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Vespers Realty
Advisors, Inc. v. Binswanger Management Corp., 21 Mass.
L. Rep. 77, 2006 Mass. Super. LEXIS 237 (May 1,
2006) (Gants, J.). |
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A Marketing Agreement between the parties
provided that a dispute between them concerning a
referral fee would be arbitrated by the Defendant’s CFO.
The Defendant’s CFO issued an arbitration award with
which the Plaintiff was dissatisfied. Plaintiff filed a
complaint to vacate the award, contending that it should
be vacated because the arbitrator was partial.
Judge Gants agreed. Under the Uniform
Arbitration Act, which is codified in Massachusetts at
G.L. c. 251, an arbitration award must be enforced
unless one or more of five very narrow grounds exists.
Here, the Court found that there was “evident partiality
by an arbitrator appointed as a neutral” under G.L. c.
251, §12(a). The Court held that the Defendant’s CFO was
appointed as a neutral because there was no other person
appointed to hear the dispute.
The Court then considered whether
Plaintiff had waived its right to an impartial
arbitrator. The Court, relying upon Patton v. Babson
Statistical Organization, Inc., 259 Mass. 424 (1927),
held that “a party may not waive its right to an
impartial arbitrator and that any arbitration agreement
appointing an evidently partial arbitrator is |
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unenforceable.” The Court acknowledged
that the Patton decision preceded Massachusetts’
enactment of the Uniform Arbitration Act, but found that
nothing in the Act was contrary to the Patton
decision.
Prior to ruling on Plaintiff’s motion to
vacate the arbitration award, the Court considered a
motion to dismiss the complaint for lack of subject
matter jurisdiction. The Plaintiff and an affiliate of
the Defendant were parties to a License Agreement, under
which they agreed that all disputes thereunder would be
litigated in Pennsylvania. The Marketing Agreement, to
which the Defendant was not a party, was silent on the
issue of venue. Although executed the same day, neither
the License Agreement nor the Marketing Agreement
incorporated the other by reference. The Court held that
although the two agreements were in essence part of one
transaction and must be read together to effectuate the
intention of the parties, it could not reasonably infer
that the litigants before it, both of whom were
Massachusetts companies, intended to litigate disputes
under the Marketing Agreement in Pennsylvania.
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