Opinion ID: 672322
Heading Depth: 3
Heading Rank: 7

Heading: Alleged damages due to loss of asset purchase option.

Text: 28 The letter also advised the parties to bring supporting documentation relevant to each of the other issues. With respect to the third issue, regarding loss of contracts, the arbitrator advised the parties to make available [c]orrespondence regarding deficiencies and shortages and [e]xpert citations regarding equipment functionality or lack thereof. Counsel for the Isoetec shareholders sent the arbitrator a letter agreeing that the arbitrator's letter listed all of the remaining issues other than the accounting issues; we have found nothing in the record to indicate that Executone ever acknowledged or objected to the arbitrator's August 14, 1991, letter. 29 The arbitrator released separate reports regarding the accounting issues and other issues in October 1991. In its report regarding the accounting issues, the arbitrator ruled that the $295,000 claimed by Isoetec as profits from the Stewart Title transaction could not be included as adjusted pre-tax profits for purposes of the purchase price computation. The arbitrator also ruled that certain other deductions should be made. The deductions in 1989 adjusted pre-tax profits required by the arbitrator totalled over $400,000. Under the terms of the arbitrator's report regarding the accounting issues, the final purchase price of Isoetec should have been roughly $1,100,000--substantially less than the interim purchase price of some $3,000,000. 30 What the arbitrator gave Executone with one hand, however, it took away with the other. In its report regarding the other issues, the arbitrator awarded $1,187,000 in damages to the former Isoetec shareholders, explaining that Executone had breached warranties with respect to the equipment involved in the Stewart Title transaction. Thus, the arbitrator awarded the former Isoetec shareholders damages equivalent to the impact on the purchase price of not having [the Stewart Title transaction] completed under its terms. Because the arbitrator deemed Executone the prevailing party, it deducted $125,000 in costs and fees from this damages award, for a total damages award of $1,062,000. 31 Returning to court, both Executone and the Isoetec defendants moved for summary judgment. Executone requested the court, among other things, to ignore the arbitrator's award of damages to the former Isoetec shareholders and to declare the final purchase price to be $1,093,921. The Isoetec defendants requested judgment in their favor in the amount of $2,573,567.27. This amount, of course, included the $1,062,000 damages award in favor of the former Isoetec shareholders and interest on that award. 32 The district court heard oral argument on the summary judgment motions on March 13, 1992. The court then directed the parties to file supplemental letter briefs addressing the scope of an arbitrator's authority and circumstances under which an arbitrator's decision can be set aside. On April 14, 1992, the district court entered an order denying Executone's motion for summary judgment and granting the Isoetec defendants' motion for summary judgment. In its final judgment, entered on June 23, 1992, the district court ordered that the arbitrator's award be adopted in all respects. The judgment further contained the following orders: (1) it awarded to the Isoetec defendants $1,187,000 with no prejudgment interest on such amount; (2) it directed that Executone should give the former Isoetec shareholders 383,399 new shares of Executone stock in exchange for the 246,619 shares previously issued; (3) it directed Executone to file a registration statement with the Securities and Exchange Commission (SEC) registering all shares of stock issued to the defendants; (4) it awarded Executone the $125,000 in fees awarded by the arbitrator and $48,579 (plus interest) as the amount that Executone had overpaid for Isoetec; and (5) it required former Isoetec shareholders who had owned stock appreciation rights in Isoetec and who had received Executone stock in exchange for those rights to surrender their Executone stock thereby received. 33 This appeal and cross-appeal followed.