Storey v. Searle Blatt Ltd.

• Decision Date: 26 May 1988
• Docket Number: No. 88 Civ. 0623 (RWS).,88 Civ. 0623 (RWS).
• Parties: Nyall STOREY, Petitioner, v. SEARLE BLATT LTD., Respondent.
• Court: U.S. District Court — Southern District of New York

685 F. Supp. 80

Nyall STOREY, Petitioner, v. SEARLE BLATT LTD., Respondent.

No. 88 Civ. 0623 (RWS).

United States District Court, S.D. New York.

May 26, 1988.

Blutrich, Falcone & Miller, New York City, for petitioner; Michael D. Blutrich, of counsel.

Lynn, Ledwith, Quinlan & White, Garden City, N.Y., for respondent; Robert P. Lynn, Jr., of counsel.

OPINION

SWEET, District Judge.

Petitioner Nyall Storey has moved pursuant to 9 U.S.C. § 9 for an order confirming the arbitration award dated January 25, 1988. Respondent Searle Blatt, Ltd. has cross-moved under 9 U.S.C. § 10 for an order vacating the January 25 award. For the reasons set forth below, the motion to confirm the award is granted.

Background

Petitioner, a citizen and resident of Ireland, is actively engaged in the textile industry as a manufacturer and a converter of fabrics. Respondent is a textile garment manufacturer with offices in New York. Through an independent textile selling agent, petitioner and respondent entered into a contract dated February 13, 1985, pursuant to which petitioner sold and respondent purchased specified quantities of textile fabrics. In accordance with the contract, the fabrics were imported into the United States and stored at an inspection facility in New Jersey. One-third of the shipment was delivered to respondent and paid for through a letter of credit that had been issued to petitioner at respondent's request by Chemical Bank. The balance of the fabrics was held at the warehouse in New Jersey. Approximately two months later, the warehouse suffered a substantial fire, and the goods were destroyed.

Respondent refused to render payment for the outstanding invoice balance on the grounds that title and risk of loss for the fabrics had never passed to it. Contending that title and risk of loss had passed to respondent both under the contract and as a matter of statutory law, petitioner initiated arbitration proceedings against respondent, in accordance with the contract's arbitration clause and pursuant to the rules of the General Arbitration Council of the Textile Industry, seeking an award directing payment of the invoices for the balance of the fabrics purchased.

Petitioner first initiated arbitration proceedings on November 7, 1986. In the eight ensuing months, arbitrators were selected and a hearing was scheduled for July 23, 1987. Due to the unavailability of one of the arbitrators for that date, with the consent of the parties, the matter was rescheduled for a hearing on July 30, 1987. After the administering tribunal announced the scheduled hearing, counsel for respondent wrote to the tribunal requesting an adjournment because its principal witness, Searle Blatt ("Blatt"), would not be able to attend the scheduled hearing. The request was granted, and the arbitration was adjourned until October 1, 1987. Thereafter, counsel for respondent requested another adjournment again based upon the unavailability of Blatt. This request was granted, and the hearing was adjourned and rescheduled with the full consent of all parties for January 13, 1988.

On the morning of January 13, 1988, respondent's counsel requested a third adjournment on the grounds that Blatt would not be able to attend the hearing because of a death in his family that morning. Petitioner objected to another adjournment. After hearing arguments from both sides and adjourning briefly to consider the request, the arbitrators ruled that they would go forward with the hearing and determine at the end of the day whether it was necessary to keep the hearing open for additional testimony and evidence. Following the submission of evidence, the taking of testimony and argument from counsel, the arbitrators ruled the proceedings closed. On January 25, 1988, the arbitrators rendered a unanimous award directing respondent to pay to petitioner the aggregate sum of $70,232.75.

Confirmation of the Award

Petitioner contends that the petition to confirm should be granted in its entirety since the subject award is wholly proper and resulted from a proceeding conducted in strict conformity with law and with the controlling rules of the administering tribunal. The respondent's cross-petition to vacate is based solely upon the arbitrators' refusal to grant respondent's request for an adjournment on the morning of the hearing because of a death in Blatt's family.

A review of the chronology of the proceedings in this case and the conduct of the arbitration hearing supports a finding that the arbitrators acted reasonably and within the scope of their broad authority in denying the request for an adjournment and that respondent was not prejudiced by the denial of its request. In particular, the record indicates that (1) after its adjournment request was denied, respondent remained at the hearing and fully participated in the proceeding, (2) as respondent concedes, the arbitrators accepted into evidence all documents relevant to the case, and (3) after the hearings were closed, respondent undertook no action with respect to the pending award, but instead waited until after obtaining an adverse award to object to the arbitrators' refusal to grant a postponement.

Section 10(c) of the Federal Arbitration Act (the "Act") authorizes the court to vacate an arbitrators' award where "the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown." The granting or denying of an adjournment falls within the broad discretion of appointed arbitrators. See Fairchild & Co. v. Richmond, et al., 516 F.Supp. 1305, 1313 (D.D.C.1981); Dan River, Inc. v. Cal-Togs, Inc., 451 F.Supp. 497, 503-04 (S.D.N.Y.1978). Because the expeditious resolution of a dispute is one of the principal purposes for referring a matter to arbitration, the Act limits the court's review to a determination of whether the arbitrators were guilty of misconduct in denying a request for an adjournment. Fairchild & Co., 516 F.Supp. at 1313. As the court in Fairchild & Co. stated, "assuming...