Opinion
Civil Action No. 3:00-CV-1561-L
October 30, 2001
ORDER
Before the court is Defendant International Depository Trust Corporation's Motion to Disallow Arbitration Award and to Direct the Plaintiff to Seek Relief from the Parties Charged with the Dissolution of the Defendant and Brief in Support ("IDTC's Motion to Disallow Arbitration Award"), filed July 11, 2001; and Plaintiff Basic Capital Management Inc.'s Renewed Motion to Confirm Arbitration Award and Brief in Support ("Basic Capital's Renewed Motion to Confirm"), filed August 3, 2001. After careful consideration of the motions, responses, briefs, evidence submitted by the parties, and applicable law, the court denies IDTC's Motion to Disallow Arbitration Award and grants Basic Capital's Renewed Motion to Confirm.
I. Procedural Background
On July 10, 2000, Plaintiff Basic Capital Management Inc. ("Basic Capital") filed suit against International Depository Trust Corporation ("IDTC") in state court. IDTC removed to this court on July 20, 2000. On July 21, 2000, IDTC moved the court to compel arbitration. Basic Capital did not oppose the motion. The court therefore directed the parties to arbitrate their dispute by order dated July 25, 2000. The parties complied with the order, and a three judge arbitration panel conducted an arbitration hearing in January 2001. The arbitration panel ruled in favor of Basic Capital on February 21, 2001.
Basic Capital filed a Motion to Recognize and Enforce a Foreign Arbitral Award ("Basic Capital's first motion") on March 20, 2001. The motion attached a copy of the arbitration award and sought to confirm the award based on 9 U.S.C. § 201, et seq., which adopts the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Basic Capital filed an amended motion on June 14, 2001. The amended motion asserted that the Federal Arbitration Act, 9 U.S.C. § 1 et seq., was an alternative basis upon which the court could confirm the award.
IDTC did not directly oppose either of Basic Capital's motions. Instead, IDTC filed a Motion to Disallow Arbitration Award on July 11, 2001. The motion asserted that the award should be disallowed because IDTC was not represented by counsel during the arbitration hearing, and the arbitration was not held in the proper locale.
Although IDTC's Motion to Disallow Arbitration Award did not directly oppose Basic Capital's motions to confirm the award, the court denied Basic Capital's motions by Memorandum Opinion and Order dated July 23, 2001. The court denied Basic Capital's first motion because 9 U.S.C. § 201 et seq. did not govern the arbitration agreement at issue. See July 23, 2001 Memorandum Opinion and Order at 5. Accordingly, the court held that 9 U.S.C. § 201 et seq. did not afford the court a basis to confirm the award. Id.
The court denied the amended motion because Basic Capital did not bring forth sufficient evidence to demonstrate that the Federal Arbitration Act afforded the court a basis to confirm the award. July 23, 2001 Memorandum Opinion and Order at 6-7. The court so ruled because the Act mandates that a court can confirm an award only 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. . . ." Id. at 6 (citing 9 U.S.C. § 9) (original emphasis omitted). The court did not believe that Basic Capital sufficiently demonstrated that IDTC agreed to have the court enter judgment on the arbitration award. Id. at 6-7. Basic Capital's Renewed Motion to Confirm addresses this issue.
II. Analysis
A. IDTC's Motion to Disallow Arbitration Award
Basic Capital contends that the arbitration award is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq., because the dispute that gave rise to the arbitration related to a contract evidencing a transaction involving interstate commerce. See Basic Capital's Response and Supporting Brief in Opposition to IDTC's Motion to Disallow Arbitration Award, filed July 30, 2001 at 5. IDTC has not challenged this contention, and the court does not have cause to disagree. Accordingly, the provisions of the Federal Arbitration Act are applicable and govern whether the court should disallow the arbitration award.
IDTC's Motion to Disallow Arbitration Award in effect seeks to have the award vacated. The motion is therefore governed by 9 U.S.C. § 10 and case law that sets forth criteria whereby a court may vacate an arbitration award. A motion to vacate an arbitration award must be asserted within the limitations period set forth in 9 U.S.C. § 12. Section 12 requires that "[n]otice of a motion to vacate . . . an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered." 9 U.S.C. § 12. (emphasis added).
The present arbitration award was signed and published on February 21, 2001. See Appendix in Support of Basic Capital's Motion to Confirm Arbitration Award at 6. The award was then filed as an attachment to Basic Capital's first motion on March 20, 2001. The certificate of conference to Basic Capital's first motion reflects that on March 20, 2001, counsel for Basic Capital personally discussed the motion — which included the arbitration award — with a representative of IDTC. See Basic Capital's first motion at 5. The certificate of service further reflects that IDTC was served with a copy of the motion and arbitration award on March 20, 2001. Id. at 6. Accordingly, nothing in the record suggests that IDTC was not aware of the award or that IDTC did not receive the award. Under section 12, the three-month limitations expired June 20, 2001, which was the last day for IDTC to notify Basic Capital that it intended to move to vacate the arbitration award.
IDTC nevertheless waited until July 6, 2001 to mail a copy of its Motion to Disallow Arbitration Award to Basic Capital. See IDTC's Motion to Disallow Arbitration Award at 7. IDTC does not direct the court to a prior date on which it notified Basic Capital that it would seek to vacate the award. The earliest date that Basic Capital received the requisite notice was July 6, 2001. This is sixteen days after the limitations period expired. IDTC's Motion to Disallow Arbitration Award is therefore untimely, and the court cannot entertain the motion. Accordingly, it must be denied. As a consequence, the court does not address whether IDTC's motion has merit. B. Basic Capital's Motion to Confirm
The court notes, however, that IDTC's proposed grounds to vacate likely do not satisfy the criteria set forth in 9 U.S.C. § 10, or the criteria developed through case law.
The court's July 23, 2001 Memorandum Opinion and Order notes that it could not confirm the arbitration award unless the parties agreement to arbitrate reflected that they consented to have the court enter judgment on the award. See July 23, 2001 Memorandum Opinion and Order at 6 (citing 9 U.S.C. § 9). Basic Capital previously failed to demonstrate that IDTC agreed to have this court enter judgment on the arbitration award. Id. Basic Capital's Renewed Motion to Confirm addresses the court's concerns. See Basic Capital's Renewed Motion to Confirm at 7 (citing T R Enterprises, Inc. v. Continental Grain Co., 613 F.2d 1272 (5th Cir. 1980)).
In T R Enterprises, Inc., the Fifth Circuit resolved whether an arbitration award should be enforced even though the parties did not expressly consent to entry of judgment on the award. Id at 1278. The court held that even if an arbitration agreement did not expressly provide that the parties consented to have a court enter judgment, a federal court's jurisdiction was invoked when the plaintiff filed suit in that court. Id. at 1279. Accordingly, "once invoked, the power of [the] court to enter a judgment on the arbitrator's award which was an outgrowth of the original action was sufficient to satisfy the jurisdictional requirements." Id; see also Specialty Healthcare Mgmt., Inc. v, St. Mary Parish Hospital, 220 F.3d 650, 653 n. 1 (5th Cir. 2000) (adopting T R Enterprises, Inc.'s holding that a court has authority to enter judgment on an award once the court's jurisdiction has been invoked). The court therefore concludes that IDTC invoked the court's authority to enter judgment on the arbitration award by removing to this court and requesting the court to compel arbitration. This is sufficient indication that IDTC consented to allow the court to confirm the award. Accordingly, the arbitration award in favor of Basic Capital should be confirmed.
Basic Capital asserts that IDTC consented to allow the court to enter judgment on the arbitration award because IDTC agreed to arbitrate under the American Arbitration Association ("AAA") rules, and AAA rules deem that an arbitration award is final, binding, and subject to entry of judgment unless parties agree otherwise. Basic Capital's Motion to Confirm at 8-9 (citing Mckee v. Home Buyers Warranty Corp., 45 F.3d 981, 985 (5th Cir. 1995)). IDTC did consent to arbitrate under AAA rules, and there is no indication that IDTC objected to the rules' mandate that an award will be final, binding, and subject to entry of judgment. The court therefore agrees with Basic Capital's argument that IDTC consented to entry of judgment by this court when IDTC agreed to arbitrate under AAA rules. This finding provides the court with an alternative ground to justify confirming the arbitration award.
III. Conclusion
For the reasons stated herein, Defendant International Depository Trust Corporation's Motion to Disallow Arbitration Award and to Direct the Plaintiff to Seek Relief from the Parties Charged with the Dissolution of the Defendant and Brief in Support is hereby denied. Plaintiff Basic Capital's Renewed Motion to Confirm Arbitration Award and Brief in Support is hereby granted; and the arbitration award, signed and published on February 21, 2001, and attached to Plaintiffs Motion to Recognize and Enforce Foreign Arbitral Award and Brief in Support, filed March 20, 2001, is hereby confirmed.