{
  "id": 12168507,
  "name": "BIREN SHAH, M.D., Plaintiff-Appellant, v. RAMAKRISHNA DEVASTHALI, M.D., PUNEET GHEI, M.D., LAS CRUCES IMAGING, LLC, LAS CRUCES RADIOLOGY ASSOCIATES, INC., and DAGS ENTERPRISES, LLC, Defendants-Appellees",
  "name_abbreviation": "Shah v. Devasthali",
  "decision_date": "2016-03-30",
  "docket_number": "No. S-1-SC-35869; Docket No. 34,096",
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    "judges": [
      "MICHAEL D. BUSTAMANTE, Judge",
      "TIMOTHY L. GARCIA, Judge",
      "J. MILES HANISEE, Judge"
    ],
    "parties": [
      "BIREN SHAH, M.D., Plaintiff-Appellant, v. RAMAKRISHNA DEVASTHALI, M.D., PUNEET GHEI, M.D., LAS CRUCES IMAGING, LLC, LAS CRUCES RADIOLOGY ASSOCIATES, INC., and DAGS ENTERPRISES, LLC, Defendants-Appellees."
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      {
        "text": "OPINION\nBUSTAMANTE, Judge.\n{1} After an arbitrator awarded Appellant Dr. Biren Shah $1,465,876, Defendants moved for\u2014and were granted\u2014a modification of the award. The district court reduced the award to $150,000. Discerning no basis for the reduction, we reverse the district court\u2019s modification and remand for confirmation of the arbitration award.\nBACKGROUND\n{2} Appellant Dr. Biren Shah (Shah) and Defendants Dr. Ramakrishna Devasthali and Dr. Puneet Ghei are radiologists. In or around 2004, Shah joined the other doctors as an employee, director, and stockholder of Las Cruces Radiology Associates, Inc. (LCRA). LCRA was governed by its bylaws (the Bylaws). Together, Shah, Devasthali, Ghei, and Alvi also formed two limited liability companies, Las Cruces Imaging, LLC (LC Imaging) and DAGS, LLC (DAGS). LC Imaging leased the radiology equipment used by the radiologists and DAGS owned the property in which they operated. LC Imaging and DAGS were governed by separate operating agreements (the Operating Agreements).\n{3} In 2010 Shah\u2019s employment with LCRA was \u201cterminated for cause,\u201d which resulted in termination of his stockholder status with LCRA and expulsion as a member from LC Imaging and DAGS. In early 2011 Shah filed a complaint in district court against Defendants for breach of contract, wrongful termination, breach of the duty of good faith and fair dealing, equitable estoppel, and unjust enrichment. He also requested an accounting, dissolution, and declaratory judgment. Defendants filed a motion to dismiss and to compel arbitration pursuant to an arbitration provision included in the Operating Agreements. After a hearing, the district court entered sixty-seven findings of fact and granted the motion to compel arbitration. The findings of fact are discussed in more detail as part of our analysis of the parties\u2019 arguments. W e refer to this order as the Arbitration Order.\n{4} A five-day arbitration took place before an arbitrator appointed by the American Arbitration Association. Without articulating the basis for his decision, the arbitrator ordered Defendants to pay Shah $1,465,876. After Shah moved to confirm the arbitration award, Defendants filed a motion to modify or correct the arbitration award. The district court granted Defendants\u2019 motion to modify the arbitration award on the ground that the arbitrator had exceeded his authority because the award was inconsistent with the parties\u2019 agreements. We call this order the Modification Order. In the Modification Order, the district court reduced the amount of the award from $1,465,876 to $150,000. Shah appeals the Modification Order.\nDISCUSSION\n{5} The question on appeal is whether the district court was correct in its conclusion that \u201c[t]he [arbitrator exceeded the scope of his authority when he awarded an amount beyond what was required under the contracts.\u201d We conclude that the district court erred in its interpretation of the Bylaws, in its factual findings, and by reconsidering its original findings after arbitration was complete.\n{6} We begin by setting out the standard of review of the district court\u2019s modification of an arbitration award. Next, we discuss the relevant provisions of the agreements between the parties. Finally, we assess the district court\u2019s Modification Order.\nStandard of Review\n{7} Arbitration provisions permit parties to \u201csubmit their disputes to an impartial private tribunal for a final and binding decision based upon the parties\u2019 presentation of arguments and evidence. This process allows for the informal, speedy, and inexpensive final disposition of disputes, and also aids in relieving the judiciary\u2019s heavily burdened caseload[.]\" Fernandez v. Farmers Ins. Co. of Ariz., 1993-NMSC-035, \u00b6 8, 115 N.M. 622, 857 P.2d 22 (citations omitted). The modification of arbitration awards by district courts is governed by Section 44-7A-25 of the Uniform Arbitration Act. NMSA 1978, \u00a7\u00a7 44-7A-1 to -32 (2001). Section 44-7A-25 provides that\nthe court shall modify or correct the award if: (1) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing or property referred to in the award; (2) the arbitrator has made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision upon the claims submitted; or (3) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted.\n{8} This provision sharply limits the district court\u2019s discretion to modify an arbitration award. Our Supreme Court has observed that \u201c[t]he [Uniform] Arbitration Act neither empowers the district court to review an arbitration award on the merits of the controversy, nor grants the district court the authority to review an award for errors of law or fact.\u201d In re Arbitration Between Town of Silver City & Silver City Police Officers Ass\u2019n (Silver City), 1993-NMSC-037, \u00b6 7, 115 N.M. 628, 857 P.2d 28; see Poster v. Turley, 808 F.2d 38, 42 (10th Cir. 1986) (\u201cBecause a primary purpose behind arbitration agreements is to avoid the expense and delay of court proceedings, it is well settled that judicial review of an arbitration award is very narrowly limited[.]\u201d (citation omitted)).\n{9} In addition, the purposes of the Uniform Arbitration Act depend on finality in arbitration awards. Consequently, \u201c[o]nce an arbitration award is entered, the finality that courts should afford the arbitration process weighs heavily in favor of the award.\u201d State ex rel. Hooten Constr. Co. v. Borsberry Constr. Co., 1989-NMSC-007, \u00b6 4, 108 N.M. 192, 769 P.2d 726. In the interest of finality, district courts should \u201cexercis[e] great caution when asked to set aside an arbitration award, which is the product of the theoretically informal, speedy and inexpensive process of arbitration, freely chosen by the parties.\u201d Id. Consistent with these principles, \u201c[i]t is not the function of the court to hear the case de novo and consider the evidence presented to the arbitrators, but rather to conduct an evidentiary hearing and enter findings of fact and conclusions of law upon each issue raised in the application to vacate or modify the award.\u201d Melton v. Lyon, 1989-NMSC-027, \u00b6 7, 108 N.M. 420, 773 P.2d 732; cf. Silver City, 1993-NMSC-037, \u00b6 7 (\u201cDe novo review of the merits of arbitration awards by the district court would only serve to frustrate the purpose of arbitration, which seeks to further judicial economy by providing a quick, informal, and less costly alternative to judicial resolution of disputes.\u201d).\n{10} In the context of appeals from orders modifying arbitration awards, our primary task is to determine de novo whether the district court adhered to the structure described above. In addition, on appeal, this Court \u201cdetermine[s] whether substantial evidence in the record supports the district court\u2019s findings of fact, and whether the court correctly applied the law to the facts when making its conclusions of law[.]\u201d Silver City, 1993-NMSC-037, \u00b6 8 (citation omitted). To the extent the latter question depends on interpretation of a contract, we review the contract terms de novo. Nearburg v. Yates Petroleum Corp., 1997-NMCA-069, \u00b6 8, 123 N.M. 526, 943 P.2d 560 (\u201cSince resolution of the issue on appeal depends upon interpretation of documentary evidence, we are in as good a position as the district court to interpret the operating agreement.\u201d). \u201cThe contract will be considered and construed as a whole, with meaning and significance given to each part in its proper context, so as to ascertain the parties\u2019 intentions.\u201d Segura v. Kaiser Steel Corp., 1984-NMCA-046, \u00b6 12, 102 N.M. 535, 697 P.2d 954.\n{11} In this case, the parties did not provide any testimony or other evidence concerning their individual understanding of the agreements or the course of negotiation, if any, leading to the operative versions of the agreements. Nor do the parties argue that the agreements are ambiguous. Given that the parties have not provided any evidence outside the documents themselves, our task is limited to construing the documents on their face. Cf. C.R. Anthony Co. v. Loretto Mall Partners, 1991-NMSC-070, \u00b6 15, 112 N.M. 504, 817 P.2d 238 (holding that the court may consider collateral evidence of the circumstances surrounding the execution of agreements in determining whether the language of the agreement is unclear).\nThe Bylaws and Operating Agreements\n{12} We turn next to the operative provisions of the corporate Bylaws and the LLC Operating Agreements. The Bylaws provide that \u201c[a]ll stockholders of [LCRA] must be employees of [LCRA]\u201d and that \u201c[i]n the event a [stockholder\u2019s employment with [LCRA] terminates for any reason, [LCRA] shall purchase the [stockholder\u2019s share in [LCRA] as set forth herein.\u201d Article VI of the Bylaws governs when shares will be transferred and how they will be valued. Consistent with the requirement that all stockholders must be employees, one of these sections addresses purchase of the terminated employee\u2019s shares by the other stockholders. In addition to termination of employment, other events\u2014death, divorce, disability, bankruptcy, and \u201cexpulsion\u201d of a stockholder-\u2014will also act as triggers requiring the transfer of the stockholder\u2019s shares.\n{13} Two of the triggering provisions are of particular interest here because our analysis depends in large part on which of these two provisions the arbitrator should have or did rely on in making the award. The first is titled \u201cBankruptcy, Expulsion, [a]nd Unspecified Events [o]f Expulsion[,]\u201d and addresses share transfer when a stockholder is \u201cexpelled from [LCRA].\u201d We call this provision \u201cthe Expulsion Provision.\u201d\n{14} The Expulsion Provision states that\n[a]ny [stockholder that has been expelled from [LCRA] or who is the holder.of an [i]nterest in [LCRA] which has resulted in an unspecified event of expulsion shall convey that [stockholder\u2019s common stock in [LCRA] to the other [stockholders of [LCRA] for the value calculated under Section 10[.]C and Section 11 of this Article.\nThe corresponding valuation provision, Section 10.C, is titled \u201cBankruptcy and Undefined Events of Expulsion.\u201d It provides that the \u201c[stockholder\u2019s common stock in [LCRA] shall be purchased by the remaining [stockholders for the lesser of the following: (1) $50,000[, or] (2) The value of the [stockholder\u2019s common stock in [LCRA] as determined pursuant to the formula set forth in [the Bylaws.]\u201d (emphasis added). [RP 148-149, \u00b610.]\n{15} The second key provision is titled \u201cResignation, Retirement, or Termination of Employment\u201d and applies when a stockholder resigns, retires, or is involuntarily terminated from employment. We call this provision \u201cthe Termination Provision.\u201d The Termination Provision states that \u201c[i]n the event a [stockholder resigns, or retires from employment with [LCRA] or the [stockholder\u2019s employment with [LCRA] is terminated, that [stockholder\u2019s common stock in [LCRA] shall be purchased by the remaining [stockholders ... in accordance with Section 10 and Section 11 of this Article.\u201d Although Section 10.D is not specifically referenced in the Termination Provision, its title, \u201cResignation, Retirement, or Termination of Employment,]\u201d mirrors that of the Termination Provision. Section 10.D provides that \u201c[i]n the event a [stockholder voluntarily resigns or retires from employment with [LCRA] or the [stockholder\u2019s employment with [LCRA] is terminated, the value of the [stockholder\u2019s common stock in [LCRA] shall be determined [according to a formula up to 100% of the value of the stock].\u201d\n{16} We note that, in spite of the significant difference in the valuation of the stock when a stockholder is expelled versus when a stockholder\u2019s employment is terminated, the terms \u201cexpulsion\u201d and \u201ctermination\u201d are not defined in the Bylaws. Nevertheless, there is no indication in the Bylaws that termination of employment and expulsion are indistinct and overlapping acts. In fact, expulsion and termination are addressed in different sections of the Bylaws. We conclude that the concept of termination of employment with LCRA is distinct from that of expulsion. The district court erred to the extent it conflated the two concepts in its reading of the Bylaws.\n{17} Reading the Bylaws as a whole, we conclude that when a stockholder is expelled through \u201cexpulsion\u201d or an \u201cundefined event of expulsion,\u201d the other stockholders may purchase the expelled stockholder\u2019s stock for the lesser of $50,000 or the value of the common stock, but when a stockholder\u2019s employment is terminated, the purchase price is not capped at $50,000 and may be up to 100% of the value of the stock.\n{18} Shah does not challenge the district court\u2019s findings of fact that he was expelled from LC Imaging and DAGS as a result of the termination of his employment with LCRA, and that an expelled member\u2019s interest in LC Imaging and DAGS is limited to the lesser of $50,000 or the value of the member\u2019s capital account. Rather, his argument focuses on the provisions in the Bylaws governing the purchase price for his stock in LCRA as set out above. We include the following description of the provisions in the Operating Agreements merely to provide context for our discussion of the provisions in the Bylaws.\n{19} Like the Bylaws, the Operating Agreements have two sets of provisions, the first setting out what happens to the stock when an \u201cevent[] of dissolution\u201d occurs, and the second setting out how the stock shall be valued in each of those instances. \u201cEvents of dissolution\u201d include\na [m]ember\u2019s i) death; ii) divorce; iii) disability . . . ; iv) bankruptcy; v) retirement; vi) resignation; vii) withdrawal; viii) termination of a [m]ember\u2019s [i]nterest [in] Las Cruces Radiological Associates, LLC [sic] . . . ; ix) gift of interest during lifetime; x) expulsion of a [m] ember, xi) any other event which would cause the dissolution of [LC Imaging or DAGS] under applicable law.\n(Emphasis added.). In the event of expulsion from the limited liability companies, the \u201c[m]ember\u2019s interest in the [c]ompany shall be purchased by the remaining [m]embers for the lesser of the following: (1) $50,000[,] (2) The value of the [m]ember\u2019s capital account as determined pursuant to the formula set forth in [the Operating Agreement.]\u201d\nModification of the Arbitration Award\n{20} As a preliminary matter, we briefly address Defendants\u2019 argument that the arbitrator exceeded the scope of his authority because \u201cthe only issues presented at [arbitration were: (1) whether [Shah] could establish his substantive claims against [Defendants]; and (2) if, and only if, he established the substantive claim against [Defendants], the amount of damages to be awarded to [Shah].\u201d Defendants maintain that because the arbitrator found no liability on Shah\u2019s substantive claims, a damages award was inappropriate. This argument is unavailing for three reasons. First, the issue of the value of Shah\u2019s LCRA stock was squarely before the arbitrator regardless of his determination of liability on Shah\u2019s tort and breach of contract claims. The district court\u2019s Arbitration Order included the following finding.\nGiven the structure of the business relationship and the events that trigger expulsion, unless the value of [Shah\u2019s] stock in LCRA . . . is also considered in arbitration, the intent of the [p]arties to have the rights of a [m]ember in the [two limited liability companies] cease and total value of a [m]ember\u2019s assets determined, provisions of the Operating Agreements, including the arbitration provisions, would be rendered meaningless and unreasonable.\n(Emphasis added.) This finding of fact was requested by Defendants. In addition, and although it was not adopted by the district court, we note that Defendants also requested a finding of fact stating their request \u201cthat arbitration be compelled and thatthe arbitrator make a determination regarding [Shah\u2019s] wrongful termination and related claims and perform an accounting and a determination of the value of [Shah\u2019s] assets in LC Imaging, DAGS, and LCRA, Inc.\" (Emphasis added.). In addition to Shah\u2019s substantive claim, the arbitrator was clearly tasked with determining the value of Shah\u2019s interest in LCRA.\n{21} Second, nothing in the district court\u2019s Arbitration Order (or in Defendants \u2019 requested findings of fact) supports Defendants\u2019 position. The word \u201cdamages\u201d does not appear in the Arbitration Order and nothing in the Arbitration Order implies that the arbitrator\u2019s determination of the value of Shah\u2019s stock depended on the arbitrator\u2019s liability findings. Third, there is no indication in the arbitrator\u2019s award that the award was based on damages for Shah\u2019s tort or breach of contract claims. Defendants\u2019 argument is merely speculative as to the arbitrator\u2019s basis for the award. Because we determine below that the arbitrator\u2019s award was consistent with the Bylaws, we will not guess at other possible bases for the award that have no support in the record.\n{22} We now address the district court\u2019s modification of the arbitration award. The district court concluded that the arbitrator exceeded his authority because the award was inconsistent with the Bylaws. This conclusion is based on its implicit finding, in the Modification Order, that Shah had been expelled from LCRA. Based on this finding, the district court also found that the governing transfer provision was the Expulsion Provision. The associated valuation provision (Section 10.C) provides that the stock purchase price was the lesser of $50,000 or the stock value. The district court concluded that Shah was entitled to only $50,000 for his stock in LCRA, in addition to $50,000 each for his interest in DAGS and LC Imaging.\n{23} But in the Arbitration Order, which governed the arbitration, the district court found that Shah\u2019s employment had been terminated. Indeed, the Arbitration Order includes three statements to the effect that Shah\u2019s employment with LCRA was terminated, one of which also states that \u201ctermination of [Shah\u2019s] employment with LCRA, Inc. triggered the termination of his status as a stockholder with LCRA, Inc. and his status as a [m]ember in LC Imaging and DAGS.\u201d Several of these findings closely resemble, or are identical to, findings requested by Defendants and are supported by an affidavit by Devasthali stating that Shah\u2019s employment with LCRA was terminated. Tellingly, the district court specifically cited to the Termination Provision in its finding that \u201c[o]nce [Shah\u2019s] employment with LCRA . .. was terminated and his stock ownership in LCRA ... ceased, he was contractually bound to have his stock purchased by the remaining stockholders.\u201d As noted above, the Termination Provision specifies that the purchase price must be determined pursuant to Section 10, but does not specify which subsection. Section 10.D, which shares the same title as the Termination Provision, does not include the \u201clesser of\u2019 language found in Section 10.C.\n{24} Under these circumstances, we discern no basis on which the district court could properly modify the arbitrator\u2019s award. First, the Arbitration Order specified that Shah\u2019s employment was terminated. Given this finding, the arbitrator could\u2014and apparently did\u2014apply the term of the Bylaws related to employment termination: the Termination Provision. In addition, the arbitrator could reasonably have concluded that Section 10.D, not Section 10.C, governed the valuation of Shah\u2019s LCRA stock based on the way the transfer provisions and associated valuation provisions are organized and the similarities in the titles of Section 10.D and the Termination Provision. Cf. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 599 (1960) (stating that \u201c[i]t is the arbitrator\u2019s construction [of the contract] which was bargained for; and so far as the arbitrator\u2019s decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his\u201d). Hence, the arbitrator\u2019s award for Shah\u2019s LCRA stock pursuant to Section 10.D is consistent with the district court\u2019s findings of fact and the terms of the Bylaws specified in the Arbitration Order. We conclude that the district court erred in finding otherwise. See Major League Baseball Players Ass\u2019n v. Garvey, 532 U.S. 504, 509 (2001) (statingthat \u201cif an arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision.\u201d (internal quotation marks and citation omitted)).\n{25} In addition, the district court\u2019s finding in the Modification Order that Shah was expelled from LCRA, instead of terminated from his employment as set forth in the Arbitration Order, is not supported by the evidence. Cf. State ex rel. Goodmans Office Furnishings, Inc. v. Page & Wirtz Constr. Co., 1984-NMSC-103, \u00b6 7, 102 N.M. 22, 690 P.2d 1016 (\u201cFindings of fact which are supported by substantial evidence will not be disturbed on appeal.\u201d). Devasthali\u2019s affidavit states that \u201cShah\u2019s employment with [LCRA] was terminated.\u201d There is no similar evidence in the record supporting the district court\u2019s finding that the removal of Shah from LCRA was an \u201cexpulsion\u201d instead of a termination of employment within the terms of the Bylaws. To the extent Defendants rely on a joint pre-hearing statement submitted to the arbitrator stating that Shah was expelled \u201cas a [s]toclcholder/[m]ember,\u201d we are not convinced by this statement because it postdates and contradicts the district court\u2019s original factual findings in the Arbitration Order.\n{26} Finally, the district court erred in revisiting the findings in the Arbitration Order. In essence, Defendants argued in the district court that Shah\u2019s employment was terminated and requested findings to that effect. The district court adopted those findings and ordered arbitration consistent with those findings. Once the arbitrator entered his award in favor of Shah based on those findings, Defendants argued that the district court\u2019s original findings\u2014the ones Defendants originally requested and to which they never objected\u2014were incorrect and requested different findings. Defendants\u2019 efforts to circumvent the arbitration award are untenable. One of the purposes of arbitration \u201cis to reduce caseloads in the courts.\u201d United Tech. & Res., Inc. v. Dar Al Islam, 1993-NMSC-005, \u00b6 11, 115 N.M. 1, 846 P.2d 307. As this case demonstrates, permitting Defendants to argue for a different factual finding post-arbitration improperly gave them an opportunity to relitigate the arbitrator\u2019s original task. See id. \u00b6 23 (\u201cHaving bitten once at the arbitration apple, [a party] cannot [then] take a second bite from the judicial one.\u201d). Moreover, even if the district court, in hindsight, felt that either its original findings or the arbitrator\u2019s award were in error, it did not have the authority to modify them under the circumstances here because \u201c[district courts] do[] not have the authority to review arbitration awards for errors as to the law or the facts; if the award is fairly and honestly made and if it is within the scope of the submission, the award is a final and conclusive resolution of the parties\u2019 dispute.\u201d Casias v. Dairyland Ins. Co., 1999-NMCA-046, \u00b6 7, 126 N.M. 772, 975 P.2d 385 (internal quotation marks and citation omitted).\nCONCLUSION\n{27} An arbitration award may be modified by the district court only in limited circumstances. Since we conclude that those circumstances do not exist here, we reverse the district court\u2019s modification of the award and remand for confirmation of the arbitrator\u2019s award.\n{28} IT IS SO ORDERED.\nMICHAEL D. BUSTAMANTE, Judge\nWE CONCUR:\nTIMOTHY L. GARCIA, Judge\nJ. MILES HANISEE, Judge\nA fourth radiologist, Dr. Naveed Alvi, was also a stockholder. Dr. Alvi is not a party to this appeal.",
        "type": "majority",
        "author": "BUSTAMANTE, Judge."
      }
    ],
    "attorneys": [
      "Business Law Southwest LLC Donald F. Kochersberger III Alicia M. LaPado Albuquerque, NM for Appellant",
      "Kemp Smith LLP CaraLyn Banks Ken Slavin Las Cruces, NM for Appellees"
    ],
    "corrections": "",
    "head_matter": "Certiorari Denied, May 19, 2016,\nNo. S-1-SC-35869\nIN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO\nOpinion Number: 2016-NMCA-053\nFiling Date: March 30, 2016\nDocket No. 34,096\nBIREN SHAH, M.D., Plaintiff-Appellant, v. RAMAKRISHNA DEVASTHALI, M.D., PUNEET GHEI, M.D., LAS CRUCES IMAGING, LLC, LAS CRUCES RADIOLOGY ASSOCIATES, INC., and DAGS ENTERPRISES, LLC, Defendants-Appellees.\nBusiness Law Southwest LLC Donald F. Kochersberger III Alicia M. LaPado Albuquerque, NM for Appellant\nKemp Smith LLP CaraLyn Banks Ken Slavin Las Cruces, NM for Appellees"
  },
  "file_name": "0744-01",
  "first_page_order": 760,
  "last_page_order": 767
}
