General Elec. Co. v. Anson Stamping Co. Inc.

• Decision Date: 30 March 2006
• Docket Number: No. Civ.A.3:04-CV-401-R.,Civ.A.3:04-CV-401-R.
• Citation: 426 F.Supp.2d 579
• Parties: GENERAL ELECTRIC CO. Plaintiff v. ANSON STAMPING CO. INC., et al. Defendants
• Court: U.S. District Court — Western District of Kentucky

426 F.Supp.2d 579

GENERAL ELECTRIC CO. Plaintiff v. ANSON STAMPING CO. INC., et al. Defendants

No. Civ.A.3:04-CV-401-R.

United States District Court, W.D. Kentucky, at Louisville.

March 30, 2006.

Hal Nance Bogard, General Electric Appliances, John David Dyche, Phillip A. Martin, Tachau, Maddox, Hovious & Dickens, Louisville, KY, for Plaintiff.

J. Bruce Miller, Michael J. Kitchen, J. Bruce Miller Law Group, Louisville, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

RUSSELL, District Judge.

This matter is before the Court on the motion of Anson Stamping Company, Inc. and Anson Machine & Manufacturing Company ("Anson") to amend the judgment entered by the Court on August 25, 2005 (DNs 32, 33). The judgment denied the motion of General Electric Company (GE) to vacate a $1,020,029.90 arbitration award entered in favor of Anson by retired Judge, Michael 0. McDonald on April 27, 2004. Anson requests the Court to amend its judgment to set forth the specific amount of interest due based on that portion of the award which provides that "Anson shall recover as an award from General Electric Company the sum of $1,020,029.90 with interest as on a judgment starting ten (10) days hence." (DN 33, Exh. 1 Ruling in Arbitration).

ARGUMENTS

Anson argues that the above language refers to KRS 360.040, Kentucky's post-judgment interest statute. The statute provides, "A judgment shall bear twelve percent (12%) interest compounded annually from its date." Based on this 12% rate, Anson calculates that it is due annual interest of $122,403.58 for May 7, 2004, until May 6, 2005, the first year beginning ten days after entry of the revised arbitration award. Anson calculates that it is entitled to receive $375.59 in daily interest for the second year of post-award annual interest from May 7, 2005, until the date on which the amended judgment is entered.¹ Anson has tendered, along with its reply brief, a proposed order and judgment that construes its motion to amend as being a request to confirm the arbitration award pursuant to Section 9 of the Federal Arbitration Act, 9 U.S.C. § 9.

General Electric has filed an opposition to Anson's motion to alter. GE argues that Anson is time-barred from seeking confirmation of the arbitration award based on the statute of limitations created by 9 U.S.C. § 9 (1999), which provides:

If the parties in their [arbitration] agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made, any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within such award is made.

9 U.S.C. § 9 (1999) (emphasis added). See Photopaint Technologies, LLC v. Smartlens Corp., 335 F.3d 152 (2nd Cir.2003) (holding that § 9 of the FAA imposes a one-year statute of limitations on the filing of a motion to confirm an arbitration award). But see, Kentucky River Mills v. Jackson, 206 F.2d 111, 120-21 (6th Cir.), cert. denied, 346 U.S. 887, 74 S.Ct. 144, 98 L.Ed. 392 (1953); Wachovia Securities, Inc. v. Dominic Gangale, 125 Fed.Appx. 671, 676 (6th Cir.2005) ("the district court correctly noted that the limitation on the time for seeking confirmation in the statute [9 U.S.C. § 9] is permissive, not mandatory . . .") (citing Kentucky River Mills).

If Anson is not procedurally barred, GE argues that the reference to "interest as on a judgment. . . ." in the arbitration award does not permit the Court to impose 12% interest via KRS § 360.040. Post-judgment interest is not a matter of state substantive law reasons GE, but rather one of federal law pursuant to 28 U.S.C. § 1961. In re Poli, 298 B.R. 557, 563 (Bkrtcy.Va.2003). The arbitration award should be treated as the equivalent of a federal judgment, according to GE. Estate of Riddle v. Southern Farm Bureau, 421 F.3d 400, 409 (6th Cir.2005). Therefore, the controlling statute for calculating interest is supposedly 28 U.S.C. § 1961, rather than KRS 360.040. Interest from the date of entry of Judge McDonald's award should be imposed at a rate that of 1.5%, the weekly average of the one-year constant maturity treasury yield as published by the Board of Governors of the Federal Reserve system for the calendar week before the judgment. See 28 U.S.C. § 1961. GE calculates that the interest owed on the first year following the arbitration award using this rate would be merely $15,264.75 with another $6,452.40 due through September 26, 2005, for a daily" interest rate of $42.45 during the second year following entry of the amended arbitration award.

GE continues to argue that if the Court should find that KRS 360.040 is the appropriate statute to determine post-award interest, then this Court should conduct its own evidentiary hearing based on the language of KRS 360.040 that provides,

When a claim for unliquidated damages is reduced to judgment, such judgment may bear less interest than twelve percent (12%) if the court rendering such judgment, after a hearing on that question, is satisfied that the rate of interest should be less than twelve percent (12%).

KRS 360.040 (Michie 1982). GE insists that a 12% interest rate is wildly in excess of any reasonable return that could have been earned by Anson since the time that the arbitration award was entered; therefore, the Court should permit GE to submit proof on the appropriate rate of interest.

Finally, GE asks that the Court clarify its prior final order to weigh the interests of the intervening secured creditors. GE points out that the Sixth Circuit may dismiss any appeal without prejudice under Daleure v. Kentucky, 269 F.3d 540 (6th Cir.2001) and General Acquisition v. Gen-Corp, 23 F.3d 1022 (6th Cir.1994) if the Court does not weigh the `competing factors against entry of a final judgment caused by the presence of these intervening creditors.

Anson counters in its reply that Kentucky River Mills holds the language of 9 U.S.C. § 9 (1999) to be permissive rather than mandatory, a holding that the Wachovia Securities case confirms. (DN 37) Anson also insists that the arbitration award was never intended to be, and is not, a judgment entered by a federal court. The decisions cited by General Electric all are federal cases, and therefor do not apply in the present context. Further, Judge McDonald intended by his award that interest be added to the quantum meruit recovery to ensure that Anson is fully compensated for the inevitable delays due to General Electric's resistance to making payment. Anson points out that GE never previously complained about the interest component of the award. Anson concludes that the arbitration award is subject to KRS 360.040, which remains the substantive law of Kentucky that the parties agreed to apply in PSA 2. No hearing is required, or even permissible, at this stage of the proceedings, to alter the plain language of the arbitration award, which expressly requires that Anson recover $1,020,029.90 "with interest as on a judgment starting ten (10) days hence." (DN 37, Exh. 1, Ruling in Arbitration).

LEGAL ANALYSIS

Confirmation of the Award.

The first task for the Court is to determine whether Anson's motion to amend the final order of August 25, 2005, may be addressed on its merits as a motion to confirm the arbitration award. To answer this question, the Court must decide whether the language of Section 9 of the FAA is merely permissive, so that the passage of more than one year after entry of the arbitration award will not bar this Court from confirming the award now that the motion to vacate has been denied; or, whether the language of § 9 of the FAA creates a mandatory statute of limitations that compels the prevailing party at arbitration to bring a timely motion to confirm "within one year after the award is made. . . ." or be left with only an action of law. 9 U.S.C. § 9 (1999).

Here, the disputed award was entered on April 27, 2004. Not until Anson filed its reply in support of its motion to amend on October 11, 2005, nearly six months beyond the presumptive deadline, did, Anson specifically request confirmation by name. If the language of 9 U.S.C. § 9 (1999) is a mandatory statute of limitations, that requires a formal "motion to confirm," then Anson may be time-barred from seeking confirmation, absent some other consideration such as tolling of the limitation period or a liberal construction of what constitutes a motion to confirm. Without confirmation, Anson will be required to file a separate action at law to attempt to collect its favorable arbitration award. On the other hand, if the language of 9 U.S.C. § 9 (1999) is merely permissive based on the use of the phrase "may apply to the court so specified for an order confirming the award," then Anson's request for confirmation will easily overcome GE's procedural challenge. 9 U.S.C. § 9 (1999) (emphasis added).

Unfortunately, the language of § 9 that relates to confirmation is far from clear. The ambiguity in the language of the statute has resulted in a split among the federal circuit courts on this exact issue. See Connolly v. Arthur Andersen, LLP, No. 04 C 7458, 2005 WL 1206516 at *3 (N.D.Ill. Feb. 24, 2005) ("Debate exists as to whether the language in § 9 constitutes a mandatory statute of limitations period."); Teresa Elliott, Conflicting Interpretations of the One-Year Requirement on Motions to Confirm Arbitration Awards, 38 Creighton L.Rev. 661, 662 (April 2005) ("Currently, there exists a circuit court split regarding language in § 9 of the FAA.") Thomas Oehmke, 3 Commercial Arbitration § 128:22 (West 2005) ("The federal circuits are divided on...