Yonir Technologies v. Duration Systems, 01 CIV.8462(CM).
| Decision Date | 25 November 2002 |
| Docket Number | No. 01 CIV.8462(CM).,01 CIV.8462(CM). |
| Citation | 244 F.Supp.2d 195 |
| Parties | YONIR TECHNOLOGIES, INC. and David Felder, Plaintiffs, v. DURATION SYSTEMS (1992) LIMITED, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Andrew J. Goodman, Kurzman, Eisenberg, Corbin, Lever & Goodman, LLP, New York, NY, for plaintiffs.
John F. Volpe, Alan B. Clement, Hedman & Costigan, New York, NY, for defendant.
Plaintiffs Yonir Technologies, Inc. ("Yonir") and David Felder ("Felder") and Defendant Duration Systems (1992) Ltd. ("Duration") are participating in an ongoing arbitration regarding the dissolution of their joint venture. See Yonir Technologies, Inc. and David Felder v. Duration Systems (1992) Limited. Case No. 19-104 0098801. A Demand for Arbitration was filed with the American Arbitration Association ("AAA") on September 4, 2001, and the arbitration is being held before a panel of three arbitrators ("the Panel")1. The Panel has issued a number of letter directives since arbitration began, but has not yet finally resolved all issues relating to the dissolution of the joint venture.
On October 22, 2002, the Plaintiffs petitioned the New York State Supreme Court, by an Order to Show Cause and Verified Petition ("Plaintiffs' Petition"), seeking to vacate five directives issued by the Panel. Plaintiffs asked that enforcement of these directives be stayed pending determination of their petition. The petition was supported by a Memorandum of Law in Support of Petitioners' Motion to Vacate an Arbitration Award. ("Plaintiffs' Memo."). One of the directives challenged by Plaintiffs required the parties to execute a contract with the Reston Group, a third-party service provider, by October 22, 2002. Pursuant to the request to stay the directives, the Honorable Bruce Allen of the New York State Supreme Court issued an order that, pending hearing of the motion, Plaintiffs not be required to execute The Reston Group contract. Judge Allen scheduled a hearing for October 24, 2002.
Defendant removed this action to federal court on October 23, 2002, pursuant to 28 U.S.C. §§ 1332 and 1441. On November 4, 2002, Plaintiffs' counsel asked for a hearing on the pending Order to Show Cause. On November 8, 2002, Defendant filed an Opposition to Plaintiffs' Motion to Vacate Arbitration Awards ("Defendant's Opposition"), and crossmoved for confirmation of an award issued in the September 17, 2002 letter. Defendant also requested that the Court issue orders mandating compliance with the challenged directives, including orders directing the petitioners: to sign The Reston Group Contract; to return $132,877.18, with interest; to the JV accounts, and to arbitrate in good faith. (Defendant's Opposition, p. 8-9).
On November 12, 2002, the parties appeared before this Court for a hearing on the Order to Show Cause. Earlier that day, Plaintiffs filed a Reply Memorandum in Support of the Motion to Vacate an Arbitration Award ("Plaintiffs' Reply") and Defendant filed an Answer to Plaintiffs' verified petition ("Defendant's Answer"). I extended Judge Allen's stay pending this decision.
I now deny the pending motions as explained below and vacate the stay issued by Judge Allen.
Defendant Duration is a corporation organized and existing under the laws of, and having its principal place of business in, the Country of Guernsey, in the Channel Islands. (Defendant's Answer, p. 2) Plaintiff Yonir is a New York Corporation. (Plaintiffs' Petition, p. 1). Plaintiff Felder is the President and sole stockholder of Yonir, and a resident of the State of New York, County of Westchester. (Plaintiffs' Petition, p.1).
In June 1992, Plaintiffs entered into a joint venture with a company that later assigned the joint venture to Duration. (Plaintiffs' Memo., p. 2). The joint venture operated in the State of New York. Its business was the procurement and sale of avionic parts for both civilian and military aircraft. The companies continued the joint venture until approximately August 2001, when Duration filed an action in this District, declaring the formal termination and dissolution of the Joint Venture and bringing an action for damages and other relief against Petitioners. (Plaintiffs' Memo., p. 2). In September 2001, the action was voluntarily discontinued, and the parties commenced an arbitration proceeding before the American Arbitration Association, pursuant to the arbitration provision of their joint venture agreement. This action was later transferred to the ICDR. (Reply Affidavit of Peter J. Mutino, Esq., November 12, 2002, ("Mutino Aff.") ¶ 3).
In the Claims for Relief Sought attached to their Demand for Arbitration, Yonir/Felder asked the arbitrators to set up a procedure for dividing the joint venture's inventory; to order Duration to reimburse them for the costs of operating the joint venture; and to award them damages for actions and failures of Defendant. (Claims for Relief Sought, Ex. 3 to the November 7, 2002 Affidavit of Jeffrey Campisi Esq. ("Campisi Aff.")). Defendant later filed a counter-claim for relief, asking the arbitrators for detailed relief to effectuate the wind up of the joint venture. (Claims for Relief Sought on Counterclaim, Ex. 56 to the Campisi Aff.). Defendant also sought damages. Id. The Panel has not yet held a hearing on all of the issues for which the parties require resolution (Defendant's Opposition, p. 1), but it has already issued a number of directives. Plaintiffs seek to vacate five of these directives. Defendant cross-moves to have an additional directive confirmed.
The parties agreed that the Panel should establish a procedure for the division of their physical inventory. (Defendant's Opposition, p. 5; Plaintiffs' Claim for Relief Sought, ¶ 1, Ex. 3 to Campisi Aff.; Defendant's Claims for Relief Sought on Counterclaim, ¶ 1, Ex. 56 to Campisi Aff.) The record reveals that the Panel held meetings and telephone conferences, and received written submissions from the parties' attorneys, on this issue. (Mutino Aff. ¶ s 2-11; Campisi Aff. ¶ s 24-48). Mr. Mutino, the attorney for Yonir/Felder, proposed at the first meeting that Yonir employees divide the inventory. (Campisi Aff. ¶ 24). Mr. Campisi, the attorney for Duration, subsequently submitted Defendant's sixteen-page counter-proposal to the Panel, with eight supporting exhibits attached. (Letter from Campisi to the AAA, Dec. 14, 2001, Ex. 5 to Campisi Aff.; Campisi Aff., ¶ 27). Plaintiffs were permitted to respond to the Defendant's proposal, and submitted a twenty-two page response. (Letter from Mutino to the AAA, Dec. 24, 2001, Ex. 6 to Campisi Aff.). A conference call was held between Counsel and the Panel to discuss the issue. (Letter to Counsel from AAA, January 24, 2002, Ex. 7 to Campisi Aff.). Both sides were given the opportunity to identify third-party vendors who could assist with the process of evaluating and dividing the inventory. (Letter to Counsel from AAA, January 24, 2002, Ex. 7 to Campisi Aff.; Letter from Campisi to AAA, February 6, 2002, Ex. 8 to Campisi Aff.; Letter from Mutino to Campisi, February 5, 2002, Ex. 9 to Campisi Aff.).
At the end of the selection process, the Panel chose The Reston Group to divide the inventory. By letter directive on May 22, 2002, the Panel ordered, "The parties are to go forward with the inventory project by engaging Reston according to the terms of its proposal." (Letter to Counsel from AAA, May 22, 2002, Ex. 13 to Campisi Aff). The Panel stated that it discussed Mr. Mutino's concerns regarding the "open-ended [contract] proposal" submitted by The Reston Group, but noted that Reston had advised that the proposal was as precise as possible. Id.
On June 27, 2002, The Reston Group advised the Panel that it could not reach an agreement with Yonir and Duration on the terms of the engagement, and was withdrawing its bid. (Letter to AAA from Reston Group, Ex. 15 to Campisi Aff.). Reston stated that it would only be willing to submit a new bid if certain principles were adhered to in contract negotiations. Id. One of these principles was that Reston would only deal with a single spokesperson. Id.
During a July 1, 2002 conference with counsel, the Panel informed the parties that the Reston Group would be submitting a new contract proposal, and that the Panel Chair would be the point person for communicating with Reston. (Mutino Aff. ¶ 9; Campisi Aff. ¶ s 41). On July 29, 2002, the Panel informed counsel that it had discussed The Reston Contract and that it would be discussing a final draft with The Reston Group. (Letter from AAA to Counsel, July 29, 2002, Ex. 47 to Campisi Aff.). According to a case status report prepared by Defendant for the ICDR case manager, the Panel undertook to "finalize The Reston Group Contract for the division of inventory." (Letter to ICDR from Campisi, August 15, 2002, Ex. 20 to Campisi Aff.). After reading the Defendant's case status report, Plaintiffs sent a letter to the ICDR manager indicating that they agreed with the portion of the status report about the Reston contract. (Letter to ICDR from Mutino, Aug. 15, 2002, Ex. 21 to Campisi Aff.). While neither party has submitted the Reston Group Contract as an exhibit, it appears that the Panel did in fact negotiate a contract with Reston, since the Panel issued the following directive on October 15, 2002:
The Panel requests that each party execute and return the Reston Group Agreement by October 22, 2002.
Plaintiff seeks to vacate that directive.
On January 10, 2002, Counsel for Duration Systems notified...
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