02 April 2009

young v peaslee

click here to download nine page .pdf from the third circuit
or download our copy here [112 kb]

on 27 april 2005, michael l. young and his wife, donna h. young, filed suit against peaslee capital group, l.l.c. and steven peaslee:
[S]eeking damages for breach of contract. The petition asserted that, in December of 2001, Mr. Young paid Steven M. Peaslee $10,000.00 for an option to purchase a ten percent interest in Peaslee Capital Group, LLC (Peaslee, LLC), and that approximately one year later Mr. Young exercised the option by paying Mr. Peaslee an additional $140,000.00 for the stated interest.

Subsequent to the purchase, according to the petition, Mr. Young discovered that Mr. Peaslee had misrepresented the value of Peaslee, LLC; had misrepresented the source and nature of its profits and losses; had failed to disclose his personal gambling habits; and had breached his fiduciary duty to Mr. Young as set forth in the organization’s Operating Agreement and as required under the “Louisiana Limited Liability Company Act.”

The Youngs sought recovery of their purchase price; general damages for emotional distress and humiliation, as well as loss of business reputation; attorney fees; and costs of court.
mr. peaslee's reply was that the firm's "operating agreement governing the ownership of peaslee, llc required that all disputes be submitted to binding arbitration."

ultimately, the arbitrator awarded the youngs' the sum of $75,978.00, together with judicial interest from date of demand in arbitration until paid in full and twenty-five percent of the principal and interest as attorney fees. the award further assessed costs of the arbitration process between the two parties.

surprisingly, or not, mr. peaslee then proceeded to object to the arbitration. asserting that "the arbitrator was arbitrary and capricious (1) in awarding the youngs attorney fees and (2) in requiring a lump sum payment rather than payment in installments as provided by the operating agreement."

ninth judicial district court judge george metoyer, however, "granted the youngs’ motion to confirm the arbitration award in full. the trial court rendered judgment without issuing oral or written reasons for its judgment."

the third circuit in their 01 april 2009, opinion said that he law pertaining to arbitration matters was discussed exhaustively in webb v. massiha, [476 kb, eight page .pdf here or here] a 30 september 2008, louisiana fifth circuit court of appeal opinion:
Arbitration proceedings are governed by La.R.S. 9:4201 et seq., and the statutory grounds for vacating or modifying an arbitration award in whole or in part are provided in La.R.S. 9:4210 and 4211.

In addition, a litigant may attack the arbitration award on the basis of “a manifest disregard of the law,” a judicially created ground for vacating an arbitration award recognized by several courts of appeal. Arbitration is favored in Louisiana.

Furthermore, an arbitration award is res judicata. Unless grounds for vacating, modifying or correcting the award are established, the award must be confirmed, and the burden of proof is on the party attacking the award.

Absent the existence of any of the statutory or jurisprudential grounds for vacating or modifying an arbitration award, a reviewing court is prohibited from reviewing the merits of the arbitration judge’s decision. Further, a reviewing court may not substitute its own conclusions for that of the arbitration judge.
the third circuit complains about not having a complete but only a partial record and goes on to cite oliver v. cal dive int’l, inc., [605 kb ten page .pdf here or here] a 19 september 2003, first circuit court of appeal opinion as precedent that "there is a presumption that the arbitrator’s award is correct in the absence of a record."

the third circuit in the footnotes, said that, "while we recognize that this is an arbitration record controlled by the procedural rules applicable to arbitration proceedings, we also note that no effort was made by the defendants to obtain a narrative of the facts as allowed by La.Code Civ.P. art. 2131.

the third circuit seemed to be particularly annoyed that mr. peaslee wanted them to engage in the dreaded "judicial activism" and apparently, especially, when mr. peaslee couldnt be bothered to obtain a complete record for them, when they wrote:
the defendants do not rely on the statutory grounds for vacating the award, but they complain that the award should be vacated on the judicially created ground—that the award is a manifest disregard for the law in that it failed to follow the binding provisions of the operating agreement...
which brings us to the inevitable final outcome:
Given the record before us and the content of the pleadings made available for review by this court, we can only apply the presumption found in Oliver, 844 So.2d 942, that the arbitrator’s award is correct. Accordingly, we affirm the trial court judgment in all respects.
so it looks like the youngs' put up $150,000 and got back $75,978.00. thats not a good return in anyones book.