John A. Cookson v. New Hampshire Ball Bearing, Inc., et al.

This is a dispute between the plaintiff, John A. Cookson Company, and the defendants, New Hampshire Ball Bearings, Inc. (NHBB) and NMB Corporation (NMB), relating to the breach of certain sales representative agreements. The plaintiff appeals decisions of the superior court requiring arbitration of its claims against the defendants and upholding the arbitrator’s award. We affirm in part, reverse in part and remand.

The record discloses the following facts. The plaintiff agreed to act as the defendants’ sales representative, selling products to companies in the aviation and aerospace industry for a commission. The plaintiff’s sales territory was California, Oregon and Washington. It maintained an office in Seattle, Washington.

Originally, the agreements contained a termination clause allowing either the plaintiff or the defendants to terminate the contracts upon sixty days’ notice. This provision was amended in August 1992 to allow termination upon eighteen months’ notice. In March 1994, the defendants informed the plaintiff that they would terminate the contracts in sixty days and that the plaintiff was not to contact any of the defendants’ customers on behalf of other companies. In addition, the defendants limited the products that the plaintiff could continue selling, eliminating approximately eighty percent of its business. As a result, the plaintiff was forced to close its office. The plaintiff filed suit in superior court in July 1996, alleging breach of contract, breach of the covenant of good faith and fair dealing, unfair trade practices, interference with business relationships, and intentional and negligent misrepresentation.

The contract with NHBB contained an arbitration clause, which stated that "[a]ny dispute between the Representative and NHBB, unless relating to the division of commissions, shall be arbitrated in Hillsborough County, New Hampshire at the American Arbitration Association in conformity with the rules of said Association then in effect." Similarly, the contract with NMB provided that "[i]f the parties do not resolve the dispute through mediation within forty-five (45) days of the Initial Notice, then the dispute shall be resolved by binding arbitration conducted in accordance with the rules then in effect of the American Arbitration Association." The defendants filed a motion to stay proceedings and compel arbitration, which the superior court granted.

Prior to arbitration, the plaintiff moved to amend its suit to include a claim under RSA chapter 339-E (1995), Sales Representatives and Post-Termination Commissions. The arbitrator denied the motion on the ground that the plaintiff did not have standing under the statute. On September 15, 1998, the arbitrator awarded the plaintiff $199,000 in damages representing commissions owed by both defendants. He did not, however, award a separate amount for the tort claims because he concluded that: 1) with respect to damages, the plaintiff’s claim for intentional interference with contractual relations was the same as its breach of contract claim; and 2) there was insufficient evidence to support the plaintiff’s misrepresentation claims.

In his damages calculation, the arbitrator reduced the plaintiff’s total damages of $410,000 by $211,000, the amount the arbitrator concluded the plaintiff saved by not having to perform under the contract. He also determined that the plaintiff failed to introduce any substantive evidence regarding the value of its lost investment or the amount of future lost profits from other prospective customers. The arbitrator also denied the plaintiff interest because the parties’ agreements did not contain any provision for the payment of interest.

The plaintiff applied to the superior court for a modification of the arbitrator’s award. See RSA 542:8 (1997). It argued, among other things, that the arbitrator committed plain mistake by finding that: 1) the plaintiff did not have standing under RSA chapter 339-E; 2) the plaintiff was not entitled to separate damages for the defendants’ alleged tortious conduct; 3) the plaintiff’s damages should be reduced by $211,000; and 4) the plaintiff was not entitled to interest. The court denied the plaintiff’s request and this appeal followed. See RSA 542:10.

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As a result, we hold that in the context of arbitrations, "arbitrators may include interest in an award unless the parties have expressly provided otherwise in their contract or arbitration agreement." Gordon Sel-Way v. Spence Bros., 475 N.W.2d 704, 711 (Mich. 1991). Because the arbitrator denied the plaintiff interest based upon an error of law, we conclude that the superior court erred by finding that the arbitrator did not commit plain mistake when he denied the plaintiff interest. Therefore, we remand to the superior court with instructions to remand to the arbitrator to determine whether interest should be awarded.

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