Superior Court in Stamford this week denied a New Canaan man’s claim that an arbitrator had been biased, upholding a ruling last fall that found him liable for civil theft, breach of contract and Connecticut state securities violations as part of a $7.8 million judgment.
In a decision issued Monday, the court found no merit in Gregory Imbruce’s arguments that the arbitrator “was biased and/or partial” and denied his request to vacate the arbitration award (see the full Memorandum of Decision embedded as a PDF at the end of this article).
The decision concludes a longstanding battle that also involves two town residents who had invested with Imbruce.
Investors—including New Canaan’s Brad Higgins and the late Bill Mahoney, formerly a partner at Bridgewater—had put money into three funds run by Imbruce to invest in oil and gas assets in Texas and Oklahoma. Concerns over how Imbruce was managing the assets culminated in arbitration, with lawsuits filed from both sides.
A judge ruled against Imbruce in each of his claims, and the award in favor of his counter-claimants was issued in September—subject since Sept. 11 to 10 percent interest, officials say. New Canaan resident Jon Whitcomb, a partner with Stamford-based Diserio, Martin, O’Connor & Castiglioni LLP, is listed as lead attorney for the counter-claimants.
The following month, Imbruce filed a motion to vacate it.
His grounds for doing so included claims that the arbitrator exhibited “evident partiality”—which, if proven, is one standard for vacating an arbitration award, as per federal law.
The claim of partiality was based “chiefly on the arbitrator’s failure to disclose her role as arbitrator in a certain divorce proceeding,” according to the decision.
“That divorce proceeding did not involve any of the parties to the subject arbitration but involved a divorce arbitration between an attorney and his spouse. The attorney was acting as the attorney for some of the defendants herein in a legal malpractice action brought against a firm of attorneys who had previously represented some of the defendants herein. In further support of their claim of ‘evident partiality’ the defendants point out that in the divorce arbitration, the arbitrator found that the attorney had engaged in an adulterous affair and that the arbitrator’s decision had subsequently been vacated by the Superior Court based in part upon the arbitrator’s consideration of ex parte evidence which she had received during a preliminary but unsuccessful mediation process. The defendants argue that the arbitrator should have disclosed her participation in the divorce arbitration proceeding.”
Ultimately, the court denied the claim of partiality—in part, because “the divorce arbitration did not involve any of the parties to the subject arbitration.”
“To suggest that the arbitrator would harbor some bias or partiality against a party because of her participation in an arbitration involving an attorney who happened to represent certain of the parties in an unrelated matter strains credibility,” the court said.
Imbruce also sought to vacate the arbitration award because, he claimed, the arbitrator lacked authority to enter a monetary award, trampled on his rights by failing to order production of certain evidence, was guilty of misconduct, exceeded her power and demonstrated a disregard of the law.
The court found that Imbruce failed to meet the appropriate standards for demonstrating any of those claims.
For example, Imbruce claimed that the arbitrator’s conclusions that his conduct constituted civil theft was a “manifest disregard for the law of civil theft.”
Yet, the court found, “the plaintiffs were not only bringing an action in their own right as limited partners but were also bringing in an action derivatively on behalf of the limited partnerships. In that regard usurpation of funds owned by the limited partnership without any justification could well have been the basis for a civil theft claim.”
Imbruce’s attorney could not immediately be reached for comment.
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