RONCO Consulting Corporation v. Leading Edge Ventures, LLC
Filing
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MEMORANDUM OPINION AND ORDER DENYING as untimely 1 Complaint to Vacate, construed as a Motion to Vacate; GRANTING 21 Petition to Confirm Arbitration Award; Entering JUDGMENT in favor of Leading Edge; GRANTING 23 Amended Motion to Dismiss; DENYING AS MOOT 26 Motion for Summary Judgment. Signed by Judge Paul W. Grimm on 12/11/2017. (hmls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
RONCO CONSULTING CORP.,
Plaintiff,
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v.
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LEADING EDGE VENTURES, LLC,
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Defendant.
Civil Case No.: PWG-17-305
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MEMORANDUM OPINION AND ORDER
Plaintiff RONCO Consulting Corporation (“RONCO”) seeks to vacate an arbitration
award issued in favor of Defendant Leading Edge Ventures, LLC (“Leading Edge”), and has
moved for summary judgment in its favor. Leading Edge seeks to dismiss RONCO’s complaint
and to confirm the same award. Because RONCO did not serve timely notice of its application
to vacate the award on Leading Edge, I must grant Leading Edge’s motion to dismiss as well as
its petition to confirm the award, and I will deny RONCO’s summary judgment motion as moot.
Background
RONCO, which had been awarded “a prime contract to perform security vetting services
at the Kandahar Air Base in Afghanistan,” entered into a subcontract (“Agreement”) with
Leading Edge. Compl. 1, ECF No. 1; see Agr., Compl. Ex. A, ECF No. 1-2. Pursuant to the
Agreement, Leading Edge had to “provide ‘written proof of the ability to assign fully cleared
personnel’ prior to award”; to do so, “Leading Edge had to obtain a ‘Facility Clearance’” from
the United States Department of Defense’s Defense Security Services (“DSS”) division. Compl.
1; Agr. § 2.2. Acting as sponsor for Leading Edge (as it was obligated to do), RONCO
submitted three Facility Clearance applications to DSS, but did not obtain the clearance because
it failed to provide a required form (a “DD-254 form”), which RONCO claims it “could not
provide.” Compl. 2. Consequently, RONCO terminated the Agreement.
The Agreement also included an arbitration provision, Agr. § 10.4, pursuant to which
Leading Edge sought to arbitrate the termination. Compl. 2. RONCO agreed to arbitration,
while maintaining that “the merits of DSS’s decision to reject the [Facility Clearance]
application cannot be questioned in the arbitration proceeding.” Id. The arbitrator ruled in
Leading Edge’s favor, finding that “the ‘DSS Specialists were in error’ in demanding the DD
254 form” and that “RONCO should have given Leading Edge the opportunity to ‘disabuse DSS’
from insisting on a DD 254.” Id. He issued a Final Award in Washington, District of Columbia,
on November 3, 2016. Final Award, Compl. Ex. C, ECF No. 1-4 (incorporating April 7, 2016
Partial Final Award, Compl. Ex. B, ECF No. 1-3, by reference).
On February 1, 2017, RONCO filed a complaint in this Court, seeking to vacate the
arbitration award. Leading Edge filed a timely Petition to Confirm Arbitration Award as part of
this same litigation. ECF No. 21; see Ans. to Pet. 2, ECF No. 22 (acknowledging that “Leading
Edge applied to the Court for an order confirming the award within one year after the award is
made as contemplated by 9 U.S.C. § 9”). Additionally, Leading Edge filed an Amended Motion
to Dismiss Complaint to Vacate, ECF No. 23, in which it also sought confirmation of the
arbitration award.1 Its primary argument is that RONCO failed to properly or timely serve it
with notice of its Complaint to Vacate pursuant to the requirements of the Federal Arbitration
Act (“FAA”), 9 U.S.C. § 12, because it did not effect service by U.S. Marshal, and it did not
1
Before it filed its Petition to Confirm Arbitration Award, Leading Edge had filed a motion to
dismiss, raising the timeliness issue only, ECF No. 16; it amended its motion after filing its
Petition, so that the motion now addresses timeliness and whether RONCO has presented valid
grounds for vacating the award.
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serve the Complaint (or notice of it) within three months of the arbitration award. Def.’s Mem.
5, ECF No. 23-1.
RONCO does not claim that it served notice by U.S. Marshal or within three months of
the issuance of the Final Award. Yet, it believes that its Complaint to Vacate is properly before
the Court because it “commenced the action within three months after the final award was filed
or delivered” and it “complied with the request to waive service of process provision in Rule 4
and then served Defendant within 90 days as now required by Rule 4.” Pl.’s Mot. Sum. J. 1,
ECF No. 26. RONCO has filed a Motion for Summary Judgment, along with a Memorandum in
Support of its motion and in response to Leading Edge’s Amended Motion to Dismiss, ECF No.
27. Leading Edge filed a Reply, ECF No. 28, with regard to both its Amended Motion to
Dismiss and RONCO’s summary judgment motion. RONCO has not filed a reply with regard to
its summary judgment motion, and the time for doing so has passed. See Loc. R. 105.6. A
hearing is not necessary. Because RONCO failed to comply with the notice requirements of the
FAA, it is unnecessary for me to reach its additional arguments attacking the arbitrator’s award.
I will grant Leading Edge’s Amended Motion to Dismiss and deny RONCO’s Complaint to
Vacate, treated as a motion to vacate, and I will deny its Motion for Summary Judgment as moot.
Additionally, I will grant Leading Edge’s Petition to Confirm Arbitration Award.
Standard of Review
Pursuant to Rule 12(b)(6), RONCO’s pleadings 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). That is, “while a plaintiff does not need to demonstrate in a complaint that
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the right to relief is ‘probable,’ the complaint must advance the plaintiff’s claim ‘across the line
from conceivable to plausible.’” Gibson v. U.S. Postal Serv., No. CCB-13-2959, 2014 WL
2109919, at *1 (D. Md. May 20, 2014) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th
Cir. 2012)). Therefore, it must contain factual allegations that are “enough to raise a right to
relief above the speculative level . . . on the assumption that all the allegations in the complaint
are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, (2007)
(internal citations and alterations omitted). Accordingly, for purposes of considering a motion to
dismiss, this Court accepts the facts alleged in the Complaint as true. See Aziz v. Alcolac, 658
F.3d 388, 390 (4th Cir. 2011). And, “[a] copy of a written instrument that is an exhibit to a
pleading,” such as the Agreement and the Final Award, “is a part of the pleading for all
purposes.” Fed. R. Civ. P. 10(c). I also will consider the Stipulated Facts that the parties jointly
submitted. See Levin v. United States, No. PX 15-1880, 2017 WL 4023177, at *1 (D. Md. Sept.
13, 2017) (“These facts are derived from Levin's Complaint and the parties’ joint stipulation of
facts, and are accepted as true for purposes of Defendant’s motion to dismiss.”); Robinson v. Bd.
of Ed. of St. Mary’s Cty., 143 F. Supp. 481, 484 (D. Md. 1956) (“The parties have filed a
stipulation of facts and have agreed that the stipulation and attached exhibits may be used in
whole or in part by any of the parties at the hearing on the motion to dismiss . . . .”).
Governing Law
Both parties seek relief pertaining to an arbitration award issued in Leading Edge’s favor,
with Leading Edge seeking to enforce it while RONCO seeks to vacate it. There is an “emphatic
federal policy in favor of arbitral dispute resolution.” Fakhri v. Marriot Int’l Hotels, Inc., 201 F.
Supp. 3d 696, 709–10 (D. Md. 2016) (quoting Mitsubishi Motors Corp. v. Soler Chrysler–
Plymouth, Inc., 473 U.S. 614, 631 (1985); citing, e.g., ESAB Grp., Inc. v. Zurich Ins. PLC, 685
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F.3d 376, 390 (4th Cir. 2012)), appeal dismissed, No. 16-2061, 2016 WL 9724329 (4th Cir. Oct.
21, 2016).
Consequently, “[j]udicial 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)).
RONCO filed its complaint in this Court pursuant to Chapter 2 of the Federal Arbitration
Act (“FAA”), 9 U.S.C. §§ 201–08. Compl. ¶ 12. Chapter 2 implements the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). The Convention
covers arbitration agreements and awards arising out of commercial relationships where one
party is not a citizen of the United States, as well as where both parties are U.S. citizens and, as
here, the agreement or award “envisages performance or enforcement abroad.” 9 U.S.C. § 202.
It confers jurisdiction on federal district courts for actions “falling under the Convention,” which
are “deemed to arise under the laws and treaties of the United States.” 9 U.S.C. § 203. And, it
adopts the provisions of Chapter 1 of the FAA, 9 U.S.C. §§ 1–12, “to the extent that chapter is
not in conflict with . . . chapter [2] or the Convention as ratified by the United States.” 9 U.S.C.
§ 208; see also Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 21 (2d Cir.
1997) (concluding that the Convention “allow[s] a court in the country under whose law the
arbitration was conducted to apply domestic arbitral law, in this case the FAA, to a motion to set
aside or vacate that arbitral award”).
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Section 9 permits the court to confirm an arbitration award, while Section 10 directs the
court to vacate an arbitration award under limited circumstances.2 9 U.S.C. §§ 9, 10. Section 9
provides:
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. Section 10 states:
[T]he United States court in and for the district wherein the award was made may
make an order vacating the award upon the application of any party to the
arbitration-(1)
where the award was procured by corruption, fraud, or undue means;
(2)
where there was evident partiality or corruption in the arbitrators, or either
of them;
(3)
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
(4)
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) (emphasis added). Insofar as these provisions refer to a court with jurisdiction,
as noted, because RONCO filed suit under Chapter 2, rather than Chapter 1, this Court has
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Certainly, the FAA “sets forth the sole method to challenge an arbitration award—‘by serving a
motion to vacate within three months of the rendering of the award,’ Taylor v. Nelson, 788 F.2d
220, 225 (4th Cir.1986)—and does not permit ‘a party to initiate a challenge to an arbitration
award by filing a complaint.’ O.R. Securities, Inc. v. Professional Planning Associates, Inc., 857
F.2d 742, 745 (11th Cir.1988).” ANR Coal Co. v. Cogentrix of N.C., Inc., 173 F.3d 493, 497 (4th
Cir. 1999) (emphasis added). But where, as here, no prejudice results from the filing of a
complaint, rather than a motion, the court may construe the complaint as a motion so as not to
“elevate form over substance.” See id. Accordingly, I will treat RONCO’s complaint as a
motion to vacate. See id.; see also Fed. R. Civ. P. 1.
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jurisdiction to hear the Complaint to Vacate, as well as the Petition to Confirm Arbitration
Award. See 9 U.S.C. § 203. “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 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). As “the party opposing the award,” RONCO
“bears the burden of proving the existence of grounds for vacating the award.” Choice Hotels
Int’l, Inc. v. Austin Area Hosp., Inc., No. TDC-15-0516, 2015 WL 6123523, at *2 (D. Md. Oct.
14, 2015) (citing Three S Del., Inc., 492 F.3d at 527).
Here, the parties do not dispute that the Agreement between them included an arbitration
provision, which provided:
In the event of a dispute, the desire is to handle all disputes at the lowest
management level possible. . . . However, if all efforts at dispute resolution fail,
the matter shall be arbitrated pursuant to the laws [of] the State of Florida in the
United States, with binding arbitration provided by the American Arbitration
Association.
Agr. § 10.4. And, while RONCO challenges whether the arbitration award addressed issues
which it agreed to arbitrate, it nonetheless participated in arbitration proceedings with Leading
Edge, after voicing its objections. Now, it seeks to vacate the arbitration award pursuant to 9
U.S.C. § 10.
Vacating Arbitration Award
The crux of Leading Edge’s motion to dismiss is that RONCO failed to comply with
either of the two components of the FAA notice requirements. First, “[n]otice 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.” 9 U.S.C. § 12. Second, when, as here, the
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adverse party is not a resident of the district where the award issued, notice of the motion “shall
be served by the marshal of any district within which the adverse party may be found in like
manner as other process of the court.” Id.
“A motion to vacate filed or served after this three-month period is time barred.” Chase
v. Nordstrom, Inc., No. CCB-10-2114, 2010 WL 4789442, at *2 (D. Md. Nov. 17, 2010) (citing
Choice Hotels Int’l, Inc. v. Shiv Hospitality, L.L.C., 491 F.3d 171, 177–78 (4th Cir. 2007);
Taylor v. Nelson, 788 F.2d 220, 225 (4th Cir. 1986)). 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, 581–82 (2008)).
The Arbitrator issued the Final Award on November 3, 2016 and emailed it to the parties
that day. Stip. Facts ¶ 12, ECF No. 15. In Chase, this Court found email delivery to be
sufficient. See Chase, 2010 WL 4789442, at *2 n.2. Therefore, RONCO had until February 3,
2017 to serve notice of its motion to vacate the award. See 9 U.S.C. § 12. Even if the threemonth period did not being to run until RONCO received its copy by mail on November 23,
2016, see Stip. Facts ¶ 13, RONCO still would have had to serve notice of its Complaint to
Vacate by February 23, 2017.
On February 1, 2017, RONCO filed suit in this Court, seeking to vacate the arbitration
award. RONCO mailed its pleadings, along with a Request for Waiver of Service, to Leading
Edge’s attorney and registered agent that same day. Stip. Facts ¶ 17. RONCO also sent the
documents via FedEx Ground, and Leading Edge’s registered agent and owner received the
FedEx package on February 8, 2017. Id. ¶¶ 18–19. Leading Edge’s registered agent and owner
received the documents by mail on February 9, 2017. Id. ¶ 20. Almost thirty days later,
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RONCO learned that Leading Edge declined to waive service, id. ¶ 21, and it served the
documents on Leading Edge’s registered agent by private process server on March 18, 2017. Id.
¶ 23.
In RONCO’s view, its Complaint should not be dismissed because it “timely filed the
complaint and fully complied with the service of process provisions in Rule 4,” and it mailed the
Complaint on February 1, 2017, and Leading Edge’s agent received it by February 8, 2017. Pl.’s
Mem. 26. RONCO insists that in Henderson v. United States, 517 U.S. 654, 669-72 (1996), “the
Court held that compliance with the service of process provisions within Rule 4 ‘displaced’ a
statute which ostensibly imposed different service of process requirements,” and “[u]nder the
Rules Enabling Act (then and now), when the Supreme Court promulgates ‘general rules of
practice and procedure’ all ‘laws in conflict with such rules shall be of no further force or
effect.’” Id. at 28 (quoting 28 U.S.C. § 2072(b)).3 As RONCO sees it, the service-by-a-U.S.Marshal requirement is an antiquated requirement that “Rule 4 effectively eliminated” when it
“permitted private service of process.” Id. at 30.
But, as Leading Edge notes, see Def.’s Reply 3, the Federal Rules of Civil Procedure,
including the service of process provisions of Rule 4, “govern proceedings under [certain] laws,”
which include “9 U.S.C., relating to arbitration.” Fed. R. Civ. P. 81(a)(6). But, importantly, the
Rules of Civil Procedure do not govern proceedings under those laws referenced by Rule
3
The Rules Enabling Act, 28 U.S.C. § 2701 et seq., “authorizes the judiciary to make rules . . .
‘for the conduct of their business,’” provided that the rules are “‘consistent with Acts of
Congress and rules of practice and procedure,’” such as the Federal Rules of Civil Procedure.
Nat’l Ass’n for the Advancement of Multijurisdiction Practice v. Lynch, 826 F.3d 191, 197 (4th
Cir.) (quoting 28 U.S.C. § 2071; citing 28 U.S.C. § 2072), cert. denied, 137 S. Ct. 459 (2016),
reh’g denied, 137 S. Ct. 716 (2017). Stated differently, “the Rules Enabling Act tells district
courts that they cannot use local rules to contradict the Supreme Court's rules of procedure.” Id.
And, the rules cannot “abridge, enlarge or modify any substantive right.” Id. (quoting 28 U.S.C.
§ 2072(b)).
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81(a)(6) to the extent that they “provide other procedures.” Id. Thus, the service procedures
outlined in Rule 4 simply do not supplant those provided in 9 U.S.C. § 12. See id. Moreover,
Rule 4 governs procedure and timing for service of the summons and complaint in civil cases
generally, see Fed. R. Civ. P. 4(c)(1), (m), whereas 9 U.S.C. § 12 governs service of notice of a
motion to vacate an arbitration award (for which there is a strong policy promoting the quick
resolution of arbitrated disputes).
There is support (albeit in a footnote in a case from another district) for RONCO’s
argument that the requirement that service of notice of a motion to vacate be effected by a U.S.
Marshal is a holdover from days of yore. E.g., Matter of Arbitration between InterCarbon
Bermuda, Ltd. & Caltex Trading & Transp. Corp., 146 F.R.D. 64, 67 n.3 (S.D.N.Y. 1993)
(“Section 12 is an anachronism not only because it cannot account for the internationalization of
arbitration law subsequent to its enactment, but also because it cannot account for the subsequent
abandonment of United States marshals as routine process servers. Amendments to the Federal
Rules of Civil Procedure in the early 1980s substantially changed the identity of those who may
serve process. ‘[P]rior to 1980, the marshal was the stated summons server unless there was a
person ‘specially appointed’ by the court to make service.’ The ‘ostensibly principal purpose’ of
the amendments was to ‘tak[e] the marshals out of summons service almost entirely.’” (quoting
Changes in Federal Summons Service Under Amended Rule 4 of the Federal Rules of Civil
Procedure, 96 F.R.D. 81, 94 (1983))). Perhaps so, but even if service did not have to be by
Marshal, RONCO still failed to effect timely service.
Rule 4(h) of the Federal Rules of Civil Procedure provides that service on a corporation,
partnership, or association in the United States must be
(A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or
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(B) by delivering a copy of the summons and of the complaint to an officer, a
managing or general agent, or any other agent authorized by appointment or by
law to receive service of process and--if the agent is one authorized by statute and
the statute so requires--by also mailing a copy of each to the defendant;
Fed. R. Civ. P. 4(h)(1). Rule 4(e)(1), in turn, provides that an individual in the United States
may be served by “following state law for serving a summons . . . in the state where the district
court is located or where service is made,” or by personally delivering the summons and
complaint to the individual, leaving them at the individual’s home with another resident of
suitable age and discretion, or delivering them to an agent authorized to accept service. Fed. R.
Civ. P. 4(e)(1), (2). Notably, Rule 4 “does not directly provide for service by mail . . . .” Mallard
v. MV Transp., Inc., No. DKC 11-2997, 2012 WL 642496, at *5 (D. Md. Feb. 27, 2012).
Under the laws of Maryland, where this Court is located, an individual may be served
(1) by delivering to the person to be served a copy of the summons, complaint,
and all other papers filed with it; (2) if the person to be served is an individual, by
leaving a copy of the summons, complaint, and all other papers filed with it at the
individual's dwelling house or usual place of abode with a resident of suitable age
and discretion; or (3) by mailing to the person to be served a copy of the
summons, complaint, and all other papers filed with it by certified mail
requesting: “Restricted Delivery--show to whom, date, address of delivery.”
Md. Rules 2-121(a). And, under the laws of Washington, where RONCO attempted to serve,
and ultimately served, Leading Edge,
The summons shall be served by delivering a copy thereof, as follows:
...
(9) If against a company or corporation [such as Leading Edge], to the president
or other head of the company or corporation, the registered agent, secretary,
cashier or managing agent thereof or to the secretary, stenographer or office
assistant of the president or other head of the company or corporation, registered
agent, secretary, cashier or managing agent.
...
(16) [If against an individual], to the defendant personally, or by leaving a copy of
the summons at the house of his or her usual abode with some person of suitable
age and discretion then resident therein.
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Wash. Rev. Code Ann. § 4.28.080. The statute explicitly states that “[s]ervice made in the
modes provided in this section is personal service.” Id. Indeed, “[s]ervice of process by means
other than personal service, i.e., constructive and substitute service, ‘is in derogation of the
common law and cannot be used when personal service is possible.’” Secco v. Secco, No. 340503-III, 2017 WL 5499875, at *3 (Wash. Ct. App. Nov. 16, 2017) (quoting Rodriguez v. James–
Jackson, 111 P.3d 271, 274 (Wash. Ct. App. 2005)).
Thus, even if the means of service enumerated in Rule 4 and incorporated into Rule 4 by
reference to state laws replaced the requirement of service by a U.S. Marshal, RONCO still did
not effect service until March 18, 2017, when it served Leading Edge’s registered agent by
private process server. Although the Maryland Rules provide for service by mail, the mail must
be by certified mail, restricted delivery. RONCO sent the package via first class mail and
Federal Express, without any restrictions on its delivery. As a result, “Leading Edge’s registered
agent and owner[] received a FedEx package left at his door containing the Complaint, all Exhibits,
a Notice of Lawsuit and Request for Waiver of Service, and Rule 4 Waiver of Service of Process on
February 8, 2017,” and he “received a copy of the Complaint, all Exhibits, a Notice of Lawsuit and
Request for Waiver of Service, and Rule 4 Waiver of Service of Process by first class mail on
February 9, 2017.” Stip. Facts ¶¶ 19, 20 (emphasis added). Neither mailing complied with the
service requirements of the federal and state rules. See Fed. R. Civ. P. 4(e)(1), (h)(1); Md. Rules 2-
121(a); Wash. Rev. Code Ann. § 4.28.080; see also Secco, 2017 WL 5499875, at *3; Mallard,
2012 WL 642496, at *5.
In sum, RONCO never properly served notice of its Complaint to Vacate in the manner
required by the FAA because it never did so by U.S. Marshal. And, even if the manner of
service effected by RONCO complied with the federal, Maryland, or Washington rules of civil
procedure, such that the March 18, 2017 service by private process server satisfied the type of
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service required by the FAA, RONCO still did not effect that service within three months of the
Final Award, which issued more than four months earlier, on November 3, 2016. Moreover,
even if the clock did not start running until RONCO received the Final Award by mail on
November 23, 2016, more than three months still had passed before the March 18, 2017 service.
Finally, I note that “[t]he Fourth Circuit has not yet recognized equitable exceptions to the
FAA’s three-month deadline for serving a motion to vacate upon an adverse party.” Chase v.
Nordstrom, Inc., No. CCB-10-2114, 2010 WL 4789442, at *2 (D. Md. Nov. 17, 2010). On the
contrary, “[t]he Fourth Circuit has strongly intimated—but has stopped short of explicitly
holding—that there are no equitable exceptions to the three-month limitations period set forth in
the Federal Arbitration Act.” Parsons, Brinckerhoff, Quade & Douglas, Inc. v. Palmetto Bridge
Constructors, 647 F. Supp. 2d 587, 594 (D. Md. 2009); see also Taylor, 788 F.2d at 225 (“The
existence of any such exceptions to § 12 is questionable, for they are not implicit in the language
of the statute, and cannot be described as common-law exceptions because there is no commonlaw analogue to enforcement of an arbitration award.”). Consequently, Leading Edge’s Amended
Motion to Dismiss must be granted, and RONCO’s Complaint to Vacate, construed as a motion
to vacate, is denied as untimely. And, RONCO’s Motion for Summary Judgment is denied as
moot.
Confirming Arbitration Award
Given that RONCO failed to file a timely motion to vacate, I must grant Leading Edge’s
Petition to Confirm Arbitration Award. See 9 U.S.C. § 9 (stating that, when a party files a timely
petition to confirm an arbitration award, “the court must grant such an order unless the award is
vacated, modified, or corrected” (emphasis added)); Taylor v. Nelson, 788 F.2d 220, 225 (4th
Cir. 1986) (“A confirmation proceeding under 9 U.S.C. § 9 is intended to be summary:
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confirmation can only be denied if an award has been corrected, vacated, or modified in
accordance with the Federal Arbitration Act. ”); First Baptist Church of Glendarden v. New Mkt.
Metalcraft, Inc., No. AW-10-00543, 2010 WL 3037030, at *1 (D. Md. July 30, 2010)
(“Confirmation of an arbitration award is a summary proceeding that merely makes what is
already a final arbitration award a judgment of the court”), aff’d, 442 F. App’x 789 (4th Cir.
2011); Parsons, 647 F. Supp. 2d at 594 (“[Because neither party timely moved to vacate or
modify the arbitral award, this Court is also required to grant Parsons’s Petition and Motion for
Order Confirming the Award.”). I note that the arbitrator awarded Leading Edge “the sum of
$501,416.00, which represents $473,322.00 in the awarded damages and $28,094.00 in the
awarded interest,” as well as “the sum of $30,498.89, representing . . . fees and expenses
previously incurred by [Leading Edge],” and “any amount [Leading Edge] contributed to” the
$1,733.75 “cost of the hearing room rental.” Final Award 16. The arbitrator ruled that “[t]he
parties’ attorney fees shall be borne as incurred,” and denied any claims not expressly granted.
Id. Leading Edge now seeks the $501,416 damages awarded, plus the $30,498.89 awarded for
fees and expenses, for a total of $531,914.89. Def.’s Pet. 3, 5. I will confirm this amount. See 9
U.S.C. § 9.
Leading Edge also seeks post-award interest, to include pre- and post-judgment interest.
Def.’s Pet. 3. Insofar as it seeks post-judgment interest, “the court need not specifically grant an
award of post-judgment interest because [the petitioner] is entitled to recover such interest by
operation of law.” Choice Hotels, Int’l, Inc. v. Shree Navdurga, LLC, No. DKC-11-2893, 2012
WL 5995248, at *3 (D. Md. Nov. 29, 2012). The federal post-judgment interest statute provides
that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district
court.” 28 U.S.C. § 1961; see also Goldman, Walker, LLC v. Shahab, No. GJH-13-113698, 2015
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WL 306746, at *6 (D. Md. Jan. 22, 2015) (“[O]nce an arbitration award is confirmed in federal
court, the rate specified by § 1961 applies . . . even if the arbitration award purported to grant
post-judgment interest [at a different rate]” (quoting Fidelity Fed Bank v. Durga Ma Corp., 387
F.3d 1021, 1024 (9th Cir. 2004))). Cf. Forest Sales Corp. v. Bedingfield, 881 F.2d 111, 111–13
(4th Cir. 1989) (concluding that federal post-judgment interest statute applies in diversity action).
As for post-award, pre-judgment interest, “the award of prejudgment interest is within the
discretion of this court, to be determined according to judge-made principles.” CSX Transp., Inc.
v. Transportation-Commc’ns Int’l Union, 413 F. Supp. 2d 553, 572 (D. Md. 2006) (quoting
Milwaukee v. Cement Div., Nat’l Gypsum Co., 515 U.S. 189, 194 (1995)), aff’d, 480 F.3d 678
(4th Cir. 2007); see also Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d
1434, 1447 (11th Cir. 1998) (“Because the district court below held federal subject-matter
jurisdiction under 9 U.S.C. § 203, the decision whether to grant prejudgment interest was a
matter for the court’s discretion and was not controlled by state law.”). Thus, the court “must
weigh the equities in a particular case to determine whether an award of prejudgment interest is
appropriate.” Moore Bros. Co. v. Brown & Root, Inc., 207 F.3d 717, 727 (4th Cir. 2000).
Here, the Final Award provided for pre-award interest at the rate the parties agreed was
applicable, that is, “4.75%, as prescribed by Florida law.” Final Award 15–16. Leading Edge
seeks post-award, pre-judgment interest at the same rate. Def.’s Pet. 3–4. This Court has noted
that, while the federal interest rate applies to post-judgment interest, post-arbitration interest may
be awarded at the state statutory rate. Goldman, 2015 WL 306746, at *5 (citing United Cmty.
Bank v. McCarthy, 2010 WL 2723726, at *2–4 (W.D.N.C. July 8, 2010)). Given that the parties
selected Florida law to govern arbitration, Agr. § 10.4, and that pre-award interest was awarded
at the Florida statutory rate, I will award post-award, pre-judgment interest beginning on
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December 3, 2016—the date on which RONCO’s payment was due under the Final Award—at
the Florida statutory rate in effect at the time of the Final Award (4.75%), to compensate Leading
Edge for the delay in payment. See Grigsby & Assocs., Inc. v. M Sec. Investments, Inc., No. 0623035-CIV, 2010 WL 11452307, at *2 (S.D. Fla. Sept. 30, 2010) (“[P]re-judgment interest is not
a penalty, but compensation to the plaintiff for the use of funds that were rightfully his . . . and
absent any reason to the contrary, it should normally be awarded when damages have been
liquidated’ by an arbitration award.” (quoting Indus. Risk. Insurers, 141 F.3d at 1446-47 (internal
citations omitted))).
ORDER
Accordingly, it is, this 11th day of December, 2017, by the United States District Court
for the District of Maryland, hereby ORDERED that
1. Defendant’s Amended Motion to Dismiss, ECF No. 23, IS GRANTED;
2. Plaintiff’s Complaint to Vacate, ECF No. 1, construed as a motion to vacate, IS
DENIED as untimely;
3. Defendant’s Petition to Confirm Arbitration, ECF No. 21, IS GRANTED;
4. The November 3, 2016 Final Award of $501,416.00 in damages and pre-award interest,
plus $30,498.89 in fees and expenses IS CONFIRMED;
5. Judgment IS ENTERED in favor of Leading Edge in the amount of $501,416.00 in
damages and pre-award interest, plus $30,498.89 in fees and expenses, plus post-award,
pre-judgment interest from December 3, 2016 to December 11, 2017 at the rate of 4.75%,
all of which shall accrue post-judgment interest as specified by statute;
6. Plaintiff’s Motion for Summary Judgment, ECF No. 26, IS DENIED AS MOOT; and
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7. Defendant’s request for attorneys’ fees must be briefed, and I will schedule a call to
set a briefing schedule.
/S/
Paul W. Grimm
United States District Judge
lyb
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