PERSONAL BEST KARATE, INC. v. JOHN A. MOSCA & Another. ( 2024 )

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
23-P-958
PERSONAL BEST KARATE, INC.
vs.
JOHN A. MOSCA & another.1
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Defendants, John A. Mosca and Barbara A. Mosca (the
Moscas), appeal from a Superior Court judge's final judgment
confirming an arbitration award issued to the plaintiff,
Personal Best Karate, Inc. (PBK Inc.). The Moscas argue that
even though they failed to respond to contractually mandated
arbitration, the judge was required to consider whether the
noncompete restriction within the franchise agreement was
unconscionable. We affirm.
Background. Personal Best Karate of Norwood, Inc. (PBK
Norwood) and PBK Inc. entered into a franchise agreement
(Agreement) granting PBK Norwood the right to operate a karate
1Barbara A. Mosca. Defendants Personal Best Karate of
Norwood, Inc., and Mosca Village Martial Arts, Inc., both owned
by the Moscas, are not parties to this appeal.
school as a franchisee of PBK Inc.2 The Agreement3 required the
parties to attempt to resolve all disputes, other than demands
for equitable relief, by proceeding first with formal
negotiation, followed by mediation, and then by arbitration as a
final resort.4 In 2019, PBK Inc. received notice from the
Moscas' counsel that they were terminating their business
relationship with PBK Inc. due to an alleged breach of contract.
PBK Inc.'s counsel responded with a letter contesting the
Moscas' breach of contract claims and requesting that the Moscas
contact her to address the dispute.
After receiving no response from the Moscas, PBK Inc. filed
a demand for arbitration against PBK Norwood and the Moscas with
the American Arbitration Association. In its demand, PBK Inc.
alleged that the Moscas materially breached the Agreement by
changing their karate studio's name from PBK Norwood to Mosca
2 The Moscas personally guaranteed the Agreement on behalf
of PBK Norwood.
3 The parties first signed the Agreement in 2006. The
parties renewed it on October 15, 2011, and again on December 4,
2016. The 2016 Agreement is controlling in this case.
4 The Agreement provides, in pertinent part, "[i]f the
parties have not resolved a claim, controversy or dispute by
negotiation, mediation, or otherwise . . . or if a claim,
controversy or dispute arises subsequent to the termination or
expiration of this Agreement, such claim, controversy or dispute
shall be referred to Arbitration in accordance with the
Commercial Arbitration Rules and Mediation Procedures . . . .
If such Rules are in any way contrary to or in conflict with
this Agreement, the terms of this Agreement shall control."
2
Village Martial Arts and by violating the noncompete provision
through their misuse of PBK Inc.'s intellectual property and
social media platforms. PBK Inc. estimated the dollar amount of
its claim to be $70,000. PBK Norwood and the Moscas were duly
noticed of the arbitration proceedings but neither participated
nor submitted documents. Furthermore, the Moscas failed to
challenge either the requirement to arbitrate or the authority
of the designated arbitrator to hear the dispute.
The arbitrator issued an interim award on November 20,
2019, in which she found the Moscas were in default of the
Agreement and ordered the Moscas to cease operations. The
arbitrator also prohibited the Moscas from operating a competing
business for two years and awarded PBK Inc. $95,847.40, as well
as attorney's fees. On December 9, 2019, the arbitrator issued
a final award in the amount of $13,724.90, stating that the
Moscas' purported termination of the Agreement for cause was
merely a fabricated claim to absolve them of their contractual
obligations. The Moscas failed to file an application to vacate
the arbitration award.
PBK Inc. filed a complaint in Superior Court on January 16,
2020, to confirm the arbitration award against the Moscas.
Shortly thereafter, the Moscas and PBK Norwood each filed
suggestions of bankruptcy and the proceedings were stayed. PBK
Inc. filed a motion for relief from the automatic stay, and the
3
Bankruptcy Court granted limited relief from it; the Superior
Court then issued an order lifting the stay on August 30, 2021.
PBK Inc. filed a motion to confirm the arbitration award, and
the Moscas thereafter filed an opposition and reply memorandum.
The motion judge then issued an order and final judgment
confirming the arbitration award.
Discussion. 1. Legal framework. Arbitration agreements
in Massachusetts are governed by the Massachusetts Arbitration
Act, G. L. c. 251, §§ 1-19. The court's review of an
arbitration award is narrow. See Katz, Nannis & Solomon, P.C.
v. Levine, 473 Mass. 784, 793 (2016). "Courts inquire into an
arbitration award only to determine if the arbitrator has
exceeded the scope of his authority, or decided the matter based
on 'fraud, arbitrary conduct, or procedural irregularity in the
hearings.'" Plymouth-Carver Regional Sch. Dist. v. J. Farmer &
Co., 407 Mass. 1006, 1007 (1990), quoting Marino v. Tagaris, 395
Mass. 397, 400 (1985).
General Laws c. 251, § 11, provides that "[u]pon
application of a party, the court shall confirm" an arbitration
award unless "grounds are urged for vacating or modifying or
correcting the award" as set forth in G. L. c. 251,
§§ 12 and 13. See Kauders v. Uber Techs., Inc., 486 Mass. 557,
569-570 (2021) ("The use of 'shall' [in G. L. c. 251, § 11] is
mandatory").
4
We review de novo the judge's decision to confirm the
arbitration award subject to the same principles. Massachusetts
Highway Dep't v. Perini Corp., 79 Mass. App. Ct. 430, 436
(2011).
2. Motion to confirm arbitration award. a. Thirty-day
limit. The Moscas argue that the judge erred by declining to
resolve their claim that the noncompete provision in the
Agreement is unconscionable. PBK Inc., however, contends that
the Moscas waived any arguments pertaining to the validity of
the noncompete provision by failing to timely challenge the
arbitration award. Any challenge to an arbitration award must
be brought within thirty days of the receipt of the award. See
G. L. c. 251, §§ 12 (b) and 13 (a). "The thirty-day limit
during which action must be commenced to vacate or modify an
award [is] strictly construed." Lumbermens Mut. Cas. Co. v.
Malacaria, 40 Mass. App. Ct. 184, 192 (1996), citing Bernstein
v. Gramercy Mills, Inc., 16 Mass. App. Ct. 403, 408-409 (1983).
In the case at hand, the final award was issued on December 9,
2019, and the Moscas failed to seek relief within the strict
thirty-day limit imposed by G. L. c. 251, §§ 12 (b) and 13 (a).
The judge did not err by confirming the arbitration award based
on the Moscas' failure to adhere to the thirty-day timeframe.
b. Bases for vacating an arbitration award. While we may
affirm solely on the grounds that the Moscas failed to adhere to
5
the thirty-day time limit, we note that the Moscas fare no
better on their substantive challenge to the arbitrator's award.
In reviewing the basis for an arbitrator's award, the court "is
strictly bound by an arbitrator's findings and legal
conclusions, even if they appear erroneous, inconsistent, or
unsupported by the record at the arbitration hearing." Lynn v.
Thompson, 435 Mass. 54, 61 (2001), cert. denied, 435 U.S. 1131(2002). General Laws c. 251, § 12 (a) provides five limited
bases for vacating an arbitration award: (1) the award was
procured by fraud; (2) the arbitrators evidenced partiality;
(3) the arbitrators exceeded their powers; (4) sufficient cause
was shown to postpone the arbitration hearing and the
arbitrators unfairly refused to do so; and (5) no arbitration
agreement ever existed. The Moscas do not advance any of these
bases on appeal; nor are any of these grounds evident to us on
our review of the record.
Instead, the Moscas argue that the noncompete provision of
the Agreement is unconscionable, and resultingly, the Superior
Court should have determined whether the Agreement was
unconscionable or returned the matter to the arbitrator for
further proceedings.5 "Under Massachusetts law, [t]o prove that
5 The Moscas fail to cite any case law or record cites in
support of their unconscionability claim, and resultingly, this
claim does not rise to the level of appellate argument. See
6
the terms of a contract are unconscionable, a plaintiff must
show both substantive unconscionability (that the terms are
oppressive to one party) and procedural unconscionability (that
the circumstances surrounding the formation of the contract show
that the aggrieved party had no meaningful choice and was
subject to unfair surprise" (quotations and citation omitted).
Machado v. System4 LLC, 471 Mass. 204, 218 (2015). The Moscas'
argument implicitly recognizes that their claim of
unconscionability could have been submitted to and determined by
the arbitrator when PBK Inc. first sought arbitration, and they
do not point to, nor do we see anything in the arbitration
clause that suggests otherwise. Having forfeited their right to
present evidence of substantive and procedural unconscionability
before the arbitrator, the Moscas are not entitled to a de novo
review in the Superior Court. As explained above, the court is
strictly bound by the arbitrator's findings and legal
conclusions. See Lynn, 435 Mass. at 61.
We also note that the Moscas' unconscionability challenge
is not aimed toward the agreement to arbitrate, and thus, the
court may not address it. See Emmanuel v. Handy Techs., Inc.,
992 F.3d 1, 11 (1st Cir. 2021) ("because the basis of [the
Mass. R. A. P. 16 (a) (9), as appearing in 481 Mass. 1628(2019); Oggiani v. Chief Justice of the Trial Ct., 476 Mass.
1016, 1017 (2017).
7
plaintiff's] unconscionability challenge is not directed
specifically to the agreement to arbitrate . . . we may not
address it" [quotations and citation omitted]).6 See also
Boursiquot v. United Healthcare Servs. of Delaware, Inc., 98
Mass. App. Ct. 624, 630 (2020).
3. Appellate costs and fees. PBK Inc. requested that for
pursuing this appeal, the Moscas be sanctioned pursuant to Mass.
R. A. P. 25, as appearing in 481 Mass. 1654 (2019), and G. L.
c. 211A, § 15. In our discretion, under these provisions we may
award double costs and attorney's fees "when the appeal is
frivolous, immaterial, or intended for delay." Avery v. Steele,
414 Mass. 450, 455 (1993).
We agree that the Moscas' appeal is frivolous and allow PBK
Inc.'s request for appellate fees and costs. See Mass. R. A. P.
25, as appearing in 481 Mass. 1654 (2019); Avery, 414 Mass. at
6 The Moscas rely on Productora E Importadora de Papel, S.A.
de C.V. v. Fleming, 376 Mass. 826 (1978) (Productora), to
support their contention that their failure to appear at
arbitration had no bearing on the court's obligation to consider
whether the unchallenged facts in this case constituted a
legitimate cause of action. In Productora, the Supreme Judicial
Court held that after a default judgment, the court remains
obligated to assess whether unchallenged facts establish a
legitimate cause of action because a party in default does not
admit conclusions of law. Id. at 834-835. Productora is
substantially dissimilar from the case at bar given that, here,
there was no default judgment entered in the trial court. See
id. Moreover, the Moscas cite no authority, and we do not
discern any authority, that supports applying the holding of
Productora to an action to confirm an arbitration award. See
id.8
455 ("An appeal is frivolous [w]hen the law is well settled,
when there can be no reasonable expectation of a reversal
. . . . The determination whether an appeal is frivolous is
left to the sound discretion of the appellate court" [quotations
and citations omitted]). In accordance with the procedure
specified in Fabre v. Walton, 441 Mass. 9, 10-11 (2004), PBK
Inc. may, within fourteen days of the issuance of this
memorandum and order, submit an application for attorney's fees
and costs with the appropriate supporting materials. The Moscas
shall have fourteen days thereafter to file a response to that
application.
Conclusion. The judgment confirming the arbitration award
is affirmed, and PBK Inc. may timely submit an application for
attorney's fees and double costs.
Judgment affirmed.
By the Court (Milkey, Sacks &
Smyth, JJ.7),
Clerk
Entered: July 26, 2024.
7 The panelists are listed in order of seniority.
9