Picciano v. Petricca

Opinion

USCA1 Opinion

                    UNITED STATES COURT OF APPEALS

                         FOR THE FIRST CIRCUIT



No. 98-2241



                      SALVATORE ANTHONY FRADELLA,



                         Plaintiff, Appellant,



                                  v.



                         RICHARD T. PETRICCA,



                         Defendant, Appellee.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                   FOR THE DISTRICT OF MASSACHUSETTS



             [Hon. Robert E. Keeton, U.S. District Judge]


Before



                        Torruella, Chief Judge,



                      Cyr, Senior Circuit Judge,



                  and Pollak, Senior District Judge.


Chase A. Caro, with whom Caro & Associates, P.C., Thomas J. Butters

and Butters, Brazilian & Small, LLP were on brief for appellant.

     Kathryn W. Kyle, with whom Michael E. MacDonald and Cain, Hibbard,

Myers & Cook, P.C. were on brief for appellee.


July 7, 1999


CYR, Senior Circuit Judge.  On December 18, 1997, an

arbitration panel convened by the National Association of

Securities Dealers (NASD) ordered appellant Salvatore A. Fradella

to pay appellee Richard T. Petricca $25,000 in compensatory

damages.  In subscribing the award the arbitrators purported to act

pursuant to New York law.  One month later Fradella's attorney

wrote to NASD counsel, advising that the December 18 award was

"imperfect as to form," in that "it should reflect that the

[arbitrators'] decision was made in accordance with Massachusetts,

not New York, practice."   

          On February 23, NASD counsel sent Fradella revised

signature pages, which deleted the earlier references to New York

law but continued to reflect the date of the arbitral award as

December 18, 1997.  Thereafter, Fradella's attorney again wrote to

NASD counsel, advising that the date of the "final" arbitral award

should be February 23, 1998, rather than December 18, 1997.  On

February 27, NASD counsel notified Fradella that the earlier date

remained in effect, and that Fradella should refer to it in any

motion to vacate the award.

          Fradella moved to vacate the award on March 25, 1998. 

See Federal Arbitration Act (FAA), 9 U.S.C.  10(a).  Petricca

responded by moving for summary judgment on the ground that the

motion to vacate was seven days late.  See id.  12 ("Notice of a

motion to vacate, modify, or correct an award must be served upon

the adverse party or his attorney within three months after the

award is filed or delivered.").  The district court entered summary

judgment for Petricca after determining that the December 18

arbitral award was "final" because it had resolved all claims

submitted in the demand for arbitration, and the arbitrators'

subsequent correction of the award as to mere  "ministerial" or

"uncontroversial" details (i.e., the ambiguity concerning choice of

law) did not impede the finality of the December 18 award.

          On appeal, Fradella first contends that the December 18

award did not become final for FAA  12 purposes, because, contrary

to the district court's characterization, the arbitrators' February

23 amendment was both substantive and substantial, rather than

"ministerial."  We do not agree.

          The primary purpose served by the arbitration process is

expeditious dispute resolution.  See United Paperworkers Int'l

Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987). 

Consequently, somewhat different standards govern the finality of

judgments and arbitral awards.  See Dreis & Krump Mfg. Co. v.

International Ass'n of Machinists and Aerospace Workers, 802 F.2d

247, 251 (7th Cir. 1986).   Normally, an arbitral award is deemed

"final" provided it evidences the arbitrators' intention to resolve

all claims submitted in the demand for arbitration, even though the

arbitrators purport to retain jurisdiction in the event the need

arises to resolve some subsidiary matter, such as damages or

backpay calculations.  See, e.g., id. (noting that unresolved

calculation of "the precise amount of backpay . . . was, therefore,

a 'ministerial' detail, such as would not have prevented the

[award] from being deemed final").  Accordingly, under the

applicable finality standard, the arbitral award to Petricca

unquestionably became "final" on December 18, since it

unambiguously determined that Fradella owed Petricca $25,000 on the

securities claim and Fradella does not contend that it left any

other "claim" unresolved.

          The one remaining question is whether either the

erroneous signature page and/or its subsequent amendment on

February 23 cast doubt upon the arbitrators' intention that the

December 18 award resolved all "claims" submitted to arbitration. 

Since the choice-of-law issue itself in no sense constituted an

arbitrable "claim," as distinguished from a subsidiary

determination regarding the legal regimen under which the

securities "claim" was to be decided, we conclude that the December

18 arbitral award finally resolved the only "claim" Petricca

submitted to arbitration   i.e., the securities claim   because

there is no suggestion that any counterclaim or affirmative defense

remained undecided.

          In all events the finality vel non of the arbitral award

itself could not have been affected by any mistaken indication as

to the governing law.  Were such alleged subsidiary "mistakes"

sufficient to divest an arbitral award of its finality, the running

of the limitations period prescribed in FAA  12 could be postponed

or suspended indefinitely.  In the process, the "finality" test

applicable to arbitral awards would be severely undermined, along

with the central purpose served by arbitration proceedings.

          That is to say, if the limitations period prescribed in

FAA  12 were subject to suspension simply because an arbitral

award contained error, even though the arbitrators had intended to

resolve all submitted "claims," an unsuccessful party could

preclude the commencement   or suspend the running   of the

limitations period simply by alleging subsidiary errors in their

FAA  10 motions to vacate an adverse arbitral award. Thus, the

contention that mere error   whether ministerial, procedural or

substantive   renders an arbitral award non-"final" is fatally

flawed.

          As the present appeal demonstrates, see supra note 3, the

finality standard suggested by Fradella would immerse reviewing

courts in highly subjective, ad hoc assessments as to which

arbitral errors are sufficiently "important" to preclude or suspend

the running of the limitations period under FAA  12.  Clearly,

however, the parties to arbitration proceedings need reliable

guidelines to enable timely compliance with the FAA  12

limitations period.  See International Ass'n of Bridge, Structural

and Ornamental Iron Workers v. Burtman Iron Works, Inc., 928 F.

Supp. 83, 89 (D. Mass. 1996)("[T]he court is unpersuaded that the

distinction between ministerial tasks and significant issues

provides a sufficiently clear guide for determining whether a

vacatur action has accrued.").  It is not surprising, therefore,

that Fradella cites no authority for the finality standard he

advocates, since it would run directly counter to the dominant

policy goal of the FAA:  promoting the expeditious and final

resolution of arbitral claims.  As the arbitrators plainly

intended, their December 18 award resolved the securities claim

submitted against Fradella, and the three-month limitations period

commenced running immediately upon entry of the arbitral award.

          Next, Fradella argues that even if the award became

"final" upon entry, federal law conclusively establishes that an

application to modify or clarify an arbitral award tolls the FAA 

12 limitations period.  We reject this contention as well, since

the authorities cited in support are clearly inapposite.



          Finally, Fradella suggests that the filing deadline in

FAA  12 is subject to equitable or "due diligence" tolling. 

Normally, a statutory limitations period is tolled only if, for

example, extraordinary circumstances beyond the claimant's control

prevented timely filing, or the claimant was materially misled into

missing the deadline.  See, e.g., Alvarez-Machain v. United States,

107 F.3d 696, 701 (9th Cir. 1996), cert. denied, 118 S. Ct. 60

(1997).  We need not consider whether the deadline prescribed in

FAA  12 is subject to such equitable tolling, since Fradella has

not generated a trialworthy issue as to his entitlement to invoke

tolling.

          Fradella was not victimized by fate or wile.  No

statutory or judicial authority supported his contention that the

December 18 award was other than "final," nor that his application

to correct the award tolled the FAA  12 limitations period.  See,

e.g., International Ass'n, 928 F. Supp. at 86-87 ("Nor does a party

moving for reconsideration of an arbitration award toll the running

of the limitations period.") (citing Dreis); supra note 4.  Rather,

in the application to correct the arbitral award, Fradella directly

stated that the December 18 award was "imperfect as to form," and

flatly conceded that the arbitrators had in fact applied

Massachusetts law (i.e., "the [arbitrators'] decision was made in

accordance with Massachusetts, not New York, practice").  (Emphasis

added.)   Moreover, in a February 27, 1998 letter, NASD counsel

explicitly alerted Fradella's counsel that the official date of the

arbitral award remained December 18, 1997, notwithstanding its

subsequent correction on February 23, and that Fradella "should

refer to the earlier date when [filing his] Motion to Vacate." 

Thus, neither the NASD nor Petricca misled Fradella in any

respect.  The decision to delay the motion to vacate was made by

Fradella.

          AFFIRMED; costs to defendant-appellee.