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Umana v. Swidler & Berlin

February 17, 2000


Before Farrell, Ruiz and Reid, Associate Judges.

The opinion of the court was delivered by: Ruiz, Associate Judge

Appeal from the Superior Court of the District of Columbia Civil Division

(Hon. Harold Cushenberry Jr., Trial Judge) (Hon. Steffen W. Graae, Trial Judge) (Hon. Susan R. Winfield, Trial Judge) (Hon. Frederick H. Weisberg, Trial Judge)

Argued June 3, 1998

This case is before the court for a second time. In his first appeal, John Umana asked the court to vacate an arbitral award in favor of Swidler & Berlin that rejected Umana's principal claim that he was an equity partner in the firm. That appeal was dismissed as having been taken from a non-final order because Umana's claims against eleven individual members of the firm, which were part of his original complaint, were still pending. See Umana v. Swidler & Berlin, 669 A.2d 717 (D.C. 1995). In this appeal, Umana argues that the trial court erred in denying his motion for a new trial on the question of the neutral arbitrator's bias, following his discovery of new evidence that the arbitrator failed to disclose a significant relationship between the arbitrator and one of the members of the firm (one of the named individual defendants in the complaint filed in Superior Court) who acted as Swidler & Berlin's representative and testified in the arbitration proceedings. Umana also contends that the trial court erred in dismissing his claims against the individual members of the firm and in ruling that all of his claims were subject to arbitration. With respect to the claim against Swidler & Berlin decided by the arbitrators against Umana, we agree that the claim was subject to the arbitration agreement and conclude that the arbitrator's nondisclosure did not concern a close or financial relationship of the type that would warrant vacatur of the arbitral award. Thus, we affirm the trial court's denial of the motion for new trial and confirmation of the arbitral award. We also affirm the trial court's ruling dismissing the case against the individual defendants for plaintiff's failure to prosecute and, as a result, we need not reach the issue of the arbitrability of Umana's claims against them.

I. Background

As the procedural history of the case is relevant to one of the issues on appeal, we set it out in some detail. In 1989 Umana concurrently filed a complaint in Superior Court against Swidler & Berlin and eleven of its members and a demand for arbitration before the American Arbitration Association (AAA) against Swidler & Berlin only. In 1990, Umana obtained a stay of the arbitration and pursued the litigation. The defendants moved to compel arbitration of all the claims under the arbitration agreement in the Employment Contract between Umana and Swidler & Berlin.*fn1 After the trial court (Judge Cushenberry) ordered that "all of Mr. Umana's claims against all of the defendants" were subject to the arbitration agreement, the litigation was stayed. Umana then proceeded with the AAA arbitration he had demanded against Swidler & Berlin, but did not amend it to include the individual members of the firm.

Pursuant to the arbitration agreement, each party appointed one arbitrator, and the two appointed a neutral third arbitrator.*fn2 At the conclusion of discovery and after a three-day evidentiary hearing, two of the arbitrators, the one appointed by Swidler & Berlin and the neutral third arbitrator, issued an award on May 15, 1991, rejecting Umana's claim because he "was not a member with tenure of Swidler & Berlin, Chartered," giving three reasons for their conclusion.*fn3 The arbitrators also awarded $50,000 to Swidler & Berlin on a counterclaim, which was later modified by a $4,000 setoff in favor of Umana for interest on a pension account which should have been paid to him upon his departure from the firm. The arbitrator appointed by Umana filed a dissenting statement from the majority's decision that Umana was not a tenured partner of the firm and that he was liable on Swidler & Berlin's counterclaim.

Umana petitioned the court to vacate the arbitral award, arguing inter alia that the matter was not arbitrable and that the third and neutral arbitrator, Robert Pitofsky, was biased because of his relationship with Arnold & Porter. Swidler & Berlin opposed Umana's motion and requested that the arbitral award be confirmed. The trial court (Judge Graae) confirmed the award on June 15, 1992. In rejecting Umana's petition, the trial court agreed with Judge Cushenberry's ruling that the claim was arbitrable and ruled that Umana had waived his claim of Pitofsky's bias based on his relationship with Arnold & Porter because he had not objected to Pitofsky's appointment at the time when Pitofsky disclosed his relationship with the firm. The trial court further ruled that, in any event, it found "nothing in the record that comes even close to demonstrating partiality, much less `evident partiality,' on Mr. Pitofsky's part."

Umana then filed his first appeal, arguing that his claims were not subject to arbitration and that the award should be set aside because of Pitofsky's partiality. While the appeal was pending in this court, Umana sought to supplement the record before this court and also filed a Superior Court Civil Rule 60 (b) motion with the trial court based on newly discovered evidence of Pitofsky's bias.*fn4 This court denied the motion to supplement, but permitted the Rule 60 (b) motion under Smith v. Pollin, 90 U.S. App. D.C. 178, 180, 194 F.2d 349, 350 (1952) ("when an appellant in a civil case wishes to make a motion for a new trial on the ground of newly discovered evidence while his appeal is still pending, the proper procedure is for him to file his motion in the trial court.")

In a June 16, 1995, order, the trial court denied Umana's Rule 60 (b) motion for a new trial and refused the request to reopen the record for new discovery and admit new evidence. Quoting from Health Servs. Management Corp. v. Hughes, 975 F.2d 1253, 1264 (7th Cir. 1992), Judge Graae concluded that Umana had failed to meet his burden that Pitofsky's alleged partiality was "direct, definite, and capable of demonstration, rather than remote, uncertain or speculative." In a footnote, the order stated that "there [did not] appear to be a dispute that Mr. Pitofsky's failure to make th[e] disclosure [concerning Ferguson] violated AAA Rules and his oath as an arbitrator."

While the first appeal was still pending, the individual defendants moved in April 1995 to dismiss the claims against them for lack of prosecution through arbitration. The trial court (Judge Winfield) ruled that it lacked jurisdiction while Umana's appeal was pending before the Court of Appeals.

On December 19, 1995, we dismissed Umana's first appeal for lack of jurisdiction because the claims against the individual defendants were still pending. See Umana, 669 A.2d at 723-24. Shortly after the dismissal, Umana's counsel advised the individual defendants that they should ready themselves for trial in Superior Court. Some eight months later, Umana's new counsel (and counsel in this appeal) again advised of Umana's intention to proceed against the individual defendants in Superior Court. The individual defendants asserted that they adhered to their previous position, i.e., that the claims were arbitrable and were subject to dismissal for lack of prosecution. Nothing further appears to have happened until March 5, 1997, when the individual defendants renewed their motion to dismiss the claims against them for failure to prosecute in accordance with Judge Cushenberry's 1990 order that the claims were subject to arbitration. Umana moved for a default judgment against the individual defendants in the Superior Court action, or, alternatively, for an order compelling them to submit to arbitration in thirty days. Noting that "[s]even years have passed since [Umana] was ordered to arbitrate all of his claims" and that he had "taken none of the ...

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