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Piacentini v. Bimbo Foods Bakeries Distribution, LLC

United States District Court, D. Connecticut

February 27, 2018




         Joseph Piacentini (“Petitioner”) has petitioned the Court to vacate an arbitrator's award in favor of Edward Giacomazzo (“Individual Respondent”) and Bimbo Foods Bakeries Distribution, LLC, and Bimbo Bakeries USA, Inc. (“BFBD” or “Respondent”) (collectively “Respondents”).

         Respondents have cross-petitioned the Court to confirm the arbitration award.

         Respondents have also moved the Court to impose sanctions on Mr. Piacentini under 28 U.S.C. § 1927, or, alternatively, under Federal Rule of Civil Procedure 11.

         For the following reasons, the petition to vacate the arbitration award is DISMISSED. The cross-petition to affirm the arbitration award is DISMISSED.

         The motion for sanctions is DENIED.



         1. The Distribution Agreement

         On September 20, 2004, Mr. Piacentini, an independent contractor, purchased from BFBD-which was then called George Western Bakeries Distribution, Inc. (‘GWBD'), Resp't Cross-Pet. at 2-exclusive distribution rights of BFBD food products within a defined geographical area, Pet'r's Pet. ¶ 5; see generally Distribution Agreement (“Agreement”), Pet'r's Pet., Ex. A, ECF No. 1-1 at 2.

         The relevant portion of the Agreement states:

§ 11.12 DAMAGES: Notwithstanding anything to the contrary contained in this Agreement, in no event shall either party be liable to the other for any consequential, incidental, indirect or special damages, including lost profits and punitive damages.

Agreement § 11.12.

         On November 15, 2010, BFBD sold the exclusive distribution rights to the Bridgeport Correctional Center (BCC) to independent contractor, Edward Giacomazzo, who then began to sell BFBD products to the BCC and has allegedly done so ever since. Resp't's Cross-Pet. at 2. On November 15, 2010, BFBD sold the distribution rights to the area surrounding BCC-but not the BCC-to independent contractor, John Balzi. Id. The sale area inadvertently failed to exclude the BCC as an exception. Id. at 3. All parties to the transaction understood Mr. Balzi did not own the distribution rights to the BCC, which were sold to Mr. Giacomazzo the same day, and thus Mr. Balzi never sold or even attempted to sell products to the BCC. Id.

         On July 14, 2011, by way of a Bill of Sale, Mr. Balzi sold his distribution rights to Mr. Piacentini, Pet'r's Pet., Ex. B, ECF No. 1-1 at 24, and, by amendment to the Agreement, the parties agreed to enlarge the geographical areas in which Mr. Piacentini had the exclusive right to distribute BFBD's baked goods, Pet'r's Pet., Ex. C, ECF No. 1-1 at 31. Due to the inadvertent omission of the BCC exception in the original Balzi transaction, the same omission carried over to this transaction. Resp't Cross-Pet. at 3. Thus, the BCC distribution rights were not included in the purchase price, as expected, since Mr. Balzi's distribution rights did not in fact include the BCC; instead, Mr. Giacomazzo owned the BCC rights and had been selling BFBD food products consistent with these rights. Id.

         2. The Arbitration Amendment

         Mr. Piacentini participated in class-action settlement of a federal lawsuit, captioned: Alhquist v. Bimbo Foods Bakeries Association, Inc., No. 3:12-cv-12727 (SRU). Pet'r's Pet. at 1, Ex. C, ECF No. 1-1 at 36. As part of the settlement, settlement beneficiaries, including Mr. Piacentini, agreed to amend their respective distribution agreements to include a provision for mandatory dispute resolution by arbitration. Id.

         In relevant part, the arbitration agreement provides:

§ 1.6 Remedies: Subject to the parties' right to appeal or seek vacatur under applicable law, the parties acknowledge and agree that the decision of the arbitrator will be final and binding on the parties and that the arbitrator is authorized to award any party the full remedies that would be available to such party if the Covered Claim had been filed in a court of competent jurisdiction, including actual and reasonable attorneys' fees and costs, if any.

         Dispute Resolution Agreement § 1.10, Pet'r's Pet. Ex. C, ECF No. 1-1 at 64.[1]

         3. Arbitration

         When the BCC omission came to light, BFBD revealed it to Mr. Piacentini, sought his cooperation with issuing corrected documents, and as consideration for such cooperation, BFBD offered a nominal payment to Mr. Piacentini. Id. Mr. Piacentini accepted payment, Ahlquist Check, Pet'r's Pet. Ex. B, ECF No. 1-1 at 58, [2] and filed a lawsuit in Connecticut Superior Court, Puma Ltr. at 1, Pet'r's Pet. Ex. C, ECF No. 1-1 at 36, seeking lost profits that would have accrued in Mr. Piacentini's favor but for the BCC omission. Resp't's Cross-Pet. Id. at 3-4. When BFBD sought arbitration or else damages under the liquidated damages clause of the amended Agreement, Mr. Piacentini dismissed the state-court action. Id. at 4.

         On March 21, 2016, Mr. Piacentini filed a demand for arbitration asserting that he, not Mr. Giacomazzo, was the true owner of the BCC distribution rights and that Mr. Piacentini was owed payment for lost profits from the BCC location for the previous five years. Id. at 4.

         The American Arbitration Association selected the Honorable John R. Downey, former Connecticut Superior Court Judge, to preside over the dispute. Pet'r's Pet. ¶ 9. The parties then engaged in motion practice. On September 26, 2016, BFBD filed a letter brief in support of its motion to dismiss, or, in the alternative, for summary judgment, Resp't's Cross-Pet. at 4, to which Mr. Piacentini objected, and BFBD replied. Id. at 4-5. On January 4, 2017, BFBD and Mr. Piacentini filed individual pre-hearing submissions. Id. at 5.

         On January 12, 2017, and continued the following day, former-Judge Downey took testimony and documentary evidence from the parties. Pet'r's Pet. ¶ 10. After the hearing, Mr. Piacentini and BFBD submitted post-hearing briefs. Id. at 5-6. On February 17, 2017, former-Judge Downey issued a written decision. Resp't's Cross-Pet. at 6. He found that Mr. Balzi sold to Mr. Giacomazzo the right to service the BBC, and that, by mutual mistake, the BBC “stop” was included as part of the transaction. Id. Therefore, according to former-Judge Downey, Mr. Balzi could not convey rights that he did not properly hold. Id. The mutual mistake with respect to the BCC was remedied by reformation to reflect the parties' intention, and former-Judge Downey awarded Mr. Piacentini distribution rights to several locations that had been serviced by Mr. Giacomazzo. Id. at 7; Pet'r's Pet. at 3. Downey further found that under the terms of the Agreement, lost profits were foreclosed as a ...

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