The opinion
STATE OF MAINE SUPERIOR COURT
CIVIL ACTION
KENNEBEC, ss. DOCKET NO. CV-96-216
SI;S - i-c4d- 2 !.-.~7
WILLIAM DONAHUE,
Plaintiff
ORDER AND JUDGMENT
JEFFREY BENNETT and
DANIEL G. LILLEY,
Defendants
Ths matter comes before the court on the application of plaintiff William
Donahue to vacate an arbitration award or to modify or correct the award, and the
defendants' cross motion to confirm the award. The arbitration decision in question
results from a hearing of the Fee Arbitration Panel of the Board of Bar Overseers. All
parties fully briefed the issues presented in the motions. An opportunity for oral
argument was scheduled and notice was sent to all parties and attorneys. However,
one attorney failed to appear for the hearing and it was cancelled. After reading the
briefs, the court finds that each side has well argued all issues and the court has no
questions. There is no need for further oral presentation and the court will decide the
motions on briefs.
Background
Ths matter arises from an attorney's fee agreement between the plaintiff - Mr.
Donahue - and two independent attorneys - Mr. Bennett and Mr. Lilley. The
Bennett/Lilley representation concerned relatively complex business litigation
including Donahue's interest in an automobile dealership. At the beginning of their
representation, Bennett and Lilley negotiated with Donahue concerning their fee
arrangement. Whatever the reason, the parties all agreed to a payment schedule which
would pay the attorneys one-half of their regular hourly charges as the representation
progressed, with the attorneys then having the option of being paid for the other half of
their hours or receiving a contingent fee of 20% of any gross recovery upon completion
of the case. Each of the attorneys would have the option of choosing the hourly rate or
the contingent fee.
The legal battle was ultimately settled, though with Donahue represented by
new attorneys. Bennett and Lilley then made a demand for payment of attorney's fees
according to their calculations, which were disputed by Donahue. Donahue then
applied for arbitration of the fee dispute by a Fee Arbitration Panel of the Fee
Arbitration Commission of the Board of Overseers of the Bar, subject to prescribed rules
and regulations and the Uniform Arbitration Act (14 M.R.S.A. 55 5927-5949). Following
hearing, the Arbitration Panel made initial awards to Bennett in the sum of $136,475.68
and Lilley in the sum of $249,500. The Bennett award was later modified to $241,597.25
after Bennett filed a motion for reconsideration based on the Panel's oversight in
ignoring Bennett's request that he be compensated using the hourly fee option under
the fee agreement.
Bennett then filed his present motion seeking to have the court vacate the award
pursuant to 14 M.R.S.A. 55 5938 and 5939, while Bennett and Lilley applied for a
confirmation of the awards pursuant to section 5937 or 5938(4) or 5939(2).
Discussion
Generally speaking, under the Uniform Arbitration Act, a court will not vacate
an award except for limited reasons set forth in the statute. 14 M.R.S. 5 5938(1)(A-F).
Donahue states many different arguments contesting the decision of the Panel, but the
arguments all resolve into two basic issues: (1) Did the Panel exceed its power with
regard to both the Bennett and Lilley decisions? and (2) Did the Panel exceed its power
in amending the initial Bennett order?
With regard to the first issue, Donahue argues that the Panel erred in upholding
the hybrid hourly feelcontingent fee agreement entered by the parties. The Panel
carefully considered this issue and was correct in its final decision that such agreement
is not forbidden under Maine Bar Rules and Ethics Opinions. The Panel was also
witlun its powers when it pointed out that the agreement had been negotiated by
sophsticated parties on both sides and with Donahue able to have changes made to his
benefit.
Even if the court did not agree with the Panel's conclusions, this still would not
necessarily mean that the Panel exceeded its powers. An arbitration panel is not
precluded from considering novel questions of law in fee arbitration cases and its
decision on such issue would not be reason in itself to vacate an award even if a court
might have held differently. In short, the parties each agreed to be bound by the
arbitrator's decision when arbitration was begun and they are both bound by the
arbitrator's determination of legal issues. Bennett v. Prawer, 2001 ME 172, q[q 8-10, 786
A.2d 605, 608-609. In summary, the Arbitration Panel did not exceed its powers in
analyzing and upholding the fee agreement.
With regard to the second issue - modification of the Bennett award - such
changes are initially governed by 14 M.R.S. 9 5935 or 5939. Under section 5935, the
arbitrators may modify or correct an award for any of the reasons stated in section
5939(1) paragraphs A or C. In the present case, the Panel immediately agreed with
Bennett's motion for reconsideration when it recognized its oversight in calculating the
Bennett award using the wrong alternative under the fee agreement. The mistake is so
clear that it is akin to the "evident miscalculation of figures" which is a basis for
recalculation and modification pursuant to section 5939(1)(A). The Panel's correction of
what it described as "an obvious error which would result in manifest injustice" is
authorized both by the statute and common sense. Had the Panel not corrected h s
obvious error on its own, it would ultimately have had to do so on remand from
Bennett's likely appeal pursuant to section 5945(1). Thus, the Panel's decision to correct
the obvious error also represented a savings of judicial resources.
For the reasons stated above, the entry will be:
(1) Plaintiffs motion to vacate awards is DENIED.
(2) Defendants' cross-motion to confirm awards is GRANTED
and the arbitration awards are CONFIRMED.
(3) Judgment shall be entered for defendant Jeffrey Bennett,
consistent with the Panel's modified award, in the amount of $241,597.25.
(4) Judgment is entered for defendant Daniel G. Lilley,
consistent with the Panel's award, in the amount of $249,500.
Justice, superior Court
WILLIAM DONAHUE - PLAINTIFF SUPERIOR COURT
67 ASH SWAMP ROAD .
KENNEBEC, SS
SCARBOROUGH ME 04074 Docket No AUGSC-CV-2006-00216
Attorney for: WILLIAM DONAHUE
JAMES KILBRETH - RETAINED 09/15/2006
VERRILL & DANA DOCKET RECORD
ONE PORTLAND SQUARE
PO BOX 586
PORTLAND ME 04112-0586
Attorney for: WILLIAM DONAHUE
VALERIE A WRIGHT - RETAINED 09/15/2006
VERRILL & DANA
ONE PORTLAND SQUARE
PO BOX 586
PORTLAND ME 04112-0586
vs
JEFFREY BENNETT - DEFENDANT
PO BOX 7799,
PORTLAND ME 04112
DANIEL G LILLEY - DEFENDANT
PO BOX 4803,
PORTLAND ME 04112
Filing Document: APPLICATION Minor Case Type: ARBITRATION AWARDS
Filing Date: 09/15/2006
Docket Events:
09/18/2006 FILING DOCUMENT - APPLICATION FILED ON 09/15/2006
APPLICATION TO VACATE ARBITRATION AWARD OR, ALTERNATIVELY, TO MODIFY OR CORRECT
ARBITRATION AWARD WITH ATTACHED DOCUMENTS AND EXHIBITS.
12/26/06 - REQUEST FOR HEARING AND
PROPOSED ORDER
09/18/2006 Party(s): WILLIAM DONAHUE
ATTORNEY - RETAINED ENTERED ON 09/15/2006
Plaintiff's Attorney: JAMES KILBRETH
09/18/2006 Party(s) : WILLIAM DONAHUE
ATTORNEY - RETAINED ENTERED ON 09/15/2006
Plaintiff's Attorney: VALERIE A WRIGHT
09/18/2006 CERTIFY/NOTIFICATION - CASE FILE NOTICE SENT ON 09/18/2006
Plaintiff's Attorney: JAMES KILBRETH
MAILED TO ATTY. OF RECORD.
11/20/2006 Party(s): WILLIAM DONAHUE
SUPPLEMENTAL FILING - APPLICATION FILED ON 11/20/2006
Plaintiff's Attorney: JAMES KILBRETH
AMENDED APPLICATION TO VACATE ARBITRATION AWARDS OR, ALTERNATIVELY, TO MODIFY OR CORRECT
ARBITRATION AWARDS.
11/20/2006 Party(s) : WILLIAM DONAHUE
MOTION - OTHER MOTION FILED ON 11/20/2006
Page 1 of 3 Printed on: 02/05/2007