Findings of Arbitrator Will Not Be Overturned in Absence of Fraud

Site, Inc. v. Peabody Constr. Co., Inc., 2007 WL 2458482 (Mass. App. Ct. Aug. 30, 2007) (Unpublished)

In this case, the Appeals Court affirmed the Superior Court’s denial of plaintiffs’ motion to vacate an arbitration award.  The defendant general contractor, Peabody Construction Company, refused to pay the plaintiff subcontractor, Site, Inc. on a subcontract after terminating the subcontractor prior to completion of the job.  The case went to arbitration.  After considering extensive evidence and testimony, the arbitrator found that the general contractor’s failure to make timely payment was a material breach of the subcontract.  Although the arbitrator found that general contractor’s material breach of the subcontract excused any subsequent failure by the subcontractor to perform its obligations under the subcontract, the arbitrator found that the subcontractor was not entitled to payment for the work it performed because the subcontractor “had not completely [and satisfactorily] performed all of its obligations under the subcontract.”

The subcontractor argued that the lower court erred in denying its motion to vacate the arbitration award because key documents were not disclosed to the arbitrator.  The court noted that factual findings and legal conclusions by an arbitrator are binding and that “even a grossly erroneous decision is binding in the absence of fraud.”  Trustees of the Boston and Me. Corp. v. Mass. Bay Transp. Auth., 363 Mass. 386, 390 (1973).  The court found that the missing document failed to evidence fraud to the point of corruption of the judicial process.  The court found that the subcontractor failed to avail itself of its ample opportunities to discover the disputed document.  Specifically, the court found that the subcontractor:  (1) never moved to compel the general contractor to produce the document, either at arbitration or in the Superior Court case; (2) failed to adduce evidence that the document was purposefully hidden; and (3) failed to discover the document through its inspection of files and during deposition.  In conclusion, the court found that the findings of an arbitrator will not be overturned in the absence of fraud and here the missing document did not amount to fraud in the arbitration or in its actions before the trial court.