Articles Posted in Massachusetts Supreme Judicial Court

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Plaintiffs and Defendant, members of an accounting firm (Firm), were parties to a stockholder agreement (Agreement) that contained an arbitration clause. The parties’ agreement to arbitrate was governed by the Massachusetts Uniform Arbitration Act for Commercial Disputes. When Plaintiffs voted to require the withdrawal of Defendant as a director and stockholder in the Firm, Defendant opened his own accounting firm. The nature and terms of Defendant’s withdrawal from the Firm and his subsequent competition with the Firm were the bases of a dispute between the parties. The dispute was submitted to binding arbitration. The arbitrator issued a final award awarding the Firm $1.7 million plus interest. The superior court confirmed the arbitration award. Defendant appealed, arguing (1) the arbitrator fundamentally misinterpreted the agreement, and (2) he was entitled to have a court consider the merits of his claim because, in the arbitration clause of the agreement, the parties specifically provided for judicial review of an award to determine if there was flagrant error by the arbitrator. The Supreme Judicial Court affirmed the motion judge’s confirmation award, holding (1) the grounds of judicial review in this case were limited to those delineated in Mass. Gen. Laws ch. 215, 12 and 13; and (2) Defendant’s claim was not reviewable by the Court. View "Katz, Nannis & Solomon, P.C. v. Levine" on Justia Law

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After a fire broke out at the Beacon Towers Condominium, the board of trustees for the Beacon Towers Condominium Trust, the unit owners’ organization for the condominium, assessed George Alex $62,995 for the two units that he owned. Alex commenced an arbitration action challenging the propriety of the trustees’ conduct regarding the fire damage repairs and the imposition of the assessment. The arbitration panel found in favor of Alex. Although the panel recognized that the arbitration agreement in the trust’s bylaw did not provide for an award of fees, the panel nonetheless awarded fees, reasoning that the American Arbitration Association allowed an award of fees where “substantially all of the defenses were wholly insubstantial, frivolous and not advanced in good faith.” The trust filed suit, claiming that the arbitrators’ award of attorney’s fees exceeded the scope of the parties’ arbitration agreement. A superior court judge vacated the award of attorney’s fees, concluding that such an award was not authorized by Mass. Gen. Laws ch. 231, 6F when ordered by an arbitrator because section 6F does not authorize an arbitrator to award attorney’s fees. The Supreme Judicial Court affirmed, holding that an arbitrator lacks the authority to award attorney’s fees under the circumstances of this case. View "Beacon Towers Condo. Trust v. Alex" on Justia Law