Foulger-Pratt Residential Contracting, LLC v. Madrigal Condominiums, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FOULGER-PRATT RESIDENTIAL )
CONTRACTING, LLC )
)
and )
)
TRAVELERS CASUALTY AND )
SURETY COMPANY OF AMERICA )
) Case No. 1:09-cv-02333 (GK)
Applicants, )
)
v. )
)
MADRIGAL CONDOMINIUMS, LLC )
)
Respondent. )
MEMORANDUM OPINION
This matter is presently before the Court on Foulger-Pratt
Residential Contracting, LLC (“Foulger-Pratt”) and Travelers
Casualty and Surety Company of America’s (“Travelers”) Application
to Confirm Arbitration Award [Dkt. No. 1], under 28 U.S.C. § 1332,
pursuant to 9 U.S.C. § 9 against Respondent Madrigal Condominiums,
LLC (“Madrigal”), and Respondent Madrigal’s Cross-Motion to Vacate
Portions of Interim Arbitration Award [Dkt. No. 27]. Upon
consideration of the Application, Motion, Oppositions, Replies,
Surreply, and entire record herein, Foulger-Pratt’s Application to
Confirm Arbitration Award is granted and Madrigal’s Motion to
Vacate is denied in its entirety.
I. Procedural Background1
The dispute in this case arises out of a construction contract
(“Contract”), consisting of the Modified General Conditions of the
Contract for Construction, (“Modified Contract Conditions”)[Dkt.
No. 27-4] , as well as the Modified Standard Form Agreement Between
Owner and Contractor, (“Modified Form Agreement”)[Dkt. No. 27-3],
and the Reconciled GMP Set of Specifications (“GMP
Specifications”).2 In 2005, Madrigal entered into these agreements
with Glen Construction Company, Inc. (“Glen”), the-then general
contractor, for the construction of Madrigal Lofts condominiums,
located at 811 4th Street, N.W. in Washington, D.C. Applicant
Travelers acted as Glen’s bonding company, providing the
performance and payment bonds for the project.
The parties’ Contract included an arbitration provision
providing that claims and disputes with a value exceeding $100,000
be submitted to a three-member Panel of arbitrators, and that any
award be considered as final, binding, and conclusive. Modified
Contract Conditions § 4.4.1. The Contract also contained a
provision directing the parties to first attempt mediation of their
1
The undisputed facts included in this section are based upon the
parties’ submissions, as well as the entire record in this case.
2
According to Foulger-Pratt and Travelers, and undisputed by
Madrigal, Madrigal drafted the Contract. Foulger-Pratt Reply to
App. 20 n.4.
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dispute, before proceeding to arbitration. Modified Contract
Conditions § 4.5.2.
In June 2007, Glen stopped paying its subcontractors who were
working on the Project. As a result of Glen’s non-performance under
the Contract, Travelers engaged Foulger-Pratt, one of its long-time
bond customers, to assume control over the project. In mid-2007,
Glen assigned the Contract and its accompanying documents to
Foulger-Pratt, which assumed the role of general contractor and
agreed to achieve substantial completion of the project by December
31, 2007. Although Foulger-Pratt allegedly failed to meet this
completion date, it did achieve substantial completion by early
June 2008, as reflected in the Certificate of Substantial
Completion issued by the project’s Architect and Development
Manager, effective as of June 1,2008 [Dkt. No. 30-4].
Beginning in early 2008, a variety of disputes arose between
the parties regarding payments to Foulger-Pratt and various
subcontractor liens on the project. The disputes came to a head in
December 2008, when Foulger-Pratt filed a mechanic’s lien for
$2,636,467 against the project. In response, Madrigal filed an
emergency motion for a temporary restraining order (“TRO”) in D.C.
Superior Court, which resulted in a court order vacating the lien.
Shortly thereafter, in January 2009, the parties engaged in
mediation to resolve several claims and disputes related to their
underlying written agreements and the project. As a result of these
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efforts, on February 2, 2009, the parties executed a partial
settlement agreement, (“APS”) [Dkt. No. 27-7], resolving a number
of these issues. As a part of this settlement agreement, the
parties agreed to designate a “Project Neutral,” who would be a
licensed architect and would certify Foulger-Pratt’s completion of
a punch-list of outstanding construction-related items (“Items 1-8
Punch-List”). APS ¶ 5.3. The Punch-List had been previously
designated in an expert report, The Exterior Building Envelope
Review Report (“Gale Report”) [Dkt. No. 27-18]. The parties further
agreed to submit to arbitration their remaining unresolved claims,
with the exception of those items reserved in the APS for the
Project Neutral, as well as any future disputes that might arise
between them. Id. ¶ 11.
During the arbitration proceedings, Madrigal brought ten
claims against Foulger-Pratt, relating to its work as general
contractor. Interim Award ¶¶ 1-10 [Dkt. No. 27-11]. Foulger-Pratt,
in turn, brought three cross-claims: (1) for damages for extended
direct supervision costs due to Madrigal’s alleged failure to
permit final completion of the project; (2) for entitlement to
payment for final completion of the contract or, alternatively, for
recusal from completing the project due to Madrigal’s actions or
inactions; and (3) for payment to Foulger-Pratt of the entire
contract balance, plus pre-award interest. Id. ¶¶ 12-13.
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From May to July 2009, the parties participated in hearings on
these issues before the Arbitration Panel, consisting of three
lawyers who were experienced in handling construction contract
disputes (“Panel”). On May 26, 2009, the Panel issued an Order,
(“May 26, 2009 Order”) [Dkt. No. 27-8], resolving several matters
raised by the parties. The Order noted that Madrigal had
potentially discovered and was investigating additional defects in
the project’s exterior skin and that it might wish to bring claims
pertaining to such “potential” defects before the Panel; the Order
stated that such claims were not ripe and the Panel postponed
ruling on those claims if, and when, they became ripe, to a second
hearing. May 26, 2009 Order ¶ 1.
On September 11, 2009, the Panel received post-hearing briefs
and heard post-hearing argument on September 21, 2009. The Panel
issued an “Interim Award” on November 30, 2009. In this award, the
Panel concluded that Foulger-Pratt was obligated to complete Items
4-8 of the Punch-List and to cure certain deficiencies in special
warranties. Interim Award ¶ 14(c)-(d). The Panel also held that
Foulger-Pratt was entitled to final payment as it had either
satisfied, or was excused from performance of, the remaining
obligations alleged by Madrigal. Id. ¶ 14(f). In connection with
this ruling, the Panel ordered Madrigal to pay $1,694,655 to
Foulger-Pratt within 15 business days and to deposit $1,113,000
into an interest-bearing escrow account, for payment to Foulger-
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Pratt upon completion of its remaining obligations. Id. ¶ 16. The
Panel also granted some, but not all, of Madrigal’s requests for
attorneys’ fees, although it reserved final determination of the
amount for an “additional Interim Award” regarding such fees. Id.
¶¶ 10, 11. In calculating the amount owed to Foulger-Pratt, the
Panel subtracted $175,920 in damages awarded to Madrigal, and also
permitted Madrigal to retain $30,117, pending the Panel’s issuance
of an interim award regarding Madrigal’s claims to attorneys’
fees.3 Id. ¶¶ 11, 16.
On December 8, 2009, Foulger-Pratt4 filed an Application to
this Court requesting confirmation of the November 30, 2009 Interim
Award (“Foulger-Pratt App.”), and the entering of a judgment
consistent with the findings and determinations of the Panel. The
Panel’s conclusions included: (1) an award to Foulger-Pratt of
$1,694,655 on or before December 21, 2009; (2) a direction to
Madrigal that it must deposit $1,113,000 into an interest-bearing
escrow account to be established by the parties; (3) an
interpretation of the contract documents; and (4) the Panel’s
3
On January 18, 2010, the Panel issued a “Second Interim Award”
[Dkt. No. 23-1], addressing the parties’ dispute regarding
attorneys’ fees. In this award, the Panel determined Madrigal was
entitled to $30,117 in attorneys’ fees, the same amount the Panel
had previously ordered Madrigal to retain for such fees pending
this further decision. Second Interim Award ¶¶ 3,5.
4
For the remainder of this Memorandum Opinion, references to
Foulger-Pratt shall be understood as also constituting reference to
Travelers.
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rulings limiting Foulger-Pratt’s remaining contractual obligations.
Foulger-Pratt App. 5. Foulger-Pratt also sought pre-judgment
interest, costs, and attorneys’ fees. Id.
On December 22, 2009, Madrigal filed an Opposition to the
Application and Cross-Motion to Enter Scheduling Order for its
Motion to Vacate parts of the arbitration award (“Madrigal Opp’n to
App.”)[Dkt. No. 4]. On January 12, 2010, Foulger-Pratt filed its
Reply brief opposing Madrigal’s attempt to submit a vacatur motion
(“Foulger-Pratt Reply to App.”)[Dkt. No. 8]. Madrigal filed its
Surreply on January 29, 2010 (“Madrigal Surreply”)[Dkt. No. 23].
Briefing on vacatur began in March 2010, with Madrigal filing a
Motion to Vacate parts of the arbitration award on March
15(“Madrigal Mot. to Vacate”). On April 30, 2010, Foulger-Pratt
filed its Opposition to the Motion, (“Foulger-Pratt Opp’n”) [Dkt.
No. 30], with Madrigal submitting its Reply brief on May 26, 2010
(“Madrigal Reply”) [Dkt. No. 37].
The pending Motions raise two main issues: (1) the law
governing judicial review of the arbitration award; and (2) the
substantive merits of the Vacatur Motion. Foulger-Pratt asserts
that the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16,
applies, while Madrigal claims that the D.C. Revised Uniform
Arbitration Act (“DCRAA”), D.C. Code §§ 16-4401 - 16-4432, governs
this Court’s consideration of the dispute. Foulger-Pratt also
challenges Madrigal’s claims for vacatur of portions of the
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arbitration award, which include: (1) claims that the Panel lacked
jurisdiction to rule on certain issues; (2) allegations that
Madrigal was deprived of a full and fair hearing; (3) claims that
the Panel exceeded its powers; and (4) arguments that the Panel
acted arbitrarily and capriciously in rendering its award.5
II. Jurisdiction
Foulger-Pratt brings its Application for Confirmation under
the federal diversity statute, 28 U.S.C. § 1332.6 The parties do
not challenge the Court’s jurisdiction in this matter, nor is there
any indication that this claim does not satisfy the federal
diversity statute.7
5
In their Joint Praecipe Regarding Arbitration Proceedings (Apr.
21, 2011) [Dkt. No. 42], the parties informed the Court that the
Panel has issued the following five orders since the Second Interim
Award: (1) Order Regarding Escrow Account and Status Conference
(Jan. 21, 2010); (2) Order Regarding Project Neutral (May 12,
2010); (3) First Supplemental Order Regarding Special Warranties
(May 20, 2010); (4) Second Supplemental Order Regarding Special
Warranties (July 27, 2010); and (5) Order Regarding Motion to
Strike (Dec. 10, 2010).
6
Although Foulger-Pratt seeks confirmation of the arbitration
award pursuant to Section 9 of the FAA, the FAA is not a
jurisdictional statute, “bestowing no federal jurisdiction but
rather requiring an independent jurisdictional basis.” Hall St.
Assocs. v. Mattel, Inc., 552 U.S. 576, 582, 128 S. Ct. 1396 (2008).
7
According to Foulger-Pratt’s Application for Confirmation,
Foulger-Pratt is a limited liability company, organized under the
laws of Maryland with its principal place of business in that
state, while Madrigal is a limited liability company organized
under Delaware law conducting business in the District of Columbia.
Foulger-Pratt App. ¶¶ 1,3. Travelers is a corporation organized
under the laws of Connecticut where its principal place of business
(continued...)
-8-
III. Analysis
A. Governing Law
Foulger-Pratt and Madrigal dispute whether the FAA or the
DCRAA applies to judicial review of the arbitration award.
As noted above, Foulger-Pratt originally filed its Application
to Confirm the Arbitration Award pursuant to the FAA. In response
to Madrigal’s Opposition to Confirmation and Cross-Motion to
Vacate, Foulger-Pratt argues that the FAA applies to the Vacatur
Motion, as well as its confirmation application, based upon the
statute’s purported preemption of state law, as well as the
parties’ Contract.
Madrigal counters, however, that the parties expressly agreed
to have all matters respecting “[t]his [a]greement to arbitrate
. . . specifically enforceable pursuant to and interpreted under
the laws of the District of Columbia,” thereby making the FAA
inapplicable in this instance. Modified Contract Conditions §
4.4.1.
As the analysis below demonstrates, Madrigal is correct that
District of Columbia law applies to this Court’s review of the
arbitration award.8 In response to Foulger-Pratt’s alternative
(...continued)
is also located. Id. ¶ 2. In this case, the arbitration award in
question exceeds the diversity statute’s $75,000 minimum. Id. ¶ 4.
8
The relevant parts of the parties’ underlying construction
(continued...)
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argument that this Court should apply the previous District of
Columbia arbitration statute, the D.C. Uniform Arbitration Act
(“D.C. Uniform Act”), D.C. Code §§ 16-4301 - 16-4319, Madrigal also
correctly argues that the DCRAA, which became fully effective on
February 27, 2008, governs this dispute.
1. The FAA and the D.C. Arbitration Statute
The FAA applies to the review of arbitration disputes
involving interstate commerce and maritime matters. 9 U.S.C. §§ 1-
2. The statute reflects a federal policy “favoring arbitration” and
supersedes any state laws that conflict with this preference. See
Preston v. Ferrer, 552 U.S. 346, 359, 128 S. Ct. 978 (2008) (“When
parties agree to arbitrate all questions arising under a contract,
the FAA supersedes state laws lodging primary jurisdiction in
another forum, whether judicial or administrative.”).
The Supreme Court’s decisions in Volt Information Sciences,
Inc. v. Board of Trustees of the Leland Stanford Junior University,
489 U.S. 468, 109 S. Ct. 1248 (1989) and Mastrobuono v. Shearson
Lehman Hutton, Inc., 514 U.S. 52, 115 S. Ct. 1212 (1995) directly
address the issue of whether a contract’s choice of law provision
trumps the FAA with respect to arbitration agreements. According to
(...continued)
agreements, which are also cited in their briefs, are as follows:
Modified Contract Conditions §§ 4.4.1, 4.6.3, 4.6.4, 4.6.5, and
4.6.6.
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Volt, the FAA “‘create[s] a body of federal substantive law of
arbitrability, applicable to any arbitration agreement within the
coverage of the Act,’ which requires that ‘questions of
arbitrability . . . be resolved in favor of arbitration.’” 489 U.S.
at 475 (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24-25, 103 S. Ct. 927 (1983)). The federal policy
underlying the FAA “is simply to ensure the enforceability,
according to their terms, of private agreements to arbitrate
. . . . Arbitration under the [FAA] is a matter of consent, not
coercion, and parties are generally free to structure their
arbitration agreements as they see fit.” Volt, 489 U.S. at 476,
479.
Volt firmly establishes that the FAA does not preempt state
arbitration laws if freely chosen by the parties. See Ekstrom v.
Value Health, Inc., 68 F.3d 1391, 1395-96 (D.C. Cir. 1995) (relying
on Volt in deciding that the FAA does not preempt parties’ choice
of state rules of arbitration that are consistent with the FAA’s
goals of protecting private arbitration agreements). See also Hall
St. Assocs. v. Mattel, Inc., 552 U.S. 576, 590, 128 S. Ct. 1396(2008) (noting in dicta that the “FAA is not the only way into
court for parties wanting review of arbitration awards: they may
contemplate enforcement under state statutory or common law, for
example, where judicial review of different scope is arguable”).
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In Mastrobuono, the Court further described the circumstances
in which either state arbitration rules or the FAA may apply to
parties’ arbitration agreements. Mastrobuono involved a contract,
with a general choice of law provision selecting New York law, as
well as an arbitration provision setting forth certain procedural
rules governing future arbitration proceedings. 514 U.S. at 58-59.
Petitioner sought a ruling that the FAA preempted a New York common
law rule, which prohibited arbitration awards of punitive damages.
Id. at 55-56. Emphasizing its continued support for Volt, the
Supreme Court found that the contract at issue did not evince the
parties’ specific intent to exclude punitive damage awards.
Moreover, the parties’ selection of New York state law conflicted
with their simultaneous selection of specific arbitration rules
governing the arbitration proceeding. Id. at 56, 61-62. Relying on
principles of contract construction as well as its decision in
Volt, the Court concluded that the resulting ambiguity demanded
that it interpret the contract so as to permit the arbitration
Panel’s award of punitive damages. Id. at 62-64.
As noted in Jung v. Association of American Medical Colleges,
300 F. Supp. 2d 119, 152 (D.D.C. 2004), “[n]umerous courts of
appeals have concluded that Mastrobuono requires that the intent of
the contracting parties to apply state arbitration rules or law to
arbitration proceedings [] be explicitly stated in the contract and
that . . . a general choice of law provision does not evidence such
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intent.”9 Cf. Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287,
298 n.6 (3d Cir. 2001), overruled on other grounds by Hall St.
Assocs., 552 U.S. 576.
In Jung, the District Court concluded that Mastrobuono stands
for the proposition that the FAA trumps a general choice of law
provision. 300 F. Supp. 2d at 153. Other D.C. District Court
decisions have also agreed with this interpretation of Mastrobuono.
See Contech Const. Prods., Inc. v. Heierli, Nos. 09-01483, 09-
02204, 2011 WL 453236 at *7 (D.D.C. Feb. 4, 2011)(citing to
Mastrobuono in holding that FAA and not D.C. arbitration law
applied to arbitration because reference in arbitration clause to
Washington, D.C. merely constituted agreement as to location of
arbitration proceedings); Khan v. Parsons Global Servs., Ltd., 480
F. Supp. 2d 327, 338 (D.D.C. 2007), rev’d on other grounds, 521
F.3d 421 (D.C. Cir. 2008)(relying on Mastrobuono and a line of
9
See Sovak v. Chugai Pharmaceutical Co., 280 F.3d 1266, 1270 (9th
Cir. 2002)(citing to Mastrobuono in holding that a general choice
of law clause does not trump the presumption favoring the FAA’s
application); Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287,
288-89 (3d Cir. 2001), overruled on other grounds by Hall St.
Assocs., 552 U.S. 576 (same); UHC Mgmt. Co. v. Computer Scis.
Corp., 148 F.3d 992, 996-97 (8th Cir. 1998)(referencing Mastrobuono
in holding that the court would not “interpret an arbitration
agreement as precluding the application of the FAA unless the
parties’ intent that the agreement be so construed is abundantly
clear”); Ferro Corp. v. Garrison, Indus., Inc., 142 F.3d 926, 937
(6th Cir. 1998)(relying on Mastrobuono in concluding that
contract’s general choice of law provision selecting Ohio law did
not evidence parties’ unequivocal selection of Ohio law to
determine the scope of their arbitration agreement).
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circuit court cases in holding that “a generic choice-of-law
clause, by itself, is insufficient evidence to prove that the
parties intended to opt out of the default federal standards”).10
This case, however, presents a different scenario from those
cases, following Mastrobuono, holding that a generic choice of law
clause is insufficient to displace the FAA’s default rules. In this
case, even though there is a general choice of law provision
applying to the Contract as a whole, Modified Contract Conditions
§ 13.1.1, the parties included a specific clause stating that
“[t]his [a]greement to arbitrate shall be specifically enforceable
pursuant to and interpreted under the laws of the District of
Columbia.” Id. § 4.4.1.
As Volt made clear, the FAA demands that private agreements to
arbitrate be upheld and that the parties’ choice of substantive law
governing those arbitrations generally be respected. Despite
Foulger-Pratt’s claims to the contrary, the choice of law clause
contained in the parties’ Contract, Modified Contract Condition §
10
In Ekstrom, our Court of Appeals held that the parties’ general
choice of law provision selecting Connecticut law did apply to the
arbitration. However, that holding is not relevant to this case
because the parties in Ekstrom did not challenge the general
applicability of Connecticut law to their arbitration agreement,
but rather disagreed as to whether a particular provision within
that law was applicable to the arbitration. 69 F.3d at 1395-96. See
Jung, 300 F. Supp. 2d at 153 (noting that Ekstrom decision was in
line with Mastrobuono, as parties in Ekstrom did not challenge
general applicability of Connecticut law to their arbitration
agreement). But see Int’l Techs. Integration, Inc. v. Palestine
Liberation Org., 66 F. Supp. 2d 3, 9 (D.D.C. 1999).
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4.4.1, specifically and unambiguously evidences their clear choice
of D.C. law rather than the FAA to govern their agreement to
arbitrate. It is an axiom of contract interpretation that, in
interpreting a contract, the court should determine “what a
reasonable person in the position of the parties would have thought
the disputed language meant.” Steel Founds., Inc. v. Clark Constr.
Group, Inc., 937 A.2d 148, 154 (D.C. 2007) (internal quotations and
citations omitted). In pursuing this inquiry, the court should
“tak[e] into account the contract as a whole, so as to give effect,
if possible, to all of the provisions in the contract.” Id.(quoting Akassy v. William Penn Apartments, Ltd. P’ship, 891 A.2d
291, 303 (D.C. 2006)). Moreover, there is nothing in the D.C.
arbitration law that conflicts with the policy behind the FAA.
Masurovsky v. Green, 687 A.2d 198, 204 n.3 (D.C. 1996).
Foulger-Pratt’s argument that D.C. law applies only to the
actual agreement to arbitrate (in other words, only to the issue of
arbitrability) is not persuasive. Foulger-Pratt Reply to App. 13-
14. As Madrigal correctly argues, a reasonable reading of the
provision would apply D.C. law to all aspects of the arbitration,
and not just to the act of entering into the arbitration agreement
itself.11
11
Foulger-Pratt also argues that, under the Contract, the party
seeking confirmation of an arbitration award has the right to
determine the applicable law. In making this claim, Foulger-Pratt
(continued...)
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Foulger-Pratt also fails in its claim that the Contract’s lack
of specific reference to the D.C. arbitration statute demonstrates
that the parties did not contemplate application of D.C.
arbitration laws. As observed by the Third Circuit Court of Appeals
in Roadway, parties may employ various means of evidencing their
clear and unambiguous intent to apply state arbitration laws and
are not limited in this respect to specifically invoking the
state’s arbitration provision. 257 F.3d at 297 n.5.
Given the emphasis in Mastrobuono and Volt on upholding
private agreements to arbitrate and the parties’ clear choice of
law governing arbitration in this case, the Court concludes that
D.C. law governs its review of the arbitration award.
2. The DCRAA and the D.C. Uniform Act
The DCRAA went into effect in the District of Columbia on
February 27, 2008, although full repeal of the D.C. Uniform Act did
(...continued)
relies upon language found in Modified Contract Conditions §§ 4.4.1
and 4.6.6. Section 4.4.1 states that, “[t]he award rendered by the
arbitrator(s) shall be final, binding and conclusive on all parties
involved, and judgment may be entered upon it in accordance with
the applicable law in any court having jurisdiction thereof.”
Similarly, Section 4.6.6 states that “[t]he award rendered by the
arbitrator or arbitrators shall be final, and judgment may be
entered upon it in accordance with applicable law in any court
having jurisdiction thereof.” Foulger-Pratt’s claim that the
Modified Contract Conditions “contemplates that the party seeking
confirmation of an award is given the right to select the forum and
concomitantly, the governing body of law,” Foulger-Pratt Reply to
App. 9., is simply not in accord with established case law. Volt,
489 U.S. at 476,479; Steel Founds. Inc., 937 A.2d at 154.
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not take place until July 1, 2009. In brief footnotes, Foulger-
Pratt argues that should the Court apply D.C. law then it is the
D.C. Uniform Act, and not the DCRAA, which should be applied.
Foulger-Pratt Reply to App. 13 n.1, 20 n.4.
Section 16-4403 of the DCRAA generally governs its
applicability. According to this section, the statute applies to
“an agreement to arbitrate made on or after February 27, 2008” as
well as to “an agreement to arbitrate made before February 27, 2008
if all the parties to the agreement or to the arbitration
proceeding so agree in a record.” D.C. Code § 16-4403 (a)-(b). The
provision goes on to state, however, that “[o]n or after July 1,
2009, this chapter governs an agreement to arbitrate whenever
made.” D.C. Code § 16-4403(e)(emphasis added). The statute also
contains a Savings Clause, stating that the DCRAA “does not affect
an action or proceeding commenced or right accrued before the
effective date of this chapter. Subject to § 16-4403, an
arbitration agreement made before the effective date of this
chapter is governed by §§ 16-4301 to 16-4319 [the D.C. Uniform
Act].” D.C. Code § 16-4432.
While there are few federal or D.C. cases that discuss the
DCRAA in any significant depth, the D.C. Court of Appeals recently
examined the import of this new statute in Menna v. Plymouth Rock
Assurance Corp., 987 A.2d 458 (D.C. 2010). According to Menna,
after July 1, 2009, the DCRAA repealed the D.C. Uniform Act in its
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entirety. Thus, any arbitration agreement entered into before or
after that date, as well as any pending arbitration hearing, would
be governed by the DCRAA. Id. at 462. Quoting commentary on the
Revised Uniform Arbitration Act, on which the DCRAA is based, the
court in Menna observed that the DCRAA’s “savings clause is
‘subject to’ the provision that, after the date on which the old
Act is repealed, the revised Act governs all arbitration agreements
whenever made.” Id. at 463 n. 14 (citation omitted).
It is well-settled that on issues of D.C. law, this Court
defers to the rulings of the D.C. Court of Appeals. Williams v.
Martinez, 586 F.3d 995, 1001 (D.C. Cir. 2009). Morever, the Menna
court’s reading of the DCRAA is persuasive and utilizes traditional
tools of statutory construction. Arlington Cent. Sch. Dist. Bd. of
Educ. v. Murphy, 548 U.S. 291, 296-97, 126 S. Ct. 2455 (2006) (“We
have stated time and time again that courts must presume that a
legislature says in a statute what it means and means in a statute
what it says there. When the statutory language is plain, the sole
function of the courts - at least where the disposition required by
the text is not absurd - is to enforce it according to its
terms.”)(internal quotations and citations omitted).
Furthermore, federal as well as D.C. law regarding statutory
retroactivity establish that where the legislature has made clear
that a law shall apply retroactively, the court shall uphold such
effect, even in cases involving private, contractual rights. See
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Landgraf v. USI Film Prods., 511 U.S. 244, 280, 114 S. Ct. 1483(1994)(“When a case implicates a federal statute enacted after the
events in suit, the court’s first task is to determine whether
Congress has expressly prescribed the statute’s proper reach. If
Congress has done so, of course, there is no need to resort to
judicial default rules.”); District of Columbia v. Beretta USA
Corp., 940 A.2d 163, 176 (D.C. 2008)(“‘When a new law makes clear
that it is retroactive, an appellate court must apply that law in
reviewing judgments still on appeal that were rendered before the
law was enacted and must alter the outcome accordingly.’”)(quoting
Plaut v. Spendthrift Farm Inc., 514 U.S. 211, 226, 115 S. Ct. 1447(1995)).
It is true that under D.C. law legislatively-mandated
retroactivity will be limited where “manifest injustice” would
occur or “substantial due process concerns” are raised. Menna, 987
A.2d at 463 n.15. In order to evaluate whether a litigant is likely
to suffer manifest injustice from the retroactive application of a
law, courts must consider “(1) the nature and identity of the
parties, (2) the nature of their rights, and (3) the nature of the
impact of the change in law upon those rights.” Holzsager v.
District of Columbia Alcoholic Beverage Control Bd., 979 A.2d 52,
57 (D.C. 2009), citing Bradley v. Richmond Sch. Bd., 416 U.S. 696,
717, 94 S. Ct. 2006 (1974). Foulger-Pratt’s decidedly brief
challenge to application of the DCRAA does not raise a due process
-19-
challenge to the law’s application or any claims that manifest
injustice would occur as a result of its use in this case. Nor does
anything included in Foulger-Pratt’s motion papers or in the DCRAA
raise such concerns.
For all the forgoing reasons, the Court concludes that the
DCRAA applies to this case.12
B. Vacatur of the Arbitration Award
Pursuant to DCRAA § 16-4423(a)-(b), Madrigal moves to vacate
five portions of the November 30, 2009 arbitration award.13 Motion
accompanying Madrigal Mot. to Vacate 1. Under Section 16-4423, a
court can vacate an arbitration award on seven general grounds,
three of which are invoked here: (1) denial of a full and fair
hearing - “an arbitrator refused to postpone the hearing upon
showing of sufficient cause for postponement, refused to consider
evidence material to the controversy, or otherwise conducted the
hearing contrary to § 16-4415, so as to prejudice substantially the
12
Because the DCRAA applies to this case, the Court will not
address parties’ arguments regarding whether the arbitration award
is interim or final in nature. As reflected in the parties’ briefs,
this dispute would be material only if the Court concluded that the
FAA was the applicable law. Madrigal Opp’n to App. 8-10; Foulger-
Pratt Reply to App. 29-32; Madrigal Surreply 8-10. As both parties
agree, under the DCRAA, the Court may review an arbitration award,
regardless of whether it is interim or final. Madrigal Opp’n to
App. 9 n.9; Foulger-Pratt Reply to App. 29-32.
13
In the alternative, Madrigal moves to vacate portions of the
award pursuant to FAA § 10(a)(3) –(4). Motion accompanying Madrigal
Mot. to Vacate 1.
-20-
rights of a party to an arbitration hearing” (§ 16-4423(a)(3)); (2)
exceeding its authority - “[a]n arbitrator exceeded the
arbitrator’s powers” (§ 16-4423(a)(4)); and (3) other reasonable
ground - ”[t]he court may vacate an award made in the arbitration
proceeding on other reasonable ground”(§ 16-4423(b)).
Pursuant to those subsections of the DCRAA, Madrigal
challenges the following five portions of the award: (1) the
portion of the award dealing with the building’s “Exterior Skin”14
(Interim Award ¶ 17);15 (2) the Panel’s decision to grant pre-award
14
The “Exterior Skin” of the building “comprises the brick masonry
walls, metal panels on the balconies and window assemblies,
aluminum window, door and balcony storefronts, roofing, rooftop and
penthouse screen walls, and exterior sealant joints between various
building components.” Madrigal Mot. to Vacate 15-16.
15
Because of its central importance to this case, the Panel’s
holding in Paragraph 17 is set out in full below:
Among the Items 1-8 Punch List Work, Paragraph 15 of the
APS provides that the Panel is to determine Foulger-
Pratt’s obligation to perform Gale report items that
Foulger-Pratt contends are not required by the Contract
Documents. This is a specific-carve out agreed [to] by
the parties to what would otherwise be the Project
Neutral’s responsibilities. There are three such issues
that were identified by Foulger-Pratt: a) whether
Foulger-Pratt is responsible for extending beyond the
windows the .090 aluminum flashing over certain exterior
windows, or providing an end-dam therefore; b) whether
Foulger-Pratt is responsible for correcting the gap
between the bottom of the exterior metal panels at the
roof level and the building structure at the 12th floor;
and c) whether Foulger-Pratt needs to install thermal
insulation between the panel and edge of the concrete
floor slab at each floor. Madrigal has requested that the
Panel defer ruling on these issues, but the Panel rejects
(continued...)
-21-
interest to Foulger-Pratt (Id. ¶ 14(g)); (3) the Panel’s decision
to excuse Foulger-Pratt from its obligation to provide certain
warranties and close-out requirements for the building (Id. ¶
14(d),(f)); (4) the Panel’s decision to deny Madrigal’s claims for
estimated costs for expected Condominium Association and Unit Owner
Punch-Lists (Id. ¶ 4(c)-(d)); and (5) the Panel’s denial of some of
Madrigal’s claims for attorneys’ fees (Id. ¶ 10).
Madrigal’s challenge to the Panel’s decision on the Exterior
Skin claims is based on the Panel having exceeded its jurisdiction
in considering the issue and having prevented Madrigal from
receiving a fair hearing on the matter. Madrigal challenges the
Panel’s decision on the remaining four claims under the DCRAA
provisions on “excess authority” and “other reasonable ground.”
1. The Judicial Standard of Review for Arbitration
Awards
As both the Supreme Court and our Court of Appeals have
recognized, judicial review of arbitration awards is extremely
limited. Major League Baseball Players Ass’n v. Garvey, 532 U.S.
15(...continued)
this request, noting that all parties have been heard on
these issues (indeed, considerable hearing time was
expended on these issues), and APS Paragraph 15 also
contemplates a ruling on these issues in advance of the
Project Neutral’s involvement. The Panel concludes that
Foulger-Pratt has no contractual responsibility to
perform the three identified items from the Gale report.
Additionally, the Panel finds that Specifications Section
08911 (Glazed Aluminum Curtain Wall) is not applicable to
the exterior metal panels. (emphasis added).
-22-
504, 506, 121 S. Ct. 1724 (2001); Kurke v. Oscar Gruss and Son,
Inc., 454 F.3d 350, 354 (D.C. Cir. 2006). Because of this
“extremely limited” standard of review, the court will not sit “to
hear claims of factual or legal error by an arbitrator as [it
would] in reviewing decisions of lower courts.” Kurke, 454 F.3d at354 )(internal quotations and citations omitted).
The local D.C. courts have similarly held that “‘[j]udicial
review of an arbitrator’s decision is extremely limited, and a
party seeking to set it aside has a heavy burden.’” Bolton v.
Bernabei & Katz, PLLC, 954 A.2d 953, 959 (D.C. 2008), quoting
Lopata v. Coyne, 735 A.2d 931, 940 (D.C. 1999). See Celtech, Inc.
v. Broumand, 584 A.2d 1257, 1258-89 (D.C. 1991)(“[T]he burden on a
party seeking to set aside the result of an arbitration proceeding
remains a formidable one.”); Lopata, 735 A.2d at 940 (“[T]his court
[] will not review an arbitration award on the merits.”)(internal
quotations and citations omitted). Such extremely limited review
“serves to attain a balance between the need for speedy,
inexpensive dispute resolution, on the one hand, and the need to
establish justified confidence in arbitration among the public, on
the other.” Bolton, 954 A.2d at 959 (internal quotations and
citation omitted).
Thus, the Supreme Court, the D.C. Circuit, and the D.C. Court
of Appeals have all concluded that the standard of review for
arbitration awards is extremely limited.
-23-
2. Claims
a. The Exterior Skin Claims - Jurisdiction/Excess
Authority
Madrigal initially relies on the principle of “excess
authority” to argue that the Panel was barred from hearing claims
related to the building’s Exterior Skin. Madrigal Mot. to Vacate
16-17. However, as Madrigal subsequently admits in its briefs, it
is arguing that, in fact, the Panel lacked jurisdiction to hear
these claims. See e.g. id. at 20 (“The Panel’s Rulings in [Interim
Award] Paragraph 17 Fall Outside Its Jurisdiction”); Madrigal Reply
7-11. In essence, Madrigal claims that the Panel decided issues
that were expressly reserved in the APS for consideration by the
Project Neutral. Madrigal Mot. to Vacate 16-22; Madrigal Reply 7-
11.16
The parties do not disagree that the Panel’s jurisdiction is
based upon the APS, although they disagree as to the scope of
jurisdiction given to the Panel by this agreement. Madrigal Mot. to
Vacate 16-22; Foulger-Pratt Opp’n 9-10.17 Paragraph 11 of the APS
16
Although the D.C. Circuit has noted that “[b]y necessary
implication, an arbitral award regarding a matter not within the
scope of the governing arbitration clause is one made in excess of
authority,” it has nonetheless analyzed the issue as a
jurisdictional one. Davis v. Chevy Chase Fin. Ltd., 667 F.2d 160,
165-67 (D.C. Cir. 1981).
17
While Foulger-Pratt appears to agree that Madrigal’s claim is
jurisdictional, it attempts to interpret Madrigal’s allegations as
a challenge to procedural, rather than substantive, arbitrability.
(continued...)
-24-
sets forth the parties’ agreement to arbitrate certain matters left
unresolved by the APS, stating, in part, that “[b]y February 2,
2009, Madrigal shall provide to Foulger-Pratt and Travelers an
updated list of the Madrigal Claims. The Parties agree that the
Madrigal Claims shall be submitted to arbitration. . . . The
arbitration shall also cover claims of the Parties that arise after
the date of this APS.” Paragraph 15 of the APS further clarifies
the Panel’s jurisdiction:
Foulger-Pratt shall complete by April 30, 2009, the items
in the Gale report that are within the scope of the
existing Contract Documents and required by the Contract.
By the close of business on February 3, 2009, Foulger-
Pratt shall deliver to Madrigal a list of those items in
the Gale report it contends are not required by the
Contract Documents and the Contract. Any dispute
regarding the Contract requirements or Foulger-Pratt’s
obligation to perform any item shall be addressed during
the arbitration . . . .
Both the parties and the Panel refer to Paragraph 15 as the
“Gale Report Carve-Out,” a provision that essentially removed Item
17
(...continued)
Foulger-Pratt Opp’n 14-15, 30-31. The Supreme Court has described
procedural arbitrability as including “prerequisites such as time
limits, notice, laches, estoppel, and other conditions precedent to
an obligation to arbitrate.” Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 85, 123 S. Ct. 588 (2002)(emphasis in original).
Foulger-Pratt claims that Madrigal’s challenge amounts to a
procedural claim that Foulger-Pratt waived its right to bring some
of the Paragraph 17 issues to the Panel’s attention, as it did not
submit these claims until after the February 3, 2009 date contained
in APS ¶ 15. However, Madrigal’s briefs clearly demonstrate that
its challenge is to the Panel’s substantive jurisdiction over the
Paragraph 17 issues. Given this conclusion, the issue must be
considered under the extremely limited standard of review discussed
above.
-25-
6 from the Items 1-8 Punch-List otherwise assigned to the Project
Neutral. May 26, 2009 Order ¶ 3.3; Madrigal Mot. to Vacate 18-19.
Madrigal does not dispute that Paragraph 15 created such a carve-
out. In fact, in its Motion papers, Madrigal acknowledges that the
Panel’s jurisdiction “to adjudicate exterior skin issues [is]
encompassed by Item 6.” Madrigal Mot. to Vacate 19. However,
Madrigal also claims that the items contained in Paragraph 17 of
the Interim Award were not covered by this carve-out because they
were submitted by Foulger-Pratt to Madrigal after the February 3,
2009 date noted in APS ¶ 15. Id. 20-21.
In order to determine whether Madrigal can bring this
jurisdictional challenge, the Court must analyze whether Madrigal
first brought its jurisdictional objections to the arbitration
Panel.
As the D.C. Circuit has held, “[a]bsent excusable ignorance of
a predicate fact, a party that does not object to the arbitrator’s
jurisdiction during the arbitration may not later do so in court.”
Howard Univ. v. Metro. Campus Police Officer’s Union, 512 F.3d 716,
720 (D.C. Cir. 2008). This rule serves two key functions. First,
“arbitration is a matter of consent; if a party submits to
arbitration without objecting to the arbitrator’s jurisdiction,
then it may fairly be said to have consented to the arbitration,
and the other party, having gone forward with the proceeding, may
fairly be said to have relied upon that consent.” Id. (citation
-26-
omitted). Second, “requiring a party to object to the arbitrator’s
jurisdiction during the arbitration conserves resources. If a party
objects to the arbitrator’s jurisdiction and the arbitrator
sustains the objection, then the parties can go directly to court
and, if the court affirms, avoid an unnecessary arbitration
proceeding.” Id. at 721.
In order to preserve an objection to an arbitrator’s
jurisdiction, a party must raise it “clearly and explicitly,” and
at a minimum before a decision or award is issued. Envt’l Barrier
Co. v. Slurry Sys, Inc., 540 F.3d 598, 606 (7th Cir. 2008). As long
as a party “has presented its objection to arbitrability to the
arbitrator and has not thereafter clearly indicated its willingness
to forego judicial review . . . the issue is sufficiently preserved
for [] subsequent judicial inquiry.” Davis, 667 F.2d at 168(citation omitted).
To corroborate its claim that it did in fact object to the
Panel’s consideration of the Paragraph 17 items, Madrigal has
submitted to the Court excerpts from the arbitration hearing
transcripts. These excerpts demonstrate that Madrigal did resist
the Panel’s consideration of at least some of the Paragraph 17
issues, namely subsections 17(a) and (b):18
18
Madrigal’s jurisdictional objection to the Panel did not cover
all Paragraph 17 items. As reflected in footnote 15, supra,
Paragraph 17 decided four issues. Subsections (a),(b), & (c) relate
(continued...)
-27-
Under the [APS] it required a statement of problems with
– that they had with the Gale Report to be submitted and
that is a February 2nd or 3rd 2009 letter from Mr. Brasco,
okay, and that is what I understand this witness ought to
be talking about. If he’s now going to quarrel with other
aspects of the Gale Report, costs or whatever, that’s not
an issue that’s here. That should go to the Project
Neutral. That’s the procedure.
Parties’ Arbitration Hearing (July 24, 2009)[Dkt. No. 37-1], Arb.
Tr. 2944:7-18. See id. Arb. Tr. 2952:21-2953:22, 2970:5-21(during
discussion of issues relating to February 3, 2009 letter, Madrigal
objects to items being addressed that were not included in that
document).
(...continued)
to Gale Report items, while the fourth issue concerns
“Specifications Section 08911" (“Section 08911”).
First, Madrigal concedes that it does not bring a
jurisdictional challenge with respect to 17(c), although it does
argue that the award should be vacated because it is in essence an
Exterior Skin matter. Madrigal Mot. to Vacate 20 n.11. Second,
while Madrigal’s hearing transcript excerpts demonstrate its
jurisdictional objections to the remaining Gale Report items (i.e.
¶ 17(a)-(b)), they do not evidence Madrigal’s objection to the
Panel’s jurisdiction over the Section 08911 issue. Madrigal Mot. to
Vacate 21-22. In fact, it appears that Madrigal did present
evidence on Section 08911 during the hearing, although it attempts
to couch it as “an incidental presentation of evidence” that
“cannot plausibly be deemed a waiver of its right to insist that
the Panel lacked jurisdiction to decide an issue that was
specifically reserved for the Project Neutral.” Madrigal Reply 10
n.12. However, as case law discussed below establishes, where a
party participates fully on an issue in an arbitration hearing and
does not register its objection to the Panel’s jurisdiction over
the matter, the party is deemed to have waived its right to later
bring a judicial challenge to the Panel’s jurisdiction over that
issue.
-28-
In addition, Foulger-Pratt’s claim that Madrigal “presented
extensive evidence on the Exterior Skin Contact Disputes . . .
without any reservation” also fails. While Foulger-Pratt presents
case law demonstrating that jurisdiction over a matter is
established where a party fully participates in an arbitration
without raising any jurisdictional objection, it proffers no
authority to support the view that a party waives its properly
raised jurisdictional challenge to a matter by merely submitting
evidence which is related to the issue. Foulger-Pratt Opp’n 13, 21-
28. See Davis v. Prudential Secs., Inc., 59 F.3d 1186, 1194-95
(11th Cir. 1995)(submission of some evidence relating to attorney’s
fees alone was insufficient to demonstrate that party had submitted
issue of his entitlement to such fees to arbitrators).
Where a jurisdictional objection has been so preserved, the
courts are empowered to determine the question of arbitrability,
unless there is “clea[r] and unmistakabl[e]” evidence that the
parties intended the arbitrator to determine it. First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920(1995)(internal quotations and citations omitted). To rule
otherwise, “might too often force unwilling parties to arbitrate a
matter they reasonably would have thought a judge, not an
arbitrator, would decide.” Id. at 945.
Where there is no clear and unmistakable evidence that the
parties intended the arbitrator to resolve the issue, “courts
-29-
generally . . . should apply ordinary state-law principles that
govern the formation of contracts” to determine the jurisdictional
issue. Id. at 944. See Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 82, 123 S. Ct. 588 (2002)(“[T]he presumption is that a
court, not an arbitrator, will ordinarily decide an ‘arbitrability’
question.”); Masurovsky, 687 A.2d at 204 (relying on First Options
in holding that presumption in favor of arbitration is reversed
when considering question of arbitrability). However, where
resolution of the arbitrability issue is within the Panel’s
jurisdiction, “a court must defer to an arbitrator’s arbitrability
decision.” First Options, 514 U.S. at 943.
Based on the parties’ APS, as well as the Panel’s May 26, 2009
Order, there is clear and unmistakable evidence that the parties
intended the Panel to decide issues of arbitrability relating to
the Item 6 Carve-Out. As noted in the May 26, 2009 Order ¶ 3.1:
Paragraph 11 of the APS specifically provides that ‘the
arbitration [i.e., this arbitration] shall also cover
claims of the parties that arise after the date of this
APS, which encompasses disputes regarding the
interpretation or application of the APS. Additionally,
all parties agreed at the hearing, in response to the
Panel’s question, that this Panel has plenary
jurisdiction to determine all disputes among the parties
relating to this contract, other than whatever disputes
were agreed to be determined by the Project Neutral per
the APS (emphasis added).
The May 26, 2009 Order ¶ 3.3 goes on to say:
Item 6 of the Items 1-8 Punch-List Work, which relates to
the Exterior Skin and Roof, includes among other
references, a reference that reads: “See Gale Reports
-30-
dated 10/02/2007 and 11/18/2008.” This is significant
because Paragraph 15 of the APS specifically confers upon
this arbitration the responsibility to determine “any
dispute regarding the Contract requirements or Foulger-
Pratt’s obligation to perform any item [in the Gale
reports that Foulger-Pratt contends is not required].” As
such, disputes on that subject are for the Panel,
effectively creating a carve-out from the Project
Neutral’s responsibility under Paragraph 5.3 for that
portion of Item 6.
Madrigal has not objected to the Panel’s rulings in its May
26, 2009 Order. Moreover, in its Motion papers, Madrigal implicitly
suggests that its challenge to the Paragraph 17 issues amounts to
a dispute regarding the scope of the Item 6 Carve-Out.19 See
Madrigal Reply 5 (“The parties . . . disagree about the scope of
this ‘carve out.’”). Contrary to Madrigal’s claim, questions about
the Project Neutral’s jurisdiction over these issues do not place
them beyond the purview of the Panel. Id. at 6 n.8. According to
the clear language of the May 26, 2009 Order, disputes concerning
Item 6 are not to be resolved by the Project Neutral, since the
item is not one that is “to be determined by the Project Neutral
per the APS.” As such, whether the Panel had jurisdiction over the
Paragraph 17 claims is an issue for the Panel itself to decide
based upon its authority “to determine all disputes among the
parties relating to this contract.” May 26, 2009 Order ¶ 3.1.
19
While the Item 6 Carve-out does not include the Section 08911
issue, Madrigal has waived its jurisdictional challenge with
respect to this claim and cannot now raise it for the first time
before this Court.
-31-
Foulger-Pratt also correctly argues that Madrigal’s statements
during the course of the arbitration proceedings demonstrated its
belief that the Panel had jurisdiction over these issues. Lopata,
735 A.2d at 936-37 (concluding that “it [was] unmistakable that the
parties agreed to submit all claims between them to arbitration,
not only from their agreement, but also from the positions taken by
them during arbitration). See Parties’ Arbitration Hearing (May 20,
2009)[Dkt. No. 31-1], Arb. Tr. 50:22 - 51:4 (“[I]n order for the
exterior Project Neutral to evaluate whether item 6 of the punch
list work has been completed, we have to have a ruling from the
Panel as to what those obligations are.”); Madrigal Pre-Hearing
Brief 18 (May 14, 2009)[Dkt. No. 30-19] (“[I]n accordance with
Section 15 of the APS, the Panel must determine the scope of
Foulger-Pratt’s obligation under the Contract to correct systemic
deficiencies identified by the Gale Reports (i.e. the Panel must
clarify the scope of the punch-list work identified in Outstanding
Item No. 6) prior to submitting the ‘Items 1-8 Punch-List Work’ to
the Development Manager and Architect and/or the Project Neutral
for certification of completion.”); Parties’ Arbitration Hearing
(May 20, 2009), Arb. Tr. 64:20-65:3 (“The Project Neutral was not
supposed to go out and make determinations whether or not this item
would be in or out of the contract, whether it was a contract
obligation, yes or no, but to determine simply is it done.”) See
also Interim Award ¶ d (“The Panel’s interpretation of [the
-32-
Contract and APS] is that its jurisdiction under the [Contract] and
the APS encompasses all disputes arising under either of these
agreements, and the parties have confirmed that they all share this
same understanding.”).
Since the question of arbitrability was properly before the
Panel for resolution, this Court may not disturb the Panel’s
jurisdictional decision on the merits. Lopata, 735 A.2d at 940.
Therefore, Madrigal’s jurisdictional challenge is denied.
b. Denial of Full and Fair Hearing Claim
In addition to its jurisdictional challenge, Madrigal claims
it was denied a full and fair hearing on its Exterior Skin claims,
based on DCRAA § 16-4423(a)(3). Madrigal argues that the Panel,
after expressly delaying consideration of issues relating to the
Exterior Skin to a later hearing, ruled on some of the issues
relating to those claims in its Interim Award. Madrigal Mot. to
Vacate 22. In essence, Madrigal claims that by ruling on the
Paragraph 17 issues, the Panel disregarded “the clear mandate of
its own May 26 [,] [2009] Order bifurcating the proceedings and
reserving all exterior skin issues for a subsequent phase of the
arbitration . . . .” Id. at 24. Madrigal also argues that the
Panel’s consideration of these issues deprived it of “an
opportunity to present all of its evidence relevant to these
issues,” evidence which it planned to present during the second
-33-
hearing. Id. at 26.20 As is demonstrated below, Madrigal’s arguments
on these points largely fail, as the May 26, 2009 Order does not
contemplate postponing all Exterior Skin issues to a second
hearing.
In general, courts accord deference to an arbitrator’s
decision regarding postponement or adjournment of matters, except
when the decision prevents a party from presenting “pertinent and
material evidence.” Naing Int’l Enterp., Ltd. v. Ellsworth Assocs.
961 F. Supp. 1, 3 (D.D.C. 1997)(internal quotations and citations
omitted). Madrigal is correct that the Panel’s May 26, 2009 Order
¶ 1 reserved certain Exterior Skin issues for adjudication during
a later hearing “if needed.” (emphasis added):
Both Claimant Madrigal and Respondents Foulger-Pratt and
Travelers agree that the potential issue regarding
potential defects in the building exterior is not ripe
for determination at this time. Investigation of the
issue is underway by Madrigal, and the issue will be ripe
for determination, if needed, only after Madrigal
completes its investigation and discloses the results of
that investigation to Respondents. If a dispute exists
once the investigation is completed and disclosed, that
dispute will accordingly be the subject of a separate
hearing to be scheduled as promptly as possible after the
current hearing concludes. The Panel is sensitive to the
fact that any award issued and relief granted in advance
of the follow-on hearing will need to take this potential
open issue into consideration.
20
Madrigal does not deny that it submitted “significant” evidence
to the tribunal on these issues. Madrigal Mot. to Vacate 23;
Madrigal Reply 13. Rather, it contends that it was prevented from
presenting evidence “critical” to the matters decided in Paragraph
17 of the Interim Award. Madrigal Mot. to Vacate 23; Madrigal Reply
13.
-34-
Id. (emphasis added).
While Madrigal repeatedly asserts that this clause postponed
consideration of all Exterior Skin issues, Foulger-Pratt argues
that only some issues, namely those that were not yet “ripe” for
consideration were covered by this provision. Foulger-Pratt Reply
32-33. In its brief, Foulger-Pratt argues that “[h]ad the Panel
actually bifurcated the hearing as to all Exterior Skin Contract
Disputes as Madrigal now suggests, there would be no question that
a second hearing would necessarily occur, and the May 26, 2009
Order would not have equivocally discussed the possibility of such
a hearing.” Foulger-Pratt Opp’n 32.
Foulger-Pratt’s reading of this clause is correct and accords
with the Item 6 Carve-Out. First, Madrigal does not contest the
Panel’s jurisdiction in the initial hearing over at least one of
the Exterior Skin issues included in Paragraph 17, namely
subsection (c). Second, Madrigal does not deny that this issue was
ready and ripe for review before the May 26, 2009 Order. Third, the
Panel never issued any Order to “bifurcate” the hearing or to hold
a “Phase II” hearing. The “Bifurcation Order” to which Madrigal
refers in its Motion papers is simply a figment of a legal
imagination. Madrigal Mot. to Vacate 24-26; Madrigal Reply 11-18.
As to the “Phase II hearing,” noted supra, the Panel made it clear
that certain Exterior Skin issues were not ripe, that Madrigal was
-35-
investigating those issues, that no claim had yet been made by
Madrigal, and that a hearing would be held only “[i]f a dispute
exists once the investigation is completed and disclosed.” May 26,
2009 Order ¶ 1. The unsubstantiated and misleading claims about the
Panel’s alleged bifurcation of the hearing made in the affidavit of
Dennis Davison, Madrigal’s attorney during the arbitration, cannot
undo the plain language of the Panel’s May 26, 2009 Order.21 See
21
The Davison Declaration contains a number of vague and conclusory
statements. See e.g. ¶ 4. Paragraph 5 of the Declaration simply
misstates what is contained in the Panel’s May 26, 2009 Order. As
discussed supra, that Order made no reference to a “Phase I” and
“Phase II” hearing nor did it specifically divide the arbitration.
In Paragraph 7 of his Declaration, Davison describes the Panel’s
May 26, 2009 Order as “bifurcat[ing] [the] hearing, with the
exterior skin issues reserved for Phase II.” Again, this is a
misrepresentation of the Panel’s May 26, 2009 Order, which did not
rule that there would definitively be a second hearing on the
Exterior Skin issues or that all the Exterior Skin issues would be
addressed in that hearing. In Paragraph 8, Davison claims that “the
Panel chair stated that each witness should testify only one time
during the course of the proceedings for the sake of efficiency,
and that while there may be some overlap between the two phases,
the Panel would wait and rule on the reserved issues until Phase
II.” (emphasis in original). The Davison Declaration does not,
however, contain citations to the hearing transcripts or any other
part of the record to substantiate this statement. Moreover, an
affidavit from Foulger-Pratt’s attorney, Christopher Brasco,
clearly contradicts this claim. See Affidavit of Christopher J.
Brasco ¶ 6 (Apr. 30, 2010) [Dkt. No. 34](“At no time did the Panel
issue a statement or ruling that required the parties to present
witness testimony or other evidence during the initial phase of the
arbitration proceedings relating to unripe exterior skin claims
that were reserved for any potentially-subsequent proceedings.
Likewise, at no time did the Panel issue a statement or ruling that
precluded witnesses who had already testified in the initial phase
of the proceedings from being re-called to testify regarding
reserved exterior skin claims in any potentially-subsequent
proceedings.”). Significantly, Madrigal never filed an affidavit
(continued...)
-36-
Declaration of Dennis A. Davison in Support of Madrigal
Condominiums, LLC’s Motion to Vacate (“Davison Declaration”) (Mar.
15, 2010) [Dkt. No. 27-2].
In light of those positions, Foulger-Pratt is correct in
arguing that, if the Panel intended to postpone all Exterior Skin
issues to a second phase, it would have used more definitive
language, as Paragraph 17 (c) was already ripe for consideration.
Because Madrigal’s argument rests squarely on its claim that
the Panel deferred all Exterior Skin issues to the second phase,
its claim to being deprived of a full and fair hearing must fail.
A far more accurate and reasonable reading of the alleged
“bifurcation” language in the May 26, 2009 Order is that the Panel
delayed hearing those Exterior Skin issues which were raised in
Madrigal’s May 13, 2009 letter to the tribunal [Dkt. No. 27-9], but
did not postpone consideration of those Exterior Skin issues which
were ripe, contained in the Gale Report, and covered by the Item 6
Carve-Out.22
21
(...continued)
contradicting Brasco’s statement.
22
The Panel’s statement during post-hearing argument, set forth
below, further supports the conclusion that it did not definitively
“bifurcate” the proceeding and postpone all Exterior Skin issues to
a second hearing. The Panel’s statement also belies Madrigal’s
claim that the Panel had not made “clear to the parties that they
consider[ed] [the] issue to be under submission . . . .” Madrigal
Mot. to Vacate 33:
(continued...)
-37-
With regard to its second argument, Madrigal fails to
demonstrate that it was prejudiced by the Panel’s failure to
consider “critical evidence” about Paragraph 17(a)-(c). In deciding
whether the Panel denied Madrigal a fair hearing, the Court is
“neither required nor authorized to comb the record for technical
errors in the receipt or rejection of evidence by arbitrators.”
Bolton, 954 A.2d at 960 (internal quotations and citations
omitted). Rather, the Court’s review is “restricted to determining
whether the procedure was fundamentally unfair.” Id. See Lessin v.
Merrill Lynch, Pierce, Fenner, & Smith, Inc., 481 F.3d 813, 818
(D.C. Cir. 2007)(“[E]very failure of an arbitrator to receive
relevant evidence does not constitute misconduct requiring
vacatur.”); Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20 (2d
Cir. 1997)(“[E]xcept where fundamental fairness is violated,
arbitration determinations will not be opened up to evidentiary
22
(...continued)
Arbitrator Ness: I think both sides addressed from an
evidentiary standpoint, I think there were three
exceptions to the Gale report that you’re talking about
and both sides addressed those in some detail and I
remember we noted your request to not rule on those three
pending, the CSC report, and dealing with it in phase II
and we agreed that we would take those under
consideration. We may rule on those we may not rule on
those. That’s where that stands.
Parties’ Arbitration Hearing (Sept. 21, 2009)[Dkt. No. 31-8 ],
Arb. Tr. 3659:12-22. (emphasis added).
-38-
review.”).23
In general, it is within the arbitrator’s discretion to decide
whether or not “additional evidence is necessary or would simply
prolong the proceedings.” Tempo Shain, 120 F.3d at 19. However,
“although not required to hear all the evidence proffered by a
party, an arbitrator must give each of the parties to the dispute
an adequate opportunity to present its evidence and argument.” Id.(internal quotations and citation omitted). Courts may vacate an
award “only if the Panel’s refusal to hear pertinent and material
evidence prejudices the rights of the parties to the arbitration
proceedings.” Lessin, 481 F.3d at 818 (internal quotations and
citations omitted).
Madrigal’s claim focuses on several pieces of evidence which
it asserts were central to its allegations regarding the Exterior
Skin issues, but which it was prevented from submitting to the
Panel. They are: (1) an expert report; (2) rebuttal expert
witnesses on the Section 08911 issue; (3) fact witnesses with
personal knowledge of Exterior Skin issues; and (4) general
evidence on how the Exterior Skin claims were interrelated.
23
The Court of Appeals for the District of Columbia has noted that
federal court decisions construing and applying the FAA may be
regarded as “persuasive authority in construing and applying the
corresponding provisions of the District of Columbia arbitration
act . . . .” Bolton, 954 A.2d at 960 n.5 (D.C. 2008)(internal
quotations and citations omitted). Although this case involved the
D.C. Uniform Act, the DCRAA also shares a number of identical
provisions with the FAA.
-39-
Madrigal Mot. to Vacate 25-26; Madrigal Reply 12.
Madrigal fails to demonstrate how these evidentiary materials
are “pertinent and relevant” to the Panel’s consideration of the
specific, ripe Gale Report items contained in Paragraph 17.
Instead, Madrigal offers rather vague and conclusory statements
that “[a]ll of this testimony would be highly relevant to the
issues addressed in Paragraph 17 of the Interim Award” and that the
evidence would “show that none of the elements [of the Exterior
Skin] can be understood without reference to the others . . . in
order for the Contract to be properly interpreted.”24 Madrigal Mot.
to Vacate 26. Such statements alone, however, do not demonstrate
sufficient prejudice, if any at all, to justify vacating the
Panel’s decision.
Similarly, Madrigal has not established how it was prejudiced
24
By and large Madrigal’s argument on the evidentiary issue boils
down to a claim that because it had evidence it believes related to
the items contained in Paragraph 17 and because it did not have an
opportunity to present this evidence, it is therefore a foregone
conclusion that Madrigal was prejudiced in the hearing of its case.
See Madrigal Reply 13-14 (“Had the Panel advised Madrigal that it
had changed its mind regarding the deferral of exterior skin issues
and that it would, notwithstanding its May 26, 2009 Order, proceed
to decide the exterior skin issues addressed in Interim Award ¶ 17,
Madrigal would have presented the testimony of its expert and other
witnesses on these issues during Phase I. Thus, the Panel’s
disregard of the procedural ground rules it established resulted in
a denial of fundamental fairness to Madrigal.”). However, as noted
in case law above, arbitration Panels are empowered to exclude
evidence and the mere fact that such evidence may have been
relevant is insufficient on its own to trigger judicial vacatur of
an award.
-40-
by the Panel’s failure to consider this purportedly relevant
evidence during the hearing that was held. Madrigal does not
challenge the Panel’s substantive holding on the three Gale Report
items or demonstrate how its decision would have been altered by
the pieces of evidence the Panel did not consider. Instead,
Madrigal’s claim appears to be that the Panel’s decisions on
Paragraph 17 “significantly undercut Madrigal’s ability to pursue
its exterior claims in Phase II.” Id. at 27. See id. at 28 (“[T]he
Panel’s rulings in Paragraph 17 eliminating Foulger-Pratt’s
obligations to perform the disputed Gale Report items and stating
that Section 08911 does not apply to the exterior metal Panels will
significantly undermine Madrigal’s ability to prevail on its
exterior skin claims in Phase II.”). Madrigal had no reason or
right to assume, for the reasons already discussed, that there
would be a Phase II hearing. Its concerns about the results of a
second hearing which was not even guaranteed to occur are not
sufficient to justify vacatur under DCRAA § 16-4423(a)(3), and
Madrigal does not present any case law that would suggest
otherwise.25 In the absence of a showing that the evidence excluded
25
In fact, the Panel’s statement in the Interim Award suggests that
it would be sensitive to Madrigal’s concerns about the impact of a
first hearing award on any subsequent hearing before the Panel:
“[N]othing in this Interim Award is intended to affect Madrigal’s
ability to assert the Reserved Exterior Skin Claim.” Interim Award
¶ 14(a). Although Madrigal argues that the Panel’s Paragraph 17
findings directly contradict this statement, it offers vague and
(continued...)
-41-
from the first hearing prejudiced Madrigal’s case, vacatur under
this provision is not merited with respect to the Gale Report items
contained in Paragraph 17.
Madrigal does, however, make a stronger showing regarding the
relationship between the Panel’s ruling on the Section 08911 issue
and evidence related to this issue which was excluded from the
hearing. The Panel’s decision on the Section 08911 issue
specifically states that “Specification Section 08911 [] is not
applicable to the exterior metal panels.” Interim Award ¶ 17. In
its Motion, Madrigal alleges that it planned to call a rebuttal
witness in the second hearing, who “would rebut the claims by
Foulger-Pratt . . . that Specification Section 08911 does not apply
to the exterior metal spandrel panels, column and slab covers at
the Project.” Madrigal Mot. to Vacate 26.
In Tempo Shain, the Second Circuit held that an arbitration
Panel had denied a party a full and fair hearing by refusing to
hear testimony from a rebuttal witness. 120 F.3d at 20-21. The
witness in question was the “only person who could have testified
in rebuttal” to the opposition’s claims, and the documentary
evidence before the Panel “did not adequately address such
testimony.” Id. at 21. While Foulger-Pratt points to places in the
25
(...continued)
unspecific arguments as to how the Panel’s decisions on the Gale
Report items will adversely impact Madrigal’s ability to pursue its
Reserved Exterior Skin Claims. Madrigal Mot. to Vacate 27-28.
-42-
record where Madrigal incidentally raised Section 08911 in
connection with its arguments on other issues, Foulger-Pratt does
not point to any place in the record, which demonstrates that
Madrigal had been given the chance to rebut Foulger-Pratt’s claim
regarding Section 08911's inapplicability to the exterior panels.
Foulger-Pratt Opp’n 27-28.
While this may suggest that Madrigal has been denied a full
and fair hearing on the Section 08911 issue, Madrigal does not meet
its burden on this claim, as it has failed to demonstrate that the
Panel definitively postponed this issue to a second hearing.
Madrigal has not presented any other credible grounds for its
assertion that the Panel took actions affirmatively denying it an
opportunity to rebut Foulger-Pratt’s argument on this point.26
The Court, therefore, denies Madrigal’s claim that it did not
receive a full and fair hearing on the Paragraph 17 issues.
c. Remaining Claims
Madrigal grounds its other claims for vacatur of portions of
26
For example, Madrigal states that during the first hearing the
Panel accepted its expert report on those Exterior Skin issues
reserved for the second hearing, but expressly stated that it would
not consider the report in rendering its first award. Madrigal Mot.
to Vacate 25 n.14. While Madrigal claims that the Panel’s refusal
to consider the expert report in Phase I was fundamentally unfair,
Madrigal at no point suggests that the Panel’s consideration of
this report, which contained determinations regarding Section
08911, during the first hearing would have specifically rebutted
Foulger-Pratt’s claims on the Section 08911 issue. Id. at 26-27;
Madrigal Reply 13.
-43-
the Interim Award upon the DCRAA’s provisions on “excess authority”
and “other reasonable ground.” According to Madrigal, the “other
reasonable ground” provision includes review for “arbitrary and
capricious” action by the arbitration Panel. Foulger-Pratt
challenges application of this evidentiary standard, while also
arguing that, in any event, Madrigal fails to demonstrate anything
arbitrary or capricious about the Panel’s rulings.
As with the D.C. Uniform Act, the DCRAA’s provision on “excess
authority” is accorded “the narrowest of readings.” Kanuth v.
Prescott, Ball & Turben, Inc., 949 F.2d 1175, 1180 (D.C. Cir.
1991). The provision does not “confer on courts a general equitable
power to substitute a judicial resolution of a dispute for an
arbitral one; rather, where the interpretation of a contract is at
issue, it is the arbitrator’s construction which was bargained for,
and not that of the courts.” Chevy Chase Fin., 667 F.2d at 165.
(internal quotations and citation omitted). In order to obtain
relief under this provision, claimant “must clear a high hurdle.”
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758,
1767 (2010).
An arbitrator’s decision may be unenforceable only when she or
he “strays from interpretation and application of the agreement and
effectively dispenses [her or his] own brand of industrial
justice.” Id. Because arbitration is a matter of contract,
arbitrators are “permitted to decide only those issues that lie
-44-
within the contractual mandate. . . . [A]n arbitral award regarding
a matter not within the scope of the governing arbitration clause
is one made in excess of authority, and a court is precluded from
giving effect to such an award.” Chevy Chase Fin., 667 F.2d at 165.
As the D.C. federal and local courts have held, an arbitration
award can only be set aside or vacated on clearly specified
statutory grounds. Stern v. Stern Co. of Washington, D.C., 200 F.2d
364, 364 (D.C. Cir. 1952). See Shaff v. Skahill, 617 A.2d 960, 963
(D.C. 1992)(dismissing motion to vacate arbitration award for
failure to raise statutory grounds for vacatur). While there is
little case law addressing the scope of judicial review under the
DCRAA’s “other reasonable ground” provision, D.C.’s highest court
recently held that the subsection does not substantially expand
judicial authority to vacate an arbitration award beyond what
existed under the D.C. Uniform Act. A1 Team USA Holdings, LLC v.
Bingham McCutchen, LLP, 998 A.2d 320, 326 (D.C. 2010). In that
case, the court concluded that this subsection does not
dramatically expand the court’s review powers and that de novo
review of an arbitrator’s award remains prohibited. Id. at 323-34.
As a result, the court’s review of an arbitration award is still
“extremely limited.” Id. at 326.
In reaching these conclusions, the court in A1 Team engaged in
an extensive review of the DCRAA’s legislative history and found
no evidence to suggest that the drafters intended the statute to
-45-
alter the existing judicial standard for reviewing an arbitration
award. Id. at 324-26. Rather, the court concluded that the DCRAA’s
creation was prompted by limitations under the previous code, which
“no longer provided answers to many modern-day issues in the
arbitration process . . . such as . . . the use of electronic
information and other modern means of technology . . . .” Id. at
324. Because of the decided absence of explicit language in the
statute, as well as in the legislative history, defining the scope
of “other reasonable ground,” the court held that the DCRAA did not
expand established D.C. law for judicial review of arbitration
awards. Id. at 325-36.
In light of A1 Team, Madrigal’s expansive reading of the
DCRAA’s “other reasonable ground” clause must be rejected. Given
that Madrigal has failed to raise any other plausible statutory
basis for applying the arbitrary and capricious standard, vacatur
cannot be granted based on this erroneous standard of review.
i. Pre-Award Interest
Madrigal challenges the Panel’s decision to grant Foulger-
Pratt pre-award interest on its final three payment applications:
Payment Applications 27, 28, and 29. In awarding Foulger-Pratt
$2,837,772 on these outstanding invoices, the Panel calculated the
unpaid amount for the three payment applications while also adding
-46-
$171,31227 in pre-award interest assessed at a rate of 6% from June
15, 2008 until the award date. Interim Award at ¶¶ 13, 14(g).
Madrigal charges that the Panel “manifestly exceeded its
authority by acting contrary to the unambiguous provisions of the
APS . . . regarding the Payment Applications.” Madrigal Mot. to
Vacate 29. As already noted, during the arbitration, the Panel
found in favor of Foulger-Pratt on its claim that Madrigal had
breached the parties’ Contract by delaying final completion of the
project. Interim Award ¶ 12. The Panel also sustained most of
Foulger-Pratt’s claim that it was “entitled to Final Payment, or
alternatively that any outstanding prerequisites for Final Payment
have been excused, waived, or prevented by Madrigal’s action or
inaction.” Id. ¶ 13. It was in connection with these findings of
contractual breach that the Panel awarded Foulger-Pratt payment on
its three outstanding payment invoices, including pre-award
interest. Madrigal’s “excess authority” argument centers on its
contention that the pre-award interest awards violate APS ¶¶ 2-5.2.
Madrigal Mot. to Vacate 29.
As to Payment Application 29, Madrigal’s claim focuses on APS
¶ 5.2, which sets out the parties’ agreed payment schedule as to
27
The Panel divided the interest payment between the three payment
applications as follows: (1) $2,294.53 in interest with respect to
Payment Application 27; (2) $26,005.96 in interest with respect to
Payment Application 28; and (3) $143,011.78 in interest with
respect to Payment Application 29. Interim Award ¶ 14(g).
-47-
the Items 1-8 Punch-List. In Paragraph 5.2, the parties agreed to
a price of $1,194,000 for this work, payable to Foulger-Pratt upon
completion, provided that it otherwise complied “with all other
terms of this APS.”28
As is clear from APS ¶ 11, the Panel was empowered to decide
issues relating to Foulger-Pratt’s right to payment under the APS
and the parties’ underlying agreements:
The arbitration shall determine the Madrigal Claims and
28
Paragraph 5.2 of the APS states, in part:
Upon the execution of a Certification of Completion of
the Items 1-8 Punch-List Work by the Development Manager,
Project Architect and Lender Architect, and Foulger-
Pratt’s delivery of all of the close-out documents
specified and required in Agreement Section 12.2.6 and
General Conditions Section 9.10.2 . . . Foulger-Pratt
shall submit an Application for Payment for said Items 1-
8 Punch-List Work. Foulger-Pratt and Madrigal agree that
the “retainage value” of the Items 1-8 Punch List Work is
set as $1,064,000. The Parties further agree that upon
Completion of the [I]tems 1-8 Punch-List Work and
Foulger-Pratt’s compliance with its obligations set forth
above, Foulger-Pratt shall submit an Application for
Payment for the sum of $1,194,000, inclusive of the
$130,000 adjustment provided for in paragraph 12 of this
APS (i.e. $1,064,000, “retainage value” of Madrigal
Outstanding Items 1-8 plus the $130,000 reduction from
Outstanding Items 9-10). Provided that Foulger-Pratt and
Travelers have complied with all other terms of this APS,
Madrigal shall certify said Application for Payment and
shall process it for payment in accordance with the
Contract procedure . . . offset by any amount awarded to
Madrigal in the arbitration as provided in paragraph 11
of this APS. Madrigal shall pay the sum of $1,194,000, as
it may be adjusted pursuant to paragraph 11, to Foulger-
Pratt for the Application for Payment for Items 1-8
Punch-List Work in accordance with the Contract terms and
the provisions of this APS.
-48-
the claims of Foulger-Pratt and Travelers that, upon
satisfaction of its obligations under this APS, Foulger-
Pratt is entitled to full payment of the balance of the
Contract Sum and Madrigal’s contention that Foulger-
Pratt’s right to such payment is subject to: (a) the
provisions of the Contract; (b) compliance with this APS,
including, without limitation, the provisions in
paragraph 5; (c) the Madrigal Claims set forth in the
February 2, 2009 “Madrigal Outstanding Items” list; (d)
Foulger-Pratt’s performance of the Condo Association and
Unit Owners Punch-Lists; and (e) submission of the
Contract close-out documents.
In light of APS ¶ 11, Madrigal fails to demonstrate how APS
¶ 5.2 has been violated by the Panel’s decision to grant pre-award
interest on Payment Application 29. That award was based on the
Panel’s conclusion that “any outstanding prerequisites” for final
payment to Foulger-Pratt had been voided by Madrigal’s contractual
breach. Madrigal does not dispute the Panel’s overall ruling on the
issue, nor can it under the terms of the APS.29 The Panel operated
within its authority under Paragraph 11 of the APS by holding that
Madrigal’s behavior nullified some of the prerequisites, including
those found in Paragraph 5, for final payment to Foulger-Pratt.
Furthermore, nothing in Paragraph 5.2 appears to prevent the
Panel from granting pre-award interest. Paragraph 5.2 primarily
serves to establish the value of the Items 1-8 Punch-List. It says
nothing about, and certainly does not restrict, interest awards on
29
Indeed, APS ¶ 17 states that “[t]he Parties further agree that
this APS extends only to those disputes expressly addressed herein
and the Parties expressly reserve their rights pertaining to any
disputes not covered by this APS.”
-49-
amounts arising from a party’s breach of the contract.
As to Payment Application 28, Madrigal’s use of “excess
authority” to challenge the pre-award interest also fails for
similar reasons.30 Madrigal argues that pre-award interest granted
on this application conflicts with the terms of APS ¶ 4. Paragraph
4 establishes Application 28’s payment price ($131,693), as well as
certain prerequisites to payment, such as Foulger-Pratt’s release
of a mechanic’s lien on the property. However, as with Paragraph
5.2, this provision does not prevent the Panel from awarding
interest on Paragraph 4’s pre-set payment amount, based on the
Panel’s findings regarding the parties’ conduct vis a vis the
underlying agreements.
In fact, Madrigal’s claims regarding pre-award interest for
both Payment Applications 28 and 29 appear to focus more on the
merits of the Panel’s decision than on any conflict with the
Contract or the APS. See Madrigal Mot. to Vacate 30 (“By ordering
payment of the entire amount of Application 29 before Foulger-Pratt
had satisfied the requirements under APS ¶ 5.2 for even a partial
payment, the Panel nullified the parties’ settlement agreement
embodied in the APS.”); Id. at 32 (“Indeed, to this day, Foulger-
30
As to Payment Application 27, Madrigal’s “excess authority”
challenge appears only in a short footnote. Madrigal Mot. to Vacate
32 n.22. As with Applications 28 and 29, Madrigal’s claims
regarding Application 27 fail to demonstrate that the Panel’s award
conflicted with the APS or the parties’ underlying agreements or
otherwise exceeded its authority in any way.
-50-
Pratt still has failed to meet the lien release requirements for
[payment of] Application 28.”)(emphasis in original).
In the most direct challenge to the merits of the Panel’s
award, Madrigal attacks the Panel’s decision to calculate pre-award
interest from June 15, 2008 (a few days after the June 1, 2008 date
for which the project was certified as “substantially complete”) to
the date of the award on November 30, 2009. Madrigal claims, in
part, that interest could not have accrued before February 3, 2009,
as the parties had “expressly” agreed in the APS that, as of
February 2, 2009, Foulger-Pratt had not met the pre-requisites for
payment on all three applications. Madrigal Reply 18-19. However,
in deciding whether and to what extent Madrigal was responsible for
delays in the project’s final completion, the Panel in its merits-
based determination as to when breach occurred, and when final
payment in effect became due, would be fully authorized to decide
the interest issue. And, indeed, nothing in the APS prevents the
Panel from doing otherwise.
This Court, therefore, denies Madrigal’s claim for vacatur of
the Panel’s decision on pre-award interest in its entirety.
ii. Warranties and Close-Out Requirements
Madrigal also challenges the Panel’s decision to excuse
Foulger-Pratt from some of its obligations to cure remaining
deficiencies in subcontractor/supplier warranties. Madrigal Mot. to
Vacate 36-41. In urging vacatur of this portion of the Panel’s
-51-
award, Madrigal argues that the Panel exceeded its authority by
rendering a decision that conflicts with the APS and the parties’
underlying agreements. Id. Based on these claims, Madrigal urges
this Court to “partially vacat[e] [Paragraph 14(d)] and remand[]
for further consideration in accordance with the requirements that
Foulger-Pratt provide all warranties.” Id. at 41.
Madrigal also contests the Panel’s conclusion that Foulger-
Pratt’s obligations to provide certain close-out documents and “any
other contract deliverables” have “either been satisfied or
excused, and Foulger-Pratt has no further obligations to provide
any such items.” Interim Award ¶ 14(f). Specifically, Madrigal
claims that Foulger-Pratt was to provide “As Built” Drawings, as
part of the “close-out documents” it was required to produce under
the APS and the Contract. Madrigal Mot. to Vacate 41-42.
While Madrigal concedes that Foulger-Pratt previously provided
such drawings, it claims that the Project Architect rejected those
documents in August 2009 “because of various deficiencies, such as
a failure to ‘mark up’ the drawings.” Id. at 42. Based on this
rejection, Madrigal argues that the Panel exceeded its authority by
absolving Foulger-Pratt from providing these documents and thereby
nullifying Foulger-Pratt’s obligations under the APS and the
Contract.31 Id.
31
The Panel’s full ruling on this issue is as follows:
(continued...)
-52-
Madrigal also asserts that the Panel’s ruling with respect to
“other contract deliverables” effectively “nullified Foulger-
Pratt’s contractual obligation to deliver extra materials” for the
building. Id. Again, Madrigal claims that Foulger-Pratt was
contractually required to provide these items and that the Panel
exceeded its authority in failing to enforce this obligation. Id.
at 42-43
As with its claims regarding pre-award interest payments,
Madrigal’s arguments for vacatur of the Panel’s decisions on
warranties and close-out documents are essentially an attack on the
merits of the Panel’s award. Much of Madrigal’s proffered claims on
the warranties issue focuses on the manner in which Madrigal and
the unit owners in the project building would be adversely affected
by deficient or missing warranties. See Madrigal Mot. to Vacate 36
(“Anyone who has paid for [an] expensive car or home repairs knows
just how valuable an enforceable warranty can be.”).
31
(...continued)
With respect to all other items alleged by Madrigal to be
incomplete or deficient and to preclude Final Completion
and/or Final Payment(including other close-out documents,
certified Cost of the Work, future Unit Owner Punchlists,
Condo Association Punchlist(s) and any other contractor
deliverables alleged by Madrigal), the Panel concludes
that all such requirements have either been satisfied or
excused, and Foulger-Pratt has no further obligation to
provide any such items.
Interim Award ¶ 14(f).
-53-
Madrigal’s arguments about the close-out documents similarly
emphasize the importance of these materials to Madrigal and the
unit owners. See id. at 42 (“Having proper As-Built Drawings is
particularly important to the unit owners and the Condominium
Association because the drawings are most likely to become
necessary years into the future.”); Id. at 43 (“Although these
[extra materials] might appear to be relatively insignificant, they
are in fact important to ongoing repairs in both the common areas
and individual units. Because creating a color match with custom-
mixed paint is nearly impossible, having paint on hand for touch-
ups is important.”).
Again, in assessing the breach of contract claims brought by
Madrigal and Foulger-Pratt, the Panel was fully authorized to
determine the parties’ continuing contractual obligations or lack
thereof. Madrigal fails to point to any provision of the APS or the
parties’ agreements that restricts the Panel on this issue.
Consequently, and in light of its extensive efforts to
convince this Court of its demonstrated need for these items,
Madrigal’s claims regarding warranties and close-out documents
amount to little more than an attempt to re-litigate these issues
on the merits and thereby fail to justify vacatur under the
applicable case law. Stolt-Nielsen, 130 S. Ct. at 1767; A1 Team USA
Holdings, LLC, 998 A.2d at 326; Kanuth, 949 F.2d at 175; Chevy
Chase Fin., 667 F.2d at 165. Madrigal’s claims on these issues are,
-54-
therefore, denied.
iii. Costs Associated with Punch-Lists
Madrigal also urges vacatur of the Panel’s decision to award
Foulger-Pratt fees for Punch-List work it failed to complete.
Madrigal Mot. to Vacate 43-44. Madrigal claims that the Panel’s
decision on this matter exceeded its authority, because Madrigal is
entitled to retain these amounts under the APS and because the
award reduced Foulger-Pratt’s scope of work under the parties’
Contract. Id. at 44.
Specifically, Madrigal contends that the parties agreed in the
APS ¶ 12 that it was entitled to hold back a total of $530,000 from
the contract price until Foulger-Pratt completed work associated
with Condo Association and Unit-Owners Punch Lists. Id. at 43.
Moreover, Madrigal argues that “[t]wo of the significant disputes
regarding Madrigal’s Outstanding Items List that were resolved in
the APS were the parties’ disputes regarding the Condominium
Association Punch List and the Unit-Owners Punch List.” Id.
Foulger-Pratt, however, is correct in noting that the APS
expressly reserved a number of specific disputes about the Punch-
Lists for arbitration. See APS ¶ 12 (“It is Madrigal’s position
that Foulger-Pratt shall complete the [Punch-Lists] Work in
accordance with the Contract terms, whether the cost of the Work is
greater than or less than these hold-back values. Foulger-Pratt
contends that its obligation to complete said Work is not unlimited
-55-
in time. The Parties hereby agree that these issues shall be
decided as part of the arbitration process . . . .”)(emphasis
added); Id. ¶ 11 (noting the parties’ disputes concerning Foulger-
Pratt’s performance of the Condo Association and Unit Owners Punch-
Lists, in specifying the subjects covered by the arbitration). In
light of this clear language, Madrigal’s claim that the Panel’s
decision on the two Punch-Lists violates APS ¶ 12’s “express
completion requirements” lacks merit.32 Madrigal Mot. to Vacate 44.
Consequently, Madrigal’s claims regarding the Punch-Lists fail as
an attack on the merits of the award and are denied.
iv. Attorneys’ Fees
Madrigal objects to the Panel’s denial of its request for
attorneys’ fees relating to the December 2008 TRO action it brought
in D.C. Superior Court. Id. at 34-35. Madrigal claims that under
the Contract it is entitled to fees that result from Foulger-Pratt
“filing a lien or failing to bond off a Subcontractor lien.” Id. at
34 (internal quotations and citation omitted). The Contract,
however, contains an exception to this prohibition for liens filed
by Foulger-Pratt “for amounts certified for payment by the
Development Manager and Architect and which remain unpaid by the
Owner.” Id. (internal quotations and citation omitted) (emphasis in
32
In addition to establishing the parties’ intention to arbitrate
matters associated with the Punch-Lists, Paragraph 12 sets out
payment prices for this work. Madrigal does not allege that the
Panel’s decision altered these prices in any way.
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brief). Madrigal asserts that Foulger-Pratt’s December 2008 lien of
$2,636,469 was not covered by this exception, because it was based
primarily on Payment Application 29, which “was never certified for
payment.” Id. Consequently, Madrigal claims entitlement to
attorneys’ fees of $62,840 relating to its efforts in D.C. Superior
Court to remove the lien. Id. Madrigal argues that the Panel’s
failure to grant its request for attorneys’ fees contradicts the
“express terms of the Contract” and was therefore in excess of its
authority. Id. at 35
Again, Madrigal’s claim appears to simply relitigate the
underlying merits issue. The parties disagreed over whether
Foulger-Pratt’s December 2008 lien fell into the exception noted
above, and therefore submitted the issue to the Panel for
resolution. Madrigal’s challenge to the Panel’s decision on this
matter, once again, focuses on its disagreement with the merits of
the Panel’s award. Madrigal Reply 20 (“[T]he parties expressly
agreed in Paragraphs 3,4,and 5.2 of the APS that Foulger-Pratt had
not yet met the terms required for any of these payments as of the
execution of the APS. . . . Thus, there was no basis for the Panel
to conclude that Madrigal had wrongfully failed to certify Payment
Applications 28 and 29 in December 2008, when Foulger-Pratt filed
the mechanic’s lien against the Project.”)(emphasis in original).
There is nothing in any of the APS provisions cited by Madrigal
that would prevent the Panel from considering claims that Madrigal
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had wrongfully failed to certify final payment applications and,
for that reason, denying its request for attorneys’ fees in the
Superior Court case. Consequently, this Court denies Madrigal’s
claim that the Panel exceeded its authority by declining to award
attorneys’ fees on this issue.
III. Conclusion
According to DCRAA § 16-4423(e), “[i]f the court denies a
motion to vacate an award, it shall confirm the award unless a
motion to modify or correct the award is pending.” Having denied
Madrigal’s Motion to Vacate portions of the arbitration award, this
Court will confirm the Interim Award in its entirety.
In response to Foulger-Pratt’s request, the Court will grant
Foulger-Pratt “reasonable attorney’s fees and other reasonable
expenses of litigation incurred in a judicial proceeding after the
award is made to a judgment confirming, vacating without directing
a rehearing, modifying, or correcting an award,” pursuant to DCRAA
§ 16-4425 (c). Foulger-Pratt Opp’n 44 n.21. Furthermore, the Court
orders that funds deposited by the parties into the Registry of
this Court, pursuant to its March 3, 2010 order [Dkt. No. 26], be
disbursed according to the terms of the Interim Award. An Order
will accompany this Memorandum Opinion.
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April 27, 2011 /s/
Gladys Kessler
United States District Judge
Copies via ECF to all counsel of record
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