Geis Constr. S. v. MDC Home Improvements, Inc.

• Decision Date: 29 August 2022
• Docket Number: 2:21-CV-02407 (LDH) (ST)
• Parties: GEIS CONSTRUCTION SOUTH, LLC, Claimant, v. MDC HOME IMPROVEMENTS, INC. Respondent.
• Court: U.S. District Court — Eastern District of New York

GEIS CONSTRUCTION SOUTH, LLC, Claimant,
v.
MDC HOME IMPROVEMENTS, INC. Respondent.

No. 2:21-CV-02407 (LDH) (ST)

United States District Court, E.D. New York

August 29, 2022

REPORT AND RECOMMENDATION

STEVEN L. TISCIONE UNITED STATES MAGISTRATE JUDGE

Claimant Geis Construction South, LLC (“Geis” or “Claimant”) commenced this action to confirm an arbitration award against Respondent MDC Home Improvement Inc. (“MDC” or “Respondent”). To date, MDC has not answered or otherwise responded to the Complaint. Before this Court is Claimant's motion to seek a declaration that MDC was properly served with the Summons and the Application to Confirm Arbitration Award; and to confirm the arbitration award against MDC.

The Honorable LaShann DeArcy Hall referred Claimant's Motion to the undersigned to issue a Report and Recommendation. For the reasons states below, this Court respectfully recommends that Claimant's Motion be GRANTED.

I. BACKGROUND

Claimant is a construction company with its principal place of business in Ohio. See Geis App. to Confirm Arbitration Award (“Geis App.”) ¶ 1, DE 1.

Respondent is a construction company with its principal place of business in New York. Id. at ¶ 2. Respondent's President is Jaime Delahunt. See Cl.'s Mem. of Law at 3, DE 16.

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The underlying case involves contractual disputes between the parties arising out of Geis's Wonder Lofts Project (“the Project”) in Hoboken, New Jersey. See Geis App. ¶ 3. In 2019, Geis entered into two subcontracts with MDC (collectively, “Subcontracts”), wherein MDC agreed to perform brick, concrete, and similar masonry work on the Project. Id. The first Subcontract was signed in June 2019 and the second Subcontract was signed in October 2019. Id. Mr. Delahunt signed both the Subcontracts on behalf of MDC. Geis App., Ex. A and B, DE 1. Each Subcontract included an arbitration clause which provided that all claims, disputes, and breaches arising out of the Subcontracts are to “be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association.” Geis App. at ¶ 4.

A. Arbitration Award against MDC

Multiple disputes related to the Project subsequently arose between Geis and MDC. Id. ¶ 5. On May 14, 2020, Geis initiated arbitration against MDC with the American Arbitration Association. Id. ¶ 6. MDC did not appear at or otherwise participate in the Arbitration hearing. Id. ¶ 8; see also Geis App., Final Award at 1-2, Ex. C, DE 1.

On April 1, 2021, the arbitration proceedings were concluded, and an Award was rendered by the panel. The arbitration panel held, among other things, that “Respondent was properly served with Claimant's Demand for Arbitration.” See Geis App., Final Award at 2, Ex. C, DE 1. The panel found that “[t]here is no question that Respondent breached the [S]ubcontracts it entered into with Claimant causing substantial damage”. Id. Accordingly, the arbitration panel awarded Geis with damages of $9,954,713.86, attorney's fees of $45,139.75, fees and expenses of arbitration of $21,977.50, totaling up to $10,021,831.10. Id. at 2-4. The sum was to be paid “on or before ten (10) days from the date of this Award,” with interest beginning to accrue if unpaid after that point. Id. at 4.

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B. The Related Action against MDC's President Delahunt^[1]

On August 20, 2020, before the conclusion of arbitration and the initiation of this action, Geis filed a separate/related lawsuit against Mr. Delahunt, in his personal capacity, alleging that he fraudulently induced Geis into entering into the two Subcontracts (the “Related Action”). Geis v. Delahunt, 20-CV-3834 (E.D.N.Y.), DE 1. Mr. Delahunt was served on September 14, 2020 but did not initially appear in that action. Id., DE 10.

When the arbitration concluded, Geis stated in its Status Report dated April 8, 2021, that it intended to “to promptly seek confirmation of this arbitration award in the U.S. District Court for the Eastern District of New York.” Id., DE 12. Geis also explained that it further intended “to seek consolidation of the arbitration confirmation action with the [fraudulent inducement] action” given the related nature of the lawsuits. Id. Geis has not yet made any motion to that end. Instead, on April 26, 2021, Geis commenced the instant action to confirm the Award against MDC.

Meanwhile, the Clerk entered a default against Mr. Delahunt in the Related Delahunt Action on April 14, 2021. Id., DE 14. On December 2, 2021, the Honorable James Wicks granted the default judgment as to Mr. Delahunt's liability but denied Geis' request to establish damages without a damages hearing. Id., DE 19. Judge Wicks ordered Geis to serve the Report & Recommendation (“R&R”) on Delahunt via first-class mail and email, following which, Mr. Delahunt promptly appeared on December 10, 2021 and moved to vacate the judgment against him. Id., DE 21, 22.

C. The Instant Action against MDC^[2]

On April 30, 2021, Geis commenced this lawsuit to confirm the Award rendered by the arbitration panel on April 1, 2021. Geis App., DE 1. Geis served the process upon MDC on

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several occasions: First, around May 2021, Claimant retained a private process server to serve Respondent with the Application to Confirm Arbitration Award and the Summons. See Cl.'s Mem. of Law at 3; see also Summons Issued to MDC, DE 5. This service attempt was allegedly unsuccessful. Id.

Second, in June 2021, Claimant obtained additional addresses for Respondent through the use of a “paid skip-trace search”. See Cl.'s Mem. of Law at 3. Claimant then served MDC with the Application to Confirm Arbitration Award and Summons at the following address: 1 Argyle Road, Plainview, NY 11803, which is the same address where Claimant served Delahunt with the R&R in the Related Action (following which Mr. Delahunt made an appearance). Id.; see Aff. of Service, DE 11. This service attempt was allegedly successful. See Cl.'s Mem. of Law at 3.

Third, out of an abundance of caution in July 2021, Claimant also arranged to have the U.S. Marshal's Office in the Eastern District of New York (“U.S. Marshal”) serve the Application to Confirm Arbitration Award and Summons upon Respondent pursuant to the Federal Arbitration Act requirements. See 9 U.S.C.§ 9. Claimant allegedly incurred approximately $600 in this unsuccessful service effort. See Cl.'s Mem. of Law at 3. The U.S. Marshal's Office made three unsuccessful attempts to serve MDC in September and October of 2021. Id.; see Summons ReIssued Returned Unexecuted, DE 15. Accordingly, this service attempt was also unsuccessful. Id.

Last, in October 2021, Claimant arranged for a second time to have the U.S. Marshal's Office serve MDC, which allegedly caused Claimant to incur further costs. See Nucifora's Supp. Decl. at 3, DE 19. In January 2022, U.S. Marshal made three additional unsuccessful attempts to serve MDC. Id. As a result, this service attempt was also unsuccessful. Id.

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In February 2022, Geis filed a supplemental declaration but did not provide any information or even mention the Related Action. See Nucifora Decl., DE 19.

II. LEGAL STANDARD

Ordinarily, “the confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court.” Laundry, Dry Cleaning Workers & Allied Industries Health Fund, Unite HereA v. Jung Sun Laundry Group Corp., 2009 WL 704723 at 4 (E.D.N.Y. Mar. 16, 2009); Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir.1984) (citations omitted). Accordingly, an arbitration award should be enforced, “unless the opposing party shows that the award was based on a manifest disregard for the law [,]” Trs. of the UNITE HERE Nat'l Health Fund v. JY Apparels, Inc., 535 F.Supp.2d 426, 428-29 (S.D.N.Y.2008) (citing Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 98 L.Ed. 168 (1953)), and “the showing required to avoid confirmation is very high.” D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir.2006) (citing Willemijn...