Opinion
No. 12–P–356.
2013-04-10
Harley KAPLAN & another v. Timothy SHANAHAN & others.
By the Court (CYPHER, KANTROWITZ & FECTEAU, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs, Harley Kaplan and Beta Industries, Inc. (Beta),
appeal, claiming error in a judgment entered by a judge in the Superior Court confirming an arbitration award. The plaintiffs maintain that the arbitrators exceeded their authority when they awarded the defendants, Timothy Shanahan, Compass Securities Corporation (Compass), and Compass Capital Corporation (Capital), their fees because (1) no authority existed for such an award; (2) there was no “joint request” for such an award; and (3) the award exceeded the amounts claimed due for the arbitration.
Beta was not a party to the “Registered Representative Agreement” (RR agreement) at issue here and was not required to arbitrate. However, Kaplan, individually and on behalf of Beta, submitted to arbitration.
Discussion. Judicial review of an arbitration award is limited. See School Comm. of Hanover v. Hanover Teachers Assn., 435 Mass. 736, 740 (2002). “Courts inquire into an arbitration award only to determine if the arbitrator has exceeded the scope of his authority, or decided the matter based on ‘fraud, arbitrary conduct, or procedural irregularity in the hearings.’ “ Ibid., quoting from Plymouth Reg. Sch. Dist. v. J. Farmer & Co., 407 Mass. 1006, 1007 (1990). “An arbitrator exceeds his authority by granting relief beyond the scope of the arbitration agreement, by awarding relief beyond that to which the parties bound themselves, or by awarding relief prohibited by law.” Plymouth–Carver Reg. Sch. Dist. v. J. Farmer & Co., supra (citations omitted). Here, the plaintiffs argue that in the absence of a contractual agreement, statutory authority, or a joint agreement, counsel fees are generally not recoverable.
See Floors, Inc. v. B.G. Danis of New England, Inc., 380 Mass. 91, 101 (1980). The defendants counter, and the arbitrators agreed, that pursuant to the “Registered Representative Agreement” (RR agreement) and the rules of the Financial Industry Regulatory Authority (FINRA) to which the plaintiffs agreed to be bound, the circumstances of this case permit attorney's fees. The judge agreed with the defendants, holding that according to the FINRA Dispute Resolution Arbitrators' Guide, attorney's fees are allowed when the contract includes a clause that provides for the fees and the all of the parties request or agree to such fees, as was the case in this matter. As the arbitration award did not violate the law, the judge confirmed the award.
The plaintiffs also claim that the arbitrators exceeded their authority by citing the RR agreement as a basis for their authority to award attorney's fees. The Supreme Judicial Court has held that “[w]e do not, and cannot, pass on an arbitrator's alleged errors of law and, absent fraud, we have no business overruling an arbitrator because we give a contract a different interpretation.” Drywall Sys., Inc. v. ZVI Constr. Co., 435 Mass. 664, 674 (2002), quoting from Concerned Minority Educators of Worcester v. School Comm. of Worcester, 392 Mass. 184, 187 (1984).
The record reveals that the plaintiffs filed a FINRA “Arbitration Submission Agreement” stating that they would agree to abide by any award rendered. The parties filed several claims and asked for attorney's fees to be decided as part of the arbitration award. As previously noted, under the FINRA Dispute Resolution Arbitrators' Guide, attorney's fees may be included in an award under certain circumstances, such as when all of the parties request or agree to such fees. Accordingly, as identified in the arbitration award, the arbitrators were acting under FINRA's guidelines by awarding such fees.
The plaintiffs further argued that their request for attorney's fees was not a generic request, but one specifically called for under the Massachusetts Wage Act, G.L. c. 149, §§ 148, 148B, 150, and under G.L. c. 93A. We are not persuaded by so limited a view. Further, we do not find that any of the points raised by the plaintiffs warrant overruling the decision of the arbitrators. See Drywall Sys., Inc. v. ZVI Constr. Co., 435 Mass. at 674.
For these reasons, as well as for substantially those in the brief of the defendants and those provided by the judge below, the judgment confirming the arbitration award is affirmed.
Judgment affirmed.