Contech Construction Products, Inc. v. Heierli

764 F. Supp. 2d 96, 2011 U.S. Dist. LEXIS 10952
CourtDistrict Court, District of Columbia
DecidedFebruary 4, 2011
DocketCivil Actions 09-01483 (RBW), 09-02204
StatusPublished
Cited by12 cases

This text of 764 F. Supp. 2d 96 (Contech Construction Products, Inc. v. Heierli) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Contech Construction Products, Inc. v. Heierli, 764 F. Supp. 2d 96, 2011 U.S. Dist. LEXIS 10952 (D.D.C. 2011).

Opinion

MEMORANDUM OPINION

REGGIE B. WALTON, District Judge.

These two cases arise from identical underlying facts. In Civil Action 09-cv-1483 (RBW), the petitioners, Contech Construction Products, Inc. and Patrick Harlow (collectively “Contech”), petition the Court to “vacate a portion of [a] [pjartial [Arbitration] Award” (“Partial Award”) rendered in favor of the respondent, Werner Heierli (“Heierli”), on May 7, 2009. Petition to Vacate a Portion of the Arbitration Award (“Contech’s Pet. to Vacate”) at 1-5. In response, Heierli opposes Contech’s petition and has filed a cross-petition seeking confirmation of the Partial Award. Subsequently, on November 12, 2009, a final arbitration award was rendered in favor of Heierli, along with interest, attorneys fees, and costs (“Final Award”). Then, on November 20, 2009, Heierli instituted the second case, Civil Action 09-cv-2204, petitioning the Court to confirm the Final Award. Petition and Motion of Werner Heierli to Confirm Arbitration Award (“Heierli’s Pet. to Confirm”) at 1. Contech opposes the petition to confirm the Final Award and has cross-petitioned to vacate the Final Award. Memorandum In Opposition to the Petition of Werner Heierli to Confirm Arbitration Award and Cross-Petition of Contech Construction Products Inc. to Vacate the Arbitration Award (“Contech’s Cross-Pet. to Vacate”) at 1. Accordingly, both cases involve the same parties and their resolution turns on the question of whether the two awards entered by the arbitrator are enforceable.

*101 For the reasons that follow, the Court must grant both Heierli’s Cross-Petition to enforce the Partial Award and his Petition to Confirm the Final Award. Thus, the Court must deny both Contech’s Petition to Vacate the Partial Award and its Cross-Petition to Vacate the Final Award.

I. Background 1

A. Civil Action 09-CV-H88

Contech Construction Products, Inc. is the sole majority shareholder of BEBOTech Corporation (“BEBOTech”) and Patrick Harlow is the President of BEBOTech’s Board of Directors. Contech’s Pet. to Vacate ¶ 8. Werner Heierli is the sole minority shareholder of BEBOTech. Id.

Contech and Heierli entered into a Stockholders’ Agreement and several other related agreements on May 2, 2003. Id. ¶ 9. The agreements contain identical dispute resolution provisions requiring the parties to “attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly by negotiation ... failing which the parties shall endeav- or to resolve any dispute ... by mediation under the CPR Mediation procedure.” Id., Ex. A at 12. If negotiations and mediation are unsuccessful, the dispute resolution clauses require the parties to arbitrate “[a]ny controversy or claim arising out of or relating to [the agreements in the International Institute for Conflict Prevention and Resolution (“CPR”) ] ... in accordance with the CPR Rules for Non-Administered Arbitration.” Id. The agreements also provide that any arbitration proceedings will be held in Washington, D.C. Id.

On March 23, 2007, after unsuccessful attempts to negotiate and mediate a dispute between the parties, Heierli filed an arbitration demand against Contech “asserting individual and derivative claims for breach of contract and breach of fiduciary duty”. Id. ¶ 13. On May 7, 2009, Arbitrator Nancy Lesser (the “Arbitrator”) issued a Partial Award finding that: (1) Contech had breached its contractual duties to Heierli; (2) Contech had breached its fiduciary duties to Heierli; (3) Heierli was entitled to at least the minimum amount of the value of his interest (his shares) in BEBOTech pursuant to the formula adopted in the Stockholders’ Agreement, upon exercise of his “Put Option” in that agreement; (4) Contech could not include certain charges and fees in determining Heierli’s share value under the Stockholders’ Agreement formula; and (5) Heierli was permitted to petition for an interim award of “reasonable attorney’s fees and costs in proceedings to be scheduled following the issuance of [the] Partial Award.” Id., Ex. E (Partial Award) at 34-35. However, the Arbitrator also found that Heierli had failed to prove that he suffered any compensatory damages or that he was entitled to punitive damages as a result of the breach. Id., Ex. E (Partial Award) at 33.

Contech filed a Motion for Reconsideration of the Partial Award with the Arbitrator on May 22, 2009, requesting that she reconsider and withdraw her award of attorneys’ fees and costs, arguing that the Arbitrator did not have the authority to make such awards under either the CPR rules or Delaware law. 2 Contech’s Pet. to Vacate ¶ 18; Heierli’s Memorandum in Op *102 position to Petition to Vacate a Portion of the Arbitration Award (“Heierli’s Opp’n”), Ex. 2 (Respondent Contech Construction Products Inc.’s Motion for Reconsideration of (1) Interim Award of Attorneys’ Fees and Costs and- (2) Termination of the Management Services Agreement) at 3. On July 15, 2009, the Arbitrator denied Con-tech’s Motion for Reconsideration, finding that “[i]t is uncontroverted that Delaware law permits such an award where circumstances warrant [making the award].” Heierli’s Opp’n, Ex. 5 (July 15 Order). Furthermore, the Arbitrator concluded that “[i]n light of [her findings], it [was] unnecessary for [her] to reach the second prong of [Contech’s] [m]otion regarding the [applicability of] the CPR [r]ules, although [she] remained] of the view that the [CPR r]ules permit such an award independent of its availability under Delaware law.” Id. Contech responded to the denial of its Motion for Reconsideration by filing the first of the two cases, Civil Action 09-cv-1483, now before this Court. After that filing, on September 11, 2009, the Arbitrator set the amount of attorneys’ fees and costs to be awarded to Heierli under the Partial Award at $556,749.99. Petitioners’ Memorandum in Opposition to Respondent’s Cross-Petition to Confirm Arbitrator’s Award of Heierli’s Attorneys’ Fees and Expenses, Ex. B (Fee Award) at 1.

B. Civil Action 09-cv-220í

In addition to the dispute resolution clause, the parties’ Stockholders’ Agreement contained “put” and “call” options which accorded Heierli the option of selling his BEBOTech shares to Contech at a price calculated pursuant to a formula specified in the Stockholders’ Agreement, and Contech had the option to purchase Heierli’s shares at a price determined by a different formula specified in the Agreement. Contech’s Cross-Pet. to Vacate, Ex. A (Stockholders’ Agreement) § 4. 3 On May 18, 2009, shortly after the Arbitrator issued her Partial Award finding that Con-tech had breached its fiduciary duties to Heierli, Heierli exercised his put option. Statement of Points and Authorities In Support of Heierli’s Petition and Motion to Confirm Arbitration Award (“Heierli’s Mem. to Confirm”) at 3. The parties, however, disagreed on the “calculated purchase price” offered by Contech, id., and Heierli then filed a request with the Arbitrator for an emergency hearing on the “put price,” Contech’s Cross-Pet. to Vacate at 5.

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Bluebook (online)
764 F. Supp. 2d 96, 2011 U.S. Dist. LEXIS 10952, Counsel Stack Legal Research, https://law.counselstack.com/opinion/contech-construction-products-inc-v-heierli-dcd-2011.