An arbitrator did not exceed his authority when he applied out-of state law to award treble damages to a husband and wife who claimed they lost millions due to the fraud and gross negligence of their investment advisor, a Superior Court judge has ruled in upholding the $48 million award.
The plaintiff investment firm, Family Endowment Partners of Newton, filed an action in Suffolk Superior Court to vacate arbitrator Philip S. Cottone’s April award to defendants James and Jane Sutow. The plaintiff argued that the award of treble damages under Pennsylvania unfair trade practices and consumer protection statutes contravened choice of law and limitation of liability clauses in its client agreement.
But Judge Edward P. Leibensperger found no reason to disturb the arbitrator’s award.
Leibensperger wrote that “the Agreement expressly contemplates the application of federal and state statutes that, in the case of the Pennsylvania Unfair Trade Practice and Consumer Protection Law, according to the arbitrator, allows for treble damages.”
The nine-page decision is Family Endowment Partners, L.P., et al. v. Sutow, et al., Lawyers Weekly No. 12-126-15.
‘48 million reasons’
The Sutows were represented by David Himelfarb and Kelly Anne Gabos, of Boston. Citing the wishes of his clients, Himelfarb declined to comment on the decision, but he did credit co-counsel Glenn S. Gitomer of Radnor, Pennsylvania, for having a lead role in the case.
THE ISSUE: Did an arbitrator exceed his authority by applying out-of-state law to award treble damages to a husband and wife who claimed they lost millions due to the fraud and gross negligence of their investment advisors?
DECISION: No (Superior Court)
LAWYERS: A. John Pappalardo and David L. Ward, of Greenberg Traurig, Boston (plaintiffs)
David Himelfarb of McCarter & English