A finding that the Panel manifestly disregarded the law requires "something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law." Fahnestock & Co. v. Waltman, 935 F.2d 512, 516 (2d Cir. 1991) (citations omitted). See Carte Blanche (Singapore) v. Carte Blanche Int'l, 888 F.2d 260, 265 (2d Cir. 1989); Merrill Lynch, Pierce, Fenner & Smith v. Bobker, 808 F.2d 930, 933-34 (2d Cir. 1986); Siegel v. Titan Indus. Corp., 779 F.2d 891, 892 (2d Cir. 1985). The alleged error "must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator," and the governing law alleged to have been disregarded by the arbitrators must be "well defined, explicit, and clearly applicable." Carte Blanche (Singapore) v. Carte Blanche Int'l, 888 F.2d 260, 265 (2d Cir. 1989) (quoting Merrill Lynch, Pierce, Fenner & Smith v. Bobker, 808 F.2d 930, 933-34 (2d Cir. 1986). Tested by that standard, the Trust has plainly failed to carry its burden of demonstrating that the Panel deliberately disregarded clearly applicable law. See Fried, Krupp, GmbH v. Solidarity Carriers, Inc, 674 F. Supp. 1022, 1026 (S.D.N.Y., aff'd, 838 F.2d 1202 (2d Cir. 1987).
The Trust does not contend that the Panel clearly and deliberately disregarded any case or statute that would compel "the average person qualified to serve as an arbitrator" to award an amount greater that $ 70,521. Merrill Lynch, Pierce, Fenner & Smith v. Bobker, 808 F.2d at 933. It follows that since the Trust has not demonstrated that the Panel "'understood and correctly stated the law but proceeded to ignore it,'" Fahnestock, 935 F.2d at 516 (quoting Siegel v. Titan Indus., 779 F.2d 891, 893 (2d Cir. 1985), the award may not be vacated on that ground.
Similarly, there is no merit to the Trust's contention that the Panel's failure to respond to the Trust's June 4, 1991 letter constitutes a refusal to hear evidence. This is especially true since at the closing argument the Trust's attorney acknowledged that he had had a full opportunity to be heard. Walters Aff., Exh. F at 8. Indeed, in its June 4, 1991 letter, the Trust did not offer the Panel any evidence, but merely requested leave to file a brief if the Panel was inclined to consider the Trustee's fiduciary responsibility. See Pet. Exh. D. Moreover, there has been no showing that the Panel rendered its award on that basis in whole or in part, and no rational inference to support that conclusion can be drawn merely because an arbitrator asked a question directed to that issue.
Finally, Shearson claims it is entitled to attorneys' fees and costs with respect to the instant motion under Fed. R. Civ. P. 11 (1988). That application is denied. While the Court has found the Trust's argument meritless, it is not so lacking in colorability as to require the imposition of Rule 11 sanctions.
For the reasons given above, petitioner's motion to vacate the arbitration award is denied, as is Shearson's application for Rule 11 sanctions. The Clerk of the Court is directed to enter a judgment accordingly and to close the above-captioned action.
It is SO ORDERED.
Dated: New York, New York
January 4, 1993
John E. Sprizzo
United States District Judge
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