910 S.E.2d 31
Va. Ct. App.2024Background
- The case involved a financial dispute over an asset purchase agreement for the sale of Di Vincenzo’s financial advisory company to Garofalo’s company.
- A FINRA arbitration panel ruled in favor of Di Vincenzo, awarding her over $1.5 million in damages and nearly $500,000 in attorney fees.
- Di Vincenzo moved to confirm the arbitration award in circuit court; Garofalo cross-petitioned to vacate the award, alleging an arbitrator's "evident partiality" due to undisclosed connections with Di Vincenzo.
- The arbitrator had prior indirect connections to Di Vincenzo, including board service and minor business overlaps, but testified to no recollection or actual bias.
- The circuit court found the connections too tenuous to constitute evident partiality and confirmed the award, including granting Di Vincenzo additional attorney fees for the confirmation proceedings.
Issues
| Issue | Plaintiff’s Argument (Garofalo) | Defendant’s Argument (Di Vincenzo) | Held |
|---|---|---|---|
| Evident Partiality Standard | Any nondisclosure that might create a possible impression of bias is enough to vacate. | Partiality requires facts showing a reasonable person would have to conclude actual partiality; undisclosed relationships must be significant. | Court adopted the stricter "reasonable person would have to conclude partiality" test, aligning with Fourth Circuit. |
| Application to Arbitrator’s Conduct | Arbitrator’s undisclosed connections required vacatur for partiality. | Connections were minor, remote, and indirect, and not likely to affect impartiality. | Court found no evident partiality and affirmed award. |
| Attorney Fees Awarded | Di Vincenzo failed to timely or properly assert fee claim per rules. | Request was properly made in a responsive pleading as permitted by rules. | Court upheld attorney fee award, finding compliance with procedural rules. |
| Relevance of FINRA Disclosure Rules | Arbitrator failed to check all possible conflicts, enhancing perceived bias. | Arbitrator's conflict check was reasonable and lack of recall genuine. | Court found no violation sufficient to show evident partiality. |
Key Cases Cited
- ANR Coal Co. v. Cogentrix of North Carolina, Inc., 173 F.3d 493 (4th Cir. 1999) (sets out the four-factor test for “evident partiality” in arbitrator disclosures under the FAA)
- Consolidation Coal Co. v. Local 1643, United Mine Workers of Am., 48 F.3d 125 (4th Cir. 1995) (interprets “evident partiality” standard and its application)
- Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968) (Supreme Court's fractured decision giving rise to the modern standard for arbitrator disclosures and partiality)