Stephens III v. Applejack Art Partners, Inc.
Defendant Applejack Art Partners, Inc., appealed a trial court enforcing an arbitration award and entered judgment in Plaintiff Albert Stephens, III's favor for $1,538,164.50 plus interest. Plaintiff began working with the company in September 2006 and subsequently invested $1,125,000 in the company in exchange for stock shares. In April 2008, Applejack terminated plaintiff's employment. Plaintiff filed suit against Defendants Applejack, Jack P. Appelman, Aaron S. Young, and William Colvin (collectively, Applejack) and Applejack counterclaimed. Applejack also sought an order enforcing its right to repurchase Plaintiff's stock. The parties engaged in binding arbitration and following four days of evidentiary hearings, the arbitrator issued his decision. He found that in October 2006, plaintiff executed an employment contract, stock purchase agreement, and shareholders' agreement. Pursuant to the stockholder's agreement, the executive stockholders had the right to buy out plaintiff's shares in the event that plaintiff's employment was terminated. The agreement identified a specific formula for valuing the stock shares and allowed for Applejack to either pay for the stock in full or provide a 10% down payment and a promissory note for payment of the balance in three equal annual installments, plus interest. Plaintiff refused to sell his stock, in part because he misunderstood the terms of the stock purchase agreement. An arbitrator concluded that Applejack had the right to buy the shares, and it ordered Plaintiff to transfer his stock into an escrow account, pending full performance of all payment obligations. Applejack did not meet its obligation on the first payment and Plaintiff brought an enforcement action. Plaintiff sought both a judgment confirming the arbitration award as well as an immediate judgment for all amounts awarded by the arbitrator due to Applejack's default. The court granted Plaintiff's request. It found that Applejack's default went to the essence of the arbitrator's award and that Applejack could not now resort to the terms of the promissory note to delay its payments. Applejack argued on appeal that the court should have remanded this case to the arbitrator for clarification, although it was not clear what part of the award Applejack believed was ambiguous. Applejack also suggested (apparently for the first time on appeal) that notwithstanding the arbitrator's decision Plaintiff should simply keep the stock shares because Applejack was unable to pay for them. Finally, Applejack asserted that the court erred in ordering full payment of the award suggesting that by doing so, the court modified the arbitration award under Vermont Rule of Civil Procedure 60(b) without authority to do so. It also argued that there was no clear basis for accelerating the payments due. Upon review of the arbitration record and the applicable legal authority, the Supreme Court found no abuse of discretion by the trial court nor from the arbitration proceedings and affirmed the decision against Applejack: [t]he court imposed an appropriate remedy for Applejack's default, and there was no error." View "Stephens III v. Applejack Art Partners, Inc." on Justia Law