Opinion
No. 01 Civ. 3366 (CBM)
April 2, 2002
MEMORANDUM OPINION
On August 16, 2001, the court entered a final order dismissing the petition in the above captioned matter for failing to comply with Federal Rule of Civil Procedure 8(a). The case was closed the following day. On January 7, 2002, plaintiff moved the court for relief from the August 16, 2001 final order under Federal Rule of Civil Procedure 60(b). For the reasons set forth below, the court hereby GRANTS plaintiffs motion and VACATES its August 16, 2001 order. Because plaintiffs petition is time-barred, however, the court hereby DISMISSES plaintiffs petition with prejudice.
BACKGROUND
On February 22, 2000, plaintiff filed a petition under the Federal Arbitration Act seeking to vacate an arbitration award rendered on November 22, 1999 in an arbitration between him and respondent BT Securities Corporation (now Deutsche Bank AG and Deutsche Bank Alex Brown, Inc.). The matter was assigned to Judge Sweet, who dismissed the case on his own motion for lack of federal subject matter jurisdiction in September 2000. Judge Sweet observed that the mere fact that a petition to vacate an arbitration award is filed under the Federal Arbitration Act does not necessarily give rise to federal subject matter jurisdiction and that plaintiffs petition had not alleged diversity jurisdiction. See Hakala v. Deutsche Bank, No. 00 Civ. 1335, 2000 WL 1425049 (S.D.N.Y. Sep. 22, 2000). Judge Sweet's order stated expressly that the dismissal was without prejudice. See id. at *2.
Rather than seeking leave from Judge Sweet to amend his petition to allege diversity jurisdiction — which it turns out was in fact present — plaintiff chose to file a second petition in state court on March 23, 2001. Defendants timely removed the second petition to this court on April 20, 2001, noting that diversity jurisdiction exists because plaintiff is domiciled in New Jersey and defendants are domiciled in Germany and New York, respectively. Defendants timely served plaintiffs counsel with their removal papers.
Because defendants' removal papers expressly suggested that the prior action before Judge Sweet was a related proceeding, the case was automatically referred to Judge Sweet as a possible related case under Rule 15(c) of the Rules for the Division of Business Among District Judges. Judge Sweet eventually rejected the related case referral on April 30, 2001, and the case was immediately assigned to Judge Wood.
On April 27, 2001 (while the related case referral was still pending before Judge Sweet), defendants filed a motion to dismiss, arguing (1) that plaintiff's petition failed to satisfy the minimum pleading requirements of Federal Rule of Civil Procedure 8(a) and (2) that it was timebarred. Because the case had not yet been assigned to a specific judge, defendants addressed their motion papers to the clerk of the court, noting once again in a cover letter that the case was related to the prior action dismissed by Judge Sweet and requesting that the motion to dismiss be referred to Judge Sweet for his consideration. Defendants simultaneously served plaintiff's counsel with the motion papers. Local Rule 6.1(b) clearly requires that an opposition brief "shall be served within ten business days after service of the moving papers." Apparently, however, plaintiffs counsel believed that his opposition would not be due until the matter was assigned to a judge who would determine whether a pre-motion conference was warranted. See Friedman Deel. ¶ 10. Accordingly, plaintiff did nothing.
On June 11, 2001 — while defendants' motion to dismiss was still pending — the case was reassigned from Judge Wood to the undersigned. Copies of the reassignment order were mailed to counsel of record, but plaintiffs counsel did not receive a copy because, inexplicably, he had not appeared in this case since it was removed to federal court and thus he was not listed as counsel of record. Plaintiffs counsel thus did not learn that the case had been reassigned to this court until sometime during the summer of 2001 when he telephoned defendants' counsel, who so informed him. Plaintiffs counsel asked defendants' counsel to join him in a request for this court to set a briefing schedule, but defendants' counsel refused, explaining his position that plaintiffs opposition to the motion to dismiss had been due in mid-April by operation of Local Rule 6.1(b).
Having been informed of defendants' position that his client's opposition was some four months late, plaintiffs counsel wrote a letter to the court dated August 1, 2001 requesting that the court set a briefing schedule. The letter explained that plaintiffs counsel would be on vacation for two weeks beginning August 17. Though his letter presumably was mailed on August 1, the court did not receive it until August 6. By that time, the court had already issued an August 2 scheduling order calendaring a routine pre-trial conference for September 25. The court's August 2 order indicated in generic language that all outstanding motions would be argued at the pre-trial conference. Apparently, plaintiffs counsel erroneously believed that the August 2 order was a response to his August 1 request for a briefing schedule and that he was therefore free to file his opposition brief after he returned from vacation in September.
On August 16, 2001, the court issued an order granting defendants' motion to dismiss. Citing Local Rule 6.1(b), the court held that plaintiffs opposition brief had been due in mid-May and that defendants' motion therefore would be deemed unopposed. The court further found that plaintiffs petition plainly did not meet the minimum pleading standards of Federal Rule of Civil Procedure 8(a). The court's August 16 order was obviously (albeit implicitly) without prejudice to plaintiffs ability to replead with the requisite specificity; however, the order did not expressly grant plaintiff leave to amend his petition.
Plaintiffs counsel began his vacation the day after the court issued its dismissal order and therefore did not receive the order until he returned from vacation on September 5. See Friedman Decl. ¶ 26. By then, the ten-day period in which Local Rule 6.3 allows parties to seek reconsideration had expired. Plaintiff therefore filed a notice of appeal.
On December 4, 2001, counsel for plaintiff and defendants entered into a stipulation, which the Second Circuit approved, dismissing plaintiffs appeal without prejudice and affording plaintiff thirty days in which to file the instant Rule 60(b) motion for relief from the court's August 16 order.
RULE 60(b)(1)Plaintiff seeks relief under Federal Rule of Civil Procedure 60 (b)(l), which applies to situations in which there has been "mistake, inadvertence, surprise, or excusable neglect." This rule "strikes a balance between serving the ends of justice and preserving the finality of judgments," and thus it should be "broadly construed to do substantial justice" even though "final judgments should not be lightly reopened."Menaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (internal quotation omitted).
Generally, Rule 60(b)(1) cannot relieve a litigant "of the burdens of a final judgment entered against him due to the mistake or omission of his attorney by reason of the latter's ignorance of the law or other rules of the court, or his inability to effectively manage his caseload." Id. at 62. In this case, there are several things plaintiff could have done in order to avoid the result he now seeks to upset. To begin with, plaintiff could have entered an appearance in federal court as soon as he was served with removal papers, thus ensuring that he would receive copies of all future filings. At a minimum, plaintiff could have called the Clerk of the Court or otherwise monitored the docket sheet, in which case he would have been well aware that Judge Sweet was no longer involved in the case after April 2001. Once defendants informed him that his opposition brief was several months late by operation of Local Rule 6.1(b), moreover, plaintiff could have filed his papers promptly instead of announcing to the court unilaterally that he was going on vacation and assuming the court would accommodate his schedule.
At the same time, however, the court recognizes that plaintiff was entitled as of right to amend his petition to conform with the minimum pleading requirements of Rule 8(a). By issuing the dismissal order (copies of which were sent to the parties by mail) the day before plaintiffs counsel's two-week vacation was to begin, the court effectively precluded plaintiffs ability to seek to file an amended petition before the expiration of his time to seek reconsideration under Local Rule 6.3. Plaintiff is solely to blame for the fact that he passed on his opportunity to oppose defendants motion to dismiss, and dismissal for failing to comply with Rule 8(a) plainly was warranted. The court never intended, however, to preclude plaintiff from exercising his right to file a properly amended petition.
Because plaintiff did inform the court of his vacation schedule in advance, and because plaintiffs counsel clearly acted in good faith and genuinely (though erroneously) believed nothing would happen with respect to defendants' motion to dismiss until he returned in September, the court finds that plaintiffs failure timely to seek to file an amended petition was the result of, at worst, excusable neglect. Because defendants have not and cannot show that they would be at all prejudiced by affording plaintiff the relief he seeks, the court hereby GRANTS plaintiffs Rule 60(b) motion and VACATES the August 16, 2001 dismissal order.
C.P.L.R. § 7511(a)Defendants argue in the alternative that even if the court grants plaintiffs Rule 60(b) motion, the petition should be dismissed with prejudice for failing to comply with C.P.L.R. § 7511(a). Section 7511(a) requires that "[a]n application to vacate or modify an award may be made by a party within ninety days after is [sic] delivery to him." Plaintiffs first petition was filed on February 22, 2000 — exactly ninety days after the arbitration award was rendered, and thus in compliance with section 7511(a). The instant petition, however, which plaintiff filed in state court after Judge Sweet dismissed the predecessor action, was not filed until March 23, 2001 — well after the ninety-day period set forth in section 7511(a) had expired.
Defendants made this argument in their motion to dismiss, but the court never reached the issue because it dismissed the petition on Rule 8 (a) grounds.
Plaintiff responds that his otherwise untimely second petition is rescued by C.P.L.R. § 205(a), which provides that:
If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a failure to obtain personal jurisdiction over the defendant, a dismissal of the complaint for neglect to prosecute the action, or a final judgment on the merits, the plaintiff . . . may commence a new action upon the same transaction or occurence . . . within six months after the termination . . . .
Because plaintiff filed the second petition within six months of Judge Sweet's dismissal of the timely filed first petition, plaintiff contends that section 205(a) renders the second petition timely as well. The court holds, however, that section 205(a) does not apply to a petition to vacate an arbitration award filed pursuant to section 7511.
The New York Court of Appeals recently discussed the scope and applicability of section 205(a) in Yonkers Contracting Co. v. Port Auth. Trans-Hudson Corp., 93 N.Y.2d 375 (N.Y. 1999). There the court distinguished between a "statute of limitations" and a "statutory time restriction on commencement of suit." "The former merely suspends the remedy provided by a right of action," the court explained, "but the latter conditions the existence of a right of action, thereby creating a substantive limitation on the right." Id. at 378 (emphasis in original). The court held that section 205(a) can toll a statute of limitations, but that it does not apply "when the statutory time bar to the commencement of the second action falls into the latter category, as a condition precedent." Id.
The question thus becomes whether the ninety-day time limit imposed by section 7511(a) is a statute of limitations, in which case section 205(a) applies and plaintiffs petition is timely, or a statutory condition precedent, in which case section 205(a) does not apply and plaintiffs petition is time-barred. Once again Yonkers Contracting is instructive: "Where a statute both creates a cause of action and attaches a time limit to its commencement, the time is an ingredient of the case." Id. at 379. In such situations, "the limitation of time is so incorporated with the remedy given as to make it an integral part of it, and the condition precedent to the maintenance of an action at all." Id. The Yonkers Construction court observed that at common law sovereign immunity barred suits against the Port Authority altogether, and that the state had consented to suits against the Port Authority but set forth time limits on such suits all in a single statutory enactment. The court thus found section 205(a) inapplicable to suits against the Port Authority because "the right to seek relief is specifically conditioned upon compliance with a particular time requirement." Id.
Applying Yonkers Construction to petitions brought pursuant to section 7511, the court concludes that the ninety-day time limit imposed by section 7511(a) is a condition precedent to the right to file of a petition, not a statute of limitations, and thus that section 205(a) does not apply. At common law, arbitration existed only as a form of settling already-existing suits by voluntary agreement. Article 75 was enacted largely to overcome the judicial hostility to arbitration and "to abolish restrictions imposed by prior statutes and case law on the enforceability of agreements to arbitrate." Commentary to C.P.L.R. § 7501, C:7501:02 at 287-88. In one single enactment, the legislature created a procedure for judicial enforcement of arbitration awards, created a right to challenge the validity of arbitration awards, and conditioned the exercise of the right to challenge upon compliance with the ninety-day filing restriction. Because Article 75 "both create[d] [the] cause of action and attache[d] a time limit to its commencement," Yonkers Construction, 93 N Y2d at 379, the ninety-day requirement is a condition precedent to the right to file, and section 205(a) does not apply.
Plaintiff argues that section 7511(s) cannot have been intended to be a condition precedent to the ability to mount a judicial challenge to an arbitration award, observing that a losing respondent in an arbitration effectively does not need to move within ninety days to vacate the award rendered against him. An arbitration petitioner, after all, must affirmatively move within one year to enforce an award in order to execute it. See C.P.L.R. § 7510. Consequently, a losing respondent always has the option to do nothing, wait until the petitioner moves to enforce, and assert alleged deficiencies in the arbitration proceeding as a defense to enforcement. However, the fact that the mechanics of the statutory scheme allow an aggrieved arbitration respondent to forego his right to challenge an award rendered against him does nothing to alter the fact that both of the time limits prescribed in Article 75 — ninety days to challenge an arbitration decision under section 7511, and one year to enforce it under section 7510— are conditions precedent under Yonkers Construction. Because plaintiff lost the arbitration at issue here, there is no award to be affirmatively confirmed, and it is only section 7511(a) — not section 7510 — that applies.
It is unfortunate that plaintiff did not seek leave from Judge Sweet to amend his first, timely-filed petition to allege diversity jurisdiction. Plaintiff certainly was or should have been aware at the time, after all, that he is domiciled in New Jersey and that defendants are domiciled in Germany and New York, respectively. Given plaintiffs failure to comply with the statutory condition precedent prescribed in section 7511(a), however, the court must and does hereby ORDER that plaintiff's untimely petition is DISMISSED with prejudice.
SO ORDERED.