognized Even those circuits that have however, ground, such a difficulty drawing there has been clear-cut law,” distinction between a “mistake mere which is ground award, disturbing not a an and a “manifest dis- regard Domke, of the law.” Martin Law & Practice of 25.05, (1968). Commercial Arbitration at 261-62 A mani- § disregard fest “rarely practice.” of the law will occur in Id. at 262. Jersey
These
majority
cases confirm that New
is not in
approach
reviewing
its
arbitration awards.
If
review,
obvious from
comparison
the above
of the standards of
it becomes
on examining
plurality’s application
clear
of its
own standard. The
judged
experts
arbitrators here are
not as
industry seeking
solution,
equitable
construction
an
but
jurists
rather as
applying
learned
intricate issues of law. See
497-516,
ante at
clearly
Ill Plurality’s The Unjustifiable Rule: Unworkable and justification subsequent Held and for the cases present judicial rule of review and vacation of arbitration
528 fail to “gross legal errors” is that such awards
awards
Held,
E.g.,
supra, 136
intent of the arbitrators.
effect the
642,
(stating
is not
.2d20
that a mistake
law
at
57 A
N.J.L.
intent”).
resulting
The rule is
there is a
failure
fatal “unless
only if the
authorizing
of the award
expressed as
vacation
Jersey
to decide in accordance with New
intended
arbitrators
Collingswood
so.
only they clearly
then
if
failed
do
law and
Mills,
at
The incorrectness of the analysis
point
on
plurali
this
ty,
cases,
prior
and
our
goes
indeed,
deeper;
goes
to the
problem.
heart of the
The issue is not
what
arbitrators
intended and whether or
intent,
not their decision reflected that
parties
but rather what the
intended to commit to arbitration
they
what
intended
subject
judicial
to
review. See
Kearney
Pba Local
supra,
No.
The analysis that examines the totally arbitrators’ intent is if irrelevant correct rule is that the legally free completely insulate the arbitrators’ I they decision. believe are, indeed, I believe the statute itself achieves that result. *42 law, law, Jersey is any errors of or
Review based on New so only if the so intended. That intent is justified arbitration, opposite goal to the ultimate as unlikely, so justify explicit expression in order to such conse- require its analysis apply to errors of fact. quences. A similar would “gross given justify A error of law” further reason significantly diminishes what would otherwise rule is that it process. Ante judicial intrusion into the arbitration excessive words, justified by it .2d at 371. In other is at A system comparing it with a comparing it with a straw man— if judicial review and vacation of the award that would allow reasoning legal Obviously, that is any error was committed. correct, only comparison that can be made— if that is the bad, rule, certainly present no matter how is better than any for error of law. one that arbitration awards vacate would rule, however, fundamentally “gross The error” is unworkable. Try may, plurality exceedingly finds it difficult as it “gross error of ante at define what is meant law.” See 515-516, praiseworthy attempt to do 610 .2dat 382-383. Its A task, difficulty of the and its result is simply so underlines the plethora of inconsistent formulations be an unfortunate provide helpful of the nature of the matter less than cause distinguish legally erroneous guidance. purports The rule sustained, grossly, from arbitration decisions which will be indubitably, erroneous arbitration decisions which clearly, or Judges adept making such distinctions. not. are not will itself, judges three conclude that there is no Indeed in case this award, others, convinced gross error and sustain the while two mistake, enormity legal would not of the arbitrators’ own, replace it with their simply vacate the award but would original by over four-and-a-half substitute that reduces 524-525, 610 .2d at 387. million dollars. See ante at A difficulty Judges experience sometimes considerable decid- wrong; uncertainty our would escalate were we ing what is degrees very wrong. concept required to decide what us, legal wrongness foreign to it is not our stock-in-trade. Certainly, legal asserted, in some cases where error is courts quite error, capable only recognizing. are but of as, characterizing example, gross either or debatable. cases, Unfortunately, however, here, there many as where easily distinction is *43 not made. We sometimes characterize disagree suggest those who us in with terms that their errors flagrant, just gross, including are not errors the of our col- leagues split when we four-to-three. we And when unanimous- ly wrong, suggest conclude the trial court was often we the question only Indeed, was not extremely debatable but close. is that the any rare characterization makes difference. What counts is whether prejudicial, the error was not whether it was clear, gross, Furthermore, or close. cases in most we have no strength standard other than the of our convictions for own an error is whether clear. Often it is not at all clear to one error, Justice that there is an while three others are convinced clear, crystal the error is and the other three convinced that beyond you doubt there no error. If to these was add difficul- concerning legal judges trying ties error those that will face error, picture system characterize factual the of an unworkable judicial review of awards is clearer. justification the When offered for the rule is that it minimizes judicial (as distinguished interference with arbitration from the justification), analysis “failure intent” a different demon- only unworkability not strates its but it failure achieve its goal: implicit give presumed benefit of New Jersey law and the of a decision conforms benefit to that any why place? law. Otherwise such rule in first have But rule, purpose why if that is the of the deprive then should we rights through legal those who lose their the arbitrators’ error remedy, just crystal of a the error is because clear? appeals litigants
In all of all before us where we reverse for error, give legal legal rights. we do so in order to them I their right, can recall no case in we said appellant which judge wrong, prejudicial, was error is but we will not judge grossly wrong. reverse because the was not What arbitrary legally- number of justification is there to allow some stand, lesser incorrect decisions to but vacate a arbitrators’ gross? If legal errors are fairness and number because law, Jersey justice uniquely found in New we have devised a rule injustice majority, a rule that assures to the we-would apply litigants in the courts. never rule, Obviously, judicial given diminished review is when justification, represents a one’s sense of as the balance between Jersey justice assuming only one believes that New law — brings finality in justice one’s sense of the need for —and irony relegating rights whose have arbitration. The those by legal remedy, vindicating no been defeated error to while gross, may others when the error is that the former grievously damaged by been much more the error. None of the suggests “gross anything cases error” relates to other rule; departs put than the error correct extent the from the differently, suggests “grossness” that the none cases impact parties. measured the ultimate on the *44 judicial justification diminished as the Given interference rule, If, wrong. I believe that the balance struck is in order protect review, willing judicial arbitration from we are debatable, legally sustain erroneous awards that are we should relatively clearly legally sustain even those few that are errone- ous. rule, “gross
Even the admitted benefit of the error” benefi- only against cial when measured the even worse rule of unre- against stricted review and not a at all measured benefit when rule, minimal, I contend is the correct what indeed uncertain. thought greater certainty If that benefit is of as the or likeli- finality, greater parties hood of confidence of the in the finality, period elapse award’s or the shorter of time that must determined, finality before the fact of that is serious- benefit ly any party’s lawyer diluted. It will be the rare event when predict of in will with confidence the outcome a case which one party appealed judiciary has to the from an arbitrator’s award just take as ground “gross legal error.” And it will on the appeal as it if all errors long dispose of those cases on would every For case led to vacation of the arbitrator’s award. quickly finds the error was “undebat- appellate court which able,” only usual many require others that not there will be to deter- if there was error at all but also effort to determine supposedly pure gross. Inevitably if that error mine gross simple be influ- legal error or error —will determination — overall sense of by explicitly a factor not credited—the enced justice injustice the outcome. may ultimately sustaining the award
Finality in the sense of “gross compared error” as to the minimally served be rule, getting finality in the sense of it over “ordinary error” but dispute A during may one’s lifetime not be. will with here, resolved, appearance, is the case not in fact and as by litigation. arbitration but determining legal error in arbitra practical difficulty
The Advest, McCarthy, Inc. v. tion awards is formidable. See (1st Cir.1990) not (noting that arbitration does F. 2d little require a record a record and without required an arbitra meeting the standard to vacate chance legal award). highly error tion refined distinction between gross legal requires error the existence of all and stenographic a trappings appellate judges are used to: record, transcript, objections rulings, applications and to, trial, during, numerous requests by prior and after counsel court, accompanied by opinions, rulings by often briefs argument containing legal contentions and detailed factual and both, finally judgment of the court support findings of fact and conclusions of law. by written supported these, legal error becomes any of the identification Absent record; require more difficult. does even Arbitration *45 nor, case, rules select applicable in this the neither the statute Eules) (Construction Industry parties Arbitration ed American Arbitration Asso requires stenographer. even a Cf. stenographic (stating cost of the that “the ciation Rule record, any made, transcripts thereof, and all shall be if prorated equally parties ordering between the copies”) (empha- added). apply sis To plurality’s rule without such a record require, minimum, would at a basic the re-creation of the proceedings, evidence, everything this case the re-cre- —in sixty-four days ation of hearings. rule, course,
The could legal be that error will not be considered in the record, absence of a but suggests double standard and imposes on they cost that may pursuit want to avoid in their allegedly an expen less sive method of resolving dispute. their The fact that arbitra tors do give not have to they reasons when rulings, make their decision, even reasons for their compounds ultimate identifying difficulties of legal if, errors. And Ias assume is case, question critical simply is not whether there was legal error but prejudicial, whether it was confusion is com pounded. “plain (Rule error” 2:10-2) doctrine likely would apply in order to purposes achieve the the doctrine serves litigation (assuring error-free proceedings by penalizing those who fail to alert it). the court to claiming error See Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. (1981) A. 2d 214 (stating that should arbitrator make full
disclosure, failure object any deemed right waiver later object). Application of (Rule both the 1:7-5) “harmless error” “plain error” doctrines impossible becomes record, with no and even with a record borders on impossible if the arbitra tor simply refuses to rule on instance, motions. For if an arbitrator, response objection an to the introduction of evidence, allows its introduction say but refuses to whether or it, not he will consider explicitly reserving right, one will never know if the arbitrator erroneously considered the evi dence, or if such prejudicial. consideration was
In this case years after four sixty-four days, the arbitra- simply tors awarded million to $14 Sands without any explana- tion whatsoever other finding than a that Perini had “failed to properly perform obligations its as construction manager pur- *46 * * reasons, findings There are no no suant to the contract fact, law, nothing foregoing. than of no of other the conclusions know, concluded that the sun rises For all we the arbitrators flat, west, damages nothing to do with the earth is and conse- foreseeability of or the of the the intentions quences of a breach. sustaining legal suggests it it is
To the extent decision, the conclusions of the correctness of the arbitrator’s questions opinion, discussed in its plurality on the various findings certain of sufficient evidence to sustain there both legal authority to warrant certain conclu- fact and sufficient law, invention, pure simple. The arbitrators sions of is an kind, If findings any legal. factual or an absolutely made no to decide appellate court faced such a record and was asked so, existed, it legal refuse to do for whether error would rulings, impossible judicial would find the task the absence conclusions, supporting findings, judicial all with judicial Instead, promptly remand reasoning. appellate court would findings make of fact the case to the trial court and direct it to and conclusions of law. record, any and the possibility of a total absence
Given findings of likely possibility judgment of a without even more law, practically applied conclusions of the rule cannot fact or of cases. The obstacle to re- at all in a substantial number obvious, especially in an creating the record is arbitration requiring findings of fact and protracted; difficulties of reality no after the is rendered is conclusions law award get the to meet trying less formidable. Besides arbitrators any findings of again, may there never were the truth be that law, simply decision. The or conclusions of there was fact plurali- espoused by the impact of these deficiencies on the rule devastating. analysis applies equal force to the ty is This with “gross for errors of rule that awards will be vacated fact.” consequences of plurality’s opinion is instructive on the
The findings of fact or conclu- legal error where no the search consequences inexorably exist. sions of law Those flow from they logic are not some result of unusual situation — plurality’s reasoning. reviewing court forced to deal practically every with conceivable contention error claimed losing party, try figure if forced to out there was *47 way some the have the arbitrators could reached conclusion they did confronted such a of It when with claim error. is not enough ordinarily review, appellate to do what is done on identify namely, to the for the basis court’s decision and then it, rule on for we do know the not basis for the arbitrator’s question, answer, decision. We ask the as if of it will admit an conclusion, whether there was support “some evidence” to whether there was “sufficient evidence” to sustain the award. question meaningless The almost not since we will know the basis for the arbitrator’s decision. The conclusion there is “some evidence” “sufficient evidence” is not one made in the abstract; it relates quantum quality to the of evidence to support legal theory, support legal a certain to certain conclu- sions, sufficiency it relates to the of the evidence to make those findings fact support legal of that will those conclusions. If were, one does not know what the conclusions of law and one were, is, does know what the conclusions of fact it in most cases, impossible question address of whether evi- dence was sufficient.
IV The the Rule Effect potential plurality’s effect apparent of the rule is from sufficient, losing this case. If the stakes are party invites the court, thereby delaying attack the arbitration award its unpredictable time, finality periods for here around three- years. Accompanying consequence and-a-half is the added parties, undoubtedly cost to the most substantial in this case. I am, any of the unaware existence Jersey statistics New concerning percentage appealed. of arbitration cases now determinations appeals from arbitrators’ My impression is however, occur, they They and when numerous. do are not today by plurality, opinion the kind rendered result in an impact on concern about the substantial there must be may on the score process. doubt Whatever arbitration party an before, crystal clear that a it is now existed persuade if of an award able to can vacation obtain legal existed. When motivations gross court that error a and, encouraged, exist, since delay appeals judiciary to the breast, expect one can in the advocate’s hope springs eternal rule appeals grow. How the Court will number of such record, compelling recreating a or on arbitra- question of on the award, findings fact and tors, to make post-arbitration I no idea. But that there will be of law have conclusions remedy of arbitration as dilution of the effectiveness further is to purpose If line of arbitration I have no the bottom doubt. disputes, the attractiveness keep the courts out of one’s opinion. Even plurality remedy seriously diminished *48 I minimal—which doubt—the impact turns out to be if the the most greatest effect on the cases of opinion have its will conse- significant financial or other importance: cases with number, cases at relatively small those if a quences. Even through parties initially sought the least will lose the benefits certainty. imagine can a finality, speed, and One arbitration: attempted should even be wondering whether arbitration party if sooner arguably case would have been concluded the since judiciary. with the originally been started had extent, rule, greater lesser to a or Finally, the effect of the finality, of their but only deprive arbitration awards not to of the arbitra- parties of the awards deprive the potentially an arbitration award will certainly in some instances tors. For parties. the never intended for reasons be vacated is need- dissent, however, judicial superintendence argues may “off the wall.” ed; decisions be it arbitrators’ that without Obviously potential the cost of 403. 610 A.2d at Post at case, view, the cost in this every point case: after years, justices three-and-a-half three conclude that disagree. the arbitration award was off the wall and two five, however, All precedents: continue bias in our the reflected protect have to community we the business from the arbitrators selected, they have they arbitrators trust. We must review they their decisions to make sure that have not made bad mistake; protect we must community business from the of the speed, finality economy they risks sought from arbitration, years if it delay even costs three-and-a-half legal no Bluntly, one knows how much in though fees. may it, businessmen who selected these arbitrators not know run, superior. long according dissent, we are And in the to the community the business readily will select arbitrators more rule, they this with will readily select arbitrators more when that, needed, they if assured the courts will decide really why they matter. That’s get chose arbitrators —to protection ultimate of judges. question
Ultimately, plurality- is whether the effect of the rule would impose be reversed were suggested we rule by this concurrence. Such rule would insulate arbitration judicial awards from all fraud, corrup- review absence tion, Quite wrongdoing. similar clearly it would achieve finality, in a way plurality’s that the rule cannot. Recourse to nonexistent, fraud, the courts be just corrup- would almost as tion, or wrongdoing similar is almost nonexistent arbitration. recourse, summary judgment When there was would swift attempt gain judicial and sure if the review lacked substance designed really delay, and was for it is most difficult to make showing any of fraud or corruption on affidavits unless there is real substance to the claim.
Y *49 Conformance, The Non-Conformance, Rule’s to Policy, Statute, Public and the Parties’ Intent case, the purposes For of this opinion this has already ade- quately question treated the public policy. of There public is no notion that arbitration would policy supporting of this state by judicial to see better review of arbitration awards be served public policy of this they Jersey if conform to New law. The resolving disputes. supports as a method of state arbitration speed, 2A:24-1 -11. It does so because of the See N.J.S.A. to finality economy, and arbitration awards. and arbitration Assocs., 214. supra, N.J. at 430 A. 2d See Barcon plurality’s dilutes each one those Unfortunately, rule three factors some extent. . favoring has significance public policy of the arbitration
The perception years in recent heightened public fact and been litigation, only to the as understand the cost we Elec., supra, Cal.Rptr. society. Gas & but See Pacific exceedingly judicial process grinds (stating at 712 that “[t]he * * * principle A reason for questions fine as to of law. exceeding selecting using the costs of arbitration is that [these] assurance ly thought not worth the additional fine wheels by judicial process”). afforded examined, pursued, litigation must
Every alternative to proven enhanced, any if has there alternative that itself, import plurality’s The it is commercial arbitration. arbitration, opinion goes beyond but it is sufficient commercial potentially policy purposes impact its public note serious tp filings per million area. annual case now over a With fifty having percent more in the last ten year, increased than delay litigation approaching catastrophic years, and with in civil need reinforce as an effective proportions, we need no rule now remedy, as it was intended to be. We arbitrators, imposing on one that judicial restraint but rather imposes judiciary. on restraint rule
Perhaps the of the failure best demonstration prior con- plurality precedents our adopted —and —to 2A:24-8 and form the the statute itself. N.J.S.A. statute provide -9 as follows: following cases: court vacate the award in any shall *50 by means; procured corruption, a. Where the was fraud award or undue corruption arbitrators, partiality
b. Where there either evident or the or thereof; any guilty refusing postpone Where the of c. arbitrators were misconduct in the hearing, upon therefor, being refusing sufficient cause shown or in to hear evidence, pertinent controversy, any and the or of material to other misbehav- prejudicial rights party; any iors to the imperfectly powers d. Where the or arbitrators exceeded so executed their mutual, upon subject a final and definite award the matter submitted was made. not agreement required anWhen award is vacated and time within the the which discretion, expired, may, the award to be made has not the court in its direct a rehearing by the arbitrators. [N.J.S.A. 2A:24-8.] modify any following The court shall or correct award in cases: figures a. Where there anwas evident miscalculation of or an evident mistake description person, thing therein; property in the of a or referred to upon b. Where the a arbitrators awarded matter not submitted to them unless upon submitted; it affects the merit of the decision the matter imperfect affecting c. Where the award in matter of form not the merits controversy. modify award, The court shall correct to effect the intent thereof and promote justice parties. between [N.J.S.A. 2A:24-9.] any 8a, By reading, fair section source the “undue rule, plurality’s means” defies the construction. The idea that “corruption, or fraud undue means” could converted into a rule that reverses awards for errors of law would be unthink- if persuasive a, able viewed anew. More than subsection however, is the thrust of entire section. It those refers to vacated, cases will result the arbitration being award changed, corrected, rejected. not but As defined statute, they go cases with deficiencies that to the heart of integrity any dispute-resolution process, whether arbitra- judicial. or tion
The first deal partiality, corruption, two subsections with fraud, or their wrongdoing; significance similar is self-evident. N.J.S.A. 2A:24-8a -8b. The third subsection deals with the deprivation grievous hearing, a fair so as be characterized not as a mistake as refusing postpone but “misconduct” — hearing, evidence, refusing to any hear other “misbehaviors” rights prejudicial party. to the of any N.J.S.A. 2A:24-8c. The is so award that deals with an arbitration fourth subsection parties that it could unresponsive to what was submitted “mutual, final, and N.J.S.A. considered definite.” not even be *51 2A:24-8d. by reading square to these simply impossible any fair
It is of the award— unique consequence clauses and their —vacation follow be- consequence the same should the notion that with law, fact. The or an error of someone made a mistake of cause original to the provide for a remand back statute does indeed, error; is not even a there to correct arbitrators over, again. is all The matter back to start over referral dependent the will proceedings totally on complete, any further agreement arbitrate may that the parties. of It even be initial arbitration and effect once the is of no further force vacated. award has been emphasized more—is underlined
That conclusion—and “modify or correct the the court to section which authorizes it, 2A:24- in certain limited cases. N.J.S.A. vacate award” —not 9 is their consequence of sections 8 and The most 9. obvious “undue means” power on the of courts when implicit limitation or correct the powerless “modify is asserted: the court of the award,” distinction between the vacation given the clear the modification or correc- by section 8 and award authorized that, some idea of the by section 9. More than tion authorized judicial review is by the statute on limitation intended extreme for “modify or correct” not 9. You can suggested by section fact, only there fact, of but “where gross of or errors errors mistake figures, or an evident miscalculation was an evident thing, property or referred description person, in the added). The difference (emphasis 2A:24-9a therein.” N.J.S.A. allowing only scope extremely limited of mistake between modification, can be vacated the notion that an award for any fact is obvious. gross errors of is allowed or correction in which modification The second case not sub- upon a matter awarded when the “arbitrators occurs upon mitted to them unless it affects the merit decision words, the matter submitted.” N.J.S.A. 2A:24-9b. In other something when arbitrators decide that no one them to asked decide, they unless had to do so in to decide order that which submitted, presum- was the modification or correction would ably be the excision of that matter from the award. The last subsection, for the or allows modification correction finally, matters of form. N.J.S.A. 2A:24-9c. put together persuade only two sections me not nothing
“undue means” has to do with errors law but that scope judicial Legislature review intended extremely concerning narrow. Section modification or errors, on extremely correction of awards based factual Therefore, only limited. tenable conclusion the stat- from fact, ute itself gross ordinary, is that errors of whether lead to neither vacation nor modification and correction. More to *52 case, point in the this there is no mention whatsoever of errors provides of law. The no remedy statute whatsoever that alleged mistake. precedents caught
The rule of part our at least of some the of spirit present of statute: “errors law”- to be so had egregious only that one look page, need at the cover at the award, to that a know horrible mistake had been made. It you should take no than more a minute to that know arbitration strictly award had to be vacated. While analo- gous, suggests deficiency it similar to those in section something getting so horrible that all without involved at with proceeding, merits of the with pages the thousands of of transcripts case, that we in say this one could that there corruption fraud wrongdoing or some similar that requires vacating the arbitrators’ award. plurality
The rule of precedents and our fails to accord parties with the intent of very purpose to arbitration. The committing dispute get to away arbitration is to from the judiciary, get away to from the strictures and limitations of case, law, Jersey judges and get away, in this from New to object if Jersey parties is not that the would New law. It law, thought appropriate Jersey to consider New arbitrators require want to them to. they absolutely it is that do not special panel panel, a reserved for was a “blue ribbon” This required disputes. parties specifically construction selected, presumably knew that construc- panel such a be Asso- tion-industry under the American Arbitration (A.A.A.) render such required only that the arbitrators ciation just equitable. an award as cases, one, parties want from the
In in this all most as just attempt reach a fair and honesty and an to arbitrators is only result, they rely on is not the arbitrators’ and what case, experience with but, depth of their honesty as this suggesting I put them. am not problems the kinds of before case, intent but that it is most every is their practically all cases. probably their intent out parties get It think that who want to incongruous litigation, system, want to somehow want the court who avoid reviewed on the basis of their conformance their awards party also Jersey A that wants arbitration but to New law. cases, say many so. In Jersey apply law wants New would state, outside this are dispute to a have interests states, interpreted used to as used to the laws other laws courts, and most of all are used arbitrators federal they want The notion that somehow throughout the nation. law, Jersey respect, is with the New in that also discordant parties. The en- presumption probable expectations *53 be, by just opposite is the of what should forced our cases agreement, nothing is in the arbitrators namely that if said just equitable and may they want to reach any use standards laws, required only to result, by any law or unrestricted ability, their on their attempt to the best of based honest and to just equitable and knowledge experience, and achieve result.
If, however, fact, unlikely parties intent is the and the really Jersey apply, they do want New law and really do gross want their award be reviewable for errors of New law, Jersey they say agreement. must so in their If prior it be that contended our decisions such as to have parties put on that their notice silence will be construed as an intent parties apply Jersey that the law New and that their regard, response award be in my reviewable errors that is partly experience on my partly based own on the sense of clear, the situation. The law all was never that this Court having clearly pronounced never so its views as it does in this opinion, my thereof, is as belief that a result to an agreement, clearly committing dispute their to arbi- courts, trators in order to avoid possibly would not believe that the law in this state was such as to result a rule that required apply Jersey the arbitrators to New law and a further rule made their award interpreting reviewable for errors in It simply that law. does make sense.
VI The Plurality Opinion’s Improvement the Existing Rule
It plurality is clear acutely potential that the aware of the damage to by arbitration that could be caused existing rule if it improperly understood and administered. For that reason, plurality goes great lengths stressing highly judicial restricted nature of I review. believe opinion plurality’s may improvement effect some in the rule compared to might what a scholar have concluded it was before opinion. Unfortunately, improvement this is more than cancelled the fact that this unambiguously Court has now adopted existing rule, slight albeit change with some emphasis. before, If any doubt gone: existed it is now arbitra- tion awards are reviewable Jersey New courts for errors of law, may however one want to define the limitations. *54 opinion not of its plurality is problem
The faced precedents. It follows making, rather is traceable to our but “gross in a vacation precedents: errors of will result those law” problem defining “gross errors of is what of the award. formidable, the numerous to. The task is law” amount that fact. The plurality opinion in the attest formulations unmistakable, “gross, or in manifest dis formulations include: 366; law,” 484, at 2d at applicable 610 A. regard of ante 491, at 610 A.2d at “wholly support,” of evidential ante bereft 370; language reasonably “interpretation the contractual is 371; 494, debatable,” “interpretation at of law at 610 A. 2d ante Ibid.; may debatable,” “interpretive that be reasonably is error unmistakable, undebatable, gross, on its face as characterized leading to an disregard applicable law and or in manifest 496, 372; result,” “arbitrators at 610 A.2d at unjust ante principle any applicable unmistakable manifestly disregarded law,” I that I Jersey at at 370. confess New ante 610 A.2d rule, rule, or which formulation do not which know is, understand, it for, regardless nor I of which plurality opts do clear, things that are There are several applied. how is be retaining the rule that the first is that we however: bound New parties intend that be presumes the arbitrators law; can arbitration award be Jersey the second is that the law; they need the third is that be gross errors vacated plurality “errors,” requirement is only since there no cases, out-of-state and federal opinion, as is in various there fully of the clear rule law aware arbitrators it; is there no disregard and the fourth intentionally instantly, immediately, and obvi the error be (cid:127)requirement appear on the “face of the ously apparent, or that it indeed record.” plurality’s formula attempt analyze each of the
I will substantially from used noted, they differ those As tions. fact, quotation from plurality’s In jurisdictions. other Bobker, Smith, Pierce, v. Lynch, Fenner & Inc. Merrill (2d Cir.1986), at indicates 610 A.2d ante F.2d 930 substantially different formulation that the Second Circuit’s plurality’s. requires from It that the error must have been *55 capable of being readily instantly perceived “obvious and and by average person qualified the to serve as an arbitrator.” 808 requires F. 2d at 933. It appreciates that “the arbitrator the governing clearly legal principle existence of a but decides to ignore words, pay or no attention to it.” In other Ibid. the law, court must find disregard blatant and intentional of the so instantly perceived. horrendous that it is quite This standard is which, plurality, different from that of the I gather, up adds only reversal when is the mistake of law not reasonably debata allowing ble. The bounds of the rule vacation of awards the defined, courts have never clearly suggest been and I that the plurality has not moved us much closer to a definitive formula tion, has, wrong and that the extent it it is the definition. concerned,
As far as I am the of plurality formulations the helpful substantially are not and leave us where we were— judges searching a record to not determine whether there were “gross disregard law,” errors of or law” “manifest of the but any rather whether were of there errors at all. law Presum- them, ably, you out, once you try figure using find what now, I they standard do not know even “gross” whether were “instantly recognizable.” certainly You try psy- do not choanalyze the arbitrator to if clearly see he knew the what law intentionally disregarded worry was but it. Nor you do about appears record, what on you the face of the read the entire transcript. crystal methodology It clear from the used court, Appellate Division, the trial the especially plurali- and ty law, for search starts errors of in and this case ends it, with worrying without how might about serious the error be. Judge opinion Gibson’s trial thorough court reflects a review of mostly assumption entire record and based on an of what is, probably accompanied by perceptive law analysis of Appellate opinion facts. The Division’s reflects more concern propositions for of presumably law the arbitrator followed. all, But plurality’s opinion above tells us what this rule to; really amounts end functionally, what we do is reality different from what we analytically, not one bit and arbitrators, initially this case had have done if instead would by the trial court. been decided one questions, and for each it deals with several plurality all legal marshals analysis
conducts factual way jurists as learned exactly the same applicable authorities recog It cites reviewing lower court decisions. would do when involved; it legal authoritative text on the issues nized and portions various the thrust and intent of examines Laws; significance relates the carefully it Restatement in propositions to the law different factual contentions volved; in the unperceived uncertainties various it notes the only every it concerning profits; of lost has rules the award relevant, grinds Hadley authority back to v. that is modern (1854), Baxendale, 341, 156 ante Eng.Rep. 9 Ex. *56 sufficient, not it 373; general if the common law is A.2d at 375; 502, 2d it 610 A. at cites authori Siegfried, *57 from the For parties award. those who think the are entitled greater justice, a share of justice and that only such exists in court, care I would hold that the free expand scope judicial by providing review for such expansion contract; in they their may, example, for specifi- cally provide arbitrators only shall render their decision in law, conformance with Jersey New and that such awards may be law, reversed either for Jersey mere errors of New Jersey errors, law and gross errors of New substantial many if they by that. I will. mean doubt define therein what go directly do, they arbitration and they if should abandon And to the law courts. concurrence, agree I with stated in
For the reasons this be con- should the arbitration award plurality’s result firmed. joins opinion.
Judge this STEIN dissenting part. STEIN, J., concurring part and observes, principles by we guiding majority which As the serve to enhance the use should review arbitration awards for dis for the resolution as an alternative forum arbitration Thus, I concur in the .2d at 369. putes. Ante at 610 A on mistakes of awards based holding that arbitration Court’s error only the arbitrators’ disturbed where law should be undebatable, disregard of unmistakable, inor manifest “gross, law,” a standard ante 610 A.2d at applicable understanding that courts with the common review consistent circum only in the most extreme upset awards will however, review, so even under availability of The stances. on standard, resort to reliance arbi also enhances restricted against runa tration, who use arbitration by protecting those legal principles set ignore fundamental awards that way matter, In this the arbitrators industry practice. tled industry principle and legal and fundamental ignored a basic damages delay contracts: governing construction practice project on time are awarded complete failure unexcused Disregarding that completion. of substantial only to the date $14,500,000 included award the arbitrators’ principle, settled $4,000,000 compensate for losses damages of over delay completion. majority the date of substantial incurred after entire award. upholds
I pursuant to Sands contract with 1983, Perini entered into a In project renovation an extensive coordinate Perini which would *58 exchange $600,000 engaged for fee. Perini was not as a perform any contractor and did not construction work. The specified parties contract that the would establish a substantial- completion they project’s date when determined the maximum provided cost. The payment contract also that final of Perini’s project fee would be due when the was either delivered to the owner, ready occupancy, actually occupied, provided or project substantially completed. the had been The completion defined substantial as * * * the when date construction is so the Owner can sufficiently complete Project designated or utilize the or thereof for the use for which occupy portion it is intended. completion Thus, The contract did refer to a final date. as contracts, parties’ is common construction bargained-for obligations completion. were linked to the date substantial gave
The contract complete also Perini reasonable to time any punch-list remaining work completion, after substantial provided remedy Sands with a if Perini to complete failed punch-list warranty work within a reasonable time. Accord- Sands, ing parties eventually agreed May 31, 1984, on as obligated the date which Perini was substantially to com- plete although project, Perini asserts “no date for completion contractually agreed upon.” had ever been project renovation consisted of five components, includ- ing building of a new entrance and the creation of an glass ornamental facade with an elevator on the outside of the building. complete, project Because most or excus- 31st, ably delayed, May delay Sands’ claim related primarily damages resulting timely from Perini’s complete failure Sands, According the new entrance and the facade. it had depending been the “glitzy” on new facade to attract customers during busy from the boardwalk Alleg- summer season. edly, incomplete appearance discouraged hotel those customers, potential and Sands claimed losses of approximately $9,000,000 in May new business August from 3rd to 31st. *59 $4,500,000 delay damages of over sought also to collect Sands through September 15th December. period for the between admitted, however, project had been substantial- that the Sands expert by September example, 15th. For Sands’ ly completed substantially complet- project that the entire had been testified date, during not contest the arbitra- by ed that and Sands did by occurred completion had proceeding tion that substantial Moreover, although Chancery Division September 15th. September 15th was acknowledged more than once that object suggest completion, did not date of substantial Sands might have substantial-completion date been that a different importantly, Ap- in its by Most contemplated the arbitrators. Perini at least six times that pellate Division Sands states brief project by September 15th. substantially completed the had asserted, true, (and Bay Greate example, “While it For Sands admitted) completion was achieved has that substantial 15, 1984, preclude Perini from terminat- September this did stated, to “While Perini was able ing the contract.” Sands also 1984, it still on completion September achieve substantial as late as Decem- working on unfinished construction the site occupancy ber, Moreover, temporary certificates 1984.” 14,1984, by September phases project had been issued all completion. See ordinarily indicates substantial a factor that (1991) 7.09, Law 1f Stein, at 7-77 Construction G.M. Steven Thus, that Sands all evidence indicates Stein]. [hereinafter completion. date of substantial September 15th as the viewed change its this Court did Sands Only supplemental in a brief to supports a “significant evidence position argue and [] long until completion did not occur finding that substantial September 15.” after 15th, necessary Perini continued the work September
After example, steps leading to For project completely. to finish improperly and had to be constructed the casino had been warranty provision in the contract. pursuant repoured however, sections, and one repoured in steps were “actual foot traffic explained that there was Sands’ witnesses through during area the entire time.” Perini also contin- work, ued punch-list including glass work on elevator. According Sands, delay damages it was entitled to after September 15th, completion, the date of substantial because the delay during loss of business caused the summer had months, causing carried over the fall Sands lose an $4,580,000. argued punch-list additional Sands also warranty work that Perini perform had continued to after September 15th had given caused inconvenience and had appearance, forcing spend hotel an unfinished Sands to extra money promotions causing profits. on additional lost
II
majority opinion presents
thorough
and well-reasoned
explanation
completion.
of the law of substantial
As the major
ity notes,
completion
meaning
“substantial
has definite
in the
500,
industry.”
construction
Ante
2d
at
610 A. at 875. General
ly,
case, parties
as in this
and courts
comple
define substantial
tion as the date
sufficiently
on which construction is
complete
occupy
to enable the
project
owner
or use the
its
intended
purpose.
liquidated
delay damages
Because
designed
approximate an
occupancy, awarding
owner’s loss
those
before
damages for
period
completion
after substantial
serves
penalize
breaching party
contrary
and would
thus
to the
principles
Stein,
fundamental
supra,
contract law. See
at
Thus,
at 8-18.
courts
consistently recognized
116.07[3]
delay or liquidated damages may
not be awarded after
completion.
substantial
Eng’g
See Monsen
Co. v. Tami-Gith
ens, Inc.,
241, 244,
N.J.Super.
250-51,
219
530
313 (App.
A .2d
Div.1987);
DiDonato,
30,
Utica Mut. Ins. Co.
N.J.Super.
v.
187
(App.Div.1982);
553
denied,
Hemenway Co. v.
(1987);
rt.
As the
necessary to
completion merely the amount
after substantial
Ante completion.
full
610 A.2d at
bring
project
Inc. Terminal Constr.
Supplies,
Dusen
v.
376;
Van
Aircraft
(1949); Feeney Bardsley,
321, 329,
Corp., 3
v.
65
N.J.
A. 2d
on
(E.
1901);
Williston
239, 240,
A.
66 N.J.L.
Ill concerning delay industry practice dam- Because the law and established, parties to a ages firmly is so well-settled and possibility of ordinarily contemplate an would not contract completion. delay damages after substantial assessment rely on that and contractors estab- One can infer that owners A con- principle negotiating construction contracts. lished would submitting a bid on a construction contract tractor profit margin, and select its sub- understandably calculate its *61 delay contractors, exposure assumption the that its for on beyond damages could not extend the substantial- liquidated collecting seeking option An the of completion date. owner completion project of a would delay damages after substantial negotiations bargain right during that but only have to pay premium option, a for that presumably expect would price. higher the form of contract industry relies on the well-settled
Although the construction completion, majority its decision bases law substantial “does not part finding language that the of the contract on 554
suggest
fully
Sands
that
conceded either that an award of
[ ]
consequential damages
precluded
15,
September
was
after
1984,
give
expression,
or that
it intended to
substantial
completion,
construction-industry
meaning.”
its
‘term of art’
506,
at
analysis suggests
Ante
The also observes that Perini’s discouraged potential patrons patron from allegedly the facade izing might have assumed the casino and that arbitrators patronage continued after the date of substantial that the lost completion. Ante assumption .2d That 610 A at 379. notwithstanding, delay damages beyond the date the award damages completion, even if such had been of substantial sustained, simply impermissible. period up principle limiting delay damages to the
Because the firmly in the completion is so embedded law substantial construction-industry practice, Sands must known If damages after that date. Sands delay would be available possible arising after protect had wanted to itself from losses substantial-completion delay to a date but attributable bargained right. completion, it should have for that substantial disregard estab- The Court should not allow the arbitrators industry practice awarding delay damages lished law and contemplated or by the contract and not bar- unauthorized parties. gained for
IV upholds requiring Perini to majority an arbitration award $14,500,000 for breach of a contract under which pay over $4,000,000 $600,000. of that receive Over award was to delay damages that accrued after the date of comprised of and construction- completion. Because the case law substantial delay damages industry practice permit do not the award committed completion, the arbitrators periods after substantial *63 reliability as an egregious error of an law. dispute judicial mandates inter- alternative method of resolution legal this in a settled vention in extreme cases such as which industry practice repudiated by principle and been majority I dissent from the Accordingly, award. arbitrators’ delay opinion upholds imposition to the extent that it completion. damages after the date of substantial joins opinion. Justice HANDLER this STEIN, Judge A.M. concur in Chief Justice WILENTZ and result. WILENTZ,
For Justice and Justices affirmance —Chief Judges A.M. CLIFFORD and O’HERN and STEIN and KEEFE —5. STEIN, part
Justices HANDLER and
concur
and dissent
part —2.
notes
ante at
500,
(Sweet,
at
judges have never heard of
ante
ties most
501,
375);
610 A .2dat
it stands
2d
375 and
at
A. at
Stein ante
completion had occurred
a
poised
if
to reverse
substantial
date,
it
might have found that
finds the arbitrators
certain
but
“reasonably
been a
if this would not have
occurred later —as
law,
500-501,
.2d
374-
610 A
at
mistake of
at
debatable”
ante
awarding
profits to a
375;
complexities
it
of
lost
deals with the
before and cites the
not been
business
business that has
issue;
at
610 A. 2d
on that
ante
Uniform Commercial Code
379;
Dixon, including
what the
analyzes
inquiring into
it
at
contemplated, ante
may
in that case
have
court,
380; and,
Jersey
and
it
no New
finally, notes that
A.2d at
York,
of New
has
only a
court
the Southern District
federal
351(3)
(Second)
interpreted the
Contracts
Restatement
§
(1979),