Introduction

In Matter of Centurion Companies, Inc. v. Bowne Tech Construction Corp. (2025 NY Slip Op 04246), the Appellate Division, Second Department, offers a significant refinement of New York’s already strict standards for judicial review of arbitration awards under CPLR article 75. While reaffirming the extreme deference courts give to arbitral fact-finding and remedies, the Court vacated the portion of an award granting “delay damages” because there was “no proof whatever” to justify the amount, rendering that component irrational and contrary to public policy. The Court simultaneously underscored the narrow scope of modification for “miscalculation of figures” under CPLR 7511(c), rejecting an attempt to recast a substantive offset as arithmetic error. The decision also confirms that a change order conditioned on signatures by both parties and the owner is unenforceable if not executed as required, and that an arbitrator’s alleged misapplication of law on a no-oral-modification clause is not, without more, a ground for vacatur.

The case arises out of a construction project to convert a building into a self-storage facility in West Nyack, New York. The general contractor, Centurion Companies, Inc. (Centurion), and a steel subcontractor, Bowne Tech Construction Corp. (Bowne), disputed payment obligations and delay responsibility. After an arbitrator denied Bowne’s unpaid work claim and awarded Centurion damages, including $91,250 in delay damages calculated at $1,000 per day, Centurion petitioned to confirm and Bowne cross-moved to vacate or modify the award. The Supreme Court confirmed in full. On appeal, the Second Department modified the judgment, severing the unsupported delay damages, while otherwise affirming.

Summary of the Judgment

• Procedural disposition:
  • The appeal from the order confirming the award was dismissed as subsumed by the subsequent judgment (appeal lies from the judgment; issues are “brought up for review”).
  • The judgment confirming the arbitration award was modified to delete the $91,250 component labeled “delay damages.”
  • As modified, the judgment was affirmed, and the matter remitted for entry of an amended judgment reflecting the reduction.
• Core holdings:
  • Delay damages award vacated as irrational and contrary to public policy because there was no evidence of actual damages attributable to Bowne, nor any rational evidentiary basis for the $1,000/day rate.
  • Modification for “miscalculation of figures” under CPLR 7511(c)(1) is limited to arithmetic errors, not disagreements with the arbitrator’s legal/factual determinations (e.g., offsets).
  • Arbitrator’s denial of Bowne’s unpaid work claim—predicated on an unsigned change order that the subcontract expressly required to be signed by both parties and the owner—was not irrational; any alleged misapplication of the law governing no-oral-modification clauses is not a valid basis for vacatur.

Detailed Analysis

Procedural Posture and Facts

• Centurion contracted to renovate a property at 100 Snake Hill Road, West Nyack, and subcontracted steel work to Bowne for $840,000.
• Bowne filed a mechanic’s lien for $261,200, tied to unpaid sums it claimed were due, including a $150,000 change order.
• Centurion demanded arbitration, disputing Bowne’s claim and seeking its own damages based on Bowne’s alleged noncompliance.
• The arbitrator denied Bowne’s claim and awarded Centurion $156,790, including $91,250 in delay damages calculated at $1,000/day.
• Centurion petitioned to confirm; Bowne cross-moved to vacate/modify. The Supreme Court confirmed in full. Bowne appealed.

Precedents Cited and Their Influence

• Matter of Aho, 39 NY2d 241 (1976)
  • Appeals from orders terminate upon entry of judgment; issues are reviewable on appeal from the judgment (CPLR 5501(a)(1)). Applied to dismiss Bowne’s appeal from the order while preserving its issues on the judgment appeal.
• Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471 (2006); American Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 35 NY3d 64 (2020)
  • Reaffirm the exceptionally limited judicial review of arbitration awards, and that vacatur for “exceeding power” under CPLR 7511(b)(1)(iii) includes awards that violate strong public policy or are irrational.
• CEO Bus. Brokers, Inc. v 1431 Utica Ave. Corp., 187 AD3d 1186; Douglas Elliman of LI, LLC v O’Callaghan, 220 AD3d 945; Briscoe Protective, LLC v North Fork Surgery Ctr., LLC, 215 AD3d 956; J-K Apparel Sales Co., Inc. v Esposito, 189 AD3d 1045
  • Collectively articulate the operative standards: party seeking vacatur bears a “heavy burden”; arbitral awards may be vacated if irrational—i.e., where there is “no proof whatever” to justify the award; courts cannot reweigh evidence or replace an arbitrator’s contract interpretation or remedial choices.
• Iannucci v Kucker & Bruh, LLP, 161 AD3d 959; Plato Gen. Constr. Corp./EMCO Tech Constr. Corp., JV, LLC v Dormitory Auth., 89 AD3d 819
  • Define the elements of delay damages: claimant must prove (a) defendant responsibility for delay; (b) impact on completion (excluding overlapping/concurrent delays); and (c) actual damages caused by the delay. These cases provided the substantive benchmark the Court applied to evaluate the arbitral delay damages component.
• Matter of Buffalo Professional Firefighters Assn., Local 282 [Masiello], 13 NY3d 803
  • Public policy exception: arbitral awards that contravene a well-defined public policy may be vacated. The Court invoked this alongside “irrationality” to invalidate damages untethered to proof.
• Matter of American Ins. Co. [Messinger—Aetna Cas. & Sur. Co.], 43 NY2d 184; Matter of Cupero v Herman, 50 AD3d 791; WBP Cent. Assoc., LLC v Deco Constr. Corp., 44 AD3d 781; cf. Matter of Paul v Ins. Co. of N. Am., 81 AD2d 671
  • Cabin the “miscalculation of figures” ground for modification to true arithmetic mistakes, not merits determinations like entitlement or offsets. The Court relied on this line to reject Bowne’s $84,000 offset argument.
• Shnitkin v Healthplex IPA, Inc., 71 AD3d 979; NFB Inv. Servs. Corp. v Fitzgerald, 49 AD3d 747
  • Alleged legal error in an arbitrator’s application of contract clauses (e.g., no-oral-modification) is generally not a basis for vacatur absent irrationality or excess of power. The Court applied this to uphold rejection of Bowne’s unpaid work claim predicated on an unenforceable change order.
• Richardson v Markovich, 227 AD3d 999; D & W Cent. Sta. Fire Alarm Co., Inc. v FlatironHotel Operations, LLC, 221 AD3d 1003
  • Recent applications of the “no proof whatever” irrationality standard leading to vacatur of arbitral damage components that lack evidentiary support. These supplied direct analogues for the outcome here.

Legal Reasoning

1) The deferential baseline—and its limits

The Court began from the well-settled premise that judicial review of arbitration awards is “extremely limited.” A party seeking vacatur bears a heavy burden and must establish, by clear and convincing evidence, that one of the narrow grounds in CPLR 7511(b) applies. One such ground is when an arbitrator “exceeded his or her power,” which New York courts construe to include awards that (i) violate strong public policy; (ii) are irrational; or (iii) clearly exceed a specifically enumerated limitation on arbitral authority.

2) Delay damages: proof, causation, and the impermissibility of “per diem by fiat”

The Court vacated the $91,250 delay damages portion because Centurion failed to prove the essential elements of delay damages:

• Responsibility: Centurion conceded that its own delays prevented Bowne from starting work until December 2020.
• Causation and concurrency: The project achieved substantial completion seven months later (July 2021). No evidence established that any later schedule slippage was attributable to Bowne, as opposed to overlapping or unrelated delays.
• Damages and quantum: There was no proof of actual monetary harm to Centurion from any Bowne-caused delay, and no contractual or evidentiary basis for the arbitrator’s $1,000/day rate. The award was therefore “irrational” because there was “no proof whatever” to justify it.

Importantly, the Court also deemed the per diem figure contrary to public policy. New York’s public policy does not tolerate arbitral remedies that are untethered to the contract or the evidence. While arbitrators enjoy broad remedial latitude, they cannot impose damages that amount to a penalty or speculation. Had the subcontract contained a liquidated damages clause with a negotiated per diem rate, the arbitrator could have applied it; absent such a clause and absent proof, the chosen rate was insupportable.

3) No-oral-modification and change orders: enforcing contractual prerequisites

Bowne’s unpaid work claim hinged on a $150,000 change order. The subcontract expressly required change orders to be signed by both parties and by the owner to be enforceable. The evidence showed only Bowne signed the document. The arbitrator found the change order unenforceable and denied Bowne’s claim. On review, the Court held that even if the arbitrator had arguably misapplied the law governing no-oral-modification clauses, such alleged legal error does not supply a ground for vacatur. The determination was not irrational given the subcontract’s clear signature condition and the absence of compliance.

4) Modification for miscalculation: not a back door to merits review

Bowne argued the arbitrator should have offset $84,000 against the damages awarded to Centurion. Invoking CPLR 7511(c)(1), Bowne framed this as a “miscalculation of figures.” The Court rejected the argument, emphasizing that “miscalculation” is limited to mechanical arithmetic mistakes, not disagreements with the arbitrator’s legal or factual conclusions on entitlement, offsets, or valuation. Attempting to recharacterize a merits dispute as a numerical error cannot circumvent the narrow modification standard.

5) Severability and remedy

The Court severed only the defective portion of the award (delay damages) and remitted for entry of an amended judgment. This recognizes the award’s separability: the unsupported component can be excised without undermining the remainder. Practically, the principal is reduced by $91,250, with any additional adjustments (e.g., statutory interest) to be addressed by the Supreme Court on remittal.

6) Appellate housekeeping: appeals from orders and judgments

As a procedural matter, the Court dismissed the direct appeal from the order confirming the award because the appeal properly lies from the judgment. All issues raised on the order appeal were considered on the appeal from the judgment (CPLR 5501(a)(1)).

Impact and Practical Implications

• For arbitrators:
  • Damages must be grounded in the record or the contract. Affixing a daily rate for delay without a liquidated damages clause or evidentiary support is vulnerable to vacatur as “irrational” and contrary to public policy.
  • When awarding delay damages, articulate findings on responsibility, concurrency, critical-path impact, and the evidentiary basis for the quantum.
  • Draft reasoned awards that connect specific evidence to the chosen measure of damages.
• For owners, contractors, and subcontractors:
  • Consider express liquidated damages provisions with clearly negotiated per diem rates if predictable delay compensation is desired.
  • Strictly follow change order formalities, especially signature requirements that include the owner; noncompliance can be fatal to payment claims.
  • Maintain contemporaneous schedule updates, time-impact analyses, and documentation of cost consequences to support or defend delay claims.
• For counsel in CPLR article 75 proceedings:
  • Partial vacatur is available where an award component is severable and lacks evidentiary support; target specific, unsupported segments rather than the whole award.
  • Reserve CPLR 7511(c) “miscalculation” arguments for genuine arithmetic slips. Attempts to recast merits disputes as “math errors” will fail.
  • Alleged legal errors (e.g., application of no-oral-modification rules) rarely carry the day unless they render the award irrational or offend strong public policy.
• Doctrinal significance:
  • The decision sharpens the “irrationality” standard in the damages context: quantification must be evidence-based. The Court’s coupling of irrationality with public policy underscores that unsupported damages are not merely poor reasoning; they cross the line into impermissible arbitral lawmaking.
  • It reiterates the narrowness of CPLR 7511(c)’s modification remedy, preserving the finality of arbitral merits determinations.

Complex Concepts Simplified

• Irrational arbitral award:
  • An award is “irrational” when there is no evidence in the record to support it. It is not enough that a court would have weighed the evidence differently; there must be a complete absence of proof for the particular determination.
• Public policy exception (arbitration):
  • Even under deferential review, an award cannot stand if it violates a well-defined, dominant public policy (e.g., imposing penalties not grounded in contract or law). The bar is high and narrowly applied.
• Delay damages:
  • The claimant must prove responsibility, causation (including elimination of overlapping/concurrent delays), and actual damages. Liquidated damages clauses, if present and enforceable, may substitute for proving actual damages but must be in the contract.
• Concurrent/overlapping delays:
  • When multiple parties or causes delay a project at the same time, a claimant must segregate the portion of delay attributable to the opposing party; otherwise, recovery may be reduced or barred.
• CPLR 7511(b) vs. 7511(c):
  • Vacatur (7511(b)) undoes an award (in whole or part) for serious problems like corruption, partiality, exceeding powers (including irrationality/public policy), or procedural misconduct. Modification (7511(c)) is a surgical fix for non-substantive issues like arithmetic miscalculations or awards on matters not submitted—without disturbing the merits.
• No-oral-modification and change orders:
  • If a contract requires written, signed change orders (often including owner consent), an unsigned change order is typically unenforceable. Arbitrators may consider equitable doctrines, but courts will not disturb their determinations absent irrationality.
• Mechanic’s lien vs. arbitration outcome:
  • A filed lien reflects a claimed amount but does not establish entitlement. If an arbitrator finds no contractual basis (e.g., unenforceable change order), the underlying claim—and thus the lien’s asserted sum—can fail.

Conclusion: Key Takeaways

• Arbitral deference is not boundless. Where a damages award lacks any evidentiary foundation—especially a per diem rate not grounded in a contract or proof—courts may vacate that portion as irrational and contrary to public policy.
• CPLR 7511(c)’s “miscalculation of figures” remains a narrow, arithmetic-only pathway; it cannot be used to re-litigate offsets or entitlement.
• Contractual formalities matter. Change orders that require signatures from both parties and the owner are unenforceable if those signatures are missing, and arbitrators may deny related claims without fear of vacatur so long as their determinations are not irrational.
• Practitioners seeking or resisting delay damages in arbitration must build a record on responsibility, concurrency, schedule impact (preferably critical-path analysis), and a non-speculative measure of loss—or an enforceable liquidated damages clause.
• Procedurally, once a judgment is entered, appeals should be taken from that judgment; issues from prior orders are preserved for review under CPLR 5501(a)(1).

Matter of Centurion v Bowne thus refines the contours of the “irrationality” and public policy limits on arbitral awards in New York, particularly in the quantification of construction delay damages, while reaffirming the narrow scope of modification for miscalculations. It will likely influence how arbitrators articulate the basis for damages and how parties document and present delay claims in future construction disputes.