Opinion ID: 774991
Heading Depth: 2
Heading Rank: 1

Heading: Freeman's Liability

Text: 34 Freeman claims that the arbitrators exceeded their authority in deciding that he was a limited partner liable as a general partner because the Agreement containing the arbitration clause did not address whether Freeman was a limited partner. 5 This claim lacks merit because, in deciding the extent to which respondents caused injury to Pike, it was well within the scope of the arbitration clause for the arbitrators to decide under what theory or theories Freeman should or could be held liable for the damage suffered. 35 Freeman further claims that he cannot be liable as a general partner because he was not even a limited partner but instead a trustee of two trusts that were limited partners. Pike asserted in the arbitration, however, that Freeman, as an individual, was a limited partner. The record, somewhat surprisingly, contains no official corporate document comprehensively setting forth the limited partners of the partnership. 6 The arbitrators were thus left with the competing arguments of the parties and sparse documentary evidence. In examining that evidence, we note that while the names of the trusts do not appear in the Agreement, the Agreement and associated documents contain several passages suggesting that Freeman individually was a limited partner. 7 Thus, the arbitrators were entitled to reach a conclusion on liability that required, as a precondition, that Freeman be a limited partner of the Partnership. 36 We similarly reject Freeman's claim that the arbitrators manifestly disregarded the law in finding him liable for the amounts specified in the Award. Freeman maintains that his official legal roles in the Project entities do not allow for a finding that he is personally liable for the amounts awarded. In particular, he contends that, under the relevant partnership law, he could not be liable as a general partner unless he was a limited partner who Pike reasonably believed was acting as the general partner. We observe, however, that one of the key issues during the arbitration hearing with respect to Freeman was the extent to which Freeman's actual participation in the entities at issue differed from the official arrangements set forth in the Agreement and other documents. Freeman's testimony during the arbitration hearing detailed an extensive list of activities Freeman carried out involving the control and management of the general partner, after Pike had relinquished control. While Freeman argued that such activities were carried out as an advisor to the general partner, among other roles, the arbitrators were entitled to determine that, after Pike relinquished control, he reasonably could have perceived such activities as evidence that Freeman was acting as a general partner. Indeed, where, as here, no explanatory opinion accompanies the award, [i]f a ground for the arbitrator's decision can be inferred from the facts of the case, the award should be confirmed. Fahnestock, 935 F.2d at 516. Based on the facts of this case - as determined by the arbitrators' interpretation of a somewhat convoluted, inconsistent, and incomplete documentary and testimonial record - we cannot say that no grounds exist to support the arbitrators' decision. 37 In any event, Freeman has not explained why partnership law provides the exclusive permissible grounds for the arbitrators' imposition of personal liability on Freeman. In fact, Freeman's counsel conceded in the hearing before the district court that the Award might also be justified on a piercing the corporate veil theory: 38 So the point that Mr. Crossman is trying to make in his brief and before your Honor is that perhaps Freeman exercised such control that it would be appropriate to hold him personally liable for the debts of the limited partnership. However, your honor, that does not convert Freeman to a general partner. What it may be, if one were to look at it in the broadest way, is a request that notwithstanding the fact that it is neither a limited partner nor a general partner, that he is nonetheless personally liable on a piercing the corporate veil issue. And what I'm arguing to your Honor is not whether the arbitrators were correct or not in making a determination that Freeman had liability, but specifically in making a declaration that he is a general partner. 39 (Emphasis added.) Based on the above, 8 it is clear that the arbitrators' decision to impose personal liability on Freeman, including liability for obligations of the Partnership, was not in manifest disregard of the law. 9 We therefore affirm the judgment of the district court to the extent that it confirmed the Award and denied Freeman's petition to vacate it.