The opinion of the court was delivered by: Wexler, District Judge.
David Raff ("plaintiff") initiated this action to recover fees
with respect to his service as arbitrator in connection with a
labor dispute. Defendant Maggio, as the employer involved with
the arbitrated labor dispute, is liable for half the cost of the
arbitrator's fees pursuant to a collective bargaining agreement.
Currently before the Court are the parties' cross-motions for
summary judgment. After a brief recitation of the facts, the
Court will address the motions.
Defendant is the sole proprietor of a skilled nursing home
facility in Patchogue, New York. He owns and operates the
facility and is responsible for all management decisions. As
operator of the home, defendant entered into a collective
bargaining agreement with Local 1199 of the Drug Hospital and
Health Care Employees Union ("Local 1199"), which agreement was
in effect in 1987 and 1988. One clause of the agreement stated
that unresolved grievances between the parties were to be
arbitrated pursuant to the Voluntary Labor Arbitration Rules of
the American Arbitration Association ("AAA Rules"). The
agreement further stated that the arbitrator's award would be
conclusive and binding, and that each party would equally bear
the fees and expenses of the arbitrator.
Plaintiff herein was designated to sit as arbitrator for an
unresolved grievance involving defendant's discharge of an
employee. He presided over four hearings before issuing an
opinion and award ordering the reinstatement of the employee.
Each party was billed for half of plaintiff's $5,500 fees and
costs. Local 1199 timely paid its portion, however, defendant
withheld his share of the bill.
On September 28, 1989, plaintiff filed the complaint in the
case at bar seeking his arbitration fee in addition to interest
and attorneys' fees. Only then did defendant attempt to settle
the matter by offering payment of plaintiff's fee, plus interest
and costs, but excluding attorneys' fees. This particular offer
by defendant was made only after defendant's petition for a
writ of certiorari in the previous matter was denied by the
Supreme Court on October 30, 1989. Maggio v. Local 1199, ___
U.S. ___, 110 S.Ct. 329, 107 L.Ed.2d 319 (1989). Furthermore,
defendant's offer was conditioned upon discontinuance with
prejudice of the entire action, thereby precluding plaintiff
from pursuing his claim for attorneys' fees.
Plaintiff rejected this offer and demanded that payment
include attorneys' fees. Defendant's answer to the complaint,
dated November 30, 1989, consented to entry of a judgment for
plaintiff's arbitration fee plus interest and court costs, but
again refused to pay attorneys' fees. Thus, the only issue
remaining is whether or not plaintiff is entitled to attorneys'
fees. It is to be noted that defendant's motion for dismissal of
the instant case on the ground that this Court lacked subject
matter jurisdiction was denied in a previous decision. Raff v.
Maggio, 734 F. Supp. 592 (E.D.N.Y. 1990).
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, a
party is entitled to summary judgment when it is shown that
"there is no genuine issue as to any material fact and the
moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In addition, "[t]he
burden falls on the moving party to establish that no relevant
facts are in dispute." Donahue v. Windsor Locks Bd. of Fire
Comm'rs, 834 F.2d 54, 57 (citations omitted). With these
principles in mind, the Court turns to the case at bar.
The commonly referred to "American Rule" is that a prevailing
party in litigation may not recover attorneys' fees from the
losing party. Instead, each party must pay his own attorneys'
fees. Alyeska Pipeline Serv. Co. v. Wilderness Soc'y,
421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975). However,
the Supreme Court has recognized the following three exceptions
to this general rule: (1) cases in which a statute or
enforceable contract provides for an award of attorneys' fees;
(2) cases in which a prevailing plaintiff confers a common
benefit upon a class or fund; and (3) where a party willfully
disobeys a court order or "`when the losing party has acted in
bad faith, vexatiously, wantonly, or for oppressive
reasons. . . .'" Id. at 257-60, 95 S.Ct. at 1621-23 (citations
Plaintiff's asserted ground for summary judgment with respect
to attorney's fees is that defendant has acted in bad faith.
Specifically, Raff alleges that Maggio's meritless and
persistent refusal to pay the arbitration fee for over seventeen
months, action which necessitated this lawsuit, justifies an
award of attorneys' fees.
Defendant argues that his motion for summary judgment should
be granted because Raff is not entitled to an award of
attorneys' fees as a matter of law. Assuming, arguendo, that
his motion is denied, Maggio asserts that plaintiff's motion
should be denied because under the bad faith doctrine, the issue
of bad ...