Karavasilis v. Burch: Maryland Circuit Court Upholds Board's Arbitration Award

Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.

In Karavasilis v. Burch, the Circuit Court of Maryland addressed an arbitration award by the Howard County Board of REALTORS® (Board). The court held that the decision of the three-person arbitration panel was neither irrational nor biased, and upheld the award.

A commission dispute arose between Karavasilis and Burch over procuring cause in the sale of property in West Friendship, MD. Karavasilis and Marshall worked for Remax. Burch and Keeny worked for Long & Foster (L&F). The property was purchased by the Peliseks. The case was submitted for arbitration, and a three-person panel issued a decision in favor of Burch. The panel ordered that the commission, which exceeded $11,000, be paid to Burch/L&F. Karavasilis petitioned the circuit court to vacate the arbitrators' award on the bases that the result was irrational and that the panel was biased. Burch, Keeny, and L&F were named as Respondents. After the petition was filed, the Board intervened.

The Circuit Court of Maryland noted that judicial review of arbitration awards was narrowly prescribed and that the circumstances under which an arbitration award could be vacated were very narrow. The court stated that a reviewing court could not substitute its judgment for that of the arbitrators, and could only vacate an award if the proceedings below were tainted by evident partiality, or if the arbitrator reached a completely irrational result.

Regarding the "irrationality" claim, Karavasilis argued that the panel's failure to honor a contract, which would have entitled him to split the commission, produced a completely irrational result. The Circuit Court of Maryland found that a "Rejection of Subagency Agreement," signed by Marshall and Keeny, was produced to the arbitrators prior to the hearing and was considered as evidence by the panel. The court also found that the arbitrators did not enforce the agreement, as the panel did not allow Marshall/Karavasilis/Remax to retain the commission. The court then found that the fact that the panel set aside the agreement did not make the decision completely irrational. To the contrary, the court found that the arbitrators heard substantial evidence that Keeny, and not Marshall, was the procuring cause of the sale to the Peliseks. The court added that the panel considered and adjudicated the very issue that was before them, namely, the dispute over the commission for the sale of the property.

Regarding the "evident partiality" claim, Karavasilis cited several instances in the arbitration transcript where two of the three members of the panel referred to Keeny by her first name only. After considering this contention, the Circuit Court of Maryland found that Karavasilis failed to demonstrate evident partiality or bias. The court noted that all of the members of the panel, as well as Marshall and Keeny, were members of the local real estate community, and that it was entirely plausible that one or more of the arbitrators may have had professional or social contacts with either of the parties. The court added that Karavasilis failed to show that such familiarity tainted the panel's decision in the matter. Thus, the court denied the petition to vacate the arbitration award.

The Circuit Court of Maryland awarded costs and attorneys' fees related to the petition to the Respondents. However, the court denied the Board costs because the Board was not a "party" to the arbitration, was not a necessary party to the appeal, and entered the appeal on its own motion.

Karavasilis v. Burch, No. 94-CA-25831 (Cir. Ct. Md., Howard County July 28, 1995). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]

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