Opinion
19 Index No. 650033/22 Case No. 2022–02124
04-11-2023
In the Matter of Mark HURLEY, et al, Petitioners–Appellants, v. EB SAFE, LLC et al., Respondents–Respondents.
Brewer, Attorney & Counselors, New York (William A. Brewer IV of counsel), for appellants. Dechert LLP, New York (Neil A. Steiner of counsel), for respondents.
Brewer, Attorney & Counselors, New York (William A. Brewer IV of counsel), for appellants.
Dechert LLP, New York (Neil A. Steiner of counsel), for respondents.
Kapnick, J.P., Kern, Friedman, Gesmer, Higgitt, JJ.
Order, Supreme Court, New York County (Melissa A. Crane, J.), entered March 31, 2022, which, to the extent appealed from, denied the petition to vacate, in part, a partial final arbitration award dated August 18, 2021, as made final in a final award dated September 29, 2021, and granted respondents’ cross petition to confirm the arbitration award, unanimously affirmed, with costs. Petitioners do not show that the arbitration tribunal acted in manifest disregard of applicable law (see Wien & Malkin LLP v. Helmsley–Spear, Inc., 6 N.Y.3d 471, 481, 813 N.Y.S.2d 691, 846 N.E.2d 1201 [2006], cert dismissed 548 U.S. 940, 127 S.Ct. 34, 165 L.Ed.2d 1012 [2006] ; Matter of Daesang Corp. v. NutraSweet Co., 167 A.D.3d 1, 15–16, 85 N.Y.S.3d 6 [1st Dept. 2018], lv denied 32 N.Y.3d 915, 2019 WL 690307 [2019] ), specifically, Delaware's "wrongdoer rule," which provides that, where the existence of damages is certain, and the only uncertainty is as to the amount of damages, the burden of the uncertainty as to the amount is upon the wrongdoer (see e.g. SIGA Technologies, Inc. v. PharmAthene, Inc., 132 A.3d 1108, 1131, n. 132 [Del. 2015] ). As the motion court found, the tribunal did not ignore the rule, but declined to award damages in petitioners’ favor notwithstanding its finding that respondent Alain Lebec committed wrongdoing in connection with the sales process of nonparty Fiduciary Network LLC, because petitioners’ proof did not establish that they "actually suffered damages," and not merely because the amount of damages was speculative. In requiring petitioners to show, as a threshold matter, that they "actually suffered damages," the tribunal did not exhibit manifest disregard of the "wrongdoer rule," as that rule does not eliminate the threshold requirement (see SIGA, 132 A.3d at 1131 ; In re Dole Food Co., Inc. Stockholder Litig., 2015 WL 5052214, *44, 2015 Del. Ch. LEXIS 223, *149-150 [Aug. 27, 2015, No. 8703-VCL] ). For the same reason, petitioners’ argument that the award should have been vacated on grounds of the tribunal's observation that they had not shown what, if any, damages were attributable to the different aspects of respondents’ alleged wrongdoing (see Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 2020 WL 948513, *20 n. 262, 2020 Del. Ch. LEXIS 76, *55 n 262 [Feb. 27, 2020, No. 7906-VCG], citing OptimisCorp v. Waite, 2015 WL 5147038, *81, 2015 Del. Ch. LEXIS 222, *277-281 [Aug. 26, 2015, No. 8773-VCP], affd 137 A.3d 970, 2016 WL 2585871 [Del. 2016] ), is unavailing.
The remainder of petitioners’ arguments are also unavailing, as they concern the propriety of the arbitration tribunal's determination that, given the purchase price received for Fiduciary Network, petitioners had not proven the existence of damages. For example, petitioners challenge the opinion of the investment banker, engaged to conduct the sales process, that the winning bid constituted "fair consideration," and they argue that the tribunal's conclusion that the price was reasonable "flies directly in the face" of its own "factual findings and record evidence to the contrary." Yet these arguments, which essentially posit that the tribunal made "errors of law and fact," lie beyond the scope of judicial review on a motion to vacate (see Wien & Malkin, 6 N.Y.3d at 479–480, 813 N.Y.S.2d 691, 846 N.E.2d 1201 ; see also Matter of Rose Castle Redevelopment II, LLC v. Franklin Realty Corp., 184 A.D.3d 230, 234, 126 N.Y.S.3d 2 [1st Dept. 2020], lv denied 36 N.Y.3d 906, 140 N.Y.S.3d 187, 163 N.E.3d 1104 [2021] ; Johnston v. Johnston, 161 A.D.2d 125, 128, 554 N.Y.S.2d 851 [1st Dept. 1990], appeal dismissed 76 N.Y.2d 1018, 565 N.Y.S.2d 767, 566 N.E.2d 1172 [1990] ).
We have considered petitioners’ remaining arguments and find them unavailing.