LEIGH C. KATZMAN, individually and as a shareholder of KATZMAN GARFINKEL, P.A. v. ALAN B. GARFINKEL, individually and as a shareholder in KATZMAN GARFINKEL, P.A. ( 2021 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
LEIGH C. KATZMAN, individually and as a shareholder of
KATZMAN GARFINKEL, P.A., and KATZMAN CHANDLER, P.A.,
Appellants,
v.
ALAN B. GARFINKEL, individually and as a shareholder in
KATZMAN GARFINKEL, P.A.,
Appellee.
No. 4D20-2570
[December 8, 2021]
Appeal of a nonfinal order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Jack B. Tuter, Judge; L.T. Case No.
CACE16-016921.
Daniel A. Bushell of Bushell Law, P.A., Fort Lauderdale, and Joshua E.
Rasco of Katzman Chandler, P.A., Fort Lauderdale, for appellants.
Eric C. Edison of Gunster, Yoakley & Stewart, P.A., Fort Lauderdale,
for appellee.
PER CURIAM.
The parties to this case entered into a settlement agreement and agreed
to submit any disputes related to the agreement to a designated third-
party neutral for resolution. In this appeal, we review a circuit court order
overruling one of the third-party neutral’s decisions. We reverse the order,
because the decision was within the broad scope of the third-party
neutral’s authority under the settlement agreement and was not subject
to judicial review. Because we reverse on this issue, we do not reach the
other issues raised on appeal.
Background
Leigh Katzman and Alan Garfinkel were the sole shareholders in a law
firm called Katzman Garfinkel, P.A. (“KGPA”). After Garfinkel sued for
judicial dissolution of the firm, the parties entered into a comprehensive
settlement agreement. As part of the agreement, the parties selected an
outside lawyer to serve as both a firm representative, to facilitate the
winding up of the firm, and a third-party neutral, to resolve any disputes
related to the agreement.
The settlement agreement gives the third-party neutral the authority to
resolve “all disputes relating to or as a consequence of” the agreement
through an “expedited and informal” dispute resolution process. The
third-party neutral has “the full breadth of powers and immunities
provided to arbitrators under all applicable law[,]” and his decisions are
“final and non-appealable.” The parties reserved the right to initiate
judicial proceedings to review or challenge the third-party neutral’s
decisions only “to the extent otherwise permitted.”
This appeal arises from a dispute over the payment of fees for legal work
related to the collection of KGPA’s outstanding accounts receivable. The
settlement agreement contemplates the hiring of counsel for this purpose
and gives the third-party neutral, in his capacity as firm representative,
the ultimate authority to choose a lawyer or law firm. The third-party
neutral chose to hire Katzman’s new law firm, Katzman Chandler, P.A.
(“KCPA”), on an hourly basis. After KCPA began submitting invoices to
KGPA, Garfinkel objected to paying the invoices for various reasons. The
third-party neutral, in his dispute resolution capacity, approved the
payment of KCPA’s invoices over Garfinkel’s objection. Garfinkel sought
review of this decision in circuit court.
The court overruled the third-party neutral’s decision to approve the
payment of KCPA’s invoices and ordered KCPA to return more than
$250,000 in payments. The court ruled that the third-party neutral
exceeded his authority under the settlement agreement in approving the
payments, because the agreement did not authorize the hiring of counsel
on an hourly basis and did not authorize any additional payment to
Katzman or KCPA related to the collection of KGPA’s accounts receivable
beyond Katzman’s entitlement to a certain percentage of the amounts
collected.
Katzman and KCPA appealed the court’s order. 1
Analysis
1We have jurisdiction under Florida Rule of Appellate Procedure 9.130(a)(3)(C)(ii),
which provides for appeal of nonfinal orders that determine the right to
immediate possession of property.
2
The primary issue presented for our review is whether the court erred
in ruling that the third-party neutral exceeded his authority under the
settlement agreement. We review this issue de novo. See Visiting Nurse
Ass’n of Fla., Inc. v. Jupiter Med. Ctr., Inc., 154 So. 3d 1115, 1124 (Fla.
2014); Nash v. Fla. Atl. Univ. Bd. of Trs., 213 So. 3d 363, 366 (Fla. 4th DCA
2017).
The parties do not dispute that they intended to limit the scope of
judicial review of the third-party neutral’s decisions to the scope of review
of an arbitrator’s decisions. An arbitrator’s decisions can be vacated only
on grounds of “arbitral misconduct or lack of authority,” and not “mere
errors of law, or errors of construction or interpretation of a contract.”
Visiting Nurse Ass’n, 154 So. 3d at 1134. A claim that an arbitrator lacked
authority to make a certain decision “is jurisdictional in nature and is in
reference to the scope of authority given to [the] arbitrator in the
arbitration agreement.” Id. at 1137; see Nash, 213 So. 3d at 367 (“An
arbitrator exceeds his or her power when he or she goes beyond the
authority granted by the parties or the operative documents and decides
an issue not pertinent to the resolution of the issue submitted to
arbitration.”) (citation and alterations omitted).
The court ruled that the third-party neutral lacked authority to approve
the payment of KCPA’s invoices over Garfinkel’s objection, because the
payments were not authorized by the terms of the settlement agreement
as the court interpreted them. But the court did not have the authority to
review the third-party neutral’s decision on the merits or reconsider his
interpretation of the settlement agreement. See Visiting Nurse Ass’n, 154
So. 3d at 1135 (“Parties to an agreement containing an arbitration
provision . . . specifically bargained for an arbitrator’s construction and
interpretation of the agreement as an alternative to litigation in the courts
system, as opposed to an additional step in the process.”).
The court’s analysis erroneously conflated the third-party neutral’s
authority—in his capacity as firm representative—to hire a law firm to
handle KGPA’s collections work with his separate authority—in his dispute
resolution capacity—to resolve a dispute resulting from his exercise of that
authority. Whether the settlement agreement authorized the hiring of
KCPA on an hourly basis to handle KGPA’s collections work goes to the
merits of the parties’ dispute, not to the scope of the third-party neutral’s
authority to resolve the dispute.
The parties’ dispute over the payment of KCPA’s invoices was plainly
within the jurisdictional scope of the third-party neutral’s authority to
resolve “all disputes relating to or as a consequence of” the settlement
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agreement. Consequently, the third-party neutral’s decision to approve
the payment of KCPA’s invoices over Garfinkel’s objection was beyond the
proper scope of judicial review. We therefore reverse the court’s order.
Reversed.
WARNER, DAMOORGIAN and ARTAU, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
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