Dist. Ct. erred in rejecting plaintiff’s challenge to arbitration award in favor of defendant in dispute regarding whether defendant violated terms of listing agreement calling for defendant to assist plaintiff in negotiating sublease of its office space, as well as finding plaintiff substitute office space. Record showed that plaintiff was unwilling to sublease its office space and move elsewhere unless it netted $7 million during said process, and defendant responded by presenting plaintiff with series of cost-benefits analyses (CBA) with respect to proposed properties, one of which included proposed net savings to plaintiff of $6.9 million that plaintiff accepted. However, when plaintiff later discovered that defendant had failed to include $3.1 million tenant improvement allowance for sublessee in relevant CBA that resulted in plaintiff only obtaining $3.8 net savings, plaintiff sued defendant for $3.1 million plus vacatur of $4.5 million in commissions that defendant had received during relocation process. Arbitration panel found that although defendant had made material “mistake” in failing to include tenant improvement allowance in CBA, plaintiff could obtain no relief where CBA contained disclaimer with respect to any errors contained therein. Ct. of Appeals, though, found that arbitration panel exceeded its authority in issuing award in favor of defendant, since panel was limited to construing listing agreement, and thus its reliance on CBA was unjustified. (Dissent filed.)
Federal 7th Circuit Court
Civil Court
Arbitration