Lopata v. Coyne

• Decision Date: 05 August 1999
• Docket Number: No. 96-CV-936, No. 96-CV-937.
• Parties: Edward J. LOPATA, Appellant, v. John T. COYNE, et al., Appellees.
• Court: D.C. Court of Appeals

735 A.2d 931

Edward J. LOPATA, Appellant, v. John T. COYNE, et al., Appellees.

Nos. 96-CV-936, 96-CV-937.

District of Columbia Court of Appeals.

Argued April 7, 1998.

Decided August 5, 1999.

Edward J. Lopata, pro se.

Michael Nussbaum, Washington, DC, for appellees.

Before WAGNER, Chief Judge, and STEADMAN and REID, Associate Judges.

WAGNER, Chief Judge:

This action involves a dispute between appellant, Edward J. Lopata, and the remaining members of a law firm in which he was formerly a partner, Jordan Coyne Savits & Lopata, now Jordan Coyne & Savits ("JCS" or "the partnership"). The parties submitted to arbitration disputed issues related to the circumstances surrounding the termination of the parties' former partnership relationship and the amounts due and owing between them. In this appeal, Lopata challenges an order of the trial court denying his motion to vacate, modify or correct the arbitration award and dismissing with prejudice his complaint for a judicial determination that the partnership dissolved when he was forced out, rather than upon his voluntary withdrawal, thereby entitling him to additional benefits upon dissolution. He argues for reversal on the grounds that: (1) the court has subject matter jurisdiction over dissolution of the partnership notwithstanding the arbitrator's award; (2) the arbitrator's apparent determination that he was a voluntary withdrawing partner is contrary to the law and evidence; (3) "evident partiality" on the part of the arbitrator requires vacation and/or modification of the arbitrator's award; (4) the arbitrator miscalculated his capital account; and (5) the amount of the arbitrator's award and the judgment entered by the trial court is null and void. We affirm.

I.

The law partnership of JCS was formed in July 1975, with its main office in Washington, D.C.¹ Starting in about 1987 until his departure from the firm, Lopata practiced out of the firm's Baltimore, Maryland office. From its inception, the partnership was governed by a written partnership agreement, which was amended from time to time. Lopata signed amended agreements in 1975, 1978, 1988, and 1990. However, he refused to sign amendments in 1991 and 1993, although he continued to practice law with the firm until August 31, 1993.

Both the 1990 and the 1993 partnership agreements contained arbitration clauses.² Both agreements also provided that in the event that any provision of the agreement contravened any provision of Title 41 (the Uniform Partnership Act) ("UPA"), the agreement would control, and the parties waived any benefits which the UPA might otherwise provide.³ Such provisions appeared in every partnership agreement since 1984.

In 1992, JCS hired a management consultant to review the firm's partnership agreement and management practices. The consultant recommended that the partnership amend its 1991 agreement with respect to payments to withdrawing and retiring partners because the benefits were too great, and JCS could not afford the level of benefits provided in the 1991 agreement. The consultant recommended that the 1991 agreement be amended to "state specifically that a partner owns no interest in accounts receivables or work in process and that when a partner leaves voluntarily, he gets only a return of capital (without interest) and earned and unpaid compensation." Lopata refused to agree to the recommended changes because, he contended, it would affect significantly ownership interests of the partners and reduce retirement, death and disability benefits which were secured under the January 1990 partnership agreement. In response to the study and recommendations, the partners, with the exception of Lopata, decided to scale back retirement benefits to a more affordable rate and to reduce funded death benefits.⁴ The 1993 agreement provided for withdrawing partners to receive their capital account only; however, retiring partners would receive their capital account, plus the amount of their partnership draw for the year in which the notice of retirement was given, payable over a two-year period. The 1993 agreement also provided that refusal to sign an approved agreement would constitute cause for expulsion from the firm.

In a memorandum to the partners dated March 17, 1993, Lopata objected to the 1993 amendment, arguing that it was an attempt to take away vested property rights arising under prior agreements. Lopata further informed his partners that he would dissolve the partnership unilaterally if the other partners signed the proposed amendment. On March 24, 1993, eleven of the twelve partners eligible to vote approved the amendments. They also voted to allow Lopata thirty days to sign the new agreement or to withdraw. Subsequently, they extended the deadline, first to July 30, 1993, and then to August 31, 1993. Lopata still would not sign the agreement. At the direction of the remaining partners, Lopata vacated the partnership's offices on August 31, 1993. The remaining partners continued to practice law together under the firm name of Jordan Coyne & Savits.

At that time, the Baltimore office was in the first year of a five-year lease. Testimony presented during the arbitration hearing indicated that the Baltimore office was opened to accommodate Lopata and his asbestos litigation practice. JCS was unsuccessful in subleasing the Baltimore office space, but negotiated a lease buy-out. Under the terms of the 1990 and 1993 agreements, Lopata was liable for a portion of the cancellation fees.⁵ After settlement negotiations failed to resolve the parties' several disputes, on December 17, 1993, JCS filed a demand for arbitration with the American Arbitration Association ("AAA"). JCS sought to enforce the terms of the 1993 partnership agreement which provided for a withdrawing partner to receive his capital account. About January 6, 1994, Lopata filed a demand for arbitration against JCS. In his claim for relief, Lopata sought the value of his pro rata ownership interest in the partnership and damages for breach of fiduciary duty, breach of the 1990 agreement, and for wrongful dissolution of the partnership. Lopata sought an additional $458,000 as his equity interest in the firm, and damages in the amount of $1,058,000 for breach of duty, or alternatively, a withdrawal payment of his net income for his last full year as provided for in the 1990 partnership agreement. JCS sought a determination of the additional amounts, if any, beyond Lopata's capital account, owing to Lopata and a portion of the lease cancellation fee incurred as a result of Lopata's withdrawal. JCS claimed that nothing more was due to Lopata under the 1993 agreement, or alternatively, that JCS owed only the amounts due under the 1990 agreement.

After an evidentiary hearing and the submission of legal memoranda, the arbitrator issued an award on November 28, 1994.⁶ The arbitrator apparently determined that the 1990 agreement was binding on the parties and awarded Lopata an amount to which a withdrawing partner would be entitled. The arbitrator awarded Lopata $250,941 plus an additional $411.60 on the counterclaim. JCS was awarded $29,318 related to the lease cancellation. Finally, the award allocated ten percent of arbitration expenses for payment by JCS, and ninety percent for payment by Lopata.

On February 24, 1995, Lopata filed in Superior Court a Motion/Application to Vacate and/or Modify or Correct Arbitrator's Award of November 28, 1994. While the motion was still pending, he filed a complaint in the trial court against the JCS partners seeking a judicial determination that they had wrongfully dissolved the partnership of Jordan Coyne Savits & Lopata on September 1, 1993. By order dated June 18, 1996, the trial court denied Lopata's motion, confirmed the arbitrator's award, dismissed with prejudice the complaint, and entered judgment in the amount of $2,229.89 for JCS and against Lopata.⁷

II.

Lopata argues that the determination of whether the partnership had been dissolved is an issue for the court, not the arbitrator. He contends that, as a matter of law, either the partnership was dissolved under the District's UPA, or the court retains jurisdiction to declare that the partnership has been dissolved pursuant to D.C.Code §§ 41-128, -130, and/or -131 (1990). Further, he argues that the UPA does not provide for "a waiver of a partner's right to seek a declaration that a dissolution of a partnership occurred prior to or subsequent to any party filing for arbitration." JCS counters that Lopata is foreclosed from challenging the arbitrator's consideration of dissolution because he agreed to have the issue decided by arbitration, and his participation in the arbitration on the merits of the dispute forecloses the issue of arbitrability after the arbitrator has rendered a decision. The trial court rejected Lopata's argument that the arbitrator lacked authority to examine dissolution questions because Lopata specifically demanded dissolution rights in his arbitration application and raised an objection only after he received an adverse award.

It is within the jurisdiction of the courts to determine whether parties have agreed to arbitrate a particular question, unless the parties submit the issue of arbitrability for arbitration. See Masurovsky v. Green, 687 A.2d 198, 204 (D.C.1996)

(citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). In making that determination, we apply state-law principles applicable to the formation of contracts. Id. (citation omitted). That is because "`arbitration is . . . a matter of contract between the parties: it is a way to resolve those disputes — but only those disputes — that the parties have agreed to submit to arbitration.'" Id. at 205 (quoting Kaplan, 514 U.S. at 943,

115 S.Ct. 1920). Both the 1990 and the 1993 agreements involved here contained arbitration provisions. Lopata signed the 1990 agreement which...