In re HBLS L.P.

272 B.R. 390, 2000 Bankr. LEXIS 1921
United States Bankruptcy Court, S.D. New York·Decided December 22, 2000·No. No. 93 B 46399(BRL)·Published·Cited by 2 cases

Opinion

MEMORANDUM DECISION GRANTING MOTION TO CONFIRM AWARD

BURTON R. LIFLAND, Bankruptcy Judge.

The following is a memorandum decision supplementing this court’s ruling on the record at the December 21, 2000, hearing regarding Dion Friedland’s motion (the “Motion to Confirm”) (i) to confirm an arbitrator’s award concerning the joint liability of Resort Entities dated October 2000, and (ii) thereafter, to reinstate the deficiency judgment jointly and severally against Leeward Isles Resorts, Limited (“LIR”) and Maundays Bay Management Limited (“MBM”). An objection to the motion was interposed by Charles C. Hick-ox on the grounds that (i) Friedland waived his right to arbitration; (ii) Hickox could not be compelled to. arbitrate, and (iii) the Mediator’s award should not be confirmed because it is based on a “completely irrational” interpretation of a settlement agreement dated May 6, 1996 (the “Settlement Agreement”). The salient facts surrounding this dispute are set forth in the district court’s decision, Hickox v. [392] Friedland, 1999 WL 970454 (S.D.N.Y. October 25, 1999)(Koeltl, J.) and will not be repeated herein.

I. Waiver of Right to Arbitrate

Federal policy strongly favors arbitration as an alternative means of dispute resolution. This preference for arbitration has led to its corollary that any doubts concerning whether there has been a waiver are resolved in favor of arbitration. Thus, the caselaw in this circuit instructs that waiver of arbitration is not to be lightly inferred. In re Crysen/Montenay Energy Co. 226 F.3d 160, 162-63 (2d Cir.2000). Nonetheless, a party may waive its right to arbitration when it engages in protracted litigation that prejudices the opposing party. Prejudice as defined by the Second Circuit Court of Appeals refers to the inherent unfairness in terms of delay, expense, or damage to a party’s legal position — that occurs when the party’s opponent forces it to litigate an issue and later seeks to arbitrate that same issue. Incurring legal expenses inherent in the litigation, without more, is insufficient evidence of prejudice to justify a finding of waiver. Id. citing PPG Industries, Inc. v. Webster Auto Parts Inc., 128 F.3d 103, 107-08 (2d Cir.1997).

In determining whether a party has waived its right to arbitration, the court must consider such factors as (1) the time elapsed from commencement of litigation to the request for arbitration, (2) the amount of litigation (including any substantive motions and discovery), and (3) proof of prejudice. There is no bright-line rule, however, for determining when a party has waived its right to arbitration: the determination of waiver depends on the particular facts of each case. PPG Industries, Inc. v. Webster Auto Parts Inc., 128 F.3d at 107-08.

Hickox argues that Friedland waived his right to arbitrate because Friedland chose to litigate first. Hickox made this same waiver argument to Judge Koeltl. Although Judge Koeltl did not directly address the waiver argument in his opinion, he did suggest that this court consider referring the dispute to the Mediator. See Hickox v. Friedland, supra at *7 (“If it is unclear that whether the specific dispute has been decided by the Mediator, the Court should consider whether the dispute should be submitted to the Mediator in view of the very broad dispute resolution powers of the Mediator and the parties’ agreement to refer disputes to the Mediator.”) To the extent that Hickox’s waiver argument was not completely disposed of by the district court, I find it to be frivolous. Friedland’s application to this court for an order granting the deficiency judgment, the amount of which had been calculated by the Mediator, was a ministerial act. It was not the type of “litigation” considered by courts to constitute waiver. The “litigation,” that is, the subsequent appeal filed by Hickox, was obviously commenced by Hickox and in no way constituted a waiver on the part of Friedland to arbitrate.

II. Compelling Hickox to Arbitrate

Hickox argues that he cannot be compelled to arbitrate this dispute because he was not a party, individually, to the settlement. However, whether Hickox is a party individually to the Settlement Agreement is irrelevant. The issue referred to the Mediator is the liability of LIR and MBM to Friedland. While Hickox was not a party individually to the Settlement Agreement, he did sign off on it in his capacity as an officer of the Debtor, LIR and MBM at a point in time when he controlled all three entities (the “Resort Entities”). And the Settlement Agreement clearly provides for this dispute to be de-[393] terrained by the Mediator. Paragraph 17 of the Settlement Agreement provides that:

Any disputes or determinations arising under, relating to or in connection with this Settlement Agreement, its interpretation, performance or enforcement shall be determined solely and exclusively by the Mediator, whose decision shall be final and binding and nonappealable.
;{; sj; £ tj: sj; #
The Mediator shall also be authorized to determine the scope of this provision. In interpreting this Settlement Agreement in resolving any disputes hereunder, the Mediator shall implement the spirit and intent of the parties.

Accordingly, I find that this dispute was properly within the purview of the Mediator pursuant to the terms of the Settlement Agreement.

III. Confirmation of Award

The Mediator found that 1) based upon his independent recollection, the intent of parties was that LIR and MBM should be liable to Friedland; 2) the conduct of the parties subsequent to the Settlement Agreement demonstrates that it was the spirit and intent of the parties that LIR and MBM be liable to Friedland, and 3) a full and objective reading of the Settlement Agreement demonstrates it creates liability to Friedland on the part of LIR and MBM.

Free access — add to your briefcase to read the full text and ask questions with AI

In re HBLS L.P., 272 B.R. 390, 2000 Bankr. LEXIS 1921 (N.Y. 2000).

272 B.R. 390 (In re HBLS L.P.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

In Re Worldcom, Inc.
340 B.R. 719 (S.D. New York, 2006)
In Re Hbls Lp
272 B.R. 390 (S.D. New York, 2000)