Mid Atlantic Capital Corporation v. Bien

A married couple, Bevely Bien and David Wellman (plaintiffs) invested money with Mid Atlantic Capital Corporation (Mid Atlantic) (defendant). Their investments performed poorly, resulting in heavy losses. To prevent further losses, Bien and Wellman initiated arbitration proceedings against Mid Atlantic alleging, among other things, that Mid Atlantic sold the couple unreasonably risky investments. During the arbitration hearing, Bien and Wellman’s expert offered the panel two methods to calculate the relevant losses: as net out-of-pocket losses and market-adjusted damages. The expert then applied the formulas in both of these methods and provided the panel with total amounts from calculations as to each method. Bien and Wellman asked only for market-adjusted damages. The arbitration panel awarded the couple initial-investment damages of $292,411 and compensatory damages of $484,683. The panel also awarded the couple attorney’s fees, arbitration costs, and pre- and post-judgment interest. The $292,411 corresponded to what the couple’s expert had presented at the hearing to be net out-of-pocket losses, and the $484,683 almost exactly matched what the expert had calculated and presented as market-adjusted damages. Mid Atlantic asked the district court to adjust the award, arguing that by effectively awarding Bien and Wellman both net out-of-pocket damages and market-adjusted damages, the panel gave Bien and Wellman double recovery because these amounts were supposed to be alternatives, not combined. Bien and Wellman countered seeking confirmation of the award on grounds the district court lacked authority and had no basis to modify the award. Although agreeing with Mid Atlantic that the award represented double recovery, the court declined to set the award aside because the miscalculation was not evident on the face of the award. To discover the miscalculation, one had to look beyond the face of the award. Mid Atlantic appealed.