Elwood Insurance v. OneBeacon America Insurance

28 Mass. L. Rptr. 81
CourtMassachusetts Superior Court
DecidedFebruary 9, 2011
DocketNo. 102332BLS2
StatusPublished

This text of 28 Mass. L. Rptr. 81 (Elwood Insurance v. OneBeacon America Insurance) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elwood Insurance v. OneBeacon America Insurance, 28 Mass. L. Rptr. 81 (Mass. Ct. App. 2011).

Opinion

Fabricant, Judith, J.

Having reviewed all materials submitted, and considered the arguments of counsel, the Court concludes and rules as follows with respect to the pending motions.

1. The Motions to Vacate or Confirm the Arbitration Award.

Although the factual and procedural background of this dispute is fully reflected in documentary materials submitted, the parties’ memoranda present distinctly different versions. Having carefully reviewed the record, the Court adopts the version set forth in the defendants’ memorandum, which the Court finds to be a fair and accurate summary of the pertinent events as reflected in the documentary record.2 The parties devote considerable attention to debating whether the Massachusetts Arbitration Act, G.L.c. 251, §12(a), or the Federal Arbitration Act, 9 U.S.C. §10(a), governs the Court’s determination whether to confirm or vacate the arbitration award. As both sides appear to recognize, however, the two statutes establish virtually identical standards and procedures for review of arbitration awards. See e.g., M&L Power Servs, Inc. v. American Networks International, 44 F.Sup.2d 134, 136 (D.R.I. 1999).3 Under either statute, the standard of review is exceedingly narrow.

A reviewing court is “strictly bound by an arbitrator’s findings and legal conclusions, even if they appear erroneous, inconsistent, or unsupported by the record at the arbitration hearing. A matter submitted to arbitration is subject to a very narrow scope of review. Absent fraud, errors of law or fact are not sufficient grounds to set aside an award . . . Even a grossly erroneous [arbitration] decision is binding in the absence of fraud . . . An arbitrator’s result may be wrong; it may appear unsupported; it may appear poorly reasoned; it may appear foolish. Yet, it may not be subject to court interference.” Lynn v. Thompson, 435 Mass. 54, 61-62 (2001) (internal quotations and citations omitted). See also Boston Housing Authy. v. National Conference of Firemen & Oilers, Local 3, 458 Mass. 155, 161 (2010); Weiner v. Commerce Ins. Co., 78 Mass.App.Ct. 563, 565-66 (2011). Compare Nat’l Cas. Co. v. First State Ins. Group, 430 F.3d 492, 496 (1st Cir. 2005) (review of arbitration awards is “extremely narrow and exceedingly deferential”); Bull NH Info. Sys., Inc. v. Hutson, 229 F.3d 321, 330 (1st Cir. 2000) (“Arbitral awards are nearly impervious to judicial oversight”). Under these standards, the Court finds no basis to disturb the arbitration award.

Elwood’s principal challenge to the arbitration award is that the panel was not properly constituted and thus lacked authority because, pursuant to the express terms of Article 12(3) of the parties’ agreement, OneBeacon named Elwood’s arbitrator upon Elwood’s refusal to do so. Elwood’s effort to escape the effect of the agreement rests on the same theory it asserted in its previous action: that it was not obligated to name an arbitrator because the arbitration demand came from Resolute, rather than OneBeacon, or at least that the source of the demand was open to doubt until after the hearing on the motion for preliminary injunction, when OneBeacon’s counsel clarified the point. The Court rejects that theory, for the same reasons the undersigned expressed in dismissing Elwood’s prior action, and Judge Neel expressed in denying Elwood’s motion for a preliminary injunction in the prior action: Attorney Knoerzer’s letter left no [82]*82room for any good faith doubt that he made the arbitration demand on behalf of OneBeacon.4 Elwood’s obligation, upon receipt of the demand, was to name its arbitrator within the one month specified in the agreement. Had it done so, it could then have presented any genuine concern it may have had regarding Attorney Knoerzer’s authority, or the roles of Resolute and OneBeacon, to the arbitration panel for resolution.

Elwood’s refusal to act in accord with the agreement subjected it to the consequences expressly specified in the agreement: OneBeacon was entitled to select Elwood’s arbitrator. See Universal Reinsurance Corp. v. Allstate Insurance Co., 16 F.3d 125, 129 (7th Cir. 1993) (enforcing similar provision, despite inadvertence and brevity of delay and lack of prejudice to opposing party). New England Reinsurance Corp. v. Tennessee Ins. Co., 780 F.Sup. 73, 77-78 n. 11 (D.Mass 1991), on which Elwood relies, does not assist its position.5 The Court there excused the responding party’s inadvertent eight-day delay in notifying the demanding party of its selection, noting the lack of any indication “that the parties intended time to be of the essence.” Id. at 77. Here, as in Universal Reinsurance Corp., 16 F.3d at 129 n.l, although the agreement does not expressly state that “time is of the essence,” it indicates the parties’ intention to that effect by setting a series of short deadlines, under which the entire case is to be submitted to the panel within three months of the initial demand. In the face of that contractual time scheme, Elwood did not merely delay, briefly and inadvertently as did the respondents in both Universal Reinsurance Corp. and New England Reinsurance Corp.; it deliberately refused to act in response to the demand. The record indicates that Elwood took a calculated risk. It is in no position to complain of the consequences of its choice.

Elwood also contends that the panel, in proceeding on a summary basis, denied it a fair opportunity to be heard, to take discovery, or to present evidence. It is sufficient to say that the record does not support these contentions. To the contrary, the record indicates that the panel provided Elwood repeated opportunities to present its position, to submit any evidence it chose, and to identify any discovery it considered necessary. Elwood’s refusal to take full advantage of those opportunities does not provide a ground to vacate the award.6 Compare Hague v. Piva, 61 Mass.App.Ct. 223, 225 (2004) (award vacated where arbitrators refused to hear any evidence relating to counterclaims).

Elwood finally contends that the panel exceeded its authority in that it refused to apply Massachusetts law in two respects: it awarded damages on claims that Elwood contends were barred by the Massachusetts statute of limitations; and it awarded attorneys fees in violation of G.L.c. 251, §10. Elwood’s theory that the panel was bound to apply Massachusetts substantive law rests on the last sentence of Article 12(1), which provides that “(t]he seat of the Board of Arbitration shall be in Boston, Massachusetts.” The Court is not persuaded that this language expresses a choice of Massachusetts law for substantive purposes. Baxter Health Care Corp. v. Harvard Apparatus, 35 Mass.App.Ct. 204, 205 (1993), which Elwood cites, construed similar language not as a choice of law provision, but as “conferring jurisdiction upon the courts of the Commonwealth to enter judgment upon the award, with venue in Suffolk County.” Id.7 In New England Energy Inc. v. Keystone Shipping Co.,

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Bluebook (online)
28 Mass. L. Rptr. 81, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elwood-insurance-v-onebeacon-america-insurance-masssuperct-2011.