Opinion
16-P-56
06-26-2017
Anthony KASINSKAS v. DAVID J. DEANGELIS INSURANCE AGENCY, INC.,& another.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendants, David J. DeAngelis Insurance Agency, Inc. (agency), and David Segal, appeal from a Superior Court judgment confirming an arbitration decision that awarded the plaintiff, Anthony Kasinskas, damages for the agency's breach of contract. The defendants argue (1) that Segal was not a party to the asset purchase agreement (agreement) or the arbitration and therefore is not individually liable for the damages awarded against the agency; and (2) that the arbitrator exceeded the scope of his authority. We conclude that the arbitration award does not reach Segal personally, but that the arbitrator's determination of damages against the agency will not be disturbed.
The judgment also dismissed Kasinskas's G. L. c. 93A claim and Segal's abuse of process counterclaim. Neither claim is at issue in this appeal.
Standard of review. On the plaintiff's motion for judgment on the pleadings under Mass.R.Civ.P. 12(c), 365 Mass. 754 (1974), the motion judge confirmed the arbitration award and entered judgment on it against both the agency and Segal. "[A]n arbitration award is subject to a narrow scope of review." Springfield v. United Pub. Serv. Employees Union, 89 Mass. App. Ct. 255, 257 (2016), quoting from Lynn v. Lynn Police Assn., 455 Mass. 590, 596 (2010). We uphold an arbitration award even if the arbitrator's findings and conclusions "appear erroneous, inconsistent, or unsupported by the record at the arbitration hearing." Katz, Nannis & Solomon, P.C. v. Levine, 473 Mass. 784, 790 (2016), quoting from Lynn v. Thompson, 435 Mass. 54, 61 (2001), cert. denied, 534 U.S. 1131 (2002). "We do, however, vacate an award if ‘[a]n arbitrator exceeds his authority by granting relief beyond the scope of the arbitration agreement ... or by awarding relief prohibited by law.’ " United Pub. Serv. Employees Union, supra at 257-258, quoting from Lynn Police Assn., supra.
Personal liability. The defendants argue that Segal cannot be held personally liable for damages because he was not a party to the arbitration. Kasinskas argues that Segal had proper notice that he was a party to the arbitration and that his failure to defend himself in the arbitration binds him to the judgment of the court. We conclude that judgment should not have been entered against Segal in his personal capacity.
First, we are not persuaded that the arbitrator ruled against Segal in his personal capacity. The arbitrator's decision regularly refers to the party "David Segal/DeAngelis Insurance Agency, Inc." in the singular form as the "Respondent," which suggests that he was addressing the only party to the agreement, the agency, as represented by Segal, its president. Additionally, the arbitrator did not discuss factors that would justify holding Segal personally liable as a nonparty to the agreement. See Machado v. System4 LLC, 471 Mass. 204, 209-210 (2015). The motion judge did not address Segal's personal liability specifically. Rather, the judge concluded that, to the extent Segal was attempting to vacate or modify the arbitration award as to him personally, such an attempt was untimely. See G. L. c. 251, §§ 12(b ), 13(a ). The judge's reasoning was based on the erroneous assumption that Segal was a party to the arbitration in the first place.
The motion judge, like the arbitrator, did not consider any basis for holding Segal personally liable for the contract damages, nor did he analyze whether the arbitrator intended to hold Segal personally liable.
Second, to the extent that we can consider the text of the agreement, Segal's signature on the agreement indicates he was signing in his representative capacity as president of the agency. Segal himself was not a party to the agreement that bound the parties to arbitration, and thus he was not properly subject to an arbitration award. See Brothers Bldg. Co. ofNantucket v. Yankow, 56 Mass. App. Ct. 688, 693 (2002).
Despite the inclusion in the record appendix of what purports to be the entire agreement, it appears that only page 9 of the agreement was presented to the Superior Court and is part of the record on appeal. See Mass.R.A.P. 8(a), as amended, 378 Mass. 932 (1979). As the judge observed, the plaintiff provided no authentication of the supplied document.
Kasinskas relies on the fact he included Segal's name in the caption of the demand for arbitration, contending that therefore Segal was on notice that he was a party to the arbitration. Kasinskas's use of "David Segal/DeAngelis Insurance Agency, Inc.," however, was inadequate to convey that he was making a claim against Segal in his individual, as opposed to representative, capacity. Contrary to Kasinskas's argument, the ignoble virgule, or "forward slash" mark, has numerous meanings, of which "and" is a disfavored and marginal usage. See, e.g., Espenschied, The Grammar and Writing Handbook for Lawyers 104 (2011). The natural reading here is that Kasinskas named Segal on behalf of the agency in his capacity as president of the agency. By contrast, Kasinskas specifically named "David Segal, individually," in his complaint in the Superior Court. Accordingly, we are unpersuaded by Kasinskas's argument, for which he cites no legal authority.
Our determination does not preclude Kasinskas from pursuing a remedy against Segal when executing the judgment against the agency, on a basis that Segal's actions opened him up to personal liability despite the corporate form. Compare Brothers Bldg. Co. of Nantucket, 56 Mass. App. Ct. at 694. Nonetheless, as the case is presented before us, we conclude that the arbitrator did not intend to find Segal, a nonparty to the agreement, personally liable for the agency's breach of the agreement. See id. at 694–695.
Arbitrator's award. The defendants argue that the motion judge's confirmation of the arbitration award was in error because the arbitrator exceeded the scope of his authority as set by the parties, by using his own formula to determine damages. We disagree.
The agency failed to timely file its challenge to the arbitrator's award. Under G. L. c. 251, § 12(a )(3), (b ), as amended by St. 1972, c. 200, § 1, a claim to vacate an award on the basis that the arbitrator exceeded his powers "shall be made within thirty days after delivery of a copy of the award to the applicant." See Lumbermens Mut. Cas. Co. v. Malacaria, 40 Mass. App. Ct. 184, 192 (1996) ("The overriding purpose behind the arbitration act, G. L. c. 251, is to provide for the expeditious resolution of disputes through a method ‘not subject to delay and obstruction in the courts' "), quoting from Lawrence v. Falzarano, 380 Mass. 18, 28 (1980). Here, the agency did not challenge the arbitrator's award until Kasinskas sought to confirm the award in the Superior Court, well after the thirty-day time allotment provided by the statute.
Even had the agency not waived its claim, the agency and Kasinskas contracted that their claims, disputes, and differences would be resolved by arbitration. Although "an arbitrator may not award damages beyond a limit clearly established by the contract, ‘the limiting boundaries ... must be set forth with clarity, and the limiting words must be plain.’ " Plymouth-Carver Regional Sch. Dist. v. J. Farmer & Co., 407 Mass. 1006, 1008 (1990), quoting from Grobet File Co. of Am. v. RTC Sys., Inc., 26 Mass. App. Ct. 132, 135 (1988). Here, as evidenced by the parties' conflicting readings of the agreement in regard to the purchase price, the damages formula was not clearly understood. It was within the arbitrator's broad authority to clarify any ambiguity, adopt his own reading of the contract, and award damages accordingly. See Plymouth-Carver Regional Sch. Dist., supra. See also School Comm. of Needham v. Needham Educ. Assn., 398 Mass. 709, 713 (1986) ( "[T]he award will be upheld unless the arbitrator's interpretations and conclusions are substantially implausible or irrational").
Attorney's fees. Kasinskas requests attorney's fees pursuant to section 6 of the agreement. The lone page of the agreement that is in the record on appeal says nothing about attorney's fees. Even if we consider the agreement provided in the appendix, we conclude that there is nothing in the agreement that entitles Kasinskas to attorney's fees for the present appeal. Section 6 of the agreement encompasses fees for the arbitration proceeding, not subsequent litigation. Furthermore, neither section 15 nor section 8.1 provide Kasinskas the opportunity to recover fees as the result of this litigation.
Section 6 is titled "Mandatory Arbitration."
Section 15, titled "Damages in Event of Default," does not discuss litigation fees.
Section 8.1, titled "Purchaser's Obligation to Indemnify," protects the seller (Kasinskas) in the case of third-party litigation.
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Conclusion. For the reasons stated above, the judgment shall be modified to exclude Segal individually from the confirmation of the arbitration award. So much of the judgment as awards damages against Segal individually is vacated. The judgment is otherwise affirmed.
So ordered.
Affirmed as modified in part; vacated in part.