A state appeals court in Florida has ruled that an arbitrator did not exceed his authority when he ordered the former partner of a group that was trying to buy a football team to pay the group $3.5 million after he violated the terms of the partnership.
Central to the appeals court’s ruling was the fact that the former partner, Robert Nucci, M.D., “elected to proceed before the arbitrator,” meaning “he could not claim that the arbitrator exceeded his authority.”
The partnership in question was formed in 2005 with the goal of purchasing the Tampa Bay Storm arena football team. Two years later, Nucci, having an interest in becoming a part owner of the Storm, sought to review the partners’ confidential business information. He and the partners entered into the agreement, after which the partners provided the requested information to Nucci.
The agreement, in pertinent part, reads as follows:
“You agree that the remedy at law of the partners would be inadequate as to any unauthorized use or disclosure of the confidential information by you and agree that the partners shall be entitled to preliminary and permanent injunctions in any court of competent jurisdiction to prevent such unauthorized use or disclosure by you.
“You agree that if circumvention of the partners to acquire or invest in the Storm occurs, the damages will be calculated as thirty percent of the value of the price paid to purchase the franchise. This percentage represents partners’ projected ownership of the franchise at acquisition.
“Any dispute or controversy arising under or in connection with this agreement shall be settled by binding arbitration, which shall be the sole and exclusive method of resolving any questions, claims or other matters arising under or related to this agreement. Such proceedings shall be conducted by contractual final and binding arbitration before one mutually agreed upon arbitrator under the administration of the American Arbitration Association (AAA) in St. Petersburg, Florida. The federal and state courts in Florida are hereby given jurisdiction to render judgment upon, and to enforce, each arbitration award, and the parties hereby expressly consent and submit to the jurisdiction of such courts.”
The agreement also provided that Nucci would not “directly or indirectly, either alone or with one or more parties, seek to acquire or invest in the Storm, without the prior written consent of the partners.”
Shortly after he signed the agreement and received the confidential business information, Nucci “began direct negotiations with the Storm’s owner, unbeknownst to the partners,” according to the panel of judges. Nucci wrote a letter to the partners “in an effort to terminate the agreement. The partners consented to the termination. They reminded Nucci, however, that he was precluded, for one year, from acquiring or investing in the Storm without their consent. The partners also demanded the return of the confidential business information; Nucci failed to comply. He asked the partners to release him from the agreement; they declined his request. He continued to negotiate with the owner to buy the Storm.”
Eventually, Nucci acquired a 51 percent interest in the Storm for over $9.6 million. He could acquire the remaining 49 percent in two future closings for a total purchase price of over $18.8 million. Allegedly, Nucci used the partners’ confidential business information to orchestrate his acquisition. The partners took action.
“On the same day they sued for injunctive relief in the trial court, the partners initiated an arbitration proceeding for damages,” wrote the panel. “Nucci asked the arbitrator to dismiss the arbitration. He argued that the partners waived their right to arbitrate by suing him in the trial court. The arbitrator refused to dismiss the arbitration. He concluded that paragraphs six and nine of the Agreement contemplated that the parties could simultaneously pursue damage claims in arbitration and injunctive relief in the trial court.”
After the arbitrator entered a substantial damage award in favor of the partners, Nucci asked the trial court to vacate the award, claiming they waived their right to arbitrate by suing him for injunctive relief.
The panel was unmoved by that argument.
“Having elected to proceed before the arbitrator, Nucci cannot claim that the arbitrator exceeded his authority,” held the appeals court, citing Federated Dep’t Stores, Inc. v. Pavarini Constr. Co., 425 So. 2d 1212, 1213 (Fla. 4th DCA 1983).
Robert Nucci, M.D., v. Storm Football Partners a/k/a collectively Thomas Begley, individually; Jay Mize, individually; Doug Graber, individually; and Eric Snow, individually; Ct. App. Fla., 2d Dist.; Case No. 2D10-1838, 2012 Fla. App. LEXIS 3838; 37 Fla. L. Weekly D 590; 3/9/12
Attorneys of Record: (for Appellant)Steven G. Burton, Mercedes G. Hale, and Nancy J. Stewig of Broad & Cassel, Tampa. (for Appellees) Brandon S. Vesely, Michael J. Keane, and Nicole M. Clausing of Keane, Reese, Vesely & Gerdes, P.A., St. Petersburg.
