Donahue v. Bennett

• Court: Superior Court of Maine
• Decided: February 2, 2007
• Docket: KENcv-06-216
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT CIVIL ACTION KENNEBEC, ss. DOCKET NO. CV-96-216 SI;S - i-c4d- 2 !.-.~7

WILLIAM DONAHUE,

Plaintiff

ORDER AND JUDGMENT

JEFFREY BENNETT and DANIEL G. LILLEY,

Defendants

Ths matter comes before the court on the application of plaintiff William

Donahue to vacate an arbitration award or to modify or correct the award, and the

defendants' cross motion to confirm the award. The arbitration decision in question

results from a hearing of the Fee Arbitration Panel of the Board of Bar Overseers. All

parties fully briefed the issues presented in the motions. An opportunity for oral

argument was scheduled and notice was sent to all parties and attorneys. However,

one attorney failed to appear for the hearing and it was cancelled. After reading the

briefs, the court finds that each side has well argued all issues and the court has no

questions. There is no need for further oral presentation and the court will decide the

motions on briefs.

Background

Ths matter arises from an attorney's fee agreement between the plaintiff - Mr.

Donahue - and two independent attorneys - Mr. Bennett and Mr. Lilley. The

Bennett/Lilley representation concerned relatively complex business litigation

including Donahue's interest in an automobile dealership. At the beginning of their representation, Bennett and Lilley negotiated with Donahue concerning their fee arrangement. Whatever the reason, the parties all agreed to a payment schedule which

would pay the attorneys one-half of their regular hourly charges as the representation

progressed, with the attorneys then having the option of being paid for the other half of

their hours or receiving a contingent fee of 20% of any gross recovery upon completion

of the case. Each of the attorneys would have the option of choosing the hourly rate or

the contingent fee.

The legal battle was ultimately settled, though with Donahue represented by

new attorneys. Bennett and Lilley then made a demand for payment of attorney's fees

according to their calculations, which were disputed by Donahue. Donahue then

applied for arbitration of the fee dispute by a Fee Arbitration Panel of the Fee

Arbitration Commission of the Board of Overseers of the Bar, subject to prescribed rules

and regulations and the Uniform Arbitration Act (14 M.R.S.A. 55 5927-5949). Following

hearing, the Arbitration Panel made initial awards to Bennett in the sum of $136,475.68

and Lilley in the sum of $249,500. The Bennett award was later modified to $241,597.25

after Bennett filed a motion for reconsideration based on the Panel's oversight in

ignoring Bennett's request that he be compensated using the hourly fee option under

the fee agreement.

Bennett then filed his present motion seeking to have the court vacate the award

pursuant to 14 M.R.S.A. 55 5938 and 5939, while Bennett and Lilley applied for a

confirmation of the awards pursuant to section 5937 or 5938(4) or 5939(2).

Discussion

Generally speaking, under the Uniform Arbitration Act, a court will not vacate

an award except for limited reasons set forth in the statute. 14 M.R.S. 5 5938(1)(A-F). Donahue states many different arguments contesting the decision of the Panel, but the

arguments all resolve into two basic issues: (1) Did the Panel exceed its power with regard to both the Bennett and Lilley decisions? and (2) Did the Panel exceed its power

in amending the initial Bennett order?

With regard to the first issue, Donahue argues that the Panel erred in upholding

the hybrid hourly feelcontingent fee agreement entered by the parties. The Panel

carefully considered this issue and was correct in its final decision that such agreement

is not forbidden under Maine Bar Rules and Ethics Opinions. The Panel was also

witlun its powers when it pointed out that the agreement had been negotiated by

sophsticated parties on both sides and with Donahue able to have changes made to his

benefit.

Even if the court did not agree with the Panel's conclusions, this still would not

necessarily mean that the Panel exceeded its powers. An arbitration panel is not

precluded from considering novel questions of law in fee arbitration cases and its

decision on such issue would not be reason in itself to vacate an award even if a court

might have held differently. In short, the parties each agreed to be bound by the

arbitrator's decision when arbitration was begun and they are both bound by the

arbitrator's determination of legal issues. Bennett v. Prawer, 2001 ME 172, q[q 8-10, 786

A.2d 605, 608-609. In summary, the Arbitration Panel did not exceed its powers in

analyzing and upholding the fee agreement.

With regard to the second issue - modification of the Bennett award - such

changes are initially governed by 14 M.R.S. 9 5935 or 5939. Under section 5935, the

arbitrators may modify or correct an award for any of the reasons stated in section

5939(1) paragraphs A or C. In the present case, the Panel immediately agreed with

Bennett's motion for reconsideration when it recognized its oversight in calculating the

Bennett award using the wrong alternative under the fee agreement. The mistake is so

clear that it is akin to the "evident miscalculation of figures" which is a basis for recalculation and modification pursuant to section 5939(1)(A). The Panel's correction of

what it described as "an obvious error which would result in manifest injustice" is

authorized both by the statute and common sense. Had the Panel not corrected h s

obvious error on its own, it would ultimately have had to do so on remand from

Bennett's likely appeal pursuant to section 5945(1). Thus, the Panel's decision to correct

the obvious error also represented a savings of judicial resources.

For the reasons stated above, the entry will be:

(1) Plaintiffs motion to vacate awards is DENIED. (2) Defendants' cross-motion to confirm awards is GRANTED and the arbitration awards are CONFIRMED. (3) Judgment shall be entered for defendant Jeffrey Bennett, consistent with the Panel's modified award, in the amount of $241,597.25. (4) Judgment is entered for defendant Daniel G. Lilley, consistent with the Panel's award, in the amount of $249,500.

Justice, superior Court WILLIAM DONAHUE - PLAINTIFF SUPERIOR COURT 67 ASH SWAMP ROAD . KENNEBEC, SS SCARBOROUGH ME 04074 Docket No AUGSC-CV-2006-00216 Attorney for: WILLIAM DONAHUE JAMES KILBRETH - RETAINED 09/15/2006 VERRILL & DANA DOCKET RECORD ONE PORTLAND SQUARE PO BOX 586 PORTLAND ME 04112-0586

Attorney for: WILLIAM DONAHUE VALERIE A WRIGHT - RETAINED 09/15/2006 VERRILL & DANA ONE PORTLAND SQUARE PO BOX 586 PORTLAND ME 04112-0586

vs JEFFREY BENNETT - DEFENDANT PO BOX 7799, PORTLAND ME 04112 DANIEL G LILLEY - DEFENDANT PO BOX 4803, PORTLAND ME 04112

Filing Document: APPLICATION Minor Case Type: ARBITRATION AWARDS Filing Date: 09/15/2006

Docket Events: 09/18/2006 FILING DOCUMENT - APPLICATION FILED ON 09/15/2006 APPLICATION TO VACATE ARBITRATION AWARD OR, ALTERNATIVELY, TO MODIFY OR CORRECT ARBITRATION AWARD WITH ATTACHED DOCUMENTS AND EXHIBITS. 12/26/06 - REQUEST FOR HEARING AND PROPOSED ORDER

09/18/2006 Party(s): WILLIAM DONAHUE ATTORNEY - RETAINED ENTERED ON 09/15/2006 Plaintiff's Attorney: JAMES KILBRETH

09/18/2006 Party(s) : WILLIAM DONAHUE ATTORNEY - RETAINED ENTERED ON 09/15/2006 Plaintiff's Attorney: VALERIE A WRIGHT

09/18/2006 CERTIFY/NOTIFICATION - CASE FILE NOTICE SENT ON 09/18/2006 Plaintiff's Attorney: JAMES KILBRETH MAILED TO ATTY. OF RECORD.

11/20/2006 Party(s): WILLIAM DONAHUE SUPPLEMENTAL FILING - APPLICATION FILED ON 11/20/2006 Plaintiff's Attorney: JAMES KILBRETH AMENDED APPLICATION TO VACATE ARBITRATION AWARDS OR, ALTERNATIVELY, TO MODIFY OR CORRECT ARBITRATION AWARDS.

11/20/2006 Party(s) : WILLIAM DONAHUE MOTION - OTHER MOTION FILED ON 11/20/2006 Page 1 of 3 Printed on: 02/05/2007