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Eastwick v. Cate Street Capital Inc.

Superior Court of Maine, Cumberland

March 31, 2017

MATTHEW EASTWICK, Movant
v.
CATE STREET CAPITAL, INC., Respondent

          ORDER ON PENDING MOTIONS

          A.M. Horton Justice.

         Movant Matthew Eastwick's Motion to Confirm Binding Arbitration Award and Respondent Cate Street Capital, Inc.'s Motion to Vacate are both before the court, as is Movant's Motion for Attachment and Attachment Upon Trustee Process. Oral argument was held January 5, 2017, after which the court took the motions under advisement.

         Background

         The pertinent factual background is as follows:

         Movant Eastwick was employed by Respondent Cate Street Capital, Inc. ["Cate Street"] from 2010 until February 2016 under an employment agreement that included the following dispute resolution process:

In the event any dispute arises between the parties to this Agreement, the matter shall be submitted promptly to mediation. In the event that mediation is unsuccessful, the dispute shall be submitted for arbitration in accordance with the rule [sic] of the American Arbitration Association.

Nov. 7, 2016 Affidavit of Robert Desrosiers ¶3.

         A dispute arose under the employment agreement after Mr. Eastwick had left Cate Street's employ, and, consistent with the provision, the parties selected Patrick Coughlan of the Conflict Solutions firm as a mediator. A mediation session occurred July 27, 2016 and the parties reached a settlement of their dispute. To memorialize the settlement, the parties signed a Memorandum of Understanding [hereinafter "the MOU"], providing in part as follows:

• termination of the employment agreement between the parties
• an exchange of releases in "standard terms" covering all claims between the parties and also providing for confidentiality
• payment by Cate Street to Mr. Eastwick of $100, 000 within 30 days of the effective date of the release and $15, 000 per quarter for 10 quarters beginning January 15, 2017
• a provision authorizing Mr. Eastwick, if Cate Street failed to make a quarterly payment within 30 days of a demand, to "file a stipulated judgment for the outstanding amount due to him."
• a provision as follows: "Any disputes that may arise during the drafting and execution of the settlement shall be submitted to Patrick Coughlan for review and resolution." Exhibit A to Affidavit of Matthew Eastwick in support of Movant's Motion for Attachment and Attachment on Trustee Process.

         The MOU does not use the words "arbitrate" or "arbitrator" to describe Mr. Coughlan's role in reviewing and resolving disputes, and according to Cate there was never any mention on July 27, 2016 of Mr. Coughlan serving as an arbitrator. Nov. 7, 2016 Affidavit of Robert Desrosiers ¶6.

         After the July 27, 2016 mediation, counsel for the parties negotiated the terms of the releases and other aspects of the settlement contemplated in the MOU. According to Movant Eastwick, those negotiations produced a written settlement agreement that included releases and the other components of the MOU and that counsel for both parties believed was satisfactory to both parties. See Exhibit C to Affidavit of Matthew Eastwick in support of Movant's Motion for Attachment and Attachment on Trustee Process (Decision Ex. B-Confidential Settlement Agreement and Mutual Release of Claims). Mr. Eastwick signed it August 30, 2016, and he claims that Cate Street simply refused to sign it, for what later appeared to be financial reasons.

         Cate Street's response is that it refused to sign the Confidential Settlement Agreement and Mutual Release of Claims because it improperly added to the terms of the MOU by including an acceleration provision to the settlement agreement, a contention Movant denies.

         In any event, the parties and/or their counsel[1] returned to Mr. Coughlan on October 11, 2016. The notices sent by Mr. Coughlan's office ahead of that meeting refer to it as a "post mediation meeting." See Nov. 7, 2016 Affidavit of Robert Desrosiers, Ex. B (Conflict Solutions email and letter dated Sept. 26, 2016).

         However, the day before the October 11, 2016 meeting, Mr. Eastwick's counsel sent Mr. Coughlan, with a copy to Cate Street's counsel, a letter enclosing Mr. Eastwick's -"proposed exhibits" and a "proposed order" that clearly put Cate Street on notice that Mr. Eastwick viewed the "post mediation meeting" as an arbitration. Nov. 7, 2016 Affidavit of Robert Desrosiers ¶11, Ex. C (October 10, 2016 Letter from Melissa Hewey, Esq. to Patrick Coughlan with attachments). The attachments to attorney Hewey's letter included a draft Decision reciting that it was enforceable as an arbitration award. See id. (Decision draft, Conclusions of Law ¶ 3).

         There is no transcript of the October 11, 2016 meeting but there seems to be no question that the participants and Mr. Coughlan discussed the disputes regarding the settlement that had arisen since the July 27, 2016 mediation. According to the Movant's reply memorandum, Mr. Coughlan attempted to mediate the disputes before ultimately signing the proposed Decision that Mr. Eastwick's counsel had forwarded the day before. Although Movant Eastwick suggests that Cate Street waived any objection to the Coughlan Decision, it appears that Cate Street objected to the October 11, 2016 meeting as being anything other than a further mediation session and filed a written objection to the Decision.

         Mr. Coughlan issuing a document titled Decision and dated October 11, 2016, containing findings of fact and conclusions of law, and adopting the Confidential Settlement Agreement and Mutual Release drafted by Movant's counsel and previously signed by him, as reflecting the terms of the settlement the parties had reached July 27, 2016.

         Movant Eastwick commenced this action by filing a Motion to Confirm Binding Arbitration Award pursuant to the Maine Arbitration Act ["the Act"], 14 M.R.S. § 5937. Cate Street responded with a Motion to Vacate pursuant to section 59S8(1)(E) of the Act, based on its contention that the parties never agreed to arbitrate the issues covered in the Coughlan Decision.

         The primary issue raised in the parties' cross-motions is whether the parties agreed that Mr. Coughlan would arbitrate any issues arising out of the MOU.

         Mr. Eastwick contends that the provision empowering Mr. Coughlan to resolve any disputes arising out of the drafting and execution of the parties' settlement was, in substance, an arbitration agreement. Mr. Eastwick also points out that the parties returned to Mr. Coughlan in October, knowing that ...


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