Superadio Ltd. Partnership v. Walt "Baby" Love Productions, Inc.

818 N.E.2d 589, 62 Mass. App. Ct. 546, 2004 Mass. App. LEXIS 1356
CourtMassachusetts Appeals Court
DecidedNovember 29, 2004
DocketNo. 03-P-27
StatusPublished
Cited by1 cases

This text of 818 N.E.2d 589 (Superadio Ltd. Partnership v. Walt "Baby" Love Productions, Inc.) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Superadio Ltd. Partnership v. Walt "Baby" Love Productions, Inc., 818 N.E.2d 589, 62 Mass. App. Ct. 546, 2004 Mass. App. LEXIS 1356 (Mass. Ct. App. 2004).

Opinion

Smith, J.

In May of 1995, Superadio Limited Partnership (Superadio) entered into a radio network agreement (agreement) with Walt “Baby” Love Productions, Inc. (Baby Love). Under that agreement, Superadio became the exclusive advertising sales agent for a radio program produced by Baby Love and distributed by Superadio. The agreement provided that revenues collected from the sale of advertisements aired on the radio [547]*547program would be divided between Superadio and Baby Love. The agreement also required that the parties arbitrate any disputes arising from the agreement before a panel of the American Arbitration Association (AAA) and that the ensuing arbitration be conducted pursuant to the AAA’s rules. The agreement terminated on December 31, 1998.

On or about March 29, 1999, Superadio filed a demand for arbitration, claiming that Baby Love had withheld approximately $150,000 in revenue from advertisements sold by Superadio. The advertisements had been booked by Superadio during the agreement, but had aired after the termination of the agreement.

Baby Love answered Superadio’s demand and asserted counterclaims claiming that Superadio violated the agreement by refusing to turn over advertising revenue that Superadio had collected on Baby Love’s behalf. Superadio did not deny that Baby Love was entitled to about $75,000 of those revenues, but claimed that it was entitled to hold those funds as a “set-off” against revenues that it might prove at the arbitration hearing.

The parties selected a panel of three arbitrators. Baby Love argued that Superadio had no right of set-off. The arbitration panel agreed. On February 7, 2000, the panel ordered Superadio to pay Baby Love the withheld funds. Superadio made the payments.

The parties then attempted to engage in discovery for the hearing on the remaining claims and counterclaims. However, although Baby Love made repeated, specific requests for the production of certain documents, Superadio did not respond to those requests.

As a result of Superadlo’s failure to respond to Baby Love’s requests, on August 21, 2000, the arbitration panel entered an order directing Superadio to comply with the requests by September 22, 2000, or it would have to pay a fine of “$1,000 per day until Superadio is either in compliance or until the date of the hearing whichever shall occur first.” The parties were also told that the failure of either party to produce requested documents would result in the unproduced evidence not being allowed in evidence at the hearing.

On or about September 28, 2000, Superadio withdrew its demand for arbitration. Baby Love, however, proceeded with its [548]*548counterclaims and again repeated its demands for Superadio to produce responsive documents and witnesses. Superadio again failed to comply with the requests.

After several continuances, which were requested by Baby Love, the hearing on Baby Love’s counterclaims commenced on June 20, 2001. At that time, Superadio still had not complied with Baby Love’s requests for discovery. During the hearing, Superadio admitted that it possessed the documents requested by Baby Love and, in fact, attempted to introduce them in evidence. The documents were not allowed in evidence by the arbitration panel because of its previous order that any requested documents that were not produced would not be admitted in evidence.

On July 23, 2001, the arbitration panel entered its award. The panel determined that Baby Love presented sufficient documentary evidence and witness testimony to support its claim that Superadio had indeed underreported the amount of advertising revenue owed to Baby Love. The arbitration panel determined, however, as to the issue of damages that “Superadio’s refusal to produce requested documents despite orders and monetary sanctions from the Panel, prevented [Baby] Love from proving its damages with the minimum threshold precision necessary for an award on its breach of contract theory.” Because of the failure of Superadio to produce the discovery material, the arbitration panel ruled that it had been “hampered in its ability to determine precise contract damages.” Consequently, the panel decided to resolve the outstanding disputes between the parties through an award of discovery sanctions against Superadio.

The arbitration panel then revisited its discovery order and noted that 271 days had elapsed between the date of that order and the start of the hearing. At the time of the order, the penalty set by the panel for noncompliance was $1,000 a day. Therefore, the arbitration panel imposed monetary sanctions on Superadio, in the form of an award, in the amount of $271,000 against Superadio.

On August 21, 2001, Superadio filed a complaint in the Superior Court seeking to vacate the award. Baby Love filed án answer requesting the judge to confirm the award. On April 5, 2002, the judge allowed Baby Love’s motion and confirmed the [549]*549award. Judgment entered in favor of Baby Love on August 30, 2002. Superadio then filed a timely appeal.

On appeal, Superadio claims that the arbitration panel exceeded its powers when it imposed monetary sanctions in the form of an award. Superadio also argues that the award was obtained by undue means because Baby Love’s attorney, who had been admitted to practice law in New York and not Massachusetts, engaged in an unauthorized practice of law during the arbitration proceedings.

1. Standard of review. Under G. L. c. 150C, § 11, “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.” Lynn v. Thompson, 435 Mass. 54, 61 (2001), quoting from Plymouth-Carver Regional Sch. Dist. v. J. Farmer & Co., 407 Mass. 1006, 1007 (1990). “The policy of limited judicial review is reflective of the strong public policy favoring arbitration as an expeditious alternative to litigation for settling commercial disputes.” Plymouth-Carver Regional Sch. Dist. v. J. Farmer & Co., supra.

There are a few exceptions, however, to the general rule. Those exceptions, which are contained in G. L. c. 150C, § 11, include the admonition that “[ujpon application of a party, the superior court shall vacate an award if ... (3) the arbitrators exceeded their powers.” As defined by our cases, “[a]n arbitrator exceeds his powers if the parties to the agreement never gave the arbitrator the power to make the award he made.” Leominster v. International Bhd. of Police Officers, 33 Mass. App. Ct. 121, 124 (1992). See Morceau v. Gould-National Batteries, Inc., 344 Mass. 120, 124 (1962).

Superadio argues that the arbitration panel exceeded its authority by imposing monetary sanctions because there is no such authority granted to the panel in the parties’ agreement to submit the dispute for arbitration, the AAA rules, or in the Uniform Arbitration Act for Commercial Disputes, as adopted by Massachusetts. See G. L. c. 251.

2. Analysis, a. The arbitration clause. Baby Love claims that the arbitration clause in the agreement gave the arbitration panel the authority to assess monetary sanctions in the form of an award. See Drywall Sys., Inc., v. ZVI Constr. Co., 435 Mass. [550]*550664, 669-671 (2002).1 In Drywall, the parties agreed to submit to arbitration “any controversy or claim . . .

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818 N.E.2d 589, 62 Mass. App. Ct. 546, 2004 Mass. App. LEXIS 1356, Counsel Stack Legal Research, https://law.counselstack.com/opinion/superadio-ltd-partnership-v-walt-baby-love-productions-inc-massappct-2004.