Slavin et al v. Imperial Parking (U.S.), LLC
MEMORANDUM OPINION AND ORDER granting in part and denying in part 35 Motion to Confirm Arbitration Award; Judgment is entered in Plaintiff's Favor against the Defendant on Count II; granting 41 Motion to Dismiss Count I of Defendants Amended Counterclaim in part and to dismiss Counts III, IV, and VI in their entirety. Signed by Judge Paul W. Grimm on 6/19/2017. (jf3s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MARC R. SLAVIN, et al.,
IMPERIAL PARKING (U.S.), LLC,
Civil Case No.: PWG-16-2511
MEMORANDUM OPINION AND ORDER
Plaintiffs/Counter-Defendants MarcParc Valet, Inc., and MarcParc, Inc. and their sole
shareholder, Marc R. Slavin (collectively, “MarcParc”), filed suit against Defendant Imperial
Parking (U.S.), LLC (“Impark”), claiming breach of contract in Count I and seeking to confirm
and enforce an arbitration award against Defendant in Count II. Compl., ECF No. 2. Impark
removed to this Court, ECF No. 1, and filed a Counterclaim ECF No. 33, which it later amended
to clarify the relief it sought, without altering its counterclaims, ECF No. 52.
counterclaims for breach of two contracts: an Asset Purchase Agreement (Count I) and a
Transition Services Agreement (Count II), fraudulent inducement (Count III), breach of duty of
good faith and fair dealing (Count IV), tortious interference with contractual relations and
prospective economic advantage (Count V), and civil conspiracy (Count VI). Am. Countercl.
Pending is MarcParc’s Motion to Confirm Arbitration Award, seeking entry of judgment in its
favor on Count II and to have that judgment made final pursuant to Rule 54(b), Pls.’
Confirmation Mot., ECF No. 35, as well as MarcParc’s Motion to Dismiss Count I of
Defendant’s Amended Counterclaim in part and to dismiss Counts III, IV, and VI in their
entirety, Pls.’ Dismissal Mot., ECF No. 41.1 Because I find that Impark’s challenge to the award
is untimely, I will grant MarcParc’s Motion to Confirm Arbitration Award and enter judgment in
MarcParc’s favor on Count II, although I will not enter a final judgment pursuant to Rule 54(b).
Impark concedes that Count I of its Amended Counterclaim should be dismissed in part if
MarcParc’s Motion to Confirm Arbitration Award is granted. Additionally, res judicata bars
Counts III, IV, and VI of the Amended Counterclaim. Accordingly, I will grant MarcParc’s
Motion to Dismiss Count I of Defendant’s Amended Counterclaim in part and to dismiss Counts
III, IV, and VI in their entirety. This lawsuit will proceed with regard to the remaining claims –
Count I of Plaintiffs’ Complaint and Counts II, V, and part of Count I of Impark’s Amended
Counterclaim. Discovery is set to close on June 26, 2017, and a status report is due July 10,
2017, after which I will schedule a status conference.
MarcParc and Impark entered into an Asset Purchase Agreement (“APA” or “Purchase
Agreement”) on March 10, 2015, under which MarcParc, a company that operated public
parking lots and garages in Washington, D.C., Virginia, and Maryland, “sold substantially all of
its assets” to Impark. Pls.’ Confirmation Mem. ¶¶ 1–2; Def.’s Opp’n to Confirmation 3; APA 1,
ECF No. 35-2. The Purchase Agreement set the price at $7,430,000.00, but the parties agreed
that the “amount was to be adjusted, depending on various subsequent events.” Pls.’
Confirmation Mem. ¶ 5; APA §§ 3.1, 6.1(a). Relevantly, Impark paid $6,430,000.00 at closing
(minus deductions not relevant here), with the understanding that the initial payment could be
The parties fully briefed the Motion to Confirm Arbitration Award, ECF Nos. 35-1, 39, 44, and
the Motion to Dismiss, ECF Nos. 41-1, 45, 47. I refer to the parties’ briefs regarding MarcParc’s
Motion to Confirm Arbitration Award as “Pls.’ Confirmation Mem.,” “Def.’s Opp’n to
Confirmation,” and “Pls.’ Confirmation Reply,” and I refer to the parties’ briefs regarding
MarcParc’s Motion to Dismiss as “Pls.’ Dismissal Mem.,” “Def.’s Opp’n to Dismissal,” and
“Pls.’ Dismissal Reply.” A hearing is not necessary. See Loc. R. 105.6
augmented by a “Holdback Amount,” with MarcParc receiving up to an additional $1 million if
none of MarcParc’s leases and/or management agreements for its parking facilities was cancelled
within 120 days after March 10, 2015 (the “Holdback Period”); that amount would be reduced by
the stipulated economic values of any parking facilities with such cancellations, and MarcParc
could end up owing money to Imperial if the total value of the facilities with cancellations
exceeded $1 million. Pls.’ Confirmation Mem. ¶ 6; Def.’s Opp’n to Confirmation 3–4; APA
According to MarcParc, “the parties also orally agreed that MarcParc would receive a
credit for any new contracts obtained during the Holdback Period due to MarcParc’s efforts,”
which “could be offset against any deduction from the Holdback Amount owed to Impark but
could not result in an affirmative increase in the Purchase Price.” Pls.’ Confirmation Mem. ¶ 7.
MarcParc asserts that “[t]he agreement concerning MarcParc’s credit was memorialized in an
email exchange a few hours after execution of the APA.” Id.; Mar. 10, 2015 Email, ECF No. 353 (email from MarcParc’s attorney Steven Friedman to Impark’s attorney Brian Schlect, copied
to Marc Slavin and Impark’s other attorney Darren Nakata, noting that “neither Section 6.8(a)
nor Schedule S w[as] changed to incorporate the concept that if MarcParc pick[ed] up any new
business during the 120 holdback period, that new business could offset the holdback amount,” a
concept that Friedman had raised in a previous email to Impark’s attorneys; responsive email
from Schlect, stating that Nakata would “confirm with [Friedman] Impark’s agreement to the
concept”). Impark insists that, to the contrary, the Purchase Agreement had a “zipper clause,”
APA § 27.1, and provided that “[n]o amendment, modification, supplement, termination or
waiver of any provision of this Agreement will be effective unless in writing signed by the
appropriate party [and] . . . [e]-mails shall not change, modify, alter or affect the terms and
conditions of this Agreement,” thereby precluding any oral or e-mailed amendment. Def.’s
Opp’n to Confirmation 4 n.3 (quoting APA § 27.2).
The Purchase Agreement provided that Impark would deliver its calculation of the
Holdback Amount to MarcParc thirty days after the conclusion of the Holdback Period. Pls.’
Confirmation Mem. ¶ 8; APA § 6.8(b). Then, if the parties disagreed about the Holdback
Amount and were unable to resolve their dispute, they would “submit the disputed matters to
Grossberg Company . . . (the ‘Independent Accountants’), to make a final determination of the
calculation.” Pls.’ Confirmation Mem. ¶¶ 9–10; APA § 6.8(b)(iii). The Purchase Agreement
The Parties shall instruct the Independent Accountants promptly to determine
solely with respect to the disputed items and amounts so submitted whether and to
what extent, if any, the calculation requires adjustment. [Impark] and [MarcParc]
shall make available to the Independent Accountants all relevant books and
records and other items reasonably requested by the Independent Accountants.
The Parties shall request that the Independent Accountants deliver to [Impark]
and [MarcParc], as promptly as practicable but in no event later than 30 days after
its retention, a report which sets forth its resolution of the disputed items and
amounts and its calculations. The decision of the Independent Accountants shall
be final, conclusive and binding on the Parties, except for fraud, manifest error or
failure to adhere to the [stipulated economic values]. The costs and expenses of
the Independent Accountants shall be borne pro rata by the Parties in accordance
with the difference between each Party’s proposed calculations and the
calculation calculated by the Independent Accountants. Each Party agrees to
execute, if requested by the Independent Accountants, a reasonable engagement
letter, including customary indemnities in favor of the Independent Accountants.
APA § 6.8(b)(iii). The parties agree that this is an arbitration clause, even though it refers to an
independent accountant rather than an arbitrator. See Pls.’ Confirmation Mem. ¶ 26; Def.’s
Opp’n to Confirmation 1–2.
In calculating the Holdback Amount, Impark determined that it was not obligated to pay
any of the $1 million to MarcParc, and instead, MarcParc owed it $108,803.80. Holdback
Refund Sched., ECF No. 35-4. MarcParc disputed the amount, believing that it was entitled to
the full $1 million. Holdback Refund Dispute Notice, ECF No. 39-1; Dec. 10, 2015 Ltr. to
Grossberg 7, ECF No. 39-2. MarcParc asserted that the Holdback Refund Schedule did “not
reflect and/or take into account any new revenue generated from and attributable to new parking
facility locations that were added to the inventory of locations since the Asset Purchase
Agreement was signed and closed,” insisting that the new revenue was “supposed to be taken
into account as off-sets against any loss of revenue resulting from the termination of any
contracts during the Holdback Period.” Holdback Refund Dispute Notice 2. According to
MarcParc, the new revenue exceeded $1 million. Dec. 10, 2015 Ltr. to Grossberg 7.
Unable to resolve the dispute, MarcParc submitted it to Richard Hill of Grossberg
Company (“Grossberg”) on December 10, 2015 and notified Impark of the submission. Dec. 10,
2015 Ltr. to Grossberg. Although MarcParc had identified Grossberg as an independent
accountant when Impark asked it to identify one for purposes of dispute resolution, Grossberg
had “provided income tax and consulting services to MarcParc, Inc. for approximately eight
years.” Engagement Ltr. 2, ECF No. 35-7. Impark insists that, contrary to MarcParc’s assertions
(Pls.’ Confirmation Mem. ¶ 11 (“Plaintiffs contend this was disclosed to Impark when Section
6.8(b)(iii) was drafted. . . . Additionally, Slaving contends he personally notified Impark on
numerous occasions through telephone and email communications that Grossberg was his
accountant . . . .”)), MarcParc never notified Impark of its relationship with Grossberg.2 Nakata
Aff. ¶¶ 5–7, ECF No. 39-6. Thus, unaware of the relationship, Impark made its submission to
As Impark acknowledges, Def.’s Opp’n to Confirmation 16, over a year earlier, in a December
8, 2014 email to Grieve, MarcParc’s COO Paul Harbolick stated that MarcParc “use[d]
Grossberg Company a local CPA firm to prepare the [tax] returns.” Dec. 8, 2014 Email, ECF
No. 39-10. Yet, Impark asserts that Grieve “would not have had any reason to review or be
consulted about the dispute resolution provisions . . . of the APA.” Def.’s Opp’n to
Grossberg by letter on January 27, 2016, ECF No. 35-5, and email on January 28, 2016 at 5:14
p.m., ECF No. 39-3.
Two hours later, at 7:33 p.m. on January 28, 2016, Doug Grieve, Impark’s Vice President
and Controller, sent an email to Impark’s attorney, Nakata, and others at Impark, stating that he
“just became aware that the Independent accountant being used[,] Richard Hill, is Marc and
Marcparc’s regular accountant and has been involved with the account, year end and taxes of
Marcparc for numerous years,” and wondering if the relationship presented a conflict of interest.
ECF No. 39-4. According to Nakata, he first learned about Impark’s relationship with Grossberg
when he received that email, and he and “certain senior executives at Impark . . . determined that
Impark should no longer participate in any arbitration proceeding regarding to ‘Holdback
Amount’ before Mr. Hill because Mr. Hill was not an ‘Independent Accountant.” Nakata Aff.
Meanwhile, Grossberg had mailed an engagement letter to the parties on January 27,
2016 and sent the same by email to their attorneys on January 29, 2016, disclosing that it had
provided and continued to provide accounting services for MarcParc. Engagement Ltr. 2.
Impark did not respond to Grossberg’s engagement letter or later inquiries for more information
regarding analysis of the Holdback Amount. See Jan. 28, 2016 – Feb. 20, 2016 Email Chain,
ECF No. 35-8 (emails from Hill to Nakata without response); Feb. 26, 2016 Email, ECF No. 3510 (email from Hill to the parties, noting “Impark’s decision not to respond to our requests for
comments and additional information”). Nakata did, however, inform MarcParc’s attorney,
Friedman, by phone on February 9, 2016 “that Impark objected to Mr. Hill serving as the
‘Independent Accountant.’” Nakata Aff. ¶ 8. He also stated that “Impark remained prepared to
proceed with arbitration, provided that the parties selected a truly ‘Independent Accountant,’” Id.
In a February 17, 2016 email to Nakata, which was copied to Friedman, Hill stated that
he learned from MarcParc’s counsel that Impark had “expressed concerns about Grossberg
Company handling the arbitration.” Jan. 29, 2016 – Feb. 20, 2016 Email Chain 1–2, ECF No.
39-5. Hill wrote:
We did not ask to be a part of this, but agreed to when asked. Although Marc is a
client, we take our responsibility seriously to decide the issues in accordance with
the agreement signed by both parties, not based on our business relationship. Our
process will be to have an independent partner at the firm (one who is not
involved with Marc’s work) review the decision and affirm agreement or require
changes before we issue the decision. Our participation in the process is solely in
accordance with the agreement of both parties at the time of Impark’s acquisition
of MarcParc’s assets. It is a difficult position for us as well, but we will seek to
fulfil it faithfully.
Id. at 2.
On February 20, 2016, Grossberg provisionally agreed with MarcParc and entered an
arbitration award (“Arbitration Award”) of $1 million in favor of MarcParc and against Impark.
Arbitration Award, ECF No. 35-9. Grossberg invited the parties’ “prompt response.” Jan. 29,
2016 – Feb. 20, 2016 Email Chain 1. Nakata, instead of responding to Grossberg, emailed
MarcParc’s counsel that day that he was “surprised” that Grossberg was “moving forward at all.”
Id. On February 26, 2016, after receiving additional information from MarcParc that did not
change its decision, and no information from Impark, Grossberg finalized its decision. Feb. 26,
Thereafter, in a March 2, 2016 phone call, memorialized in a March 9, 2016 letter to
Friedman, Nakata “reiterated [his] concerns about Mr. Hill’s lack of independence” and stated
again that Impark was willing to proceed with arbitration “before a truly ‘Independent
Accountant.’” Nakata Aff. ¶¶ 10, 11; see Mar. 9, 2016 Ltr., ECF No. 35-11. He stated that the
parties agreed “to submit any holdback dispute to an independent accountant,” but “[i]t is
difficult to understand how anyone could reasonably conclude that Richard Hill could serve as an
independent accountant given his long history of providing accounting services to MarcParc and
Marc Slavin,” and “because of this history, [Impark did] not believe that another accountant at
Grossberg Company could be considered independent either.” Mar. 9, 2016 Ltr.
MarcParc filed suit to confirm the Arbitration Award on May 18, 2016, and Impark
removed to this Court on July 7, 2016. ECF Nos. 1, 2. Prior to opposing MarcParc’s pending
Motion to Confirm Arbitration Award, Impark did not move to vacate the Arbitration Award or
otherwise formally oppose it.
Choice of Law
MarcParc seeks to confirm the Arbitration Award, while Impark argues that the award
should be vacated instead of confirmed.
According to MarcParc, “the parties specifically
provided in their APA that future disputes between them would be governed by both the District
of Columbia’s substantive and procedural rules,” and the procedural rules include the D.C.
arbitration act.3 Pls.’ Confirmation Reply 4–5. As they see it, this means that the District of
Columbia’s arbitration law applies, id., and “[u]nder District of Columbia law, the Court must
confirm the Arbitration Award since Impark never filed a post-Award motion to modify or
vacate the award and the time for doing so is now long past,” Pls.’ Confirmation Mem. 8. They
insist that, even if the Maryland Uniform Arbitration Act applied, the Court still would have to
The parties both refer to the District of Columbia Uniform Arbitration Act (“DCUAA”), but the
DCUAA was repealed in 2009 and replaced by the Revised Uniform Arbitration Act, D.C. Code
§§ 16–4401 to 16–4432. Bolton v. Bernabei & Katz, PLLC, 954 A.2d 953, 958 n.1 (D.C. 2008)
(citing Arbitration Act of 2007, D.C. Law 17–111, § 3, 55 DCR 1847).
confirm the Arbitration Award because Impark did not file “a timely post-award motion.” Id. at
In Impark’s view, the choice of law provision does not clearly state that the D.C.
arbitration act would apply in lieu of the Federal Arbitration Act (“FAA”), and therefore the
FAA applies because “arbitration provisions in contracts involving commerce, such as the APA,
apply . . . FAA procedures unless there is a clear and unequivocal intent to apply the state’s
arbitration act.” Def.’s Opp’n to Confirmation 1.
The APA’s choice of law provision explicitly states that “[t]he substantive and procedural
laws, without regard to conflicts of law principles, of the District of Columbia will govern all
questions concerning the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.” APA § 24.1. Viewing arbitration
law as procedural and general choice of law provisions as ones that only specify the substantive
law to apply, MarcParc insists that the APA’s provision is more than a “general contractual
choice of law clause” and therefore applies to arbitration law. See Pls.’ Confirmation Reply 3, 4
(“[A] general contractual choice of law clause is not in itself sufficient evidence that the parties have
chosen to be bound by the applicable jurisdiction’s procedural law, such as its arbitration act, in
addition to its substantive law . . . .”). But, the FAA is substantive as well as procedural. See
Dewan v. Walia, 544 Fed. App’x 240, 244 (4th Cir. 2013) (“[The FAA] supplies not simply a
procedural framework applicable in federal courts; it also calls for the application . . . of federal
substantive law regarding arbitration.”) (quoting Preston v. Ferrer, 552 U.S. 346, 349 (2008));
Glass v. Kidder Peabody & Co., 114 F.3d 446, 451–52 (4th Cir. 1997) (noting that the FAA
provides “the substantive and procedural law associated with arbitration cases and the
enforceability of arbitration agreements found valid by the district court”); Hill v. Peoplesoft
USA, Inc., 412 F.3d 540, 543 (4th Cir. 2005) (“The Supreme Court has directed that we ‘apply
ordinary state-law principles that govern the formation of contracts,’ First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 944 . . . (1995), and the ‘federal substantive law of arbitrability.’
Moses H. Cone Mem’l Hosp. [v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)].”). Therefore, if
a general choice of law clause covered all substantive law, it would cover arbitration law as well,
contrary to the clear Fourth Circuit case law holding that general choice of law provisions
selecting state substantive law do not apply to arbitration law. See Porter Hayden Co. v. Century
Indem. Co., 136 F.3d 380, 383 (4th Cir. 1998).
Moreover, the relevant question of what a choice of law clause covers is not substantive
versus procedural law but rather law in general versus arbitration law in particular. See id. (a
choice-of-law provision requiring the application of state substantive law “to resolve disputes
arising out of the contractual relationship” is not “an unequivocal expression of the parties’ intent
to invoke [state], rather than federal, arbitration law” (emphasis added)); UBS Fin. Servs., Inc. v.
Padussis, 127 F. Supp. 3d 483, 492–93 (D. Md. 2015) (same), aff’d, 842 F.3d 336 (4th Cir.
2016). Thus, “absent a clear[ ] expression of the parties’ intent to invoke state arbitration law,
[the Fourth Circuit] will presume that the parties intended federal arbitration law to govern.”
Porter Hayden Co., 136 F.3d at 383 (emphasis added).
Here, the APA does not specify which arbitration law to apply, and as a result, there is
not a “clear expression of the parties’ intent to invoke [D.C.] arbitration law.”
Therefore, the FAA governs. See id. Yet, given that there was an agreement to arbitrate, as
discussed at length below, this is a distinction without a difference because the same three-month
statute of limitations applies pursuant to D.C. and federal arbitration law. Compare 9 U.S.C.
§ 12 (“Notice of a motion to vacate, modify, or correct an award must be served upon the
adverse party or his attorney within three months after the award is filed or delivered. . . .”), with
D.C. Code Ann. § 16-4423(c) (“A motion [to vacate an arbitration award] shall be filed within
90 days after the movant receives notice of the award . . . or . . . a modified or corrected award
. . . , unless the movant alleges that the award was procured by corruption, fraud, or other undue
means, in which case the motion shall be made within 90 days after the ground is known or by
the exercise of reasonable care would have been known by the movant.”).4
Review of Arbitration Award
“Judicial review of an arbitration award in federal court is ‘substantially circumscribed.’”
Three S Del., Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007) (quoting
Patten v. Signator Ins. Agency, Inc., 441 F.3d 230, 234 (4th Cir. 2006)). Indeed, given that “full
scrutiny of such awards would frustrate the purpose of having arbitration at all—the quick
resolution of disputes and the avoidance of the expense and delay associated with litigation,” a
court’s review of an arbitration award “is among the narrowest known at law.” Id. (quoting Apex
Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 (4th Cir. 1998)). The FAA
If the parties in their 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 which such award was made.
9 U.S.C. § 9.
“If there is a valid contract between the parties providing for arbitration, and if the
dispute resolved in the arbitration was within the scope of the arbitration clause, then substantive
Although the D.C. law provides additional time when a party learns of fraudulent acts after the
issuance of the award, here, Impark learned of the allegedly fraudulent naming of a partial
accountant rather than an independent accountant on January 28, 2016, well before the final
award issued on February 26, 2016.
review is limited to those grounds set out in [9 U.S.C. § 10].” Choice Hotels Int’l, Inc. v. Shriji
2000, No. DKC-15-1577, 2015 WL 5010130, at *1 (D. Md. Aug. 21, 2015) (citing Apex
Plumbing, 142 F.3d at 193). If “any party to the arbitration” files a motion to vacate, a court
may vacate the arbitration award
where the award was procured by corruption, fraud, or undue means;
where there was evident partiality or corruption in the arbitrators, or either
where the arbitrators were guilty of misconduct in refusing to postpone the
hearing, upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; or of any other misbehavior by
which the rights of any party have been prejudiced; or
where the arbitrators exceeded their powers, or so imperfectly executed
them that a mutual, final, and definite award upon the subject matter
submitted was not made.
9 U.S.C. § 10(a). “[T]he party opposing the award bears the burden of proving the existence of
grounds for vacating the award.” Choice Hotels Int’l, Inc. v. Austin Area Hosp., Inc., No. TDC15-0516, 2015 WL 6123523, at *2 (D. Md. Oct. 14, 2015) (citing Three S Del., Inc., 492 F.3d at
Significantly, as noted, a three-month limitations period applies. 9 U.S.C. § 12 (“Notice
of a motion to vacate, modify, or correct an award must be served upon the adverse party or his
attorney within three months after the award is filed or delivered . . . .”). This limitations period
serves “[t]he role of arbitration as a mechanism for speedy dispute resolution,” as well as the
“national policy favoring arbitration” that “[t]he FAA embodies.” Popular Sec., Inc. v. Colón,
59 F. Supp. 3d 316, 318–19 (D.P.R. 2014) (citing Hall Street Assocs. v. Mattel, 552 U.S. 576,
District of Columbia law is similar. See D.C. Code Ann. § 16-4423.5
Yet, the D.C.
statute, unlike the FAA, sets a limitations period (of ninety days) for a party to move to vacate on
the basis that “[t]here was no agreement to arbitrate.” See id. § 16-4423(a)(5), (c). Impark
contends that, “[u]nlike the DCUAA, the FAA does not require a party to file a motion to vacate
when that party contends an arbitration award should be vacated because there was no agreement
to arbitrate.” Def.’s Opp’n to Confirmation 1. It insists that, under the FAA, its argument in
favor of vacating is timely because there was no agreement to arbitrate. Id.
Certainly, at least in the First Circuit,
A party that contends that it is not bound by an agreement to arbitrate can
therefore simply abstain from participation in the proceedings, and raise the
inexistence of a written contractual agreement to arbitrate as a defense to a
proceeding seeking confirmation of the arbitration award, without the limitations
contained in section 12, which are only applicable to those bound by a written
agreement to arbitrate.
Section 16-4423 provides:
(a) Upon motion to the court by a party to an arbitration proceeding, the court
shall vacate an award made in the arbitration proceeding if:
(1) The award was procured by corruption, fraud, or other undue means;
(2) There was:
(A) Evident partiality by an arbitrator appointed as a neutral
(B) Corruption by an arbitrator; or
(C) Misconduct by an arbitrator prejudicing the rights of a party to
the arbitration proceeding;
(3) An arbitrator refused to postpone the hearing upon showing of
sufficient cause for postponement, refused to consider evidence material to
the controversy, or otherwise conducted the hearing contrary to § 16-4415,
so as to prejudice substantially the rights of a party to the arbitration
(4) An arbitrator exceeded the arbitrator’s powers;
(5) There was no agreement to arbitrate; or
(6) The arbitration was conducted without proper notice of the initiation of
an arbitration as required in § 16-4409 so as to prejudice substantially the
rights of a party to the arbitration proceeding.
(b) The court may vacate an award made in the arbitration proceeding on other
MCI Telecommc’ns Corp. v. Exalon Indus., Inc., 138 F.3d 426, 430 (1st Cir. 1998).
But, as MarcParc notes, “there is in fact an underlying arbitration agreement.” Pls.’
Confirmation Reply 3. Indeed, Impark asserts that “[i]t is important to note that Impark was not
claiming that there was no agreement to arbitrate at all,” see Def.’s Opp’n to Confirmation 14
n.11, and Impark does not now contend that that there was no agreement to arbitrate whatsoever;
rather, it argues that “there was no agreement to arbitrate before Grossberg,” id. at 2 (emphasis
added). Moreover, it signed and then sought to proceed under the arbitration agreement, asking
MarcParc to resolve the dispute through a “truly independent accountant.” Def.’s Opp’n to
Confirmation 2; see id. at 7 (“Notably, Impark did not refuse to participate in any arbitration
proceeding whatsoever; rather, it offered to participate in an arbitration proceeding before a truly
independent accountant.”). Throughout its brief, Impark reiterates its willingness to arbitrate and
its communications to MarcParc that “it ‘remain[ed] ready to discuss engagement of an
independent accountant mutually agreeable to both parties.’” Id. at 8–9 (quoting Mar 9, 2016
Ltr.)); see also id. at 14; 30; 35. And, it now repeatedly asks the Court to “compel the parties to
submit their dispute regarding the ‘Holdback Amount’ to a truly ‘Independent Accountant.’”
Def.’s Opp’n to Confirmation 1; see id. at 2, 3. Thus, Impark concedes that it is “bound by a
written agreement to arbitrate,” and consequently it cannot claim the “inexistence of a written
contractual agreement.” See MCI Telecommc’ns Corp., 138 F.3d at 430. Impark cannot have it
both ways, seeking arbitration pursuant to the parties’ agreement while denying that same
On these facts, Impark cannot argue credibly that there was no arbitration
Because there was an agreement to arbitrate, the three month limitations period applies.
See 9 U.S.C. § 12. Grossberg delivered its final decision on February 26, 2016. Feb. 26, 2016
Email. Therefore, Impark had until May 26, 2016 to move to vacate the award. See 9 U.S.C.
§ 12. Impark did not challenge the award in court at all until it filed its Opposition to MarcParc’s
Motion to Confirm Arbitration Award on November 3, 2016, over five months later. It is true
that, when a party moves to confirm an arbitration award and the opposing party asserts in its
opposition that the award should be vacated, “[a] separate motion . . . to vacate the arbitrators’
award is not necessary. Such relief may properly be requested in the papers submitted in
opposition to a motion to confirm an arbitrators’ award.” Catz Am. Co. v. Pearl Grange Fruit
Exch., Inc., 292 F. Supp. 549, 551 (S.D.N.Y. 1968) (citing The Hartbridge, 57 F.2d 672 (2d Cir.
1932)). But, that request must be made within the limitations period. See Florasynth, Inc. v.
Pickholz, 750 F.2d 171, 175 (2d Cir. 1984) (“[A] party may not raise a motion to vacate, modify,
or correct an arbitration award after the three month period has run, even when raised as a
defense to a motion to confirm.”); Chauffeurs, Teamsters, Warehousemen & Helpers, Local
Union No. 135 v. Jefferson Trucking Co., 628 F.2d 1023, 1025 (7th Cir. 1980) (“[A party’s]
failure to move to vacate the arbitration award within the prescribed time period for such a
motion precludes it from seeking affirmative relief in a subsequent action to enforce the
award.”); W. Int’l Sec. v. Devorah, 181 F. Supp. 3d 85, 86 (D.D.C. 2014) (“[O]nce those three
months [provided for in 9 U.S.C. § 12] have elapsed, a party may not defend against a petition
for confirmation on any of the grounds set forth in sections 10 and 11.”); Popular Sec., Inc. v.
Colón, 59 F. Supp. 3d 316, 318–19 (D.P.R. 2014) (“Once the three month period for filing a
motion to vacate has expired, a subsequent attempt to vacate an arbitration award cannot
generally be made even in opposition to a later motion to confirm the award.”) (citing Cullen v.
Paine, Webber, Jackson & Curtis, Inc., 863 F.2d 851, 853–854 (11th Cir. 1989)).
Impark also asserts that it “was fraudulently induced into agreeing to the arbitration
clause that identified Grossberg as the ‘Independent Accountant.’” Defs.’ Opp’n 3; see id. at 26.
Perhaps so, but fraud is one of the grounds for moving to vacate, to which the period applies.
See 9 U.S.C. § 10(a)(1). In this regard, Fairmount Minerals, Ltd. v. Mineral Serv. Plus, LLC,
No. 14-CV-400-BBC, 2015 WL 542282 (W.D. Wis. Feb. 10, 2015), appeal dismissed (Dec. 14,
2015), is informative. There, the plaintiff, which raised fraud after the limitations period had
run, insisted that it had “not take[n] a ‘wait and see’ approach to arbitration because it did not
know about the alleged fraud until after the arbitrator issued the award.” Id. at *3. The court
observed that the plaintiff learned about the alleged fraud in time to have “had ample opportunity
to challenge the validity of the award under § 10 but failed to do so.” Id. It also noted that the
plaintiff had “not argued or identified any legal authority suggesting that § 10 is an improper
means of challenging the validity of an arbitration agreement after the entry of an arbitration
award.” Id. The court reasoned that §§ 9 and 10 applied because the arbitration award already
had been entered, whereas “§ 4 sets out a procedure for determining the scope and validity of an
arbitration agreement prior to an arbitration.” Id. Citing Hall Street Associates, L.L.C. v. Mattel,
Inc., 552 U.S. 576, 578, 586 (2008), the court concluded that the plaintiff was “bound by the
requirements of § 10” because “the Supreme Court has held that §§ 9 and 10 provide the
exclusive grounds for vacating, modifying or correcting an arbitration award and that these
limited grounds for vacatur cannot be supplemented or expanded by contract.” Id.
Likewise, here, the alleged fraud did not prevent Impark from acting within the
limitations period; as noted, Impark learned that Grossberg’s partiality was questionable on
January 28, 2016, well before the Arbitration Award issued on February 26, 2016 and the period
began to run. Moreover, Impark’s insistence that there was an agreement to arbitrate forecloses
any argument that the arbitration clause was not valid. Thus, allegations of fraud do not bring
Impark’s argument outside the scope of the limitations period.
See 9 U.S.C. § 10(a)(1);
Fairmount Minerals, Ltd., 2015 WL 542282, at *3.
Party to the Arbitration
Insisting that, after it made its initial submission to Grossberg, it stopped communicating
with the arbitrator, Impark alternatively argues that the limitations period is inapplicable because,
in its view, it was not a “‘party to’ an ‘arbitration proceeding.’” Def.’s Opp’n to Confirmation 2.
Defendant asserts that “[u]pon learning of Mr. Hill’s long-standing relationship with MarcParc,
Impark immediately stopped participating in the so-called arbitration by refusing to respond to
numerous requests.” Id. at 5 (emphasis added); see also id. at 28 (“Impark immediately ceased
its participation in the so-called ‘arbitration proceeding’ as soon as it discovered the conflict of
interest.” (emphasis added)). Impark certainly made clear to MarcParc that it no longer would
participate in the arbitration, and Grossberg was aware at the very least that Impark had
reservations, albeit through MarcParc’s communications, as Impark never notified Grossberg
that it objected to the firm acting as the “Independent Accountant.” Defendant cites cases from
other jurisdictions to support its contentions that a party that refuses to participate in an
arbitration proceeding is not required to move to vacate within three months, and that, when
arbitration does not go according to the agreement, the limitations period does not apply. But,
the facts of this case differ significantly from the cases on which Impark relies.
Impark relies on Jaffe v. Nocera, 493 A.2d 1003, 1008 (D.C. 1985), in support of its
position that it was not a party to the arbitration and that its objection to the arbitration preserved
the issue for court review. Def.’s Opp’n to Confirmation 20, 22. There, although the D.C. Court
of Appeals noted the extent of Nocera’s participation in the arbitration, it also stated that “once
[a party] was served personally with a demand for arbitration that named him individually as the
respondent, he became a party to the arbitration.” Id. at 1008 (citing Restatement (Second) of
Judgments § 34(1) & comment a (1982) (noting that a person named as party can become a party
to the action through service or participation in the action)). Here, although Impark ceased its
participation, initially, it participated by submitting documents to Grossberg. In its brief, it
concedes that “Impark at first was willing to participate in the process and made its initial
submission to Richard Hill of Grossberg Company . . . , the so-called ‘Independent Accounts,’
on January 28, 2016 at 5:14 p.m. PST.” Def.’s Opp’n to Confirmation 5 (bold in original).
Indeed, to stop participating, Impark necessarily first had to participate in the arbitration.
Consequently, Jaffe is inapposite.
Moreover, in Jaffe, the court stated that Nocera had three options when he received the
demand for arbitration: to seek a stay of arbitration from the court, “to raise the objection that
there was no agreement to arbitrate at the arbitration hearing, and to thereby preserve the issue
for court review,” or “to frame the submission to the arbitrators to include the issue of the
identity of the parties to the contract.” Id. at 1008–09. Nocera, like Impark, did not exercise any
of these options.6
The court concluded that, as a result, Nocera “waived any defense to
confirmation of the award against him as void on the basis of a lack of an agreement to
arbitrate.” Id. at 1010. The court denied Nocera’s challenge to the award on a different ground,
however. It found that, while raising an objection before an arbitrator may preserve the issue,
that does not render the statute of limitations inapplicable. Thus, the court did not hold, as
Impark seems to suggest, that raising an objection with the opposing party eliminates the need to
Impark only raised the issue in communications with MarcParc without communicating its
objections directly to Grossberg.
challenge the award within the limitations period; rather, it denied the challenge because it was
outside the applicable 90-day statute of limitations and therefore untimely. Id. at 1013.
Relying on Citibank (S. Dakota) N.A. v. Dahlquist, 2007 MT 42, ¶ 12, 152 P.3d 693, 695
(Mont. 2007), Impark also contends that a party is not a party to the arbitration proceeding and
not constrained by the statute of limitations when it does not consent to a specific arbitrator.
Def.’s Opp’n to Confirmation 21–22. It is true that in Dahlquist, the Montana court held that
“[u]nder the FAA, where parties have not agreed to arbitrate, or where the arbitration does not
follow the format provided for in the arbitration agreement, the arbitration award is invalid ab
initio.” 2007 MT 42, ¶ 12. For example, an “arbitration award [is] invalid ab initio” when the
arbitrator used “was not the arbitrator specified in the arbitration agreement,” and the party
challenging the award “did not consent to arbitration under [that arbitrator].” Id. ¶ 15. But, here,
the arbitration did “follow the format provided for in the arbitration agreement”; Grossberg was
specified in the arbitration agreement, and Impark consented in the arbitration agreement to
submit the Holdback Amount dispute to Grossberg. The issue was, rather, that Grossberg had an
undisclosed relationship with MarcParc. Although that likely would have been a basis for a
timely challenge to the Arbitration Award, it does not invalidate the award that issued pursuant
to the terms of the agreement. See id.
Impark also argues that it should not be bound by the Arbitration Award because
“MarcParc failed to file a motion to compel arbitration, even though it knew that Impark refused
to participate in any proceeding before Mr. Hill.”
Def.’s Opp’n to Confirmation 22–23.
Certainly, it would have been appropriate for MarcParc to file a motion to compel. But, given
that Impark already submitted its documents to Grossberg, MarcParc did not need to compel any
action on Impark’s part for Grossberg to conclude its assessment and issue an award.
Consequently, even if MarcParc waived its right to compel arbitration, as Impark contends,
Def.’s Opp’n to Confirmation 23, it does not need that right, as it already secured the Arbitration
Award. Once an arbitration award has issued, if the time for the other party to challenge it has
passed, then, on motion, the court must confirm the arbitration award. See 9 U.S.C. § 9.
Moreover, it would have been equally appropriate, if not more so, for Impark to file a motion to
stay arbitration. See Jaffe, 493 A.2d at 1008–09 (noting that party opposed to arbitration could
seek stay of arbitration proceeding); see also Application of Deiulemar Compagnia Di
Navigazione S.p.A. v. M/V Allegra, 198 F.3d 473, 482 (4th Cir. 1999) (noting that “motions to
stay arbitration, compel arbitration, or vacate arbitration awards” are “‘judicial proceedings
under the FAA’” (quoting Champs v. Siegel Trading Co., 55 F.3d 269, 274 (7th Cir. 1995)
(emphasis removed)); Goel Servs., Inc. v. Kevin Dockett, Sr. Trucking, Inc., No. 12-1377-AW,
2012 WL 5252057, at *1 (D. Md. Oct. 22, 2012) (in response to plaintiff’s arbitration demand,
defendant filed motion to stay arbitration, arguing that it did not accept the agreement to
arbitrate, there was a novation negating the agreement to arbitrate, it signed under duress, the
dispute was not subject to arbitration, and in any event, plaintiff waived the right to arbitrate).
“Equitable tolling is available in “those ‘rare instances where—due to circumstances
external to the party’s own conduct—it would be unconscionable to enforce the limitation
against the party and gross injustice would result.”’” United States v. Kidd, No. ELH-12-0606,
2017 WL 1153868, at *3 (D. Md. Mar. 27, 2017) (quoting Whiteside v. United States, 775 F.3d
180, 184 (4th Cir. 2014) (quoting Rouse v. Lee, 339 F.3d 238, 246 (4th Cir. 2003) (en banc))).
Equitable tolling only applies under “extraordinary circumstances.” Id. (quoting Holland v.
Florida, 560 U.S. 631, 634 (2010)).
For relief under a theory of equitable tolling, an otherwise time-barred petitioner
must demonstrate “‘(1) that he has been pursuing his rights diligently, and (2) that
some extraordinary circumstance stood in his way’ and prevented timely filing.”
Holland, 560 U.S. at 649 (quoting Pace v. DiGuglielmo, 544 U.S. 408, 418
(2005)). But, only “‘reasonable diligence’” is required. Holland, 560 U.S. at 653
(citation omitted). There is no requirement for “maximum feasible diligence.”
(Citations and internal quotations omitted).
Impark contends that the limitations period “was tolled because, as of March 2, 2016,
Impark reasonably believed that MarcParc was not going to enforce the so-called ‘award’ and it
was potentially amenable to submitting the ‘Holdback Amount’ dispute to a truly independent
accountant until June 10, 2016 or, in the alternative, May 10, 2016.”
Def.’s Opp’n to
Confirmation 29–30. Impark insists that, while it “informally learned of MarcParc’s intention to
enforce the award only eighteen (18) days before the statute of limitation was scheduled to
expire, . . . it did not receive confirmation of MarcParc’s intention to enforce the award until
fifteen (15) (arguably thirteen (13)) days after the 90 day (or three month) limitation period
expired.” Id. at 31–32.
Impark does not cite any authority for its position that it did not have to act while it was
under the impression that MarcParc would not enforce the award, despite the existence of a final
award. On the contrary, as discussed, the statute of limitations runs from when the final decision
issues. See 9 U.S.C. § 12. While Impark may have been relying on MarcParc’s assurances,
Impark does not suggest that MarcParc’s actions, or any other “circumstances external to the
party’s own conduct” prevented Impark from filing a timely motion. See Lee, 339 F.3d at 246;
Whiteside, 775 F.3d at 184; Kidd, 2017 WL 1153868, at *3. These circumstances, in which one
party hopes that a conflict will resolve itself without the need for judicial intervention, are far
from extraordinary, and enforcing the limitations period is not unconscionable. See Lee, 339
F.3d at 246; Whiteside, 775 F.3d at 184; Kidd, 2017 WL 1153868, at *3. Thus, equitable tolling
is not appropriate under these circumstances. See Holland, 560 U.S. at 649; Kidd, 2017 WL
1153868, at *3. Consequently, Impark’s request to vacate the award is untimely, and this Court
must grant MarcParc’s Motion to Confirm Arbitration Award and enter judgment in its favor on
Count II. See 9 U.S.C. § 9.
Entry of Final Judgment
Plaintiffs ask the Court to “enter a final judgment pursuant to Fed. R. Civ. P. 54(b) on its
order confirming the Arbitration Award.” Pls.’ Confirmation Mem. 15. The Court may “enter
final judgment as to one or more but fewer than all claims in a multiclaim action,” pursuant to
Rule 54(b), which “allows the district court to provide relief to litigants that would suffer undue
hardship if final judgment is not entered on the adjudicated claim prior to the resolution of the
unadjudicated claims.” Braswell Shipyards, Inc. v. Beazer E., Inc., 2 F.3d 1331, 1335 (4th Cir.
1993). This “certification is recognized as the exception rather than the norm” and “should
neither be granted routinely” or “as an accommodation to counsel.” Id. Rather, it is to “be
reserved for the unusual case in which the costs and risks of multiplying the number of
proceedings and overcrowding the appellate docket are outbalanced by pressing needs of the
litigants for an early and separate judgment as to some claims or parties.”
Morrison–Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir. 1981)). Plaintiffs must show “that
the case warrants certification.” Id.
The Court follows a two-step process to certify a judgment as final pursuant to Rule
54(b). See id. (citing Curtis–Wright Corp. v. General Electric Co., 446 U.S. 1, 7–8 (1980)).
“First, the district court must determine whether the judgment is final. The Court in Curtis–
Wright stated that a judgment ‘must be final in the sense that it is an ultimate disposition of an
individual claim entered in the course of a multiple claims action.’” Id. (quoting Curtis–Wright,
446 U.S. at 7 (internal quotation marks omitted)). Here, the judgment entered as to Count II is
an ultimate disposition of Plaintiffs’ claim to confirm the arbitration amount.
Second, the district court must determine whether there is no just reason for the
delay in the entry of judgment. Curtis–Wright, 446 U.S. at 8, 100 S.Ct. at 1465.
This inquiry, “tilted from the start against fragmentation of appeals, is necessarily
case-specific.” Spiegel v. Trustees of Tufts College, 843 F.2d 38, 43 (1st
Cir.1988); see also Curtis–Wright, 446 U.S. at 10–11, 100 S.Ct. at 1466–67
(“because the number of possible [Rule 54(b) ] situations is large, we are reluctant
either to fix or sanction narrow guidelines for district courts to follow”). In
determining whether there is no just reason for delay in the entry of judgment,
factors the district court should consider, if applicable, include:
(1) the relationship between the adjudicated and unadjudicated
claims; (2) the possibility that the need for review might or might
not be mooted by future developments in the district court; (3) the
possibility that the reviewing court might be obliged to consider
the same issue a second time; (4) the presence or absence of a
claim or counterclaim which could result in a set-off against the
judgment sought to be made final; (5) miscellaneous factors such
as delay, economic and solvency considerations, shortening the
time of trial, frivolity of competing claims, expense, and the like.
Allis–Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d [360,] 364 [(3d Cir.
1975)](footnotes omitted); see also Curtis–Wright, 446 U.S. at 8, 100 S.Ct. at
1465 (“whether the claims under review were separable from the others remaining
to be adjudicated and whether the nature of the claims already determined was
such that no appellate court would have to decide the same issues more than once
even if there were subsequent appeals”) (footnote omitted).
Braswell, 2 F.3d at 1335–36.
As discussed further below, Impark has various claims related to the same commercial
transaction that could result in a set-off against the judgment in Plaintiffs’ favor on Count II.
Specifically, Impark seeks damages for its overpayment of “assets it purchased in connection
with the APA,” the liabilities it incurred, its loss of “the 501 K Street customer contract,” and the
expenses it has incurred and will continue to incur as a result of “being named a defendant in the
501 K Street Lawsuit,” Am. Countercl. ¶ 56; as well as payment of the “sums owed to Impark
that Impark had earned after the APA closed,” id. ¶¶ 59–62.
It also seeks damages for
“additional existing contracts and/or potential future contracts with other real estate properties
owned or controlled by the managing member of 501 K Street property,” because it “may lose”
those contracts. Id. ¶ 77. Because these claims all relate to the same commercial transaction and
could set off substantially, if not entirely, the amount Impark owes to MarcParc under Count II,
there is a “just reason for delay in the entry of judgment.” See Braswell, 2 F.3d at 1335–36; see
also Curtis–Wright, 446 U.S. at 8; Allis–Chalmers Corp., 521 F.2d at 364. Therefore, I decline
to enter a final judgment as to Count II at this time. See Braswell, 2 F.3d at 1335–36.
Motion to Dismiss Count I of the Amended Counterclaim in Part
In Count I of its Amended Counterclaim, Impark alleges that MarcParc “breached the
APA by violating and/or making false representations and warranties in Section 8,” Am.
Countercl. ¶ 55, and it asks the Court, inter alia, to vacate the Arbitration Award, order the
parties to participate in an arbitration proceeding before an independent accountant, and order
“MarcParc to pay Impark the appropriate amounts based on the ‘holdback’ formulas in Schedule
S for the ‘Redeveloped Properties’ and ‘Cancelled Properties,’” id. at 14. MarcParc argues that,
insofar as Count I is a request to vacate the Arbitration Award, it fails to state a claim for breach
of contract because it is untimely. Pls.’ Dismissal Mem. 10, 13. And, it contends that insofar as
Count I is a request “for a money judgment for the APA Schedule S value of the Cancelled
Properties and the Redeveloped Properties,” it fails to state a claim for breach of contract
because it “violates the APA’s plain terms.” Id. at 10, 16. Impark asserts that it included these
“requests for relief . . . to preserve Impark’s ability to challenge the validity of the arbitration
award,” and that, “if the Court confirms the arbitration award, Impark’s request to vacate the
arbitration award should be dismissed.” Def.’s Opp’n to Dismissal 8 n.4. Accordingly, I will
dismiss Count I in part with regard to Impark’s requests for the Court to vacate the Arbitration
Award, to order the parties to participate in other arbitration, and to adjust the Holdback Amount
that was decided in the Arbitration Award.
Motion to Dismiss Counts III, IV, and VI of the Amended Counterclaim
MarcParc asks the Court to dismiss Counts III, IV and VI of the Amended Counterclaim
in their entirety pursuant to Fed. R. Civ. P. 12(b)(6) because, in MarcParc’s view, the claims are
barred by res judicata and the APA’s integration clause. Pls.’ Dismissal Mem. 19; see Pls.’ Mot.
to Dismiss 1.
Standard of Review
Under Rule 12(b)(6), Impark’s counterclaims are subject to dismissal if they “fail[ ] to
state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A pleading must
contain “a short and plain statement of the claim showing that the pleader is entitled to relief,”
Fed. R. Civ. P. 8(a)(2), and must state “a plausible claim for relief,” Ashcroft v. Iqbal, 556 U.S.
662, 678–79 (2009). “A claim has facial plausibility when the [claimant] pleads factual content
that allows the court to draw the reasonable inference that the [opposing party] is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. Rule 12(b)(6)’s purpose “is to test the sufficiency of
a [claim] and not to resolve contests surrounding the facts, the merits of a claim, or the
applicability of defenses.” Velencia v. Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D.
Md. Dec. 13, 2012) (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir.
2006)). If an affirmative defense “clearly appears on the face of the [pleading],” however, the
Court may rule on that defense when considering a motion to dismiss. Kalos v. Centennial Sur.
Assocs., No. CCB-12-1532, 2012 WL 6210117, at *2 (D. Md. Dec. 12, 2012) (quoting Andrews
v. Daw, 201 F.3d 521, 524 n. 1 (4th Cir. 2000) (citation and quotation marks omitted)). One such
affirmative defense is res judicata.
Although at this stage of the proceedings, I accept the facts as alleged in Impark’s
Amended Counterclaim as true, see Aziz v. Alcolac, 658 F.3d 388, 390 (4th Cir. 2011), when
reviewing a motion to dismiss, I “may consider documents attached to the [pleading], as well as
documents attached to the motion to dismiss, if they are integral to the [pleading] and their
authenticity is not disputed.” Sposato v. First Mariner Bank, No. CCB-12-1569, 2013 WL
1308582, at *2 (D. Md. Mar. 28, 2013); see CACI Int’l v. St. Paul Fire & Marine Ins. Co., 566
F.3d 150, 154 (4th Cir. 2009); see also Fed. R. Civ. P. 10(c) (“A copy of a written instrument
that is an exhibit to a pleading is a part of the pleading for all purposes.”). Consideration of
documents that the [claimant] references and relies upon does not convert a motion to dismiss
into a motion for summary judgment. See Sec’y of State for Defence v. Trimble Navigation Ltd.,
484 F.3d 700, 705 (4th Cir. 2007).
When a federal court litigant asserts that a state court judgment has preclusive effect,
“[the] federal court must give to [the] state court judgment the same preclusive effect as would
be given that judgment under the law of the State in which the judgment was rendered.” Migra v.
Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). The Arbitration Award issued in
the District of Columbia.
Under District of Columbia law, “[f]or res judicata to apply, the following elements must
be satisfied: (1) an identity of parties in both suits; (2) a judgment rendered by a court of
competent jurisdiction; (3) a final judgment on the merits; and (4) an identity of the cause
of action in both suits.”
Camp v. Kollen, 567 F. Supp. 2d 170, 172–73 (D.D.C. 2008) (footnote omitted) (quoting
American Forest Council v. Shea, 172 F. Supp. 2d 24, 29 (D.D.C. 2001) (internal quotations and
citations omitted); citing Watergate West, Inc. v. Barclays Bank, S.A., 759 A.2d 169, 179 (D.C.
It is undisputed that the parties are the same. And, under District of Columbia law, “[t]he
decisions of binding arbitration proceedings are final decisions on the merits for purposes of res
judicata.” Century Int’l Arms, Ltd. v. Fed. State Unitary Enter. State Corp. “Rosvoorouzheinie,”
172 F. Supp. 2d 79, 95 (D.D.C. 2001) (citing Schattner v. Girard, Inc., 668 F.2d 1366, 1368
(D.C. Cir. 1981)). As Impark sees it, the second element “is immaterial for the purposes of the
pending Motion, except for the fact that Impark is challenging the enforceability of the
arbitration ‘award’ issued by Mr. Hill” in its Opposition to MarcParc’s Motion to Confirm
Arbitration. Def.’s Opp’n to Dismissal 5 n.2; see also id. at 2, 7, 9. Impark insists that its
challenge prevents the Arbitration Award from having a preclusive effect, and it contends that
“because it was not a ‘party’ to the so-called ‘arbitration proceeding,’ there is no decision on the
merits.” Id. at 7; see also id. at 9 (“[T]he arbitration award is not a final decision on the merits
because Impark is challenging the validity of the arbitration award.”). But, I already have
concluded that Impark was a party to the arbitration and that its challenge to the proceeding was
untimely. Consequently, these arguments are without merit, and the Arbitration Award is a final
judgment on the merits issued by a court of competent jurisdiction. See Century Int’l Arms, Ltd.,
172 F. Supp. 2d at 95; Camp, 567 F. Supp. 2d at 173 (giving unconfirmed award preclusive
effect where it was not challenged).
With regard to the fourth element of res judicata, under District of Columbia law, “[i]f
there is a common nucleus of facts, then the actions arise out of the same cause of action.”
EDCare Mgmt., Inc. v. DeLisi, 50 A.3d 448, 451 (D.C. 2012) (quoting Patton v. Klein, 746 A.2d
866, 870 (D.C. 1999) (internal quotation marks omitted)). Thus, “[r]es judicata bars not only
claims that actually were litigated in the first action but ‘all issues arising out of the same cause
of action’ that could have been litigated.” Id. (quoting Faulkner v. Gov’t Emps. Ins. Co., 618
A.2d 181, 183 (D.C. 1992)). Therefore, the issue is whether the claims Impark now raises could
have been litigated previously.
The APA provided that, if the parties could not agree on the Holdback Amount, then they
would “submit the disputed matters to Grossberg Company . . . (the ‘Independent Accountants’),
to make a final determination of the calculation pursuant to Section 6.8(a) [Holdback Amount],”
and they would “instruct the Independent Accountants promptly to determine solely with respect
to the disputed items and amounts so submitted whether and to what extent, if any, the
calculation requires adjustment.” APA 19–20, § 6.8(b)(iii) (emphasis added). Relying on this
provision, Impark contends that it limits the scope of arbitration to resolution of the Holdback
Amount and “makes it clear . . . that Impark’s fraudulent inducement (Count III), good faith and
fair dealing (Count IV), and civil conspiracy (Count VI) claims are not within the scope of the
arbitration agreement and, as such, they could not have been presented to Mr. Hill (or a truly
neutral arbitrator if one was selected).” Def.’s Opp’n to Dismissal 9. Impark insists that
“MarcParc’s argument that Impark’s good faith and fair dealing (Count IV) and civil conspiracy
(Count VI) claims are ‘back-door attempts to avoid the arbitration award’ and thus are barred by
the doctrine of res judicata misses the mark.” Id. at 10. MarcParc counters that this argument
“ignores the fact that, under either the [D.C.] Act or the FAA, Impark’s fraudulent inducement
defense to the arbitration clause could have been asserted before a judge.” Pls.’ Dismissal Reply
7. In MarcParc’s view, “[e]ach of the claims in Counts III, IV, and VI stems from Plaintiffs’
supposed misrepresentation of Grossberg’s independence,” and “res judicata prevents a party
from affirmatively asserting a claim that could have been raised as a defense in prior litigation if
the purpose of the later assertion is to negate the result in the prior case.” Id. at 5–7.
It is true that Impark could not have brought its claims of fraudulent inducement, good
faith and fair dealing, and civil conspiracy before Grossberg. See APA 19–20, § 6.8(b)(iii). But,
as MarcParc notes, as part of the arbitration, Impark could have brought its claims in court via a
motion to stay arbitration or a motion to vacate the award. See 9 U.S.C. § 10(a)(1); Application
of Deiulemar Compagnia Di Navigazione S.p.A. v. M/V Allegra, 198 F.3d 473, 482 (4th Cir.
1999) (noting that “motions to stay arbitration, compel arbitration, or vacate arbitration awards”
are “‘judicial proceedings under the FAA’” (quoting Champs v. Siegel Trading Co., 55 F.3d 269,
274 (7th Cir. 1995) (emphasis removed)); Jaffe v. Nocera, 493 A.2d 1003, 1008–09 (D.C. 1985)
(noting option of motion to stay); Goel Servs., Inc. v. Kevin Dockett, Sr. Trucking, Inc., No. 121377-AW, 2012 WL 5252057, at *1 (D. Md. Oct. 22, 2012) (motion to stay arbitration filed,
challenging acceptance of agreement to arbitrate and scope of arbitration, and raising duress and
waiver of right to arbitrate). See generally Capitol Hill Grp. v. Pillsbury, Winthrop, Shaw,
Pittman, LLC, 569 F.3d 485, 492 (D.C. Cir. 2009) (noting that res judicata may bar a permissive
counterclaim “if allowing [the] permissive counterclaim to go forward would nullify the earlier
judgment or impair rights established in the earlier action”). Therefore, these claims could have
been litigated previously as part of the arbitration proceeding, See Application of Deiulemar
Compagnia, 198 F.3d at 482; Jaffe, 493 A.2d at 1008–09, and res judicata bars Impark from
raising them now. See Camp, 567 F. Supp. 2d at 172–73.
This Memorandum and Opinion and Order disposes of Count II of Plaintiffs’ Complaint,
but not Count I. In Count I, Plaintiffs seek payments due under the Asset Purchase Agreement.
See Compl. ¶¶ 12–22. Insofar as Plaintiffs seek payment of the Holdback Amount, id. ¶ 16, that
claim is mooted by the confirmation of the Arbitration Award in their favor for the Holdback
Amount. With regard to their claims for payments of the escrow and accounts receivable
amounts due under the Purchase Agreement, id. ¶¶ 15, 17, as well as attorneys’ fees, costs,
expenses, and expert witness fees, id. ¶ 21, Impark has filed an Answer, ECF No. 10, and those
claims will proceed.
This Memorandum and Opinion and Order also disposes of part of Count I and all of
Counts III, IV, and VI of Defendant’s Amended Counterclaim. As for Count I of Impark’s
Amended Counterclaim, as noted, I dismissed the claims for the Court to vacate the Arbitration
Award, to order the parties to participate in other arbitration, and to adjust the Holdback Amount
that was decided in the Arbitration Award. In Count I, Impark also claims harm from “having
overpaid for assets it purchased in connection with the APA, . . . incurring liabilities that Slavin
and MarcParc were obligated to assume, . . . losing the 501 K Street customer contract,” and
“being named a defendant in the 501 K Street Lawsuit and incurring and continuing to incur
substantial litigation expenses in connection with that lawsuit,” for which Plaintiffs “refus[e] to
defend and indemnify Impark.” Am. Countercl. ¶ 56. And, in Count II, Impark alleges breach of
another contract, the Transition Services Agreement that MarcParc and Impark entered into, by
MarcParc and Slavin’s “refus[al] to remit sums owed to Impark that Impark had earned after the
APA closed” and their “refus[al] to defend and indemnify Impark in connection with the 501 K
Street Lawsuit.” Id. ¶¶ 59–62. Finally, in Count V, Impark claims tortious interference with
contractual relations and prospective economic advantage based on 501 K Street’s cancellation
of “the contract it had in effect with Impark (which 501 K Street had originally entered into with
Slavin and MarcParc” due to the fraud that Slavin and MarcParc allegedly “perpetrated at the
501 K Street property.” Id. ¶¶ 75–76. Impark claims that it “may lose additional existing
contracts and/or potential future contracts with other real estate properties owned or controlled
by the managing member of 501 K Street property.” Id. ¶ 77. MarcParc has filed an Answer,
ECF No. 54, and these claims will proceed.
Accordingly, it is, this 19th day of June, 2017, by the United States District Court for the
District of Maryland, hereby ORDERED that
1. Plaintiffs’ Motion to Confirm Arbitration Award, ECF No. 35, IS GRANTED IN
PART AND DENIED IN PART as follows: Judgment IS ENTERED in Plaintiffs’
favor on Count II, but the judgment is not made final pursuant to Rule 54(b);
2. Plaintiffs’ Motion to Dismiss Count I of Defendant’s Amended Counterclaim in part
and to dismiss Counts III, IV, and VI in their entirety, ECF No. 41, IS GRANTED;
3. I will schedule a status conference following receipt of the parties’ joint status report,
which is due on July 10, 2017, following the close of discovery.
Paul W. Grimm
United States District Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?