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COMMONWEALTH OF MASSACHUSETTS
DUKES, ss SUPERIOR COURT DEPARTMENT
Civil Action No. 1574CV00037
CULIK LAW, P.C.
Plaintiff,
v.
MICHAEL J. ARRUDA,
Defendant.
nr ws BS
PLAINTIFF CULIK LAW, P.C.’S APPLICATION TO
COMPEL ARBITRATION AND STAY LITIGATION
Plaintiff Culik Law, P.C. (“Culik”) hereby submits this Application, brought pursuant to
M.G.L. c. 251 § 2(c), seeking an order compelling the parties to proceed to arbitration pursuant
to the terms of a written fee agreement between Culik and Defendant Michael J. Arruda
(“Arruda”) and staying litigation brought by Arruda in the Edgartown Division of the District
(civil action no. 1535-cv-0059) (the “District Court Action”) (attached as Exhibit A). As
grounds therefor, Culik states as follows.
PARTIES
1. Plaintiff Culik is a professional corporation with its principal place of business
located in Boston, Massachusetts. Attorney Josef C. Culik is the President of Culik and a
practicing member in good standing of the Massachusetts Bar.
2. Defendant Arruda is a natural person residing in Oak Bluffs, Massachusetts.FACTS
3. In April 2013, Arruda retained Culik to represent Arruda in an action against
Arruda’s mortgage lender, JP Morgan Chase Bank (“Chase”), to enforce the terms of a loan
modification agreement that Culik previously had negotiated with Chase on Arruda’s behalf.
4. Because Arruda did not have sufficient funds available to pay Culik on an hourly
basis, Culik and Arruda entered into a contingent fee agreement (the “Fee Agreement”) (attached
as Exhibit B), with compensation to be paid to Culik upon “recovery of any amount, whether by
settlement, judgment, or any other means.” The agreement further provided that Culik’s
compensation would be either 33 1/3 % of the gross amount collected, or the amount of any
attorneys’ fees awarded by a court or included in a settlement, whichever was greater.
5. The Fee Agreement also contained an arbitration provision that read as follows:
If the Attorney and I are unable to resolve our differences on the
question of any fee, and/or expense, we agree to make a good faith
effort at resolving our dispute. If the dispute cannot be resolved,
we agree to place the matter before the Massachusetts Bar
Association Legal Fee Arbitration Board and to be bound by the
decision of the arbitrators.
6. As a condition of the representation, Arruda agreed that he would escrow in
Culik’s IOLTA account the monthly mortgage payments that were due to Chase under the
previously-negotiated modification agreement, with the understanding that these payments
would be paid over to Chase if the litigation against Chase was successful. Pursuant to this
arrangement, Arruda deposited $14,886.60 into Culik’s IOLTA account.
7. In or around December 2013, Culik was able to reach a settlement agreement with
Chase. Under the settlement agreement, Chase agreed: (1) to waive all interest and other non-
escrow-related charges for the period Chase claimed the loan had been in default; (2) to reduce
the principal amount of the loan by $982.88; (3) to reduce the interest rate on the loan, resulting
2in a significant decrease in Arruda’s monthly mortgage payment and a savings of approximately
$210,000 over the life of the loan; and (4) to request amendments to Arruda’s credit history to
reflect that Arruda had been current on the loan during the period Chase claimed the loan had
been in default. Chase also agreed that, in lieu of paying a separate amount in settlement for
Culik’s attorneys’ fees, it would waive its right to collect the monthly mortgage payments
Arruda had set aside in Culik’s IOLTA account.
8. On December 27, 2013, Arruda executed an amendment to the Fee Agreement
(amendment attached as Exhibit C), acknowledging that the attorneys’ fees included as part of
the settlement with Chase would be paid out of the funds escrowed in Culik’s IOLTA account.
9: On April 7, 2014, Culik’s office manager, Shawna Culik, sent a closing letter to
Arruda (attached as Exhibit D) confirming that the amounts held in escrow were being paid over
to Culik, pursuant to the settlement terms with Chase.
10. On March 5, 2015, Arruda wrote to Culik and claimed that he believed that the
monthly mortgage payments he had escrowed with Culik were going to be returned to him.
11. On March 11, 2015, Attorney Culik responded to Arruda, attaching copies of the
above documents and reminding Arruda of the terms of the settlement with Chase.
Notwithstanding these documents, Arruda now claims that he never understood that the
escrowed funds were being paid to Culik as part of the settlement with Chase. Arruda apparently
now contends that Culik was not entitled to any compensation for his successful representation
of Arruda in the litigation against Chase and the settlement of that action.
12. The parties were unable to resolve their dispute.
13. Arruda filed the District Court Action on August 11, 2015, generally alleging that
he is entitled to the return of the monthly mortgage payments that he had escrowed in Culik’sIOLTA account, and that Culik was not entitled to collect any legal fees for his representation of
Arruda.
14. On August 26, 2015, Culik invoked his right under the Fee Agreement to demand
arbitration by filing a Petition for Arbitration of a Fee Dispute with the Massachusetts Bar
Association Legal Fee Arbitration Board (attached as Exhibit E).
ARGUMENT
15. Culik and Arruda’s agreement to arbitrate is expressly articulated in the Fee
Agreement and should be enforced as written. As an initial matter, jurisdiction to compel
arbitration rests exclusively with the Superior Court Department. GLE251,§ | 2(@), @; >
Connolly v. Moreno, No. Civ. A. 98-00325, 1998 WL 472038, *1 (Mass. Super. Ct. Aug. 5,
1998) (the District Court Department lacks Jurisdiction to compel arbitration). Thus, where
arbitrable issues exist ina pending District Court action, an application to compel arbitration
must be brought in the Superior Court for the county in which the non-applying party resides.
G.L. ¢. 251, § 2(c); G.L. c. 251, § 17.
16. In Massachusetts, arbitration agreements are “valid, enforceable and irrevocable.”
GL. c. 251, § 1; Miller v. Cotter, 448 Mass. 671, 676 (2007) (arbitration provides an
“expeditious alternative to litigation for settling commercial disputes.”). Indeed, Massachusetts
courts have expressed a strong public policy in favor of arbitration. Home Gas Corp. of
Massachusetts, Inc. v. Walter’s of Hadley, Inc., 403 Mass. 772, 774 (1989). To that end,
arbitration clauses are construed broadly, such that applications to compel arbitration are denied
Co
only where “it may be said with positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute.” Commonwealth v. Philip Morris Inc., 448
Mass. 836, 844 (2007). The question for the Court’s determination is not resolution of theparties’ underlying dispute, but rather, whether the dispute falls within the class of claims that
parties have agreed to arbitrate. Commonwealth v. Philip Morris, Inc., 448 Mass. 836, 843
(2007) (“[W]hen deciding whether a dispute is arbitrable, a court does not consider the merits of
the underlying claims.”).
17. Here, there is no doubt that the issues Arruda raises in the District Court Action
fall within the Fee Agreement’s arbitration provision. That provision, found in Section 15 of the
Fee Agreement, requires disputes “on the question of any fee, and/or expense” to be adjudicated
by the Massachusetts Bar Association Legal Fee Arbitration Board. Arruda alleges in the
District Court Action that Culik was not entitled to any fee for his representation of Arruda in the
action against Chase; Culik disputes that assertion. This plainly concerns “the question of any
fee, and/or expense” and therefore falls within the class of claims Arruda agreed by contract to
arbitrate.
18. The filing of an application to compel arbitration necessitates the issuance of an
order to stay “[a]ny action or proceeding involving an issue subject to arbitration...” G.L.c.
251, § 2(d). The Court should not delay the issuance of a stay while it considers the merits of the
application to compel. Id. Culik therefore requests that the Court expeditiously stay the District
Court Action during the arbitration process. Granting this stay makes especially good sense in
this case because a ruling in favor of Culik at arbitration would moot each of the claims brought
by Arruda in the District Court Action.
aCONCLUSION
WHEREFORE, Culik respectfully requests that the Court enter an order compelling
Arruda to arbitrate the issue of Culik’s entitlement to attorneys’ fees for his representation of
Arruda in the action against Chase and staying the District Court Litigation pending arbitration.
CULIK LAW, P.C.
By its attorneys,
Erin K. Higgins (BBO #559510)
Christopher K. Sweeney (BBO #685315)
CONN KAVANAUGH ROSENTHAL
PEISCH & FORD, LLP
Ten Post Office Square
Boston, MA 02109
(617) 482-8200
ehiggins@connkavanaugh.com
csweeney@connkavanaugh.com
Dated: August 26, 2015
1208072.1 05490-000
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OC COMMONWEALTH OF MASSACHUSETTS DUKES, ss SUPERIOR COURT DEPARTMENT Civil Action No. 1574CV00037 CULIK LAW, P.C. Plaintiff, v. MICHAEL J. ARRUDA, Defendant. nr ws BS PLAINTIFF CULIK LAW, P.C.’S APPLICATION TO COMPEL ARBITRATION AND STAY LITIGATION Plaintiff Culik Law, P.C. (“Culik”) hereby submits this Application, brought pursuant to M.G.L. c. 251 § 2(c), seeking an order compelling the parties to proceed to arbitration pursuant to the terms of a written fee agreement between Culik and Defendant Michael J. Arruda (“Arruda”) and staying litigation brought by Arruda in the Edgartown Division of the District (civil action no. 1535-cv-0059) (the “District Court Action”) (attached as Exhibit A). As grounds therefor, Culik states as follows. PARTIES 1. Plaintiff Culik is a professional corporation with its principal place of business located in Boston, Massachusetts. Attorney Josef C. Culik is the President of Culik and a practicing member in good standing of the Massachusetts Bar. 2. Defendant Arruda is a natural person residing in Oak Bluffs, Massachusetts.FACTS 3. In April 2013, Arruda retained Culik to represent Arruda in an action against Arruda’s mortgage lender, JP Morgan Chase Bank (“Chase”), to enforce the terms of a loan modification agreement that Culik previously had negotiated with Chase on Arruda’s behalf. 4. Because Arruda did not have sufficient funds available to pay Culik on an hourly basis, Culik and Arruda entered into a contingent fee agreement (the “Fee Agreement”) (attached as Exhibit B), with compensation to be paid to Culik upon “recovery of any amount, whether by settlement, judgment, or any other means.” The agreement further provided that Culik’s compensation would be either 33 1/3 % of the gross amount collected, or the amount of any attorneys’ fees awarded by a court or included in a settlement, whichever was greater. 5. The Fee Agreement also contained an arbitration provision that read as follows: If the Attorney and I are unable to resolve our differences on the question of any fee, and/or expense, we agree to make a good faith effort at resolving our dispute. If the dispute cannot be resolved, we agree to place the matter before the Massachusetts Bar Association Legal Fee Arbitration Board and to be bound by the decision of the arbitrators. 6. As a condition of the representation, Arruda agreed that he would escrow in Culik’s IOLTA account the monthly mortgage payments that were due to Chase under the previously-negotiated modification agreement, with the understanding that these payments would be paid over to Chase if the litigation against Chase was successful. Pursuant to this arrangement, Arruda deposited $14,886.60 into Culik’s IOLTA account. 7. In or around December 2013, Culik was able to reach a settlement agreement with Chase. Under the settlement agreement, Chase agreed: (1) to waive all interest and other non- escrow-related charges for the period Chase claimed the loan had been in default; (2) to reduce the principal amount of the loan by $982.88; (3) to reduce the interest rate on the loan, resulting 2in a significant decrease in Arruda’s monthly mortgage payment and a savings of approximately $210,000 over the life of the loan; and (4) to request amendments to Arruda’s credit history to reflect that Arruda had been current on the loan during the period Chase claimed the loan had been in default. Chase also agreed that, in lieu of paying a separate amount in settlement for Culik’s attorneys’ fees, it would waive its right to collect the monthly mortgage payments Arruda had set aside in Culik’s IOLTA account. 8. On December 27, 2013, Arruda executed an amendment to the Fee Agreement (amendment attached as Exhibit C), acknowledging that the attorneys’ fees included as part of the settlement with Chase would be paid out of the funds escrowed in Culik’s IOLTA account. 9: On April 7, 2014, Culik’s office manager, Shawna Culik, sent a closing letter to Arruda (attached as Exhibit D) confirming that the amounts held in escrow were being paid over to Culik, pursuant to the settlement terms with Chase. 10. On March 5, 2015, Arruda wrote to Culik and claimed that he believed that the monthly mortgage payments he had escrowed with Culik were going to be returned to him. 11. On March 11, 2015, Attorney Culik responded to Arruda, attaching copies of the above documents and reminding Arruda of the terms of the settlement with Chase. Notwithstanding these documents, Arruda now claims that he never understood that the escrowed funds were being paid to Culik as part of the settlement with Chase. Arruda apparently now contends that Culik was not entitled to any compensation for his successful representation of Arruda in the litigation against Chase and the settlement of that action. 12. The parties were unable to resolve their dispute. 13. Arruda filed the District Court Action on August 11, 2015, generally alleging that he is entitled to the return of the monthly mortgage payments that he had escrowed in Culik’sIOLTA account, and that Culik was not entitled to collect any legal fees for his representation of Arruda. 14. On August 26, 2015, Culik invoked his right under the Fee Agreement to demand arbitration by filing a Petition for Arbitration of a Fee Dispute with the Massachusetts Bar Association Legal Fee Arbitration Board (attached as Exhibit E). ARGUMENT 15. Culik and Arruda’s agreement to arbitrate is expressly articulated in the Fee Agreement and should be enforced as written. As an initial matter, jurisdiction to compel arbitration rests exclusively with the Superior Court Department. GLE251,§ | 2(@), @; > Connolly v. Moreno, No. Civ. A. 98-00325, 1998 WL 472038, *1 (Mass. Super. Ct. Aug. 5, 1998) (the District Court Department lacks Jurisdiction to compel arbitration). Thus, where arbitrable issues exist ina pending District Court action, an application to compel arbitration must be brought in the Superior Court for the county in which the non-applying party resides. G.L. ¢. 251, § 2(c); G.L. c. 251, § 17. 16. In Massachusetts, arbitration agreements are “valid, enforceable and irrevocable.” GL. c. 251, § 1; Miller v. Cotter, 448 Mass. 671, 676 (2007) (arbitration provides an “expeditious alternative to litigation for settling commercial disputes.”). Indeed, Massachusetts courts have expressed a strong public policy in favor of arbitration. Home Gas Corp. of Massachusetts, Inc. v. Walter’s of Hadley, Inc., 403 Mass. 772, 774 (1989). To that end, arbitration clauses are construed broadly, such that applications to compel arbitration are denied Co only where “it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Commonwealth v. Philip Morris Inc., 448 Mass. 836, 844 (2007). The question for the Court’s determination is not resolution of theparties’ underlying dispute, but rather, whether the dispute falls within the class of claims that parties have agreed to arbitrate. Commonwealth v. Philip Morris, Inc., 448 Mass. 836, 843 (2007) (“[W]hen deciding whether a dispute is arbitrable, a court does not consider the merits of the underlying claims.”). 17. Here, there is no doubt that the issues Arruda raises in the District Court Action fall within the Fee Agreement’s arbitration provision. That provision, found in Section 15 of the Fee Agreement, requires disputes “on the question of any fee, and/or expense” to be adjudicated by the Massachusetts Bar Association Legal Fee Arbitration Board. Arruda alleges in the District Court Action that Culik was not entitled to any fee for his representation of Arruda in the action against Chase; Culik disputes that assertion. This plainly concerns “the question of any fee, and/or expense” and therefore falls within the class of claims Arruda agreed by contract to arbitrate. 18. The filing of an application to compel arbitration necessitates the issuance of an order to stay “[a]ny action or proceeding involving an issue subject to arbitration...” G.L.c. 251, § 2(d). The Court should not delay the issuance of a stay while it considers the merits of the application to compel. Id. Culik therefore requests that the Court expeditiously stay the District Court Action during the arbitration process. Granting this stay makes especially good sense in this case because a ruling in favor of Culik at arbitration would moot each of the claims brought by Arruda in the District Court Action. aCONCLUSION WHEREFORE, Culik respectfully requests that the Court enter an order compelling Arruda to arbitrate the issue of Culik’s entitlement to attorneys’ fees for his representation of Arruda in the action against Chase and staying the District Court Litigation pending arbitration. CULIK LAW, P.C. By its attorneys, Erin K. Higgins (BBO #559510) Christopher K. Sweeney (BBO #685315) CONN KAVANAUGH ROSENTHAL PEISCH & FORD, LLP Ten Post Office Square Boston, MA 02109 (617) 482-8200 ehiggins@connkavanaugh.com csweeney@connkavanaugh.com Dated: August 26, 2015 1208072.1 05490-000