Court Opinion

ID: 9965759
Source: CourtListenerOpinion
Date Created: 2024-05-03 14:08:52.756203+00
Date Added: 2024-06-11T08:25:38.499834
License: Public Domain

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

                       COMMONWEALTH OF MASSACHUSETTS

                                 APPEALS COURT

                                                  23-P-313

                     AMERICAN GRAPHICS INSTITUTE, LLC

                                       vs.

                    NOBLE DESKTOP NYC, LLC, & another.1

               MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

       The plaintiff, American Graphics Institute, LLC (AGI),

 appeals from a judgment of the Superior Court confirming, and

 denying a petition to vacate or modify, an arbitration award in

 favor of defendants Noble Desktop NYC, LLC (Noble), and its

 owner, Mourad Kattan.       AGI argues that the judge should have

 vacated the award because the arbitrator acted beyond her

 authority when she found AGI to have breached the parties'

 agreement and assessed the value of damages.             AGI further argues

 that the judge erred in awarding Noble attorney's fees.               We

 affirm.

       Background.     We summarize the facts found by the

 arbitrator.     Both AGI and Noble are schools that provide

       1   Mourad Kattan.
professional development training relating to various computer

applications and programs.   Noble is licensed in New York and

run by Kattan.   AGI is licensed in Massachusetts and run by its

principals, Christopher Smith and Jennifer Smith.

    On May 1, 2020, the parties entered into an agreement under

which AGI agreed to sell to Noble certain assets defined in that

agreement as AGI's "New York Business."   Among the terms of the

agreement were section 4.1, requiring AGI to "use commercially

reasonable efforts to transition" the New York Business to Noble

by "no later than June 1, 2020"; section 4.4, constraining AGI

until March 31, 2029, from competing with Noble by engaging in

any business in New York similar to that of Noble; and section

4.5, forbidding AGI from soliciting Noble's New York customers.

Also among the terms of the agreement was section 6.3, providing

that any dispute arising from certain provisions of the

agreement including section 4.1 would be resolved by

arbitration, and "[t]he decision and award of the arbitrator

shall be final and binding on the parties and shall not be

subject to appeal."

    Between May and December 2020, Noble and Kattan took steps

to transition to Noble the New York Business it was purchasing

from AGI.   In contrast, AGI resisted and obstructed the

transition of the New York Business.

                                 2
     On December 1, 2020, Noble filed an action in a New York

trial court alleging that AGI had breached the noncompete

(section 4.4) and nonsolicitation (section 4.5) provisions of

the agreement.2   On February 8, 2021, that court entered a

preliminary injunction restraining AGI from running any classes

in New York, running any advertisements on its website marketing

classes or services in New York, or further breaching the

noncompete provision of the agreement.   After entry of the

injunction, AGI did nothing more to direct its New York Business

to Noble.   Instead, on February 9, 2021, AGI removed from its

website the New York category pages where Noble's courses were

listed, and removed all sixty of Noble's design courses,

redirecting potential customers to general category pages where

only AGI courses were listed.

     Noble brought this arbitration claim, alleging that AGI had

breached section 4.1 of the agreement, which required AGI to

"use commercially reasonable efforts to transition" the New York

Business to Noble.   The arbitrator found that when AGI removed

from its website all references to AGI's courses available in

New York, "these actions destroyed the value of Noble's purchase

of the New York Business," and constituted a breach of section

     2 Under section 6.3(a) of the agreement, breaches of
sections 4.4 and 4.5 were not required to be resolved by
arbitration.

                                 3
4.1.    The arbitrator further concluded that "a fair measure of

damages is to look to the market value of the New York Business

as of the date of the breach," which she determined "is no

earlier than February 9, 2021," the date that AGI removed

Noble's courses from AGI's website.     The arbitrator assessed the

value of the New York Business on that date at $350,000.        To

this amount the arbitrator added "an admittedly arbitrary, but

highly conservative, compensation figure of $50,000, for

Kattan's efforts to make the deal work for the period May

through December 2020."

       AGI sought review of the award in Superior Court pursuant

to G. L. c. 251, § 12.     On the parties' cross motions, the judge

confirmed the arbitration award and allowed Noble's motion for

interest, costs, and attorney's fees.     This appeal ensued.

       Discussion.   1.   Confirmation of arbitration award.    AGI

argues that the Superior Court judge erred in confirming the

arbitration award because the arbitrator exceeded her powers,

G. L. c. 251, § 12 (a) (3), when she (1) concluded that AGI's

removing Noble's courses from its website breached the parties'

agreement, (2) assessed the value of the New York Business at

$350,000, and (3) awarded Noble $50,000 to compensate for

Kattan's time.

       "We review the trial [court] judge's decision to uphold the

arbitration award de novo, but our examination of the underlying

                                   4
award is informed by the 'strong public policy favoring

arbitration'" (citation omitted).    Pittsfield v. Local 447 Int'l

Bhd. of Police Officers, 480 Mass. 634, 637 (2018).   "Indeed, an

arbitration award carries a presumption of propriety because it

is the arbitrator's judgment, not necessarily an objectively

correct answer, for which the parties have bargained."     Id. at

638, citing United Steelworkers of Am. v. American Mfg. Co., 363

U.S. 564, 568 (1960).   "[T]he powers of the arbitrator . . . are

wide and the scope of judicial review of the arbitration

proceedings is narrow."   Katz, Nannis & Solomon, P.C. v. Levine,

473 Mass. 784, 793 (2016), quoting Grobet File Co. of Am. v. RTC

Sys., Inc., 26 Mass. App. Ct. 132, 135 (1988).   A court will

"uphold an arbitrator's decision even where it is wrong on the

facts or the law, and whether it is wise or foolish, clear or

ambiguous" (citation omitted).   Pittsfield, supra at 638.

    As the judge noted, the arbitrator, a retired Federal trial

judge, conducted a five-day hearing at which she considered 248

exhibits and heard the testimony of witnesses, based on which

she issued a ninety-three-page decision.    Even if the

arbitrator's decision was "wrong on the facts or law," or

"foolish" or "ambiguous," Pittsfield, 480 Mass. at 638, that

would not be grounds to vacate it.   AGI nonetheless argues that

the decision should be vacated because "the arbitrator[]

                                 5
exceeded [her] powers," G. L. c. 251, § 12 (a) (3).     We are not

persuaded.

    a.   AGI's removal of New York courses from its website.

AGI argues that the arbitrator exceeded her powers by finding

that AGI breached of section 4.1 of the agreement, because any

breach by AGI was predicated on actions AGI took to comply with

the New York court's injunction.      The argument is unavailing.

    The arbitrator found that the intangible assets that Noble

contracted to purchase included access to and use of AGI's

website, and access to AGI's Google Analytics account used to

track traffic to AGI's website.    The arbitrator credited the

testimony of special master Gordon Cormack that AGI's website

had been altered beginning on February 8, 2021, to stop

capturing any data on traffic to its New York pages.      The

arbitrator found that AGI's removing the categories of New York

courses from its website "destroyed the value of Noble's

purchase of the New York Business."      Although AGI was required

to comply with the New York injunction, nothing in that

injunction required AGI to comply in this manner.     Rather, AGI

could have complied by continuing to list Noble's classes and

ceasing to market them as AGI classes.      Finding those facts and

applying the terms of the parties' agreement to the facts was

plainly within the powers of the arbitrator.     See Katz, Nannis &

Solomon, P.C., 473 Mass. at 796-797.     AGI "presents nothing more

                                  6
than a dispute over a question of fact that is not reviewable by

this court."   Id. at 797.   See American Fed'n of State, County,

and Mun. Employees, Council 93, AFL-CIO v. School Dep't of

Burlington, 462 Mass. 1009, 1010 (2012).3

     b.   Arbitrator's assessment of value of New York Business.

AGI argues that the arbitrator acted in "manifest disregard of

the law" when she valued the New York Business at $350,000.       The

Superior Court judge noted that the arbitrator followed the

valuation method endorsed by the court in Schonfeld v. Hilliard,

218 F.3d 164, 176 (2d Cir. 2000).    Once again, the arbitrator's

findings on that issue were squarely within her purview.   See

Katz, Nannis & Solomon, P.C., 473 Mass. at 796-797.

     c.   Award of $50,000 for Kattan's time.   AGI argues that

the arbitrator exceeded her powers in awarding $50,000 as "an

admittedly arbitrary, but highly conservative" amount to

compensate Noble for the time that Kattan spent.    Focusing on

the arbitrator's use of the word "arbitrary," AGI argues that

the word choice demonstrates that the arbitrator's assessment of

     3 AGI misplaces its reliance on the opinion of this court in
that case, American Fed'n of State, County, and Mun. Employees,
Council 93, AFL-CIO v. School Dep't of Burlington, 78 Mass. App.
Ct. 511 (2011). We are bound to follow the Supreme Judicial
Court's subsequent opinion on further appellate review, which
declared that an "argument that there was no evidence in the
record to support the arbitrator's finding . . . falls short of
th[e] deferential standard" under which arbitration awards are
reviewed. American Fed'n of State, County, and Mun. Employees,
Council 93, AFL-CIO, 462 Mass. at 1010.

                                 7
those damages exceeded her powers.    Kattan testified at length

about the efforts he made throughout the period from May to

December 2020 to comply on Noble's behalf with section 4.1 of

the parties' agreement.   It was certainly within the

arbitrator's powers to set a value on Kattan's time.

    2.   Award of Superior Court attorney's fees.    AGI argues

that the Superior Court judge erred in awarding $19,050 in

attorney's fees to Noble.   Section 6.3(b) of the agreement

provides that "[a]ny party unsuccessfully refusing to comply

with an order of the arbitrator shall be liable for costs . . .

and attorney's fees" (emphasis added).   We discern no error of

law or abuse of discretion in the Superior Court judge's

awarding Noble attorney's fees under that section.      See

Massachusetts Highway Dep't v. Perini Corp., 79 Mass. App. Ct.

430, 435 (2011) ("[i]t should be the rule, rather than the

exception, that when arbitrators hand down an award the parties

will comply with it, without the necessity of court proceedings,

just as it is (or should be) the normal or usual result that

parties comply with a judgment, without the necessity of resort

to process or appeal" [quotation and citation omitted]).

    3.   Appellate attorney's fees.   Noble has requested that

this court award it attorney's fees and double costs incurred in

                                8
defending this appeal, pursuant to Mass. R. A. P. 25, as

appearing in 481 Mass. 1654 (2019).4

     Given the language of the parties' agreement and the case

law construing G. L. c. 251, §§ 11 & 12, AGI "could not have had

a reasonable expectation" that the confirmation of the

arbitration award would be reversed on appeal.       Love v. Pratt,

64 Mass. App. Ct. 454, 459 (2005).      In its appeal AGI

essentially sought to second-guess the factual findings and

assessment of damages in the decision of the arbitrator, which

the parties had agreed "shall be final and binding . . . and

shall not be subject to appeal."       We conclude that the appeal

was frivolous.   See Avery v. Steele, 414 Mass. 450, 456 (1993).

Consistent with the requirements of Fabre v. Walton, 441 Mass.

9, 10 (2004), Noble may file a request for its costs, along with

supporting documentation, within fourteen days of the issuance

     4 Noble does not ask that we award appellate attorney's fees
under section 6.3(b) of the agreement, and so we do not consider
that issue.

                                   9
of the decision in this case.    AGI shall have fourteen days

thereafter within which to respond.

                                      Judgment affirmed.

                                      By the Court (Rubin,
                                        Ditkoff & Grant, JJ.5),

                                      Assistant Clerk

Entered:   May 3, 2024.

    5   The panelists are listed in order of seniority.

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