Should You Resolve a Florida Partnership Dispute Through Arbitration?
Many Florida partnership disputes are resolved by an alternative to traditional litigation such as mediation or arbitration. The latter, arbitration, is often required by the partnership agreement itself. Under a mandatory arbitration clause, a partner waives their right to sue the partnership in the event of a disagreement. Instead, both sides agree to have an arbitrator–either a single person or a panel–hear and decide the matter. The Tampa business formation lawyers at Bleakley Bavol Denman & Grace can assist you in drafting such partnership agreements and arbitration clauses, and represent you in enforcing such provisions should the need arise.
Arbitrators Side with Fired Accounting Firm Partner
Federal and state laws strongly favor the enforcement of arbitration agreements. This means that once an arbitrator issues a decision–commonly known as an award–a party dissatisfied with the outcome will have very limited options for appeal. Indeed, Florida courts almost never agree to modify or vacate an arbitration award.
A recent decision from a federal judge here in Florida, Bakahi v. BDO USA, Inc., provides a case in point. The petitioner, a man named Bakhai, was a partner in a Florida accounting firm. In December 2020, Bakhai and his fellow partners agreed to sell their firm to BDO USA, P.C., the sixth-largest accounting firm in the United States.
Concurrent with the sale, Bakhai became a partner at BDO. Under the partnership agreement he signed with BDO, the firm could terminate him “for cause” as further defined by the agreement. He also agreed to mandatory arbitration of any dispute under the partnership agreement.
In 2023, BDO terminated Bakhai’s partnership, citing two events triggering “for-cause” dismissal. The first involved allegations that Bakhai had “leaked confidential information” about one of the firm’s clients. The second involved allegations that Bakhai failed to drop a client who had “sexually harassed a firm employee.”
Bakhai challenged his dismissal and initiated arbitration as required by the partnership agreement. A majority of the arbitration panel sided with Bakhai and issued an award in his favor. The panel determined that BDO had not “validly terminated” Bakhai “for cause” under Delaware law, which governed the partnership agreement as a whole.
Bakhai subsequently filed a petition in federal court to “confirm” the panel’s award. BDO opposed and asked the court to vacate the award. Among other grounds, BDO argued the arbitration panel exceeded its authority when it “modified” the terms of the partnership agreement rather than simply “interpreting” its provisions.
United States District Judge Roy K. Altman, upholding a federal magistrate judge’s preliminary finding on this issue, rejected BDO’s characterization of the arbitration panel’s actions. Altman said this “really boils down to BDO’s dissatisfaction with how the Panel interpreted the Partnership Agreement.” BDO maintained the partnership agreement required the panel to defer to the firm’s judgment as to whether Bakhai’s actions justified for-cause dismissal. The panel rejected that interpretation. And even if that interpretation was incorrect, Judge Altman noted, he was not allowed to “second guess” the panel’s reasoning.
Contact a Tampa Partnership Disputes Lawyer Today
No business partnership wants a dispute to rise to the level of requiring arbitration or litigation. Unfortunately, it is sometimes necessary when the parties reach an impasse. If you find yourself in this type of situation and need legal representation from a qualified Tampa partnership disputes attorney, contact Bleakley Bavol Denman & Grace today at (813) 221-3759 to schedule a consultation.
Source:
scholar.google.com/scholar_case?case=14254105884330678555
