## Facts

- Greate Bay Hotel & Casino, Inc. (operating the Sands in Atlantic City) hired Perini Corporation as construction manager for major renovations intended to increase casino profitability.
- Perini’s compensation was approximately a $600,000 management fee plus certain cost reimbursements; the contract contemplated a guaranteed maximum price and tied substantial completion timing to that pricing structure.
- The project suffered delays and coordination disputes; Sands alleged it was forced to operate with disrupted facilities during profitable periods, causing substantial lost casino profits.
- Sands terminated Perini and pursued arbitration under construction-industry arbitration rules; Perini contested liability and sought unpaid compensation.
- After extensive arbitration proceedings, the panel awarded Sands roughly $14.5 million in lost-profit damages attributable to Perini’s delays, along with other adjustments.
- Perini sought to vacate the award; the trial court confirmed it, and the Appellate Division affirmed.

## Issues

1. Whether a court may vacate an arbitration award based on alleged legal error in applying contract-damages limits (foreseeability/contemplation of consequential lost profits).
2. Whether arbitrators exceeded their authority or manifestly disregarded law by awarding lost profits extending beyond the project’s substantial completion date.
3. Whether the disparity between Perini’s fee and the magnitude of the lost-profit award justified vacatur as an excess of arbitral power or legally impermissible damages.

## Decision

- The New Jersey Supreme Court affirmed confirmation of the arbitration award.
- The Court held that alleged legal mistakes are not grounds for vacatur unless they are gross, unmistakable, or in manifest disregard of applicable law, or otherwise fall within narrow statutory vacatur categories.
- The Court found the lost-profit award was within the arbitrators’ remedial authority and was not shown to reflect manifest disregard of contract-damages principles.
- The Court declined to treat the post-substantial-completion period of damages or the size of the award, standing alone, as proof that the arbitrators exceeded their powers.

## Legal Principles

- Judicial review of arbitration awards is highly constrained; courts do not re-try facts or correct ordinary legal error.
- Vacatur is limited to narrow statutory or recognized grounds (e.g., corruption, fraud, undue means, or arbitrators exceeding/imperfectly executing their powers so no final and definite award is made).
- An arbitral legal error warrants vacatur only if it amounts to a gross, unmistakable mistake or manifest disregard of the law.
- Where arbitration rules and the parties’ agreement authorize broad remedial relief within the scope of the agreement, arbitrators may award consequential damages, including lost profits, if rationally connected to the contract and evidentiary record.
- The magnitude of an award relative to a contractor’s fee does not, by itself, show the award is beyond arbitral authority; sophisticated parties bear responsibility for negotiating contractual limits on consequential damages.

## Conclusion

The court upheld a large lost-profits arbitration award, reaffirming that New Jersey courts will not vacate arbitration outcomes for ordinary alleged legal error and will intervene only for narrow statutory defects or a showing of manifest disregard (or comparable, unmistakable legal error) by the arbitrators.


Perini Corp. v. Greate Bay Hotel & Casino, Inc., 610 A.2d 364 (N.J. 1992)