Cheruvoth v. Seadream Yacht Club, Inc.
| Decision Date | 22 October 2020 |
| Docket Number | CASE NO.: 1:19-cv-24416-GAYLES/OTAZO-REYES |
| Parties | RAMESH CHERUVOTH, Plaintiff, v. SEADREAM YACHT CLUB, INC., and SEADREAM YACHT CLUB LIMITED CORPORATION, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
THIS CAUSE comes before the Court on Defendants SeaDream Yacht Club, Inc., and SeaDream Yacht Club Limited Corporation's (collectively "Defendants") Motion to Dismiss and to Compel Arbitration [ECF No. 13]. The Court has reviewed the Motion and the record and is otherwise fully advised. For the reasons that follow, Defendants' Motion is granted in part and denied part.
Plaintiff Ramesh Cheruvoth,1 who is domiciled in Saudi Arabia, brings this action against Defendants SeaDream Yacht Club, Inc., a corporation registered and incorporated in Florida, and SeaDream Yacht Club Limited Corporation, a foreign corporation registered and incorporated in the Bahamas, alleging claims for quantum meruit, breach of implied contract, unjust enrichment, and breach of oral contract against Defendants. [ECF No. 1]. The parties' dispute centers aroundtwo agreements titled "Standard Yacht Hire Agreement" (the "Agreements") to charter a small cruise ship for several days. Both Agreements include an arbitration clause that states in relevant part:
Section 14, Governing Law and Venue: This Agreement is governed by Norwegian law, except for Norwegian choice of law principles. All disputes arising out of or in connection with this Agreement shall be referred to arbitration in accordance with the Norwegian Arbitration Act 14 May 2004 no. 25. The arbitration court shall be composed of three arbitrators. The chairman shall be a Norwegian legal professional. The seat of the arbitral proceedings shall be in Oslo, Norway, and the proceedings shall be conducted in the English language.
[ECF No. 13 at 2 ¶¶ 3, 6]; see also [ECF No. 13-1 at 9]; [ECF No. 14-1 at 6]; [ECF No. 14-3 at 6]. Plaintiff disputes the validity of both Agreements, alleging that the first was never executed or agreed to by the parties, [ECF No. 1 at 4 ¶ 20], and the second is null and void because certain conditions precedent were never met. Id. at 5 ¶ 23; see also [ECF No. 14 at 2]. Defendants, however, argue that Plaintiff's claims arise out of the Agreements and must therefore be submitted to arbitration. In their Motion, Defendants seek to compel arbitration per the terms of the Agreements and dismiss this action. Defendant SeaDream Yacht Club, Inc., alternatively seeks dismissal or summary judgment in its favor as an improper party to the action.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (the "New York Convention" or the "Convention"), codified at 9 U.S.C. §§ 201-208, "is a multilateral treaty that addresses international arbitration." GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1644 (2020) (citation omitted). The goal of the New York Convention is "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed . . . in the signatory countries."Scherk v. Alberto-Culver Co., 417 U.S. 506, 519-20 n.15 (1974) (citation omitted). "In 1970, the United States acceded to the New York Convention, and Congress enacted implementing legislation in Chapter 2" of the Federal Arbitration Act (the "FAA"). Outokumpu Stainless USA, LLC, 140 S. Ct. at 1644 (citation omitted). "[F]ederal courts have original [subject-matter] jurisdiction over any action or proceeding falling under the Convention . . . because they are deemed to arise under the laws and treaties of the United States." Ytech 180 Units Miami Beach Invs. LLC v. Certain Underwriters at Lloyd's, London, 359 F. Supp. 3d 1253, 1259 (S.D. Fla. 2019) (citations and internal quotation marks omitted).
The Court's inquiry on a motion to compel arbitration under the New York Convention is limited. Bautista v. Star Cruises, 396 F.3d 1289, 1294 (11th Cir. 2005) (citations omitted). An arbitration agreement "falls under the Convention" where the agreement "aris[es] out of a legal relationship, whether contractual or not, which is considered commercial," and "which is [not] entirely between citizens of the United States . . . ." 9 U.S.C. § 202. The Court must compel arbitration where the four jurisdictional prerequisites under the New York Convention are met and where the New York Convention's affirmative defenses do not apply. See Bautista, 396 F.3d at 1294-95 (citations and footnote omitted). The four jurisdictional prerequisites are met when:
(1) [T]here is an agreement in writing within the meaning of the Convention; (2) the agreement provides for arbitration in the territory of a signatory of the Convention; (3) the agreement arises out of a legal relationship, whether contractual or not, which is considered commercial; and (4) a party to the agreement is not an American citizen, or that the commercial relationship has some reasonable relation with one or more foreign states.
Id. at 1294 n.7 (citation omitted); see also 9 U.S.C. § 202. The New York Convention "generally establishes a strong presumption in favor of arbitration of international commercial disputes." Bautista, 396 F.3d at 1295 (citation omitted). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration . . . ." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).
Even where the four jurisdictional prerequisites are satisfied, the party opposing arbitration may bring affirmative defenses to the arbitration agreement. Article II of the New York Convention provides that an arbitration agreement is unenforceable where "the agreement is null and void, inoperative or incapable of being performed." Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1263, 1272 (11th Cir. 2011) (internal citations and quotation marks omitted). Furthermore, the "null and void clause [is] confined to standard breach-of-contract defenses and [] the limited scope of the Convention's null and void clause must be interpreted to encompass only those situations—such as fraud, mistake, duress, and waiver—that can be applied neutrally on an international scale." Id. at 1272 (internal citations and quotation marks omitted). "The Eleventh Circuit has interpreted the Convention's 'null and void' clause to limit the bases upon which an international agreement may be challenged to standard breach-of-contract defenses." Ytech 180 Units Miami Beach Invs. LLC, 359 F. Supp. 3d at 1266-67 (citing Bautista, 396 F.3d at 1302).
Plaintiff asserts that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). [ECF No. 1 at 2 ¶ 5]. Plaintiff states that he is domiciled in Saudi Arabia, that Defendant SeaDream Yacht Club, Inc., is a corporation registered and incorporated—and thus domiciled—in Florida, and that SeaDream Yacht Club Limited Corporation is a foreign corporation registered and incorporated—and thus domiciled—in the Bahamas. Id. District courts enjoy 28 U.S.C.§ 1332(a)(2). "Citizenship is equivalent to 'domicile' for purposes of diversity jurisdiction." Travaglio v. Am. Exp. Co., 735 F.3d 1266, 1269 (11th Cir. 2013) (quoting McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002)). Upon consideration of the parties' domicile, the Court finds that diversity jurisdiction exists in this action. However, because the issues in the Motion relate to a federal statute—namely, the provisions of the FAA—the Court also finds that federal question jurisdiction exists. See 28 U.S.C. § 1331 (). The Court thus proceeds to consider the merits of the Motion.
Defendants argue that Plaintiff's claims are subject to arbitration pursuant to the arbitration clause in the Agreements. Plaintiff opposes arbitrating his claims, arguing that the Agreements are null and void. The Court first determines whether the Agreements satisfy the four jurisdictional prerequisites under the New York Convention and then considers Plaintiff's arguments against compelling arbitration.
Although Plaintiff does not challenge the four jurisdictional prerequisites and only attempts to bring affirmative defenses, the Court nonetheless evaluates the prerequisites against the Agreements and finds that they are met. The Agreements satisfy the first jurisdictional prerequisite because they are agreements in writing that reflect the parties' signatures and contain an arbitration clause, titled "Section 14, Governing Law and Venue". See [ECF No. 13-1]; [ECF No. 14-1]; [ECF No. 14-3]; see also, e.g., Bendlis v. NCL (Bahamas), Ltd., 112 F. Supp. 3d 1339, 1343-44 (S.D. Fla. 2015). The second jurisdictional prerequisite is met because Norway is a signatory to the treaty implementing the New York Convention. See Azavedo v. Royal Caribbean Cruises, Ltd., 4 F.Supp. 3d 1357, 1360 (S.D. Fla. 2014) (citation omitted) ( Norway's status as a signatory to the New York Convention); Contracting States - List of Contracting States, N.Y. Arb. Convention, http://www.newyorkconvention.org/list+of+contracting+states (last visited Oct. 21, 2020); Status: Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (the "New York Convention"), U.N. Comm'n on Int'l Trade Law,...
To continue reading
Request your trial