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SJC-13819
J.C. CANNISTRARO, LLC vs. COLUMBIA CONSTRUCTION CO. & another.1
Norfolk. February 2, 2026. – June 26, 2026.
Present: Budd, C.J., Gaziano, Kafker, Wendlandt, Georges,
Dewar, & Wolohojian, JJ.
Arbitration, Authority of arbitrator, Confirmation of award.
Massachusetts Arbitration Act. Public Policy. Contract,
Construction contract, Subcontract. Payment.
Civil action commenced in the Superior Court Department on August 3, 2020.
Motions to vacate and to confirm an arbitration award were heard by Keren E. Goldenberg, J.
The Supreme Judicial Court granted an application for direct appellate review.
Jeff D. Bernarducci (Seth M. Pasakarnis & Lindsey K.P. Black also present) for Columbia Construction Co.
J. Nathan Cole (Ross C. Wecker also present) for the plaintiff.
The following submitted briefs for amici curiae:
Robert W. Stetson for Real Estate Bar Association for Massachusetts, Inc., & another.
1 Travelers Casualty & Surety Company of America.
2
David E. Wilson for Associated Subcontractors of
Massachusetts, Inc.
Kenneth E. Rubinstein, Nicholas A. Dube, & Michael J. Amato for Associated General Contractors of Massachusetts & others.
Joseph A. Barra for Electrical Contractors Association of Greater Boston, Inc., & others.
WOLOHOJIAN, J. The question is whether an arbitrator
exceeded his authority by awarding recoupment of payments to a
general contractor, Columbia Construction Co. (Columbia), that
(a) did not timely certify its rejection of invoices submitted
by a subcontractor, J.C. Cannistraro, LLC (Cannistraro), and (b)
asserted defenses to payment before paying the invoices. See
Business Interiors Floor Covering Business Trust v. Graycor
Constr. Co., 494 Mass. 216, 225 (2024) (Graycor) (establishing
payment prerequisite where contractor does not reject invoices
in conformity with requirements of prompt pay act, G. L. c. 149,
§ 29E). We conclude that the arbitrator's award was within his
authority, and accordingly reverse the judgment of a Superior
Court judge vacating the arbitration award.2
2 We acknowledge the amicus briefs submitted by Real Estate Bar Association for Massachusetts, Inc., and the Abstract Club; Electrical Contractors Association of Greater Boston, Inc., Boston Roofing Contractors Association, Inc., Painting & Finishing Employers Association of New England, Inc., and Glass Employers Association of New England, Inc.; Associated Subcontractors of Massachusetts, Inc.; and Associated General Contractors of Massachusetts, Construction Industries of Massachusetts, Inc., and Utility Contractors' Association of New England, Inc.
3
Background.3 On February 3, 2017, Columbia entered into a
contract for the construction and renovation of an office and
manufacturing facility located in Walpole (prime contract). The
prime contract was a "contract for construction" as defined in
G. L. c. 149, § 29E (a), and was therefore subject to the
provisions of the prompt pay act.
Columbia then entered into two subcontracts with
Cannistraro, both of which contained the following arbitration
provision:
"At the sole election of [Columbia], any disputes shall be
resolved by arbitration in accordance with the Construction
Industry Arbitration Rules of the American Arbitration
Association."
Cannistraro thereafter proceeded to perform work under both
subcontracts and submitted regular monthly requisitions for
payment.
In addition, in January 2020, Cannistraro submitted change
order requests under each subcontract. Columbia timely rejected
those requests and conveyed its reasons for doing so.
Approximately two months later, Cannistraro submitted
applications and certificates for payment for the change orders
3 We draw the facts, which are undisputed, from the arbitrator's findings. The arbitrator's findings were contained in his interim order on the parties' cross motions for summary judgment, his ruling on Columbia's motion for leave to amend its response to the arbitration demand, his ruling on Cannistraro's second motion for summary judgment, and his final award.
4
(collectively, invoices). Although Columbia timely rejected the
invoices, it failed to include the certification required by the
prompt pay act that its rejections were made in good faith.4 See
G. L. c. 149, § 29E (d).5 Columbia did not pay the amounts
invoiced.
Procedural history. Cannistraro filed suit in the Superior
Court seeking damages in the amount of the invoices. Among
other things, Cannistraro's amended complaint asserted a claim
for violation of the prompt pay act, alleging that Columbia
failed to make payments in accordance with the requirements of
the statute.6
4 Several months later, on September 22, 2020, Columbia provided certification that its rejections of the invoices were made in good faith. But those certifications were not made within the time allowed by the prompt pay act. See G. L. c. 149, § 29E (d).
5 The prompt pay act has two provisions concerning certification of good faith rejection: one for progress payments, see G. L. c. 149, § 29E (c), and one for change orders, see G. L. c. 149, § 29E (d). Because this case concerns invoices for change orders, it falls under the latter, but both provisions contain the same requirement that a rejection of a request for payment "shall be made in writing," "shall include an explanation of the factual and contractual basis for the rejection and shall be certified as made in good faith." G. L. c. 149, §§ 29E (c), (d).
6 The amended complaint also asserted claims for breach of contract, unjust enrichment, promissory estoppel, enforcement of mechanic's lien bonds under G. L. c. 254, § 14, and violation of G. L. c. 93A, § 11.
5
Columbia answered, denied liability, and asserted various
affirmative defenses.7 In addition, Columbia moved to compel
arbitration. That motion was allowed, and the case thereafter
proceeded to arbitration under the American Arbitration
Association's Construction Industry Arbitration Rules (AAA
Construction Rules), as required by the subcontracts.8
Once in arbitration, and after discovery, the parties
cross-moved for summary judgment. Those cross motions raised,
among other things, the question of what, if any, legal
consequences were to flow from the fact that Columbia had not
timely certified that its rejections of the invoices were made
in good faith. The arbitrator, knowing that this legal issue
was then pending before the Appeals Court in Tocci Bldg. Corp.
v. IRIV Partners, LLC, 101 Mass. App. Ct. 133 (2022) (Tocci),
deferred ruling on the cross motions until the Appeals Court
issued its decision in that case.
The Appeals Court in Tocci concluded that the good faith
certification requirement was "an essential component of the
7 Columbia's affirmative defenses included that Cannistraro had committed a breach of the terms of the subcontract, that it had willfully and knowingly inflated the amount of its mechanic's lien, and that its claims were barred by fraud.
8 The parties have provided in the appellate record the AAA Construction Rules published in 2015, which we accordingly take to be the version of the rules under which the arbitration proceeded.
6
scheme set up by the" prompt pay act and that the failure to
certify timely in good faith the rejection of an invoice results
in deemed approval of the invoice. Tocci, 101 Mass. App. Ct. at
139. The Appeals Court further held that a party may not
withhold payment without issuing a timely rejection that
complies with statutory requirements, including the good faith
certification requirement. Id. at 142. Based on Tocci, the
arbitrator ruled that Columbia had violated the prompt pay act
by failing to provide timely the required certification of good
faith and, therefore, that the invoices were deemed approved.
See G. L. c. 149, § 29E (d) ("[a] request which is neither
approved nor rejected within such time period shall be deemed to
be approved"). The arbitrator accordingly ordered Columbia to
pay the unpaid amount of Cannistraro's invoices, namely,
$951,855.05.9
Columbia complied with the arbitrator's order. It then
moved to assert a counterclaim for recoupment under rule 6(b) of
the AAA Construction Rules, which allows counterclaims to be
asserted with leave of the arbitrator.10 Over Cannistraro's
The arbitrator left to another day the calculation of
9
interest.
Rule 6(b) provides: "Any new or different claim or
10
counterclaim, as opposed to an increase or decrease in the amount of a pending claim or counterclaim, shall be made in writing and filed with the AAA, and a copy shall be provided to the other party, who shall have a period of [fourteen] calendar
7
objection, the arbitrator allowed the motion, and Columbia then
filed an amended answer that included a counterclaim for
recoupment.
In response, Cannistraro filed another motion for summary
judgment, in essence arguing that the recoupment counterclaim
was foreclosed by Tocci. The arbitrator disagreed. The
arbitrator concluded that Tocci did not foreclose Columbia's
recoupment claim, explaining that Cannistraro had received
timely notice of the grounds for Columbia's rejection of the
invoices even though it had not received timely certifications
of good faith.
The arbitrator then conducted a three-day evidentiary
proceeding on the recoupment counterclaim, found that Columbia
met its burden to prove that Cannistraro's invoices were not
fair and reasonable, and ruled that Columbia was entitled to
recover $576,855.05 plus interest. A final award issued to this
effect on April 3, 2024.
Cannistraro next filed in the Superior Court a motion to
vacate the final award, pursuant to G. L. c. 251, § 12 (a) (3),
on the ground that the arbitrator had exceeded his authority.
days from the date of such transmittal within which to file an answer to the proposed change of claim or counterclaim with the AAA. After the arbitrator is appointed no new or different claim or counterclaim may be submitted without the arbitrator's consent."
8
Shortly thereafter, this court issued its decision in Graycor.
Graycor, like this case, involved a dispute between a contractor
and a subcontractor over amounts allegedly due for work
performed under a contract subject to the prompt pay act.
Graycor, 494 Mass. at 217-218. Unlike this case, however, the
contractor withheld payment even though it did not dispute the
amounts invoiced, nor did it provide written notice rejecting
the subcontractor's applications for payment. Id. at 219. When
the subcontractor then sued, the contractor sought to raise a
common-law defense of impossibility. Id. at 219-220. Noting
that the prompt pay act does not address common-law defenses,
id. at 225, we concluded that
"a party does not waive its defenses by failing to approve
or reject an invoice within the strict time requirements
established by the act. However, a party that neither
approves nor rejects a payment application within the
requisite time must first make the payment in order to
pursue any defenses in a subsequent proceeding related to
the invoices, as the invoices have been deemed
'approved.' The invoice payments must be made prior to, or
contemporaneous with, the raising of the defenses, or the
defenses cannot be raised."
Id. at 217-218. Accordingly, where the general contractor never
had paid the disputed invoices, it was precluded from invoking
common-law defenses to the subcontractor's breach of contract
claim for failure to pay. Id. at 225.
Pointing to Graycor, the Superior Court judge concluded
that the arbitrator's award exceeded his authority because
9
Columbia had asserted defenses to payment in its original
answer, which was filed before Columbia paid Cannistraro's
invoices. The judge accordingly vacated the recoupment damages
component of the arbitration award.11 This appeal followed,
which is now before us on direct appellate review.
Discussion. The question before us is whether, assuming
that the sequence of events here was inconsistent with the
payment prerequisite established in Graycor,12 the judge erred in
vacating the arbitration award on the ground that it exceeded
the arbitrator's authority. We review a trial judge's decision
to uphold or vacate an arbitration award de novo. Pittsfield v.
Local 447 Int'l Bhd. of Police Officers, 480 Mass. 634, 637
(2018).
The parties' agreement to arbitrate is governed by the
Massachusetts Arbitration Act, G. L. c. 251, §§ 1 et seq.,
11The judge determined that Columbia had asserted the defense in its answer filed in the Superior Court before the case was transferred to arbitration.
12Columbia disputes that it did not satisfy Graycor's payment prerequisite, noting that it did not assert its recoupment counterclaim until after it had paid the invoices. Cannistraro is of the opposite view and points out that, although Columbia did not assert any counterclaims before obtaining leave from the arbitrator, it had asserted affirmative defenses to payment as early as its initial answer to the complaint, which was filed before Columbia paid the invoices. Deciding this case as we do, we need not resolve this issue. We accordingly assume, without deciding, that the sequence of events here ran afoul of Graycor's payment prerequisite.
10
which, in §§ 11 through 13, sets out "[t]he role of courts with
respect to confirming, vacating, and modifying an arbitration
award." Katz, Nannis & Solomon, P.C. v. Levine, 473 Mass. 784,
789 (2016). "Consistent with policy strongly favoring
arbitration, an arbitration award is subject to a narrow scope
of review" (citation omitted). Superadio Ltd. Partnership v.
Winstar Radio Prods., LLC, 446 Mass. 330, 333 (2006)
(Superadio). More specifically, "[u]pon application of a party,
the court shall confirm" (emphasis added), G. L. c. 251, § 11,
an arbitration award unless one of the limited grounds
identified in §§ 12 and 13 applies, see Kauders v. Uber Techs.,
Inc., 486 Mass. 557, 569-570 (2021), quoting Katz, Nannis &
Solomon, P.C., 473 Mass. at 789 (use of "shall confirm" in § 11
is mandatory and "carries no hint of flexibility"). Otherwise,
a court is "strictly bound by an arbitrator's findings and legal
conclusions, even if they appear erroneous, inconsistent, or
unsupported by the record at the arbitration hearing." Lynn v.
Thompson, 435 Mass. 54, 61 (2001), cert. denied, 534 U.S. 1131
(2002). To allow otherwise "would undermine the predictability,
certainty, and effectiveness of the arbitral forum that has been
voluntarily chosen by the parties." Plymouth-Carver Regional
Sch. Dist. v. J. Farmer & Co., 407 Mass. 1006, 1007 (1990)
(Plymouth-Carver). "The policy of limited judicial review
preserves arbitration as an expeditious and reliable alternative
11
to litigation for commercial disputes." Katz, Nannis,
& Solomon, P.C., 473 Mass. at 794-795.
As relevant here, one of the limited grounds upon which an
arbitration award may be vacated is where an arbitrator exceeds
his authority. G. L. c. 251, § 12 (a) (3). "An arbitrator
exceeds his authority by granting relief beyond the scope of the
arbitration agreement, by awarding relief beyond that to which
the parties bound themselves, or by awarding relief prohibited
by law" (citations omitted). Plymouth-Carver, 407 Mass. at
1007. See Katz, Nannis & Solomon, P.C., 473 Mass. at 795;
Superadio, 446 Mass. at 334. The first two situations are not
at issue in this case because the recoupment award was within
the broad remedial scope of relief allowed under the AAA
Construction Rules to which the parties agreed to be bound.13
Where, as here, "the parties have incorporated the AAA rules
into their arbitration agreement, [those rules] exclusively
govern[] the scope of authority for [the arbitrator's] award[]."
Beacon Towers Condominium Trust v. Alex, 473 Mass. 472, 478
Rule 48 of the 2015 AAA Construction Rules provided, in
13
relevant part:
"The arbitrator may grant any remedy or relief that the
arbitrator deems just and equitable and within the scope of
the agreement of the parties, including, but not limited
to, equitable relief and specific performance of a
contract."
12
(2016) (involving arbitrator's award of attorney's fees). See
Superadio, 446 Mass. at 337 (arbitration panel's authority
derived from parties' agreement and from broad remedial
provision of AAA rules).
Thus, we deal here only with whether the arbitrator
exceeded his authority by awarding relief prohibited by law.
Awarding relief prohibited by law is not the same thing as
awarding relief that constitutes, or results from, an error of
law. And, in reviewing an arbitration award, it is essential
not to conflate or confuse these two distinct concepts because,
while a judge may vacate an arbitration award that is prohibited
by law, a judge may not, absent fraud, vacate an award that is
an error of law. See Katz, Nannis & Solomon, P.C., 473 Mass. at
795 ("If [an] arbitrator[] in assessing damages commit[s] an
error of law or fact, but do[es] not overstep the limits of the
issues submitted to [him], a court may not substitute its
judgment on the matter" [citation omitted]); Thompson, 435 Mass.
at 61. "The fact that an arbitrator has committed an error of
law does not alone mean that he has exceeded his authority."
Concerned Minority Educators of Worcester v. School Comm. of
Worcester, 392 Mass. 184, 187-188 (1984). See Boston v. Boston
Police Patrolmen's Ass'n, 443 Mass. 813, 818 (2005) (Patrolmen's
Ass'n) (consistent with strong policy favoring arbitration,
arbitrator's award is to be upheld "even where it is wrong on
13
the facts or the law, and whether it is wise or foolish, clear
or ambiguous").
An arbitrator awards relief prohibited by law where the
relief "offends public policy or . . . directs or requires a
result contrary to express statutory provision." PlymouthCarver, 407 Mass. at 1007. Neither situation is presented here.
Turning to the latter first, we begin by noting that the prompt
pay act does not by its express terms state if or when a
recoupment counterclaim may be raised after an invoice is deemed
to be approved due to a failure to provide a timely
certification of good faith. See G. L. c. 149, § 29E. Indeed,
we held in Graycor that the statute "does not expressly preempt
all common-law defenses to breach of contract," and such
"defenses are not precluded by the [statute], even if a
contractor fails to approve or reject an application for payment
as required." Graycor, 494 Mass. at 225-226. As a result, the
arbitration award did not direct or require a result contrary to
an express provision of the prompt pay act.14 Contrast
14Given the absence of an express statutory provision upon which to rely, Cannistraro turns to language in Graycor in which this court concluded that the Legislature's determination "that the failure to accept or reject a periodic payment application within the defined time requirements is deemed an approval of the payment . . . must have meaningful consequences." Graycor, 494 Mass. at 227. This was a "necessary implication" of the statute as a whole. Id. at 226. In that case, the contractor, who had sought to litigate common-law defenses without ever paying the invoices, was precluded from doing so. See id. at
14
Commonwealth v. Massachusetts Org. of State Eng'rs & Scientists,
423 Mass. 667, 671 (1996) (arbitration award contravened express
provisions of G. L. c. 32, § 28K); Massachusetts Bay Transp.
Auth. v. Local 589, Amalgamated Transit Union, 406 Mass. 36, 39
(1989) (arbitration award required conduct by public employer to
which agency could not bind itself under express terms of G. L.
c. 161A, § 19); Marlborough v. Cybulski, Ohnemus & Assocs., 370
Mass. 157, 161 (1976) (arbitration award of damages in excess of
amount allowed by G. L. c. 44, § 31); Massachusetts Bd. of
Higher Educ./Holyoke Community College v. Massachusetts Teachers
Ass'n/Mass. Community College Council/Nat'l Educ. Ass'n, 79
Mass. App. Ct. 27, 32 (2011) (arbitration award intruding on
decision-making authority "left by statute to the exclusive
managerial control of designated public officials").
What remains is whether the arbitration award offends
public policy. See Lawrence v. Falzarano, 380 Mass. 18, 29
(1980) (arbitration award may be vacated if relief is "contrary
to legislative or other public policy"). "[B]ecause the public
policy [exception] allows courts to by-pass the normal heavy
deference accorded to arbitration awards and potentially to
'judicialize' the arbitration process, the judiciary must be
228. Regardless, the cited language in Graycor did not identify any "express statutory provision" prohibiting the relief awarded by the arbitrator here. Plymouth-Carver, 407 Mass. at 1007.
15
cautious about overruling an arbitration award on the ground
that it conflicts with public policy" (quotation and citation
omitted). Bureau of Special Investigations v. Coalition of Pub.
Safety, 430 Mass. 601, 604 (2000). Consequently, cases granting
relief on such grounds are exceptional; indeed, the public
policy exception has arisen almost exclusively in the context of
public employees who have engaged in malfeasance. See
Patrolmen's Ass'n, 443 Mass. at 823 (vacating arbitration award
reinstating police officer who committed perjury and filed false
police reports); School Dist. of Beverly v. Geller, 435 Mass.
223, 224, 237 (2001) (Ireland, J., concurring) (vacating
arbitration order reinstating school teacher who used physical
force against student); Boston v. Boston Police Patrolmen's
Ass'n, 74 Mass. App. Ct. 379, 382 (2009) (vacating reinstatement
of police officer who committed assault by means of dangerous
weapon). As the person seeking to vacate the arbitration award,
Cannistraro bears the burden to establish that public policy was
violated. Local 447 Int'l Bhd. of Police Officers, 480 Mass. at
640.
Cannistraro has not met its burden here. The particulars
of this case make clear that the arbitrator's award does not
rise to the level of a violation requiring judicial relief. The
public policy that Cannistraro relies on is essentially the
statutory requirement of a timely rejection of an invoice that
16
includes a good faith certification. Here, the first
requirement of a timely rejection was met, while the good faith
certification was not made timely. But, as explained above, the
statute does not address the consequences of the failure to
comply fully with these requirements, except to state that the
invoices are deemed approved. The statute also does not address
whether recoupment claims can nonetheless be pursued. The
arbitrator allowed such claims to proceed, but only after
Columbia first paid the disputed invoices in full –- a procedure
permitted under the AAA Construction Rules to which the parties
agreed to be bound. See note 13, supra. In so doing, the
arbitrator presciently anticipated Graycor's central requirement
that, when a contractor fails to satisfy all statutory
requirements for rejecting a claim, it must pay the disputed
amount before asserting defenses. Moreover, although Columbia
failed to timely provide good faith certifications, it timely
notified Cannistraro of the reasons why it was rejecting the
invoices. The arbitrator appears to have concluded that these
reasons were offered in good faith, and that Cannistraro was not
harmed by the lack of timely certification because the
certifications would have provided no more information about why
the invoices were being rejected than Cannistraro had already
received. Such an interpretation, determining that the
essential purpose of the prompt pay act was satisfied, even
17
assuming it was incorrect as a matter of law, does not
constitute a violation of public policy. Accordingly, we
conclude that Cannistraro has failed to show that the recoupment
award violates public policy.
Conclusion. The arbitrator did not exceed his authority in
awarding recoupment of payments to Columbia, and thus the judge
should not have vacated the arbitration award. The judgment is
reversed, and the matter is remanded to the Superior Court for
entry of a judgment confirming the arbitration award.
So ordered.