Astanza Design, LLC v. Giemme Stile, S.p.A.

220 F. Supp. 3d 641, 2016 U.S. Dist. LEXIS 173959, 2016 WL 7324266
CourtDistrict Court, M.D. North Carolina
DecidedDecember 15, 2016
Docket1:16CV1238
StatusPublished
Cited by35 cases

This text of 220 F. Supp. 3d 641 (Astanza Design, LLC v. Giemme Stile, S.p.A.) is published on Counsel Stack Legal Research, covering District Court, M.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Astanza Design, LLC v. Giemme Stile, S.p.A., 220 F. Supp. 3d 641, 2016 U.S. Dist. LEXIS 173959, 2016 WL 7324266 (M.D.N.C. 2016).

Opinion

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

Plaintiff Astanza Design, LLC (“Astan-za”) seeks to confirm an arbitration award against Defendants Giemme Stile, S.p.A. and Giemme USA, LLC arising out of a contractual relationship among them. (Doc. 3.) Defendants oppose the motion and move to vacate, modify, or correct the award pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 10. (Doc. 11.) The issues are fully briefed and ready for decision. For the reasons set forth below, Defendants’ motion will be denied and the arbitration award will be confirmed,

I. BACKGROUND

This action arises out of a dispute between the parties as to the interpretation of a March 1, 2011 Representation Agreement (Doc. 12-2) whereby Plaintiff was to serve as the exclusive representative for sales of Defendants’ furniture to the Church of Jesus Christ of Latter-Day Saints (“LDS Church”). (Doc. 6-1.) At some point, the LDS Church sought to deal directly with Defendants, thus reducing its cost by eliminating the commission owing to Astanza. (Doc. 3-1 at 7-9; Doc. 12 at 4-7; Doc. 16 at 3.) Defendants acquiesced to that arrangement, and Astanza objected. (Doc. 3-1 at 7-9; Doc. 12 at 4-7; Doc. 16 at 3.) After unsuccessful discussions, Astanza submitted a petition for arbitration pursuant to the terms of the Representation Agreement, which provided that any disputes would be addressed by the International Centre for Dispute Reso[644]*644lution (the “ICDR”) and its Rules of Procedure, (Doc. 12-2 at 8, ¶ 13(C).)

The arbitration proceeding was comprehensive. The parties participated in mediation, amended their filings, conducted discovery, held hearings, and had a final arbitration on June 6 and 7, 2016. (Doc. 3-1 at 1.) Thereafter, the arbitrator directed the parties to submit briefs on certain issues, including Astanza’s claim for attorneys’ fees. Responsive briefs were also filed. The record was closed on July 8, 2016, and on August 16, 2016 (following an agreed upon extension), the arbitrator issued his Final Award (the “arbitration award”). (Doc. 3-1 at 1-3, 16.) The arbitration award found that Defendants breached the Representation Agreement and awarded monetary damages against them, jointly and severally, of $15,066.01 in unpaid earned commissions and interest; $44,554.00 in lost future commissions; $86,447.10 in attorneys’ fees; and $19,737.50 in fees and costs of the arbitrator, with 8% interest. (Id. at 15.) Post-arbitration motions of the parties to modify and clarify the award were denied. (Doc. 16-13.)

Astanza filed its motion to confirm the arbitration award in the North Carolina General Court of Justice, Superior Court Division, Guilford County, on September 21, 2016 (Doc. 1-1 at 2-4) and amended the motion on October 14 (id. at 31-35). Shortly before a scheduled hearing to confirm the arbitration award (Doc. 16 at 5), Defendants removed the action to this court based on diversity jurisdiction. (Doc. 1.)

In this court, Astanza quickly moved to attach Defendants’ assets in North Carolina, and Defendants resisted. The court issued an order of attachment on November 18, 2016, and amended the order on December 8, 2016. (Docs. 15, 22.) Meanwhile, Defendants moved to vacate, modify, or correct the arbitration award. (Doc. 11.) Defendants’ challenge is directed to the arbitrator’s award of attorneys’ fees, as to which Defendants contend the arbitrator lacked authority to enter and nevertheless was not reasoned.1 (Doc. 12 at 8-11.) Astanza argues that the arbitrator was vested with authority to enter an award including attorneys’ fees and that Defendants both waived any objection to, and invited, the decision. (Doc. 16 at 7-16.)

II. ANALYSIS

A. Motion to Vacate, Modify, or Confirm Arbitration Award

The arbitration award was entered in this district, and the court has subject matter jurisdiction over the dispute.2 28 [645]*645U.S.C. § 1382. Therefore, removal to this court was proper. 9 U.S.C. §§ 9, 10, 11 (authorizing federal court in district where award entered to enter order confirming, vacating or modifying award).

The Fourth Circuit has recently reiterated that the scope of judicial review of an arbitration award “is among the narrowest known at law.” UBS Fin. Servs., Inc. v. Padussis, 842 F.3d 336, 339 (4th Cir. 2016). Courts may modify, vacate, or correct an award only under the limited circumstances set forth in the FAA, 9 U.S.C. §§ 10-11, “or under the common law if the award ‘fails to draw its essence from the contract’ or ‘evidences a manifest disregard of the law.’ ” Id. (quoting Patten v. Signator Ins. Agency, Inc., 441 F.3d 230, 234 (4th Cir. 20Ó6)). The court’s duty is “to determine whether the arbitrators did the job they were told to do — not whether they did it well, or correctly, or reasonably, but simply whether they did it.” Id. (quoting Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007)).

In determining whether the arbitrators acted within their authority, the court is permitted, therefore, to determine whether the arbitrators “exceeded their powers,” 9 U.S.C. § 10(a)(4), and in pursuing this inquiry may decide whether the parties agreed to arbitrate a particular dispute. AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 651, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). However, “[a]n arbitration award is enforceable even if the award resulted from a misinterpretation of law, faulty legal reasoning or erroneous legal conclusion, and may only be reversed when arbitrators understand and correctly state the law, but proceed to disregard the same.” Upshur Coals Corp. v. United Mine Workers of Am., Dist. 31, 933 F.2d 225, 229 (4th Cir. 1991) (citations omitted). Apart from these fundamental questions of arbitrability, courts must defer to the arbitrators as to the merits of a dispute and any procedural questions arising from them, even if they bear on the final result. UBS Fin., 842 F.3d at 340. To do otherwise “would frustrate the purpose of having arbitration at all.” Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 193 (4th Cir. 1998).

The Supreme Court has said that a party seeking relief under § 10(a)(4) of the FAA bears “a heavy burden.” Oxford Health Plans LLC v. Sutter, — U.S. —, 133 S.Ct. 2064, 2068, 186 L.Ed.2d 113 (2013). “Because the parties ‘bargained for the arbitrator’s construction of their agreement,’ an arbitral decision ‘even arguably construing or applying the contract’ must stand, regardless of a court’s view of its (de)merits.” Id (citations omitted). Any doubt concerning the scope of the arbitra-ble issues or the arbitrator’s remedial authority must be resolved in favor of the arbitrator. Three S Del., 492 F.3d at 531.

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220 F. Supp. 3d 641, 2016 U.S. Dist. LEXIS 173959, 2016 WL 7324266, Counsel Stack Legal Research, https://law.counselstack.com/opinion/astanza-design-llc-v-giemme-stile-spa-ncmd-2016.