Opinion
No. 01 Civ. 3903 (LTS)(KNF)
September 30, 2002
MEMORANDUM OPINION AND ORDER
Petitioner ITXC Corporation moves, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting it summary judgment and confirming an arbitration award dated December 29, 2000 (the "Arbitration Award"). Respondent Teleconomico USA, Inc., which filed an answer to the original petition and whose attorney was thereafter relieved of the representation, has not interposed a response to Petitioner's motion. The November 2, 2001 order granting counsel's motion to withdraw directed Respondent to appear by new counsel within 30 days. No appearance was thereafter made by counsel, and the Court has received no further communications from Respondent. Petitioner's motion for summary judgment confirming the award was served on Respondent, in care of Respondent's principal, on February 13, 2002. In connection with the motion, Petitioner also served on Respondent's principal this Court's standard form of Notice to Pro Se Litigant Opposing Motion for Summary Judgment, which identifies clearly the obligation to file a response to a motion for summary judgment.
The Court has considered thoroughly the record and all written submissions made in connection with this motion. For the following reasons, the motion for summary judgment is granted.
The Court has jurisdiction of this proceeding pursuant to 9 U.S.C. § 9 and 28 U.S.C. § 1332.
BACKGROUND
The following facts are uncontested.
On or about January 26, 2000, Respondent executed an agreement under which Respondent agreed to pay Petitioner for various services rendered in connection with the provision of telephone services over the Internet (the "Agreement"). Petitioner and Respondent agreed to arbitrate disputes arising from or related to the Agreement. Ex. A to Affidavit of Jeffrey J. Wild, sworn to February 7, 2002. ("Wild Aff.").
The arbitration provision of the Agreement provides, in pertinent part:
[A]ny disputes arising pursuant to or in any way related to this Agreement or the transactions contemplated hereby, which cannot be resolved by negotiation, will be settled by binding arbitration in New York, New York, in accordance with the JAMS/EN DISPUTES Arbitration Rules and Procedures, provided, however, that nothing in this section will restrict the right of either party to apply to a court of competent jurisdiction for emergency relief pending final determination of a claim of arbitration in accordance with this action. The decision of the arbiter, based upon written findings of fact and conclusions of law, will be binding upon the parties and judgment in accordance with that decision may be entered in any court of having jurisdiction thereof.
Ex. A to Wild Aff.
On or about October 19, 2000, Petitioner filed a demand for arbitration and a statement of claim, seeking arbitration of a claim against Respondent for breach of contract, promissory estoppel and unjust enrichment arising from Respondent's failure to pay for services rendered by Petitioner under the Agreement.
On or about December 13, 2000, the parties reached a settlement of the dispute (the "Settlement Agreement"). Under the Settlement Agreement, Respondent agreed to pay Petitioner the total amount of $260,000 in the form of two wire transfers, each in the amount of $130,000. The first wire transfer was due on December 15, 2000 and the second wire transfer was due on December 29, 2000. Respondent did not make either of the wire transfers required under the Settlement Agreement.
In or about December 2000, an arbitrator issued the Arbitration Award against Respondent. The Arbitration Award recited Respondent's acknowledgment that it had failed to pay Petitioner amounts still owing under the Settlement Agreement. Ex. B to Wild Aff. Rejecting Respondent's challenge to her jurisdiction to enter the award, the arbitrator found that she had such jurisdiction in that the arbitration had not been terminated under JAMS Rule 22(c),
JAMS is an acronym for Judicial Arbitration and Mediation Services.
because: (a) JAMS was not notified by the parties, in writing, that they had reached a settlement, but instead was notified only by Claimant that a settlement agreement had been breached; (b) the agreement of the Parties expressly authorizes JAMS to adjudicate disputes about the settlement; and (c) the purpose of arbitration would be thwarted if a party could use Rule 22(c) to enter into settlement agreements in order to divest an arbitrator of jurisdiction, thereby fostering a cycle of breached settlements and renewed arbitrations.Id. The Arbitration Award, in the amount of $262,098.77, further provided that interest would accrue on the award at the rate of the higher of 9% and the legal rate in any jurisdiction where Petitioner may enforce the award. Ex. B to Wild Aff.
On or about January 19, 2001, Respondent made one payment in the amount of $10,000 by wire transfer to Petitioner. To date, Petitioner alleges, $252,098.77, together with interest, attorneys' fees and costs remains due and owing from Respondent.
Respondent asserted in its answer and in the preliminary pre-trial statement that it had made a second $30,000 payment to Petitioner. As set forth, the Court will require Petitioner to submit further evidence of the amounts paid by Respondent.
DISCUSSION
Summary judgment is appropriate where there is no triable issue of material fact and the movant is entitled to judgment as a matter of law.Slattery v. Swiss Reinsurance America Corp., 248 F.3d 87, 91 (2d Cir. 2001). On a motion for summary judgment, the court must resolve all ambiguities and draw all inferences in favor of the nonmoving party. Id. Holt v. KMI-Continental, Inc., 95 F.3d 123, 128-29 (2d Cir. 1996).The district court's review of an arbitration award is governed by the Federal Arbitration Act (the "FAA"). Under the FAA, a court must confirm an award upon proper application unless the award is vacated, modified or corrected on grounds specified in the statute. See 9 U.S.C.A. § 9 Section 10(a) of the statute provides that an award may be vacated if: (1) the award was procured by corruption, fraud or undue means; (2) the arbitrators exhibited "evident partiality" or "corruption:" (3) the arbitrators were guilty of misconduct; or (4) the arbitrators exceeded their power. See 9 U.S.C.A. § 10(a) (West 1999 Supp. 2002). In addition, the Second Circuit has recognized that an arbitration award may be vacated if it is in "manifest disregard of the law." Halligan v. Piper Jaffra v. Inc., 148 F.3d 197, 202 (2d Cir. 1998); see Wilko v. Swan, 346 U.S. 427, 436-37, 74 (1953), overruled on other grounds in Rodriguez de Quilas v. Shearson/American Express. Inc., 490 U.S. 477 (1989). Determining that an award is in manifest disregard of the law" requires "something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law." Siegel v. Titan Indus. Corp., 779 F.2d 891, 892 (2d Cir. 1985). To modify or vacate an award on this ground, a court must find that: "(1) the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrators was well defined, explicit, and clearly applicable to the case." Halligan, 148 F.3d at 202 (citing DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997)). The party seeking to avoid confirmation of an arbitration award has the burden of proof. See Houdstermaatschappii, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997).
9 U.S.C. § 9 provides in part:
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award, is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made.9 U.S.C.A § 9 (West 1999 Supp. 2002).
Section 11 provides:
In either of the following cases the United States court in and for the district wherein the award was made may make an order modifying or correcting the award upon the application of any party to the arbitration —
(a) Where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award.
(b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted.
(c) Where the award is imperfect in matter of form not affecting the merits of the controversy. The order may modify and correct the award, so as to effect the intent thereof and promote justice between the parties.9 U.S.C.A. § 11 (West 1999 Supp. 2002).
The Agreement provides that "any disputes arising pursuant to or in any way related [to the Agreement] will be settled by binding arbitration." Ex. A to Wild Aff. Respondent asserted in its answer and in the preliminary pre-trial statement filed with the Court that the Arbitrator no longer had jurisdiction to enter an award once the parties had reached a settlement agreement. In the Arbitration Award, the Arbitrator set forth the basis for her finding that she had jurisdiction to enter it. The Arbitrator found, and it is undisputed, that the Settlement Agreement provided that the Arbitrator was authorized to adjudicate disputes arising from the settlement. See Ex. B to Wild Aff. Respondent's disagreement with the Arbitrator's jurisdictional determination does not constitute a ground for vacatur or modification of the award under the FAA. In addition, there is no showing that the Arbitration Award was rendered in manifest disregard of the law. Respondent's conclusory assertions in its answer and in the preliminary pre-trial statement are legally insufficient to establish a ground for denying confirmation of the Arbitration Award. Accordingly, the Court will grant Petitioner's motion to confirm the Arbitration Award.
CONCLUSION
For all of the above reasons, Petitioner's motion for summary judgment is granted. The Arbitration Award dated December 29, 2000 is confirmed. Petitioner is awarded prejudgment interest as specified in the Arbitration Award, post-judgment interest at the legal rate, and its reasonable attorneys' fees. Petitioner is directed to submit a proposed form of Judgment, on twenty (20) days notice to Respondent and its principal. The proposed Judgment shall be accompanied by an affidavit based upon personal knowledge and attesting to all payments made by Respondent in respect of the Arbitration Award, as well as evidence and an accounting of the legal fees and expenses incurred by Petitioner in bringing this action to enforce the Arbitration Award.
SO ORDERED.