{"id":886740,"date":"2016-02-02T17:18:33","date_gmt":"2016-02-03T00:18:33","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=886740"},"modified":"2016-02-02T17:18:33","modified_gmt":"2016-02-03T00:18:33","slug":"arbitrators-award-of-attorneys-fees-thrown-out-because-the-parties-agreement-did-not-provide-for-it","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/arbitrators-award-of-attorneys-fees-thrown-out-because-the-parties-agreement-did-not-provide-for-it\/","title":{"rendered":"Arbitrators&#8217; Award of Attorney&#8217;s Fees Thrown Out Because the Parties&#8217; Agreement Did Not Provide for It"},"content":{"rendered":"<p>Andrew G. Wailgum and Sara P. Bryant | Murtha Cullina LLP | January 27, 2016<\/p>\n<p>The Massachusetts Supreme Judicial Court recently voided an arbitration panel\u2019s award of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/attorney-fees-provisions-must-contracts\/\" target=\"_blank\"><strong class=\"highlight\">attorney<\/strong>\u2019s\u00a0<strong class=\"highlight\">fees<\/strong><\/a> because the terms of the parties\u2019 arbitration agreement did not specifically provide that the prevailing party could be awarded <strong class=\"highlight\">fees<\/strong>. Beacon Towers Condo. Trust v. Alex, 473 Mass. 472 (2016). The case involved a dispute between a condominium association trust and a unit owner regarding a common expense assessment. As required by the condominium bylaws, the parties submitted their dispute to arbitration and the arbitration panel found that the assessment against the unit owner was improper. In addition to awarding the unit owner the return of the assessment that he had paid under protest, the panel awarded him <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/defeating-a-construction-lien-claim-does-not-always-entitle-a-party-to-attorneys-fees\/\" target=\"_blank\"><strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong><\/a> even though the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/award-of-attorneys-fees-in-construction-dispute-founded-solely-on-aaa-rules\/\" target=\"_blank\">arbitration agreement<\/a> did not provide for an award of\u00a0<strong class=\"highlight\">fees<\/strong>. The panel had found that the trust\u2019s defenses were meritless and reasoned that American Arbitration Association (\u201cAAA\u201d) rule 47(d)(ii), allows for an award of <strong class=\"highlight\">fees<\/strong> where \u201cauthorized by law\u201d and awarded <strong class=\"highlight\">fees<\/strong> relying on M.G.L. c. 231 \u00a7 6F, which allows for an award of <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong> where a party asserts defenses that are \u201cwholly insubstantial, frivolous and not advanced in good faith.\u201d<\/p>\n<p>The trust filed suit in Massachusetts Superior Court under the Massachusetts Arbitration Act (M.G.L. c. 251 \u00a7 1 et seq.) challenging the fee award on the ground that the arbitration panel exceeded its authority. The Superior Court agreed, finding that M.G.L. c. 231 \u00a7 6F does not give an arbitrator the authority to award <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong>. The unit owner then appealed and the SJC, on its own motion, transferred the case from the Appeals Court.<\/p>\n<p>The SJC held that the arbitration panel\u2019s award of <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong> exceeded its authority. An arbitrator exceeds his authority \u201c\u2026 by awarding relief beyond that to which the parties bound themselves \u2026 or by awarding relief prohibited by law.\u201d <u>Beacon Towers Condo. Trust<\/u>, 473 Mass. at 475 (internal quotation omitted). The arbitrator\u2019s authority is derived from the Massachusetts Arbitration Act, which has been interpreted by the Court to only allow an award of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/confirmation-that-a-joint-offer-of-judgment-can-be-used-to-obtain-an-award-of-attorneys-fees-in-a-construction-lien-case\/\" target=\"_blank\"><strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong><\/a> if the parties\u2019 arbitration agreement authorizes it. The Court noted two additional circumstances where a fee award is permitted even though the arbitration agreement does not specifically authorize it: (1) when a party prevails on a statutory claim and that statute provides that the prevailing party may recover <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong>; and, (2) as part of discovery sanctions if the arbitration is governed by the AAA rules.<\/p>\n<p>The unit owner advanced two arguments as to why the fee award was justified despite the absence of authorizing language in the parties\u2019 agreement. First, the unit owner argued that the panel\u2019s fee award was proper because AAA rule 47(a) allows the arbitration panel to award relief it deems \u201cjust and equitable.\u201d However, the Court pointed <strong class=\"highlight\">out<\/strong> that rule 47(a) also requires that the relief be within the scope of the parties\u2019 arbitration agreement. As conceded by the arbitration panel in its award, nowhere in the parties\u2019 agreement to arbitrate was there a provision permitting the award of <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong>. The Court further held that to allow an arbitrator to award <strong class=\"highlight\">fees<\/strong> whenever he believed it was \u201cjust and equitable\u201d would render superfluous AAA rule 47(d)(ii), which provides that an arbitrator may award <strong class=\"highlight\">fees<\/strong> \u201cif all parties have requested such an award or it is authorized by law or their arbitration agreement.\u201d Accordingly, the fee award could not be supported by rule 47(a).<\/p>\n<p>Second, the unit owner asserted that the fee award was \u201cauthorized by law\u201d because M.G.L. c. 231 \u00a7 6F permits an arbitrator to award <strong class=\"highlight\">fees<\/strong> where it finds, in essence, that the defenses were frivolous. The Court rejected this argument, pointing <strong class=\"highlight\">out<\/strong> that \u00a7 6F provides that a \u201ccourt\u201d may award <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong> under such circumstances and the definition of \u201ccourt\u201d in \u00a7 6E of that same chapter does not include an arbitrator (in fact, it\u2019s interesting to note that it also does not include District Courts). Therefore, \u00a7 6F could not be used as a basis to support an arbitrator\u2019s award of <strong class=\"highlight\">attorney<\/strong>\u2019s <strong class=\"highlight\">fees<\/strong>. The Court therefore voided the panel\u2019s award of <strong class=\"highlight\">fees<\/strong>.<\/p>\n<p><strong>Take Away<\/strong><\/p>\n<p>The SJC\u2019s decision in the <u>Beacon Towers<\/u> case underscores the importance of having clear terms in your arbitration agreement. If you want&#8230;<\/p>\n<p><a href=\"http:\/\/www.lexology.com\/library\/detail.aspx?g=0a32b611-93f7-4ee8-8187-ca2c35d0924f\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Andrew G. Wailgum and Sara P. Bryant | Murtha Cullina LLP | January 27, 2016 The Massachusetts Supreme Judicial Court recently voided an arbitration panel\u2019s award of attorney\u2019s\u00a0fees because the terms of the parties\u2019 arbitration agreement did not specifically provide that the prevailing party could be awarded fees. Beacon Towers Condo. Trust v. Alex, 473&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/arbitrators-award-of-attorneys-fees-thrown-out-because-the-parties-agreement-did-not-provide-for-it\/\">Continue reading <span class=\"screen-reader-text\">Arbitrators&#8217; Award of Attorney&#8217;s Fees Thrown Out Because the Parties&#8217; Agreement Did Not Provide for It<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[41],"tags":[42,142],"class_list":["post-886740","post","type-post","status-publish","format-standard","hentry","category-arbitration","tag-arbitration-2","tag-attorneys-fees","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Arbitrators&#039; 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