Robert E. Derecktor, Inc. v. Bruderman et, al

CourtDistrict Court, S.D. New York
DecidedJanuary 19, 2021
Docket7:15-cv-08257
StatusUnknown

This text of Robert E. Derecktor, Inc. v. Bruderman et, al (Robert E. Derecktor, Inc. v. Bruderman et, al) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Robert E. Derecktor, Inc. v. Bruderman et, al, (S.D.N.Y. 2021).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------x ROBERT E. DERECKTOR, INC. : : Plaintiff, : v. : OPINION AND ORDER : M/Y INDEPENDENCE, her engines, boilers, : 15 CV 8257 (VB) tackle, apparel, etc., in rem, and MATTHEW J. : BRUDERMAN, in personam, : : Defendants. : ---------------------------------------------------------------x DUCKY-MOMO, LLC, : : Plaintiff, : v. : : ROBERT E. DERECKTOR, INC., E. PAUL : 15 CV 9372 (VB) DERECKTOR, THOMAS E. DERECKTOR, : MICAH TUCKER, ELIZABETH : WEATHERBORN, in personam, and M/Y : INDEPENDENCE, in rem, : : Defendants. : ---------------------------------------------------------------x

Briccetti, J.:

Ducky-Momo, LLC (“Ducky-Momo”), and Matthew J. Bruderman move, pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., to, inter alia, confirm a “final” arbitration award (the “final award”), issued on February 28, 2020. (Doc. #124).1 Robert E. Derecktor, Inc. (“Derecktor”), in turn, has moved to vacate and/or modify the final award. (Doc. #131). For the reasons set forth below, Ducky-Momo and Bruderman’s motion is GRANTED IN PART and DENIED IN PART.

1 The parties’ motions are filed on the dockets for cases 15 CV 8257 and 15 CV 9372. Unless otherwise noted, references to “Doc. # ” refer to the docket in case 15 CV 8257. Derecktor’s motion is DENIED. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1333. BACKGROUND These cases arise out of a dispute over repair services Derecktor performed on the vessel

M/Y Independence (the “Yacht”). On March 24, 2014, the parties entered into a Yard Services Agreement (“YSA”), which outlined the parties’ rights and responsibilities with respect to the repair of the Yacht. The YSA contains an arbitration clause, which states: “Any controversy or claim arising out of or relating to this Contract, or the breach thereof, which are not resolved . . . shall be settled by arbitration administered by the American Arbitration Association [“AAA”] under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.” (Doc. #126-1 (“YSA”) ¶ 11(b)). After disputes arose concerning repairs to the Yacht, Derecktor filed a demand for arbitration on October 15, 2015, commenced the instant action (15cv8257) on October 20, 2015,

and had the Yacht arrested at its shipyard in Mamaroneck, New York. Shortly thereafter, Ducky-Momo brought the related action (15cv9372) demanding repossession of the Yacht and alleging, inter alia, breach of contract, negligence, and fraud, against Derecktor and additional individual defendants. On January 4, 2016, pursuant to the parties’ stipulation, the Court entered a stay pending arbitration. (Doc. #38 (“January 4 Stipulation and Order”)). The January 4 Stipulation and Order states, in pertinent part: Notwithstanding any stay pending the issuance of an arbitration award, the Court will retain jurisdiction to hear and decide any issues concerning the custody, care and preservation of the Yacht or any issues pertaining to substitute security or bonding concerning the vessel . . . (Doc. #38 ¶ 7). On December 21, 2016, the AAA arbitration panel (the “panel”) concluded the first phase of arbitration. At that time, the panel issued a “partial final award” granting Derecktor recovery of $56,106.75. In the partial final award, the panel explained:

The parties agree upon very little, including who are parties and who are potentially parties. The sole exception to that is the request of the parties for the panel to issue a Partial Final Award dealing with the amount of money owed to [Derecktor] for work done and other services rendered to the Yacht. At the request of the parties, none of the many other outstanding issues are to be decided at this point. . . . We find that [Derecktor] has performed services with respect to Independence and would be entitled to $56,106.75 if this were a final award. (Doc. #85-2 at ECF 2, 3) (emphasis added).2

On June 23, 2017, the Court issued an Order releasing the Yacht from arrest, directing Ducky-Momo to deposit $331,000.00 in the Court registry as substitute security for Derecktor’s in rem claims against the Yacht, and directing Derecktor to deposit $331,000.00 in the Court registry as countersecurity for Ducky-Momo’s counterclaims. (Doc. #76). Ducky-Momo and Derecktor complied with the Court’s June 23, 2017, Order on August 23 and September 5, 2017, respectively. On March 6, 2018, the Court confirmed the partial final award but declined to enter judgment for $56,106.75 in Derecktor’s favor based on the partial final award, concluding entry of judgment was premature because the arbitration panel had not issued a comprehensive final award. (Doc. #100). The second phase of arbitration dealt with claims asserted by Ducky-Momo against

2 “ECF __” refers to page numbers automatically assigned by the Court’s Electronic Case Filing System. Derecktor, including “wrongful arrest, conversion, breach of contract, negligence and gross negligence, breach of warranty of workmanlike performance, loss of use, loss in value/reputation of the Yacht, loss in value due to damages, fraud and fraudulent misrepresentation, resulting in direct compensatory and consequential damages, attorneys’ fees and expenses in the total

amount of $3,704,852.92, plus punitive damages, arbitrators’ fees and expenses, and interest.” (Doc. #126-3 (“Award”) at ECF 2). On February 28, 2020, the panel issued the final award, concluding Ducky-Momo is entitled to a total net recovery of $1,628,754.00 from Derecktor, including, inter alia, damages for Derecktor’s breach of the YSA and a subsequent settlement agreement, compensation for damages to the Yacht, reimbursement for unfinished or defective work, attorneys’ fees and expenses, arbitration fees and expenses, and interest. On April 3, 2020, Ducky-Momo and Bruderman filed the instant motion to confirm the final award. (Doc. #124). The motion also requests that the Court (i) enter judgment against Derecktor, with interest, (ii) order the release of the cash security deposited by Ducky-Momo in

the Court’s registry, with interest, (iii) order payment of the judgment under the bond posted by Derecktor, with interest, and (iv) order Derecktor pay the attorneys’ fees and expenses Ducky- Momo and Bruderman incurred in making the instant motion. On April 24, 2020, Derecktor filed its motion to partially vacate and/or modify the final award. (Doc. #131). In its motion, Derecktor requests that the Court vacate the portions of the final award pertaining to the panel’s finding that Derecktor’s arrest of the Yacht was wrongful and, based thereon, awarding Ducky-Momo compensatory damages and attorneys’ fees and expenses. DISCUSSION I. Vacatur and Confirmation of the Final Award Derecktor argues the final award should be vacated or modified because (i) the arbitration panel exceeded its authority by deciding issues over which it argues the Court retained

jurisdiction, and (ii) the panel’s award of attorney’s fees is inexplicable and contrary to controlling case law. The Court disagrees. A. Legal Standard “Federal court review of an arbitral judgment is highly deferential.” Pike v. Freeman, 266 F.3d 78, 86 (2d Cir. 2001).3 Indeed, “[a] court’s review of an arbitration award is . . . severely limited, so as not to frustrate the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation.” Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins.

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