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concluding that no res or property was involved in a case involving competing actions to confirm and vacate an arbitration award
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Case No. 3:14-mc-017
02-11-2015
THE REYNOLDS & REYNOLDS COMPANY, Plaintiff, v. JAMES MIKUTA, Defendant.
ENTRY AND ORDER OVERRULING MIKUTA'S AMENDED MOTION TO STAY (Doc. # 16); GRANTING REYNOLDS' MOTION TO CONFIRM ARBITRATION AWARD (Doc. #1); ENTERING JUDGMENT AGAINST MIKUTA AND FOR REYNOLDS; FINDING MIKUTA'S MOTION TO DISMISS (Doc. #20) MOOT AND TERMINATING THIS CASE
On September 30, 2014 Arbitrator David A. Skidmore, Esq. entered a Final Award against James Mikuta ("Mikuta"). Mikuta is a former employee of The Reynolds & Reynolds Company ("Reynolds") that resigned. (Declaration of Charles Havener ("Havener Decl.") ¶¶ 7 and 10 Nov. 13, 2014.) The Final Award (the "Arbitration Award") granted permanent injunctive relief in Reynolds' favor, enforcing the terms of a covenant not to compete that was in the Parties' written employment agreement.
Reynolds brought a Motion To Confirm the Arbitration Award (doc #1) which Mikuta opposed (doc. #12). Mikuta argued that this Court lacked subject matter jurisdiction and that Reynold's Motion To Confirm is premature because he had three (3) months from the date of the filing of the Arbitration Award in which to file a motion to vacate, modify or correct the Arbitration Award.
This Court has confirmed that it has subject matter jurisdiction. (Doc. #17.) Before subject matter jurisdiction was confirmed, Mikuta moved to stay these proceedings because he has filed a Motion To Modify/Vacate Arbitration Award in the Court of Common Pleas of Montgomery County, Ohio. (Doc. #16) In addition to confirming subject matter jurisdiction, the Court set forth an expedited briefing schedule on Mikuta's Motion To Stay. (Doc. #17.) Briefing is now complete and the Court turns to an analysis of Mikuta's Motion To Stay.
ANALYSIS OF MOTION TO STAY
The Federal Arbitration Act (the "FAA"), 9 U.S.C. § 9 et seq., provides that a court shall enter judgment on an arbitration award if the parties have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration. A court shall enter judgment only if the award is not vacated, modified or corrected as prescribed in 9 U.S.C. §§ 10 and 11.
The FAA also provides that a party must serve notice of a motion to vacate, modify or correct an arbitration award upon the adverse party within three months after the award is delivered. 9 U.S.C. § 12. The Ohio Revised Code also makes this same provision. Ohio Rev. Code § 2711.13.
The Arbitration Award at issue in this case was filed on September 30, 2014. Less than ninety (90) days later, on December 24, 2014, Mikuta filed a Motion To Vacate/Modify Arbitrator's Award in the Court of Common Pleas of Montgomery County, Ohio. (Doc. 16, Ex. B.) On that same date, Mikuta filed the Motion To Stay that is now before this Court. (Doc. #16.)
Mikuta argues that the proceeding in this Court should be stayed until such time as his Motion To Modify/Vacate Arbitration Award is decided by the Court of Common Pleas for Montgomery County, Ohio. Reynolds opposes a stay by this Court arguing that abstention by this Court is not warranted and that the Court of Common Pleas of Montgomery County, Ohio does not have concurrent jurisdiction.
The legal issue to first be determined here is whether this Court should abstain from exercising its jurisdiction because Mikuta has filed a second lawsuit in another forum. Under the doctrine of abstention, a federal district court may decline to exercise or postpone exercising jurisdiction. Colorado River Water Conservation District v. United States, 424 U.S. 800, 813 (1976). However, abstention from the exercise of federal jurisdiction is the exception and not the rule. Id. "Generally, as between state and federal courts, the rule is that the pendency of an action in the state court is not bar to proceedings concerning the same subject matter in the Federal court having jurisdiction." Id. at 817.
In cases involving arbitration, such as this one, both the Supreme Court and the Sixth Circuit have denied requests for abstention. See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983); Great Earth Companies, Inc. v. Simons, 288 F.3d 878 (6th Cir. 2002). These decisions were based, in part, on the strong federal policy interests favoring arbitration as a method of resolving disputes.
The Supreme Court has identified a number of factors to be considered when conducting an abstention analysis. Moses H. Cone, 460 U.S. at 15. Those factors include: (1) whether the state court has assumed jurisdiction over any res or property; (2) whether the federal forum is less convenient to the parties; (3) avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether the source of governing law is state or federal; (6) the adequacy of the state court action to protect the federal plaintiff's rights; (7) the relative progress of the state and federal proceedings; and (8) the presence or absence of concurrent jurisdiction.Great Earth, 288 F.3d at 886.
Before the Court needs to conduct the abstention analysis, however, it must first determine if the Court of Common Pleas of Montgomery County, Ohio (the "State Court") has jurisdiction. Relevant here is the requirement under both Federal and Ohio law that a motion to vacate, modify or correct an award must be served upon the adverse party or his attorney within three months after the award is delivered to the parties in interest. The docket sheet from the State Court reflects that service of Mikuta's Motion To Vacate/Modify Arbitration Award was completed on January 2, 2015. The Arbitration Award at issue indicates that is was signed on September 30, 2014 but there is no evidence as to when the Arbitration Award was "delivered" to the Parties in interest. Therefore, the Court is unable to determine if the Motion To Vacate/Modify the Arbitration Award was served on Reynolds within ninety (90) days of when the Arbitration Award was delivered to Reynolds and Mikuta. As a result, this Court cannot definitively determine whether the State Court has jurisdiction.
However, even if Mikuta could establish that both this Court and the State Court have concurrent jurisdiction, his request for a stay will be denied based upon the Colorado River factors. Each will be addressed seriatim.
State Court Jurisdiction Over any Res or Property
When the state court does not assume jurisdiction over any res or property, federal jurisdiction is supported. PaineWebber, Inc. v. Cohen, 276 F.3d. 197, 207 (6th Cir. 2001). In this case, there is no res or property involved. Thus, the State Court has not assumed jurisdiction over any res or property. As a result, this factor supports federal jurisdiction and weighs against abstention.
Federal Forum Less Convenient
For the second factor, a court considers whether the Federal Court and State Court are geographically separated. Id. The Federal Court in this case is not any less convenient that the State forum in which Mikuta has filed his Motion To Modify/Vacate Arbitration Award. Both this Court and the State Court are in the same city and, as a matter of fact, are across a street from each other. This factor weighs against federal abstention. See Romine v. Compuserve Corp., 160 F.3d 337, 341 (6th Cir. 1998).
Avoidance of Piecemeal Litigation
The FAA may result in related disputes being resolved in different forums, an arbitral forum could be used to resolve one dispute and a court could be used to resolve another related dispute. However, the dispute here regarding the Arbitration Award is only one dispute and not the multiple or related disputes envisioned by the FAA.
Irregardless, this factor is an inquiry into whether avoiding piecemeal litigation is a priority contemplated by the FAA. Nationwide Mutual Fire Insurance Co. v. George V. Hamilton, Inc., 571 F.3d 299, 308 (3d Cir. 2009). Avoiding piecemeal litigation clearly is not a priority contemplated by the FAA. Therefore, this factor does not weigh in favor of abstention.
Order In Which Jurisdiction Was Obtained
Based upon a federal court's obligation to exercise jurisdiction, obtaining jurisdiction first counsels against abstention. See Colorado River, 424 U.S. at 818. Reynolds filed first and filed in this Court. Reynolds filed a Motion To Confirm the Arbitration Award. Mikuta subsequently entered an appearance in this Court.
Approximately two months later, Mikuta filed a Motion to Vacate/Modify the Arbitration Award in the Court of Common Pleas of Montgomery County, Ohio. Mikuta has not yet established that the Court of Common Pleas of Montgomery County, Ohio has jurisdiction over his Motion To Vacate/Modify. Regardless, it is undisputed that this Court obtained jurisdiction when the Motion To Confirm was filed and before Mikuta filed in State Court.
The "order in which jurisdiction was obtained" could also be measured in terms of how much progress has been made in the two actions instead of being measured in terms of "time." See Great Earth, 288 F.3d at 887. In this case, there is no material progress in the State Court, and the matter is ready to consider entry of judgment confirming the award in this Court. This factor weighs against abstention.
Source of Governing Law
The presence of federal issues always is a major consideration weighing against abstention. Moses H. Cone, 460 U.S. at 26. Further, the FAA provides the exclusive law for confirmation, vacation or modification of an arbitration award. Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008). Thus, federal law is applicable to the Motion To Confirm that Reynolds filed and to Mikuta's Motion To Vacate/Modify. While this Court does not question the ability of the State court to apply federal law, this factor counsels against abstention.
Adequacy of State Court Action To Protect Federal Plaintiff's Rights
A delay that advantages a potentially recalcitrant party counsels against abstention. Moses H. Cone, 460 U.S. at 27. Reynolds asserts that it has been seriously injured and seeks confirmation of the Arbitration Award to prevent imminent and irreparable injury. This conclusion was also reached by the Arbitrator. If the injury is "imminent and irreparable," any additional time taken to adjudicate the dispute could result in further injury to Reynolds.
This Court does not question the State court's ability to fairly adjudicate Mikuta's Motion To Modify/Vacate. However, this Court is prepared to adjudicate this matter now while permitting the State Court to adjudicate part of this matter would only mean additional time and, therefore, additional potential damage to Reynolds. Thus, this factor does not weigh in favor of abstention.
Relative Progress
Relative progress of the two potential factors is considered with the intent of avoiding duplicative judicial effort. George V. Hamilton, Inc., 571 F.3d at 309. No progress has been noted in the State court action, and progress has been made in this action in federal court. Therefore, there does not appear that there will be any duplicative judicial effort if this Court does not abstain. This factor weighs against abstention.
Presence of Concurrent Jurisdiction
The lack of concurrent jurisdiction counsels against even a consideration of abstention. IFC Interconsult, AG v. Safeguard International Partners, LLC., 438 F.3d 298, 306 (3d Cir. 2006). As more fully set forth above, it is unclear at this time as to whether the State Court has jurisdiction. Therefore, this factor weighs against abstention.
Conclusion
In this case at this time, all but one of the Colorado River factors weigh against abstention. There is no res or property involved, the federal forum is not less convenient, jurisdiction was first obtained in this Court, federal law is the source of governing law, state court action may not be timely enough to fully protect Reynolds' interest, no progress has been noted in the State Court action, and there is no proof of concurrent jurisdiction with the State Court. The avoidance of piecemeal action counsels for abstention, but the FAA, applicable here, provides for piecemeal action.
This is not one of those exceptional cases where this Court may decline to exercise its jurisdiction. This Court is not required to wait for another court to decide whether to confirm the Arbitration Award. Therefore, Mikuta's Amended Motion To Stay Proceedings (doc. #16) is overruled.
ANALYSIS OF MOTION TO CONFIRM
Mikuta's Motion To Stay Proceedings has been overruled. Therefore, the Court will turn to Reynolds' Motion To Confirm, which is the only Motion now before this Court.
Reynolds petitioned the Court to confirm the Arbitration Award. Mikuta opposed confirmation of the Arbitration Award because, according to Mikuta, this Court does not have subject matter jurisdiction and the Motion is premature.
This Court has since determined that it has subject matter jurisdiction. (Doc. #17.) Further, the ninety (90) day time period which Mikuta used to argue that Reynolds' Motion was premature has run. Therefore, both of Mikuta's arguments have been resolved.
The Court recognizes that a Motion To Amend/Correct the Arbitration Award may exist' but it has not been filed in this Court and it is unclear whether any court has jurisdiction over this Motion. --------
The Federal Arbitration Act, 9 U.S.C. § 9 et seq., provides that a court shall enter judgment on an arbitration award if the parties have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration. A court shall enter judgment only if the award is not vacated, modified or corrected as prescribed in 9 U.S.C. §§ 10 and 11.
The Parties in this case have agreed that judgment upon the Arbitration Award "may be entered in any court having jurisdiction thereof." (Employment Agreement ¶ 9.) As determined above, this Court has subject matter jurisdiction, and there is no dispute that this Court has personal jurisdiction. Further, the Arbitration Award has not been vacated, modified or corrected as prescribed in 9 U.S.C. §§ 10 or 11.
Therefore, Reynolds' Motion To Confirm Arbitration Award (doc. #1) is granted. The Arbitration Award is confirmed and judgment against James Mikuta is hereby entered.
The confirmation of jurisdiction (doc. #17) and affirmation of the Arbitration Award renders Mikuta's pending to dismiss (doc. #20) moot. Finally, the captioned cause is hereby ordered terminated upon the docket records of the United States District Court for the Southern District of Ohio, Western Division, at Dayton.
DONE and ORDERED in Dayton, Ohio this Eleventh day of February, 2015.
s/Thomas M. Rose
THOMAS M. ROSE
UNITED STATES DISTRICT JUDGE Copies furnished to: Counsel of Record