SJC Reverses Lower Court | Upholds Arbitrator's Award in Prompt Pay Dispute - Cannistraro v. Columbia
Earlier today, the Massachusetts Supreme Judicial Court issued an important decision for the construction industry: J.C. Cannistraro, LLC v. Columbia Construction Co., SJC-13819 (June 26, 2026).
The ruling significantly reinforces the finality of arbitration awards in disputes arising under the Massachusetts Arbitration Act. Importantly, the Court also reaffirmed that the Prompt Pay Act (G. L. c. 149, § 29E) does not preempt common-law defenses or recoupment claims, and it endorsed the practical sequence the arbitrator followed: pay the deemed-approved amount first, then pursue defenses and recoupment.
What the Court Decided
The Supreme Judicial Court overruled a lower court's decision that that the arbitrator exceeded his authority by allowing the contractor to pursue a recoupment counterclaim.
Instead, the Court upheld the arbitrator's decision holding that a court may only vacate an arbitration award where the relief is prohibited by law (meaning it offends public policy or contravenes an express statutory provision) and not merely because the court believes that arbitrator may have committed an error of law.
Even if the arbitrator's handling of the Prompt Pay Act were found to be incorrect, that would be an error of law a court has no power to correct, not relief prohibited by law. The Court also reaffirmed that the Prompt Pay Act does not preempt common-law defenses or recoupment claims, and it endorsed the practical sequence the arbitrator followed: pay the deemed-approved amount first, then pursue defenses and recoupment, though it did so through dicta.
The Underlying Facts
A subcontractor's change-order invoices were "deemed approved" under the Prompt Pay Act because the general contractor, while timely rejecting the invoices and stating its reasons, failed to include the statute's good-faith certification within the required time. After paying the disputed amounts in full, the contractor obtained the arbitrator's leave to pursue a recoupment counterclaim and prevailed, recovering a substantial portion of the payment. The subcontractor moved to vacate, arguing the award conflicted with the Court's 2024 decision in Business Interiors Floor Covering Business Trust v. Graycor Construction Co. For purposes of the decision, the SJC assumed the contractor's sequence ran afoul of Graycor and confirmed the award anyway.
Why It Matters
The decision confirms that when parties commit to arbitrate disputes through AAA Construction Industry arbitration, courts will apply heavy deference and will rarely disturb the arbitrator's resolution. The Court also reaffirmed that the Prompt Pay Act does not preempt common-law defenses or recoupment claims, and it endorsed the practical sequence the arbitrator followed: pay the deemed-approved amount first, then pursue defenses and recoupment.
A word of caution, however: this decision is not a license to skip or delay the good-faith certification. The Court did not bless the contractor's late certification — it simply held that an arbitrator's error of law is not reviewable by a court. Contractors should continue to issue timely, fully compliant rejections, including the required good-faith certification, to avoid having invoices deemed approved in the first place.
Preti Flaherty's Role
Preti Flaherty attorneys Kenneth E. Rubinstein, Nicholas A. Dube, and Michael J. Amato submitted an amicus curiae brief in this case on behalf of the Associated General Contractors of Massachusetts, Construction Industries of Massachusetts, Inc., and the Utility Contractors' Association of New England, Inc. We are pleased that the Court's decision recognizes the strong policy favoring arbitration that our clients advanced.
For further information, please contact Kenneth E. Rubinstein, Nicholas A. Dube, or Michael J. Amato.