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August 05, 2010

Remanding an arbitration award for the sole purpose of calculating or recalculating "damages" does not permit a new determination on the merits

Remanding an arbitration award for the sole purpose of calculating or recalculating "damages" does not permit a new determination on the merits
Shroid Construction v Dattoma, App Div, 250 AD2d 590

Sometimes an arbitration award is challenged pursuant to Article 75 and while sustained on the merits, the matter is remanded to calculate or recalculate the amount of “damages” to be paid. May the arbitrator make new or additional findings in calculating the “damages” to be paid?

In the Shroid case, the Appellate Division ruled that the answer is no: “under the circumstances, it was improper for the [hearing officer] to attempt to amend his findings after they had been reviewed and affirmed on appeal.”

Shroid alleged the union had sanctioned a work slowdown by its members in violation of the terms of a collective bargaining agreement. The Judicial Hearing Officer [JHO] who heard the complaint ultimately sustained the allegations and ruled that the union’s action violated the contract, which resulted in Shroid’s suffering “actual damages.”

The JHO’s determination was sustained by the Appellate Division and the matter was returned to him for a determination of amount of the damages Shroid suffered. However, while considering the question of damages, the JHO made “substantive changes” in his findings and Shroid again appealed.

Shroid argued that the JHO did not have any power to make a substantive change in his findings, particularly in the light of the Appellate Division’s determination sustaining his findings.

The Appellate Division agreed. According to the ruling, the JHO’s authority was limited to making a “calculation of damages” resulting from the work slowdown.

The Appellate Division commented that its ruling in a prior appeal is not only binding on the parties, but was binding “on this court as well.”

In other words, once an arbitration award is sustained by the court, that determination is binding on the parties, and on the courts, in any future litigation involving a challenge to that determination.

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