Opinion
15-P-327
02-19-2016
AMERICAN CAPITAL ENERGY, INC. v. THE REAL THING, LLC.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
On appeal from a judgment entered in the Superior Court, American Capital Energy, Inc., (ACE) contends that its application to vacate an arbitration award on the ground that the arbitrator erred in awarding attorney's fees was improperly dismissed by the Superior Court judge. ACE challenges the award of attorney's fees to The Real Thing, LLC, (TRT) for two reasons. First, ACE contends the arbitrator exceeded his authority in awarding attorney's fees to TRT based on the lodestar methodology rather than on a contingent fee basis. Second, ACE contends that the arbitrator erred in failing to grant it a continuance to file its response to TRT's attorney's fee filing. We affirm.
Background. We summarize the pertinent facts to this appeal as found in the arbitrators final award.
ACE and TRT entered into a cooperation agreement on December 7, 2010, in which the parties agreed to "co-develop" certain solar energy projects. The cooperation agreement contained the following arbitration clause:
"Any claim or controversy arising out of or relating to this Agreement or any breach thereof that cannot be amicably resolved by the Parties within thirty (30) days shall be settled by binding arbitration under the then current rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitration shall be held in New York, and shall be conducted before a single arbitrator mutually agreeable to the Parties, or if no agreement can be reached, then selected by the American Arbitration Association. The arbitrator shall render detailed findings of fact and conclusions of law in writing and in support of his/her decision, and shall award reimbursement of attorneys' fees and other costs of arbitration to the prevailing Party. Both parties consent to the jurisdiction of the courts of the State of New York in connection with any action to collect any such award and agree that service of process for any such action may be served either within or without the State of New York in the manner provided for such service if made within the State of New York."The arbitrator issued his final award on April 11, 2014. He ruled that ACE had breached both the cooperation agreement and its fiduciary obligations to TRT. The arbitrator awarded TRT $461,653 plus interest. He also awarded TRT attorney's fees totaling $215,021.50, and other costs and expenses of arbitration.
The parties agreed to hold the arbitration in Massachusetts and that it be subject to Massachusetts law.
Discussion. ACE contends that its application to vacate the award should not have been dismissed because the arbitrator improperly awarded attorney's fees to TRT. We note, as a general matter, that "we are strictly bound by an arbitrator's factual findings and conclusions of law, even if they are in error." School Comm. of Pittsfield v. United Educators of Pittsfield, 438 Mass. 753, 758-759 (2003). "This strict standard of review is highly deferential to the decision of an arbitrator, and it reflects a strong public policy in the Commonwealth in favor of arbitration." School Comm. of Lexington v. Zagaeski, 469 Mass. 104, 110 (2014). "Short of fraud, arbitrary conduct, or significant procedural irregularity, the arbitrator's resolution of matters of fact or law is binding." Grobet File Co. of America, Inc. v. RTC Sys., Inc., 26 Mass. App. Ct. 132, 135 (1988). See Trustees of Boston & Me. Corp. v. Massachusetts Bay Transp. Authy., 363 Mass. 386, 390 (1973) (courts will not disturb arbitrator's findings and conclusion even if "grossly erroneous").
A. Arbitrator's authority. ACE contends that its motion to vacate should not have been dismissed because the arbitrator exceeded his authority in awarding attorney's fees to TRT. We disagree. ACE's argument that the arbitrator exceeded his authority is based on the arbitrator's interpretation of the underlying contract provision, specifically the use of the word "reimbursement" in the phrase "shall award reimbursement of attorneys' fees." Ace contends that the use of "reimbursement" restricted the arbitrator to use of the contingent fee agreement as a ceiling to the amount of attorney's fees that could be awarded, and that by using the lodestar method, the arbitrator exceeded his authority.
However, even if we agreed with ACE's interpretation of "reimbursement," we cannot overrule an arbitrator solely because "we give a contract a different interpretation." Concerned Minority Educators of Worcester v. School Comm. of Worcester, 392 Mass. 184, 187 (1984). The limiting boundaries of the arbitrator's authority must be clear and "the limiting words must be plain." Groblet File Co. of America, Inc., 26 Mass. App. Ct. at 135. "If there is room for doubt or interpretation on the question, then the issue properly lies within the broad authority conferred upon arbitrators of civil disputes." Ibid. "Reimbursement" is defined as "[r]epayment[;] [i]ndemnification," while "indemnify" is defined as "[t]o reimburse (another) for a loss suffered because of a third party's or one's own act or default." Black's Law Dictionary 1399, 837 (9th ed. 2009). It is clear that the arbitrator acted within the authority conferred on him, as "reimbursement" is not a clear and plain limiting word with no room for interpretation.
We also note that established case law supports the arbitrator's decision. Cambridge Trust Co. v. Hanify & King Professional Corp., 430 Mass. 472, 479 (1999) ("Contingent fee agreements and court-awarded attorney's fees may coexist independently of one another. . . . A contingent fee agreement does not impose a ceiling on the amount of attorney's fees a court may properly award").
An arbitrator deciding an attorney's fee award should be made aware of a contingent fee agreement. See Winthrop Corp. v. Lowenthal, 29 Mass. App. Ct. 180, 186 (1990). TRT provided its contingent fee agreement to the arbitrator when it submitted its affidavit for attorney's fees. However, even if the arbitrator erred in not considering the contingent fee agreement, it is not an error that we can correct. See Softkey, Inc. v. Useful Software, Inc., 52 Mass. App. Ct. 837, 840-841 (2001). "Assuming, without deciding, that Winthrop Corp. v. Lowenthal, supra, is not distinguishable, the arbitrator's deviation from the holding in that case was at most an error of law, and therefore not subject to review." Softkey, Inc., supra at 841.
B. Failing to grant ACE a continuance. ACE next argues that the judge erred in dismissing its application to vacate the award because of procedural irregularities, specifically, the failure to grant a continuance of a procedural deadline in the arbitration process. This stems from the arbitrator allowing ACE three days to review certain documents related to the award of attorney's fees. There were no procedural irregularities in the arbitrator's decision not to extend the original deadline. Moreover, even if we were to assume, arguendo, that there were procedural irregularities, ACE was not prejudiced by them. See G. L. c. 251, § 12(a)(4), inserted by St. 1960, c. 374, § 1 (motion to vacate allowed if "the arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of section five, as to prejudice substantially the rights of a party"). ACE filed a comprehensive objection to TRT's request for attorney's fees in a timely manner. This comprehensive objection was substantially similar to what ACE submitted in the Superior Court. Therefore, it is unlikely that ACE's submission would have been different if given an extension. ACE has failed to show that it was prejudiced substantially. See G. L. c. 251, § 12(a)(4).
C. Attorney's fees. TRT seeks an award of attorney's fees associated with defending ACE's appeal to this court. We note that ACE substantially raises the same issues that were raised before and answered by the Superior Court judge, essentially enumerating the arbitrator's alleged errors. The arguments raised on appeal "were wholly insubstantial, frivolous and not advanced in good faith," G. L. c. 231, § 6F, inserted by St. 1976, c. 233, § 1, and TRT is entitled to an award of attorney's fees and cost associated with defending ACE's appeal. See Farm Constr. Serv., Inc. v. Robinson, 21 Mass. App. Ct. 955, 956 (1986). TRT may file with the clerk of this court materials detailing and supporting its request for such fees and costs within fourteen days of the date of the rescript in this case. ACE shall have fourteen days thereafter to respond, and this court will then enter an appropriate order. See Fabre v. Walton, 441, Mass. 9, 10-11 (2004); Beal Bank, SSB v. Eurich, 448 Mass. 9, 11-14 (2006).
We also note that the arbitration agreement allowed for the "reimbursement of attorneys' fees and other costs of arbitration to the prevailing Party." Therefore, TRT would be entitled to an award of attorney's fees under the arbitration agreement.
Judgment affirmed.
By the Court (Trainor, Agnes & Massing, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: February 19, 2016.