1. Respondent is liable for and shall pay to Claimant Beverly Bien an initial investment loss in the amount of $240,321.00.
2. Respondent is liable for and shall pay to Claimant Beverly Bien compensatory damages in the amount of $437,286.00.
3. Respondent is liable for and shall pay to Claimant Beverly Bien interest at the rate of 8% per annum beginning February 6, 2015 until the total amount of $677,607.00 (total of paragraphs 1 and 2 above) is paid in full.
4. Respondent is liable for and shall pay to Claimants an initial investment loss in the amount of $52,090.00, plus interest at the rate of 8% per annum beginning February 6, 2015 until the amount of $52,090.00 is paid in full.
5. Respondent is liable for and shall pay to Claimant David H. Wellman compensatory damages in the amount of $47,397.00, plus interest at the rate of 8% per annum beginning February 6, 2015 until the amount of $47,397.00 is paid in full.
6. Respondent is liable for and shall pay to Claimants attorneys' fees in the amount of $118,560.00, pursuant to U.S. Offshore, Inc. v. Seabulk Offshore,Ltd., 753 F. Supp. 86, 92 (S.D.N.Y. 1990), Marshall Co., Inc. v. Duke, 114 F.3d 188 (11th Cir. 1997).
7. Respondent is liable for and shall pay to Claimants costs in the amount of $26,812.82.
8. Claimants must reassign ownership of all Sonoma Ridge Partners and KBS REIT investments to Respondent.9. Respondent's request for attorneys' fees is denied.
10. Any and all claims for relief not specifically addressed herein, including punitivedamages, are denied.
8. MACC seeks vacatur of the Award under 9 U.S.C. § 10(a)(2), 10(a)(3) and 10(a)(4) because the Panel (a) grossly exceeded its powers and manifestly disregarded the law by entering an Award in an arbitration on claims that were clearly ineligible under the FINRA Code Rule 12206's six-year eligibility rule and time-barred by shorter applicable statutes of limitation; and (b) improperly and grossly exceeded its powers, demonstrated evident partiality and misconduct, and/or imperfectly executed its powers by awarding Respondents more than double the amount of damages they requested (not including the additional award of interest, fees and costs), and by otherwise engaging in misconduct by, inter alia, conducting the Arbitration in a manner that demonstrated evident partiality against MACC, including by refusing to permit MACC to offer material evidence and repeatedly ruling in favor of Respondents and against MACC on evidentiary and other matters material to the substance of the claims and defenses at issue.9. In the alternative, to the extent the Award is not vacated for the foregoing reasons and as explained more fully below, MACC requests that the Award be modified pursuant to U.S.C. § 11(a) to correct the Panel's unsupported decision to render an award that effectively returns Respondents' principal twice and contains other clear computational errors.
The arbitration panel did not make any findings of fact or conclusions of law in its order denying MACC's preliminary motion to dismiss, or in its final written award decision. The panel had no obligation to do so, but this Court can only infer the reasoning resulting in the panel's decisions.
At Page 9 of the DCO OrderThe final damages award is disturbing. The arbitration panel awarded Respondents both net out-of-pocket losses (what the panel called "initial investment loss[es]") and market adjusted damages (what the panel called "compensatory damages"), thereby double-counting Respondents' lost investment. MACC contends that the arbitration panel exceeded its powers by awarding damages in excess of what Respondents requested, because Respondents presented net out-of-pocket losses and market-adjusted damages as alternative damages measures and argued to the panel that net out-of-pocket losses should not be used to determine damages. . . .
At Page 10 of the DCO Order[T]he issue of damages was unquestionably submitted to the panel to decide, and both net out-of-pocket losses and market-adjusted damages are described in the FINRA Office of Dispute Resolution Arbitrator's Guide as types of compensatory damages that a panel may consider. [Doc. 15-3 at 65-66.] The panel did not fashion some type of remedy outside the scope of the parties' arbitration agreement. What appears is that the panel made a mistake of fact or law by awarding both measures of damages. Such mistakes are beyond this Court's review. As such, the Court does not find that the arbitration panel exceeded its powers with respect to the damages award. Nor does the record reflect that the panel knew and explicitly disregarded the governing damages law, and therefore the Court finds no manifest disregard of the law.
does not have authority to modify the amount of the award. Even assuming such authority, simply subtracting the "initial investment loss[es]" awarded by the panel from the total damages amount as MACC suggests would disregard the panel's requirement that Respondents reassign ownership of their investments back to MACC, in effect reducing the value of the award by the present value of those investments. That was not contemplated or accounted for in any of the damages calculations that Respondents' expert presented at the hearing. Any correction of the panel's damages award would require some hearing to determine that value and account for the reassignment requirement.
[W]ith respect to the interest award, while the FINRA Code provides that an award "shall bear interest from the date of the award," the panel had discretion to award interest from an earlier date. . . .
Respondents have not yet assigned the subject securities back to MACC as the award requires. No final judgment can be entered until that matter is resolved. Upon the foregoing, it is ORDERED thatPetitioner's Amended Motion to Vacate or in the Alternative, to Modify or Correct Arbitration Award [Doc. 10] is DENIED;Respondents' Cross-Motion to Confirm FINRA Arbitration Award [Doc. 14] is GRANTED; the final arbitration award executed on December 12, 2016 [Doc. 14-1] is CONFIRMED . . .
[M]id Atlantic's appeal presents one question for our review: Did the district court err by holding that it lacked authority to modify the arbitration award to correct an alleged evident material miscalculation of figures because that miscalculation does not appear on the face of the arbitration award? In their cross-appeal, Ms. Bien and Mr. Wellman raise three questions. Did the district court err by (1) granting post-award interest on damages, but not on attorney's fees and other costs; (2) awarding postjudgment interest at the federal rate; and (3) ordering Ms. Bien and Mr. Wellman to reassign to Mid Atlantic any post-award distributions from their ownership interests in Sonoma Ridge Partners and KBS (as well as interest thereon).
Whether § 11(a) permits courts to go beyond the face of the arbitration award in looking for an evident material miscalculation of figures is a question of first impression in this circuit. We answer that question in the negative: that is, we conclude that § 11(a) embodies a face-of-the-award limitation. In reaching that conclusion, first and foremost, we draw inferences from the text and context of the FAA. Our independent reading of this text and context is reinforced by our recognition of the narrow and deferential standard of review applicable in the arbitration context. We close our analysis of this matter by recognizing, moreover, that the persuasive authority of our sister circuits has reached a similar conclusion.
What's more in dispelling Mid Atlantic's misguided notion that the statute functions in an arbitrary manner -- under a face-of-the-award approach -- it is important to keep in mind that "arbitration is a matter of contract." Henry Schein, 139 S. Ct. at 529. If Mid Atlantic wished to avoid the supposedly random chance that the arbitration panel would not show its work, it could have contracted for a fully explained award. See Am. Express, 570 U.S. at 233 (noting that parties can contract to specify the arbitrator and the rules for arbitration); United Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 598 (1960) ("Arbitrators have no obligation to the court to give their reasons for an award."). But Mid Atlantic did not do so. In fact, the current contracts lead us to the opposite conclusion. Most obviously, Mid Atlantic's contracts with Ms. Bien and Mr. Wellman specify, "[t]he arbitrators do not have to explain the reason(s) for their award." Aplt.'s App., Vol. III, at 737. We thus cannot (and would not attempt to) rewrite the parties' contracts just because Mid Atlantic is now dissatisfied with the fruits of its bargain. After all, "by agreeing to arbitrate," Mid Atlantic traded "procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." Gilmer, 500 U.S. at 31 (quoting Mitsubishi, 473 U.S. at 628). Stated otherwise, that Mid Atlantic is displeased with the level of informality with which the arbitration panel resolved the dispute is not cause to undo the bargain it struck with Ms. Bien and Mr. Wellman. Cf. Beumer Corp. v. ProEnergy Servs., LLC, 899 F.3d 564, 566 (8th Cir. 2018) ("The parties bargained for the arbitrator's decision; if the arbitrator got it wrong, then that was part of the bargain.").In sum, we conclude that § 11(a) allows courts to correct only those evident material miscalculations that appear on the face of the award. The provision's text compels that conclusion, when it is read in the context of the FAA's purposes, history, and structure. And this conclusion is bolstered by the narrow and deferential standard of review applicable in the arbitration context.
"Ownership" of the investments, then, entailed the right to receive distributions and to share in the liquidated assets. Thus, the arbitration award that ordered Ms. Bien and Mr. Wellman in December 2016 to reassign ownership of their investments in Sonoma Ridge Partners and KBS to Mid Atlantic also should be read as having effectively ordered them to reassign to Mid Atlantic (in addition to any actual common stock) their rights to future distributions from those investments. And it is undisputed that-irrespective of the reason-Ms. Bien and Mr. Wellman did not act on the arbitration panel's order: that is, they did not reassign their ownership interests in the Sonoma Ridge Partners and KBS investments to Mid Atlantic before the district court entered its amended final judgment in April 2018. It is further uncontested that at the time the court entered its amended final judgment, essentially all that was left of the ownership interests of Ms. Bien and Mr. Wellman in Sonoma Ridge Partners and KBS was their distributions following liquidation.Therefore, when the district court ordered Ms. Bien and Mr. Wellman to reassign their distributions from Sonoma Ridge Partners and KBS (as well as interest thereon) to Mid Atlantic, it was actually enforcing the terms of the arbitration award-which required reassignment of their ownership interests in those investment vehicles-instead of straying from those terms. Stated otherwise, when the district court entered its amended final judgment in April 2018, it ensured that Mid Atlantic received all of the ownership interests-which included the right to future distributions-that Ms. Bien and Mr. Wellman had in their Sonoma Ridge Partners and KBS common stock, just as the arbitration panel contemplated. Accordingly, we reject the last contention of error of Ms. Bien and Mr. Wellman.