NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
23-P-313
AMERICAN GRAPHICS INSTITUTE, LLC
vs.
NOBLE DESKTOP NYC, LLC, & another.1
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiff, American Graphics Institute, LLC (AGI),
appeals from a judgment of the Superior Court confirming, and
denying a petition to vacate or modify, an arbitration award in
favor of defendants Noble Desktop NYC, LLC (Noble), and its
owner, Mourad Kattan. AGI argues that the judge should have
vacated the award because the arbitrator acted beyond her
authority when she found AGI to have breached the parties'
agreement and assessed the value of damages. AGI further argues
that the judge erred in awarding Noble attorney's fees. We
affirm.
Background. We summarize the facts found by the
arbitrator. Both AGI and Noble are schools that provide
1 Mourad Kattan. professional development training relating to various computer
applications and programs. Noble is licensed in New York and
run by Kattan. AGI is licensed in Massachusetts and run by its
principals, Christopher Smith and Jennifer Smith.
On May 1, 2020, the parties entered into an agreement under
which AGI agreed to sell to Noble certain assets defined in that
agreement as AGI's "New York Business." Among the terms of the
agreement were section 4.1, requiring AGI to "use commercially
reasonable efforts to transition" the New York Business to Noble
by "no later than June 1, 2020"; section 4.4, constraining AGI
until March 31, 2029, from competing with Noble by engaging in
any business in New York similar to that of Noble; and section
4.5, forbidding AGI from soliciting Noble's New York customers.
Also among the terms of the agreement was section 6.3, providing
that any dispute arising from certain provisions of the
agreement including section 4.1 would be resolved by
arbitration, and "[t]he decision and award of the arbitrator
shall be final and binding on the parties and shall not be
subject to appeal."
Between May and December 2020, Noble and Kattan took steps
to transition to Noble the New York Business it was purchasing
from AGI. In contrast, AGI resisted and obstructed the
transition of the New York Business.
2 On December 1, 2020, Noble filed an action in a New York
trial court alleging that AGI had breached the noncompete
(section 4.4) and nonsolicitation (section 4.5) provisions of
the agreement.2 On February 8, 2021, that court entered a
preliminary injunction restraining AGI from running any classes
in New York, running any advertisements on its website marketing
classes or services in New York, or further breaching the
noncompete provision of the agreement. After entry of the
injunction, AGI did nothing more to direct its New York Business
to Noble. Instead, on February 9, 2021, AGI removed from its
website the New York category pages where Noble's courses were
listed, and removed all sixty of Noble's design courses,
redirecting potential customers to general category pages where
only AGI courses were listed.
Noble brought this arbitration claim, alleging that AGI had
breached section 4.1 of the agreement, which required AGI to
"use commercially reasonable efforts to transition" the New York
Business to Noble. The arbitrator found that when AGI removed
from its website all references to AGI's courses available in
New York, "these actions destroyed the value of Noble's purchase
of the New York Business," and constituted a breach of section
2 Under section 6.3(a) of the agreement, breaches of sections 4.4 and 4.5 were not required to be resolved by arbitration.
3 4.1. The arbitrator further concluded that "a fair measure of
damages is to look to the market value of the New York Business
as of the date of the breach," which she determined "is no
earlier than February 9, 2021," the date that AGI removed
Noble's courses from AGI's website. The arbitrator assessed the
value of the New York Business on that date at $350,000. To
this amount the arbitrator added "an admittedly arbitrary, but
highly conservative, compensation figure of $50,000, for
Kattan's efforts to make the deal work for the period May
through December 2020."
AGI sought review of the award in Superior Court pursuant
to G. L. c. 251, § 12. On the parties' cross motions, the judge
confirmed the arbitration award and allowed Noble's motion for
interest, costs, and attorney's fees. This appeal ensued.
Discussion. 1. Confirmation of arbitration award. AGI
argues that the Superior Court judge erred in confirming the
arbitration award because the arbitrator exceeded her powers,
G. L. c. 251, § 12 (a) (3), when she (1) concluded that AGI's
removing Noble's courses from its website breached the parties'
agreement, (2) assessed the value of the New York Business at
$350,000, and (3) awarded Noble $50,000 to compensate for
Kattan's time.
"We review the trial [court] judge's decision to uphold the
arbitration award de novo, but our examination of the underlying
4 award is informed by the 'strong public policy favoring
arbitration'" (citation omitted). Pittsfield v. Local 447 Int'l
Bhd. of Police Officers, 480 Mass. 634, 637 (2018). "Indeed, an
arbitration award carries a presumption of propriety because it
is the arbitrator's judgment, not necessarily an objectively
correct answer, for which the parties have bargained." Id. at
638, citing United Steelworkers of Am. v. American Mfg. Co., 363
U.S. 564, 568 (1960). "[T]he powers of the arbitrator . . . are
wide and the scope of judicial review of the arbitration
proceedings is narrow." Katz, Nannis & Solomon, P.C. v. Levine,
473 Mass. 784, 793 (2016), quoting Grobet File Co. of Am. v. RTC
Sys., Inc., 26 Mass. App. Ct. 132, 135 (1988). A court will
"uphold an arbitrator's decision even where it is wrong on the
facts or the law, and whether it is wise or foolish, clear or
ambiguous" (citation omitted). Pittsfield, supra at 638.
As the judge noted, the arbitrator, a retired Federal trial
judge, conducted a five-day hearing at which she considered 248
exhibits and heard the testimony of witnesses, based on which
she issued a ninety-three-page decision. Even if the
arbitrator's decision was "wrong on the facts or law," or
"foolish" or "ambiguous," Pittsfield, 480 Mass. at 638, that
would not be grounds to vacate it. AGI nonetheless argues that
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NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
23-P-313
AMERICAN GRAPHICS INSTITUTE, LLC
vs.
NOBLE DESKTOP NYC, LLC, & another.1
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiff, American Graphics Institute, LLC (AGI),
appeals from a judgment of the Superior Court confirming, and
denying a petition to vacate or modify, an arbitration award in
favor of defendants Noble Desktop NYC, LLC (Noble), and its
owner, Mourad Kattan. AGI argues that the judge should have
vacated the award because the arbitrator acted beyond her
authority when she found AGI to have breached the parties'
agreement and assessed the value of damages. AGI further argues
that the judge erred in awarding Noble attorney's fees. We
affirm.
Background. We summarize the facts found by the
arbitrator. Both AGI and Noble are schools that provide
1 Mourad Kattan. professional development training relating to various computer
applications and programs. Noble is licensed in New York and
run by Kattan. AGI is licensed in Massachusetts and run by its
principals, Christopher Smith and Jennifer Smith.
On May 1, 2020, the parties entered into an agreement under
which AGI agreed to sell to Noble certain assets defined in that
agreement as AGI's "New York Business." Among the terms of the
agreement were section 4.1, requiring AGI to "use commercially
reasonable efforts to transition" the New York Business to Noble
by "no later than June 1, 2020"; section 4.4, constraining AGI
until March 31, 2029, from competing with Noble by engaging in
any business in New York similar to that of Noble; and section
4.5, forbidding AGI from soliciting Noble's New York customers.
Also among the terms of the agreement was section 6.3, providing
that any dispute arising from certain provisions of the
agreement including section 4.1 would be resolved by
arbitration, and "[t]he decision and award of the arbitrator
shall be final and binding on the parties and shall not be
subject to appeal."
Between May and December 2020, Noble and Kattan took steps
to transition to Noble the New York Business it was purchasing
from AGI. In contrast, AGI resisted and obstructed the
transition of the New York Business.
2 On December 1, 2020, Noble filed an action in a New York
trial court alleging that AGI had breached the noncompete
(section 4.4) and nonsolicitation (section 4.5) provisions of
the agreement.2 On February 8, 2021, that court entered a
preliminary injunction restraining AGI from running any classes
in New York, running any advertisements on its website marketing
classes or services in New York, or further breaching the
noncompete provision of the agreement. After entry of the
injunction, AGI did nothing more to direct its New York Business
to Noble. Instead, on February 9, 2021, AGI removed from its
website the New York category pages where Noble's courses were
listed, and removed all sixty of Noble's design courses,
redirecting potential customers to general category pages where
only AGI courses were listed.
Noble brought this arbitration claim, alleging that AGI had
breached section 4.1 of the agreement, which required AGI to
"use commercially reasonable efforts to transition" the New York
Business to Noble. The arbitrator found that when AGI removed
from its website all references to AGI's courses available in
New York, "these actions destroyed the value of Noble's purchase
of the New York Business," and constituted a breach of section
2 Under section 6.3(a) of the agreement, breaches of sections 4.4 and 4.5 were not required to be resolved by arbitration.
3 4.1. The arbitrator further concluded that "a fair measure of
damages is to look to the market value of the New York Business
as of the date of the breach," which she determined "is no
earlier than February 9, 2021," the date that AGI removed
Noble's courses from AGI's website. The arbitrator assessed the
value of the New York Business on that date at $350,000. To
this amount the arbitrator added "an admittedly arbitrary, but
highly conservative, compensation figure of $50,000, for
Kattan's efforts to make the deal work for the period May
through December 2020."
AGI sought review of the award in Superior Court pursuant
to G. L. c. 251, § 12. On the parties' cross motions, the judge
confirmed the arbitration award and allowed Noble's motion for
interest, costs, and attorney's fees. This appeal ensued.
Discussion. 1. Confirmation of arbitration award. AGI
argues that the Superior Court judge erred in confirming the
arbitration award because the arbitrator exceeded her powers,
G. L. c. 251, § 12 (a) (3), when she (1) concluded that AGI's
removing Noble's courses from its website breached the parties'
agreement, (2) assessed the value of the New York Business at
$350,000, and (3) awarded Noble $50,000 to compensate for
Kattan's time.
"We review the trial [court] judge's decision to uphold the
arbitration award de novo, but our examination of the underlying
4 award is informed by the 'strong public policy favoring
arbitration'" (citation omitted). Pittsfield v. Local 447 Int'l
Bhd. of Police Officers, 480 Mass. 634, 637 (2018). "Indeed, an
arbitration award carries a presumption of propriety because it
is the arbitrator's judgment, not necessarily an objectively
correct answer, for which the parties have bargained." Id. at
638, citing United Steelworkers of Am. v. American Mfg. Co., 363
U.S. 564, 568 (1960). "[T]he powers of the arbitrator . . . are
wide and the scope of judicial review of the arbitration
proceedings is narrow." Katz, Nannis & Solomon, P.C. v. Levine,
473 Mass. 784, 793 (2016), quoting Grobet File Co. of Am. v. RTC
Sys., Inc., 26 Mass. App. Ct. 132, 135 (1988). A court will
"uphold an arbitrator's decision even where it is wrong on the
facts or the law, and whether it is wise or foolish, clear or
ambiguous" (citation omitted). Pittsfield, supra at 638.
As the judge noted, the arbitrator, a retired Federal trial
judge, conducted a five-day hearing at which she considered 248
exhibits and heard the testimony of witnesses, based on which
she issued a ninety-three-page decision. Even if the
arbitrator's decision was "wrong on the facts or law," or
"foolish" or "ambiguous," Pittsfield, 480 Mass. at 638, that
would not be grounds to vacate it. AGI nonetheless argues that
the decision should be vacated because "the arbitrator[]
5 exceeded [her] powers," G. L. c. 251, § 12 (a) (3). We are not
persuaded.
a. AGI's removal of New York courses from its website.
AGI argues that the arbitrator exceeded her powers by finding
that AGI breached of section 4.1 of the agreement, because any
breach by AGI was predicated on actions AGI took to comply with
the New York court's injunction. The argument is unavailing.
The arbitrator found that the intangible assets that Noble
contracted to purchase included access to and use of AGI's
website, and access to AGI's Google Analytics account used to
track traffic to AGI's website. The arbitrator credited the
testimony of special master Gordon Cormack that AGI's website
had been altered beginning on February 8, 2021, to stop
capturing any data on traffic to its New York pages. The
arbitrator found that AGI's removing the categories of New York
courses from its website "destroyed the value of Noble's
purchase of the New York Business." Although AGI was required
to comply with the New York injunction, nothing in that
injunction required AGI to comply in this manner. Rather, AGI
could have complied by continuing to list Noble's classes and
ceasing to market them as AGI classes. Finding those facts and
applying the terms of the parties' agreement to the facts was
plainly within the powers of the arbitrator. See Katz, Nannis &
Solomon, P.C., 473 Mass. at 796-797. AGI "presents nothing more
6 than a dispute over a question of fact that is not reviewable by
this court." Id. at 797. See American Fed'n of State, County,
and Mun. Employees, Council 93, AFL-CIO v. School Dep't of
Burlington, 462 Mass. 1009, 1010 (2012).3
b. Arbitrator's assessment of value of New York Business.
AGI argues that the arbitrator acted in "manifest disregard of
the law" when she valued the New York Business at $350,000. The
Superior Court judge noted that the arbitrator followed the
valuation method endorsed by the court in Schonfeld v. Hilliard,
218 F.3d 164, 176 (2d Cir. 2000). Once again, the arbitrator's
findings on that issue were squarely within her purview. See
Katz, Nannis & Solomon, P.C., 473 Mass. at 796-797.
c. Award of $50,000 for Kattan's time. AGI argues that
the arbitrator exceeded her powers in awarding $50,000 as "an
admittedly arbitrary, but highly conservative" amount to
compensate Noble for the time that Kattan spent. Focusing on
the arbitrator's use of the word "arbitrary," AGI argues that
the word choice demonstrates that the arbitrator's assessment of
3 AGI misplaces its reliance on the opinion of this court in that case, American Fed'n of State, County, and Mun. Employees, Council 93, AFL-CIO v. School Dep't of Burlington, 78 Mass. App. Ct. 511 (2011). We are bound to follow the Supreme Judicial Court's subsequent opinion on further appellate review, which declared that an "argument that there was no evidence in the record to support the arbitrator's finding . . . falls short of th[e] deferential standard" under which arbitration awards are reviewed. American Fed'n of State, County, and Mun. Employees, Council 93, AFL-CIO, 462 Mass. at 1010.
7 those damages exceeded her powers. Kattan testified at length
about the efforts he made throughout the period from May to
December 2020 to comply on Noble's behalf with section 4.1 of
the parties' agreement. It was certainly within the
arbitrator's powers to set a value on Kattan's time.
2. Award of Superior Court attorney's fees. AGI argues
that the Superior Court judge erred in awarding $19,050 in
attorney's fees to Noble. Section 6.3(b) of the agreement
provides that "[a]ny party unsuccessfully refusing to comply
with an order of the arbitrator shall be liable for costs . . .
and attorney's fees" (emphasis added). We discern no error of
law or abuse of discretion in the Superior Court judge's
awarding Noble attorney's fees under that section. See
Massachusetts Highway Dep't v. Perini Corp., 79 Mass. App. Ct.
430, 435 (2011) ("[i]t should be the rule, rather than the
exception, that when arbitrators hand down an award the parties
will comply with it, without the necessity of court proceedings,
just as it is (or should be) the normal or usual result that
parties comply with a judgment, without the necessity of resort
to process or appeal" [quotation and citation omitted]).
3. Appellate attorney's fees. Noble has requested that
this court award it attorney's fees and double costs incurred in
8 defending this appeal, pursuant to Mass. R. A. P. 25, as
appearing in 481 Mass. 1654 (2019).4
Given the language of the parties' agreement and the case
law construing G. L. c. 251, §§ 11 & 12, AGI "could not have had
a reasonable expectation" that the confirmation of the
arbitration award would be reversed on appeal. Love v. Pratt,
64 Mass. App. Ct. 454, 459 (2005). In its appeal AGI
essentially sought to second-guess the factual findings and
assessment of damages in the decision of the arbitrator, which
the parties had agreed "shall be final and binding . . . and
shall not be subject to appeal." We conclude that the appeal
was frivolous. See Avery v. Steele, 414 Mass. 450, 456 (1993).
Consistent with the requirements of Fabre v. Walton, 441 Mass.
9, 10 (2004), Noble may file a request for its costs, along with
supporting documentation, within fourteen days of the issuance
4 Noble does not ask that we award appellate attorney's fees under section 6.3(b) of the agreement, and so we do not consider that issue.
9 of the decision in this case. AGI shall have fourteen days
thereafter within which to respond.
Judgment affirmed.
By the Court (Rubin, Ditkoff & Grant, JJ.5),
Assistant Clerk
Entered: May 3, 2024.
5 The panelists are listed in order of seniority.