MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Pursuant to the terms of contracts drafted by the defendant, Kevin Michelson, for a loan from the plaintiff, Elsie Fetterman, to Michelson, a Superior Court judge compelled arbitration. Rather than complying with the order, Michelson repeatedly delayed and thwarted arbitration. After an evidentiary hearing, the judge entered a default judgment and sanctions for attorneys fees, holding that Michelson intentionally avoided arbitration in bad faith. On appeal, Michelson argues that once the judge referred the matter to arbitration, the judge lacked the authority to issue the default judgment or sanctions. Michelson further argues that even if the judge had the authority, the judge erred in imposing sanctions, as the appropriate remedy was contempt. We affirm.
Background.
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a. The loans. The underlying matter concerns three loans advanced by Fetterman to Michelson. Fetterman trusted Michelson, whom she knew through her connection to his father; she viewed Michelson like a member of her family. The first loan originated on February 6, 2015. Fetterman was then eighty-seven years old and loaned Michelson $36,000. Michelson represented that he would repay the loan as soon as his credit improved and that he would pay interest in the meantime. In June 2015, again at Michelsons request, Fetterman loaned him an additional $30,000. At that time, the parties executed a “[p]ersonal [l]oan [c]ontract,” drafted by Michelson, which required him to make payments until he paid the $66,000 principal, but with the option to pay only interest, and no principal. Finally, in November 2017, once again at Michelsons request, Fetterman loaned him an additional $20,000. The parties executed a further “[p]ersonal [l]oan [c]ontract,” again drafted by Michelson, which required him to make payments until he repaid $86,000 in principal with the option to make payments of interest only (accruing at 8.4 percent). The two written contracts provided, “[b]oth parties agree to arbitration.”
As of September 2019, Michelson had never made a payment towards the principal of the loans. On September 16, 2019, Fetterman filed suit against Michelson alleging breach of contract and unjust enrichment. Michelson did make interest payments until approximately December 2019. Since December 2019, Michelson has only intermittently paid Fetterman interest. As of August 2021, accrued interest payments were in arrears in the amount of $4,314.
b. Attempts to arbitrate. On October 31, 2019, Michelson served a motion to dismiss pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), in part based on the arbitration language in the written loan agreements. Fetterman opposed. The motion judge construed Fettermans opposition as a motion to stay further proceedings and compel arbitration and allowed the motion. The judge ordered that “[w]ithin 60 days the parties will institute binding arbitration through the Hampden County Bar Association [Arbitration and Mediation Service (HCBA)] using a Business Law arbitrator from the list, and splitting the arbitration costs evenly” (February 28, 2020 order).
Within three days, on March 2, 2020, Fetterman attempted to schedule arbitration with Michelson through their respective counsel, consistent with the February 28, 2020 order. Upon expiration of the time period provided in the February 28, 2020 order, the parties filed a joint motion to extend the time to institute arbitration for an additional sixty days (to approximately June 30, 2020), which was granted. Despite repeated requests, Michelsons counsel did not provide a substantive response to Fettermans proposed arbitrators until June 28, 2020, two days before the extension was to expire. In July 2020, the parties agreed to hold a remote virtual arbitration before the HCBA-list arbitrator. Arbitration was scheduled for August 12, 2020.
Fetterman and her counsel prepared for the August 12, 2020 arbitration. But, on the afternoon of August 11, 2020, Michelson notified Fetterman and the arbitrator that he would not be appearing for arbitration, claiming that he was “not feeling well.” He offered no other evidence of any medical issues related to that claim. For the next month, on at least five occasions, Fetterman attempted to solicit proposed dates from Michelson to reschedule arbitration but received no substantive response.
On September 14, 2020, Fetterman served Michelson with a motion to compel arbitration. After Michelson received the motion, the parties agreed to an arbitration date of October 15, 2020. Once again, Fetterman and her counsel prepared for the scheduled arbitration. Yet, three days prior to the scheduled date, Michelsons counsel notified Fetterman and the HCBA that Michelson had “directed that I cancel this arbitration ․ as he did not understand the [February 28, 2020] [o]rder to be for binding arbitration which he discovered over the weekend in reviewing his file.” Thereafter, Michelsons counsel withdrew.
Fetterman sought to proceed with the arbitration but received no further cooperation in scheduling from Michelson. In response, on December 1, 2020, Fetterman served another motion to compel arbitration on Michelson, and on December 21, 2020, she filed it along with his opposition in Superior Court. Michelson then obtained successor counsel.
After a February 4, 2021 hearing on the motion to compel, the judge entered an order (February 4, 2021 order) which provided in relevant part: “It is ordered that the parties submit, participate, and complete arbitration by April 5, 2021. Parties are advised that if the Court finds that either avoids arbitration without good cause, the court will entertain the other partys motion for default judgment and conduct an evidentiary hearing on the issue of damages.”
On February 24, 2021, the parties agreed to submit to and conduct arbitration on March 25, 2021, at noon. Fetterman then paid $700 for her portion of the arbitration fees and costs. On March 22, 2021, three days before the scheduled arbitration, Michelsons counsel filed an emergency motion to withdraw. While the judge allowed counsel to withdraw, he reiterated that the February 4, 2021 order compelling arbitration remained in effect. The next day, Fetterman filed her case overview with the arbitrator. On that same day, the HCBA emailed Michelson confirming the time of arbitration, re-sending an invoice for his portion of the costs, and re-sending the invitation to the Zoom arbitration. Michelson received and replied to the email. On March 24, 2021, the day before the scheduled arbitration, Michelson filed motions in the Superior Court to disqualify Fettermans attorney and his firm; to continue the arbitration; and to have the Superior Court judge recuse himself. The motion judge denied all three motions and ordered that the next days arbitration proceed.
Michelson was in contact with the HCBA during the week leading up to the scheduled arbitration hearing. In that time he received and responded to the email with the Zoom invitation; informed the HCBA he would not be participating in the arbitration; insisted the arbitration be recorded; asked to be allowed to attend and make a statement, but not otherwise participate; alleged the arbitration process was “a setup to deny my civil rights,” “a lynching with the judge picked by ․ opposing counsel who is in clear conflict,” and that he believed there was “a little bit of corruption” between the HCBA and the Superior Court in denying his motions; and requested the HCBAs insurance information, implying he would be filing a claim against the HCBA.
c. Day of scheduled arbitration. On March 25, 2021, the day of the scheduled arbitration, Fetterman, HCBA facilitating staff, and the arbitrator joined the Zoom meeting in advance of its scheduled noon start time. Michelson did not appear via Zoom or otherwise contact the HCBA. The arbitrator opened the arbitration and waited for Michelson to appear. After some time, the arbitrator closed the arbitration, directing Fetterman to seek her remedy as stated in the February 4, 2021 order.
At 12:50 P.M. that day, Fettermans counsel discovered that Michelson had sent an email at exactly noon claiming not to have the Zoom link and requesting it be resent. Michelson alleged the same thing in further emails. At 12:52 P.M. and then 12:55 P.M., Michelson sent two emails, one to the HCBA, and another to the HCBA and copying Fettermans attorney, stating that he would be going back to work because he had not received the Zoom link.
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Immediately thereafter, at 12:57 P.M., the HCBA advised Michelson that the link to the Zoom meeting was in the email chain to which Michelson was responding.
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The HCBA and Fetterman also let Michelson know they were both available to hold the arbitration at 1:30 P.M. Yet, at 1:30 P.M., when Fetterman, the HCBA facilitating staff, and the arbitrator rejoined the arbitration, Michelson did not. The HCBA attempted to contact Michelson, but he did not respond or join.
The arbitrator concluded the arbitration at 1:51 P.M. She issued a written report summarizing the frustrated attempts to arbitrate, and finding that Michelson “failed to appear[ ] despite being provided with the means necessary and every opportunity to attend. [Par.]Accordingly, the arbitration as ordered by the Court did not go forward specifically and solely due to [Michelsons] refusal to submit, participate, and complete the arbitration.”
d. Postarbitration proceedings. Citing the February 4, 2021 order, Fetterman filed a motion for entry of default judgment and imposition of sanctions. On August 13, 2021, an evidentiary hearing was held where both parties were represented by counsel and both testified.
After the hearing, the judge found that Michelson had “no reasonable or adequate reason for failing to participate in the March 25, 2021 arbitration.” The judge also found that Michelson had received the Zoom link and did not credit his claims that he did not have the means or ability to access the Zoom arbitration. In addition, the judge held that Michelsons motions to disqualify counsel and for the judge to recuse himself were efforts to delay the March 25, 2021 arbitration. Finally, the judge found that Michelson had actual notice that the motions were denied and knew he was obligated to participate in the arbitration.
The judge adopted the arbitrators finding that Michelson failed to appear despite being provided the means and opportunity to do so, and that the arbitration did not move forward “specifically and solely due to the defendants refusal to submit, participate, and complete the arbitration.” The judge held that Michelson “avoided the arbitration without good cause, acted in bad faith, and made misrepresentations to Fetterman, [the arbitrator], and the HCBA in exercise of his bad faith.” The judge also held that Michelson intentionally avoided arbitration in bad faith in August 2020 and October 2020, and did not credit his uncorroborated assertions of illness or failing to understand court orders.
Consistent with those findings, the judge entered a default judgment against Michelson for $90,314, representing the $86,000 in unpaid principal and $4,314 in accrued and unpaid interest, plus interest and costs, and imposed sanctions of an award of Fettermans attorneys fees. Thereafter, Fetterman submitted a motion for attorneys fees, which Michelson opposed. On November 4, 2021, the judge allowed Fettermans motion and entered a judgment in favor of Fetterman totaling $131,808.11.
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This appeal followed.
Discussion. a. Waiver of arbitration. It has long been the law of the Commonwealth that while a party may have a right to arbitrate under a contract, that right, like all contractual rights, may be waived. Home Gas Corp. of Mass., Inc. v. Walters of Hadley, Inc., 403 Mass. 772, 775 (1989). This court recently reiterated that point. Kettle Black of MA, LLC v. Commonwealth Pain Mgt. Connection, LLC, 101 Mass. App. Ct. 109, 115-116 (2022) (Kettle Black) (rejecting argument that waiver of arbitration is a procedural question presumptively for the arbitrators to decide).
Despite this controlling case law, Michelson argues that nonpayment of arbitration fees is a procedural question and that procedural questions “are presumptively not for the judge, but for an arbitrator, to decide.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002). However, we recently clarified in Kettle Black that while Howsam “make[s] passing references to procedural questions, including allegations or claims of waiver, delay, or a like defense to arbitrability,” neither Howsam nor BG Group PLC v. Republic of Argentina, 572 U.S. 25 (2014), “involved an issue regarding a waiver.” Kettle Black, 101 Mass. App. Ct. at 115-116, quoting Howsam, 537 U.S. at 84. Furthermore, “[m]ost Federal circuit courts that have considered the above-quoted language in Howsam and BG Group PLC, have concluded that it does not apply to waiver of arbitrability by litigation.” Id. at 116. For instance, in JPD, Inc. v. Chronimed Holdings, Inc., cited by Michelson, the Sixth Circuit held that “courts have long decided whether conduct inconsistent with reliance on an arbitration agreement waives a defendants ability to seek an arbitration referral.” 539 F.3d 388, 394 (6th Cir. 2008).
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There, the court reasoned, first, that waiver through conduct usually turns on whether a party abused the litigation or prelitigation process, and that courts are most adept at policing procedure-abusing conduct. Second, referring the question of waiver through inconsistent conduct to an arbitrator would often be “exceptionally inefficient,” as it would fail to advance the substance “of the case -- it just gets referred back to the court.”
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Id. Thus, the JPD court concluded, “Howsam did not disturb the traditional rule that the courts presumptively resolve waiver-through-inconsistent-conduct claims.” Id. See Marie v. Allied Home Mtge. Corp., 402 F.3d 1, 13-14 (1st Cir. 2005).
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Michelsons argument that the arbitrator must go forward with arbitration, even where one party has not paid their fee or appeared, also is unavailing. Section 5 of the Massachusetts Uniform Arbitration Act for Commercial Disputes states that “[t]he arbitrators may hear and determine the controversy upon the evidence produced notwithstanding the failure of a party duly notified to appear.” G. L. c. 251, § 5 (a). Contrary to Michelsons contention, the statute is permissive and does not require that an arbitrator conduct the hearing when the arbitrator has not been paid or a party failed to appear. See Brittle v. Boston, 439 Mass. 580, 594 (2003) (the use of “may” is permissive and not mandatory). While the arbitrator in this case could have chosen to proceed with the hearing on the merits, issued a decision, and sought remuneration from Michelson after the fact, she was not required to do so.
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Having disposed of Michelsons procedural arguments that the court was without authority to conclude he waived arbitration, “[t]he essential question is whether, under the totality of the circumstances, the defaulting party acted inconsistently with the arbitration right” (quotation omitted). Home Gas Corp., 403 Mass. at 775. See Bishara v. Brown, Daltas & Assocs., Inc., 21 Mass. App. Ct. 941, 943 (1985) (“A fortiori, one who actively thwarts the attempt of the other party to have the dispute resolved by arbitration should be held estopped to invoke the arbitration clause to avoid suit”). This is a question of law which we review de novo. Pre-Paid Legal Servs., Inc. v. Cahill, 786 F.3d 1287, 1293 (10th Cir. 2015), cert. denied, 577 U.S. 940 (2015). Accord Kauders v. Uber Techs., Inc., 486 Mass. 557, 566 (2021).
On this record, we agree that there was ample evidence that Michelson actively and repeatedly thwarted arbitration, beginning in early 2020 with his nonparticipation in scheduling arbitration and continuing after and in violation of the February 4, 2021 order. Among other things, Michelson engaged in tactics designed to delay arbitration, failed to pay his share of the arbitration fee, sought to impose arbitrary conditions on the arbitration, made threatening suggestions to the arbitration organization, and ultimately chose not to participate in the arbitration despite being given every opportunity to do so. Accordingly, Michelson waived his right to arbitrate. His conduct was particularly egregious in light of Fettermans age, which was ninety-four when the judge held the evidentiary hearing on the motion for a default and to set damages and ninety-five at the time of oral argument in this appeal, and given the impact his refusal to pay had on her financial situation.
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b. Sanctions. Michelson also argues that even if the judge had the authority to enter the default and award damages, the sanctions were improper. He contends that the correct procedure to address repeated violations of a court order would have been civil contempt pursuant to Mass. R. Civ. P. 65.3, as appearing in 386 Mass. 1244 (1982). Therefore, he argues, the judge abused his discretion in exercising his inherent powers to find Michelson in contempt without the prerequisites required. We disagree.
“We review the judges imposition of sanctions under the courts inherent powers for abuse of discretion.” Wong v. Luu, 472 Mass. 208, 220 (2015). The Superior Court has “the inherent power to enforce its own orders, to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases” (quotation omitted). Sommer v. Maharaj, 451 Mass. 615, 621 (2008), cert. denied, 556 U.S. 1235 (2009). A judge may use those inherent powers to assess attorneys fees where “such sanctions [are] necessary to preserve the courts authority to accomplish justice.” Wong, supra at 218. Judges also have the inherent authority to hold a party in contempt of court. See Sussman v. Commonwealth, 374 Mass. 692, 695 (1978). Importantly, they are not limited to one option or the other. See Bassichis v. Flores, 490 Mass. 143, 153 (2022) (trial judges have the authority “to sanction an attorney for his or her misconduct in the court room, ․ or to hold the attorney in contempt of court”).
Here, the judge exercised his inherent powers to issue sanctions against Michelson for intentionally and repeatedly defying court orders, causing Fetterman, the HCBA, and the arbitrator to incur time and expense, misrepresenting facts to the arbitrator and Fetterman, and generally acting in bad faith. We discern no error or abuse of discretion.
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Judgment affirmed.
FOOTNOTES
1
. We summarize the facts as set forth in the judges findings of fact, rulings of law, and order for judgment on Fettermans motion for default judgment and imposition of sanctions, supplemented by descriptions of the procedural history of the case.
2
. Michelson concedes that he received the Zoom link. He argued below that he did not see it due to the “threading” feature in Gmail. The judge did not credit Michelsons claim that he did not have the means or ability to access the Zoom arbitration based on Michelsons own emails to the HCBA that he had no intention of participating as he saw the arbitration as a “sham.” Where, as here, the record supports the judges determination, we discern neither an error of law, nor an abuse of discretion. Constance C. v. Raymond R., 101 Mass. App. Ct. 390, 397 (2022) (“Our role as a reviewing court is not to reassess credibility determinations made by the hearing judge”).
3
. In her report, the arbitrator wrote that at 1:14 P.M. she received a call from the HCBA indicating that Michelson had been in touch, and maintained that he wanted to go forward with the arbitration.
4
. The total judgment was comprised of the $90,314 in single damages, $23,176.38 in prejudgment interest, $377.29 in statutory costs, and $17,940.44 in attorneys fees.
5
. “We interpret the substantive provisions of the FAA [Federal Arbitration Act] and its Massachusetts counterpart in the same manner. ․ Although the agreement [in that matter] provide[d] that it [was] governed by the FAA, State law concerning the validity, revocability, and enforceability of contracts generally determines whether parties have executed a valid and enforceable arbitration agreement.” Boursiquot v. United Healthcare Servs. of Delaware, Inc., 98 Mass. App. Ct. 624, 630 n.7 (2020) (quotation omitted).
6
. As another Federal circuit court observed, if the sole remedy for the party who has paid their fee was “a court order compelling a return to arbitration,” then “[t]he same offending party could ․ default a second time, and the prejudiced partys sole remedy, again, would be another order compelling arbitration. This cycle could continue, resulting in frustration of the aggrieved partys attempts to resolve its claims.” Sink v. Aiden Enters., Inc., 352 F.3d 1197, 1201 (9th Cir. 2003).
7
. Cases cited by Michelson, such as Dealer Computer Servs., Inc. v. Old Colony Motors, Inc., 588 F.3d 884 (5th Cir. 2009), and Sea Vault Partners, LLC v. Bermello, Ajamil & Partners, Inc., 274 So. 3d 473 (Fla. 3d Dist. App. Ct. 2019), which cite Howsam without analysis are unpersuasive for the same reason.
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. Michelson also relies on Parekh Constr., Inc. v. Pitt Constr. Corp., 31 Mass. App. Ct. 354 (1991), which, quoting from rule 30 of the Construction Industry Arbitration Rules of the Association, observes that those rules provide that:“Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or counsel, who, after due notice, fails to be present or fails to obtain an adjournment. An award shall not be made solely on the default of a party. The arbitrator shall require the party who is present to submit such evidence as is deemed necessary for the making of an award.” Id. at 356 n.2.This rule is inapplicable here. Even if it were to apply, it would not compel the arbitrator to issue an award without first being paid their fee. It merely acknowledges that an arbitration “may” proceed in the absence of a party. Id.
9
. Fetterman took out a home equity loan on her home.
10
. It does not appear that Michelson raised the issue of contempt being the appropriate remedy in a timely fashion. We typically deem any arguments raised for the first time on appeal to be waived. McCormick v. Labor Relations Commn., 412 Mass. 164, 166 (1992).