Love v. BMW Financial Services NA, LLC
ORDER granting 54 motion to confirm arbitration award and denying 57 cross-motion to vacate arbitration award. For the reasons stated herein, I grant defendant's motion to confirm the arbitration award with respect to both plaintiffs, and d eny plaintiff Kevin Love's cross-motion to vacate. Accordingly, judgment shall enter in favor of defendant BMW Financial Services, NA, LLC and against plaintiffs Kevin B. Love and Maria Love, jointly and severally, for $34,826.84 owed under the lease agreement, together with interest at 9 percent per annum from April 30, 2013; $50,000 in attorney's fees awarded by the arbitrator; and $12,960.02 in attorney's fees and costs incurred in connection with defendant's motion to confirm and its opposition to plaintiff Kevin Love's cross-motion. The Clerk of Court is respectfully requested to enter judgment accordingly. Ordered by Magistrate Judge Steven M. Gold on 12/5/2017. (Recca, Vincent)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
KEVIN B. LOVE,
BMW FINANCIAL SERVICES NA, LLC,
GOLD, STEVEN M., U.S.M.J.:
In this action, plaintiff Kevin Love asserts, inter alia, a violation of the Fair Credit
Reporting Act. Plaintiff’s claim arises from a motor vehicle lease agreement and, in particular,
defendant’s contention that plaintiff failed to make certain payments required under the lease.
Defendant has counterclaimed and added co-lessee Maria Love as a third-party defendant,
seeking to recover the amounts remaining due under the lease after the vehicle was repossessed
and sold. The parties have consented to the exercise of jurisdiction by a Magistrate Judge, and
the case was accordingly reassigned to me for all purposes. Docket Entries 11, 12.
The lease agreement at issue includes an arbitration clause. By Order dated January 21,
2016, I granted defendant’s motion to compel arbitration. Docket Entry 24. The parties then
arbitrated their claims before a neutral arbitrator, who ultimately entered an award in favor of
defendant. Award of Arbitrator (“Award”), Docket Entry 54-1. Defendant now moves to
confirm that award under Section 9 of the Federal Arbitration Act. Docket Entry 54. Plaintiff
Kevin Love cross-moves to vacate that award. Docket Entry 57. Maria Love has not directly
participated in the briefing or motion practice.
For the following reasons, defendant’s motion to confirm is granted and plaintiff Kevin
Love’s cross-motion to vacate is denied.
In January 2010, plaintiffs Kevin and Maria Love (“plaintiffs”) entered into a motor
vehicle lease agreement (the “lease agreement”) for a 2010 BMW (the “car” or “vehicle”) with
nonparty Open Road BMW, which assigned its rights under the lease to defendant.1 Stipulation
of Uncontested Facts (“Stip.”) ¶¶ 1, 3, Docket Entry 21.2 In his complaint, plaintiff Kevin Love
alleges that the car had a variety of mechanical problems and required substantial repairs.
Complaint (“Compl.”) ¶¶ 4, 9-15, Docket Entry 1-1. Plaintiff took the car to a repair facility in
March 2012 and never regained possession of it again. Stip. ¶¶ 7-8.
The lease agreement required plaintiffs to make monthly payments. Stip., Ex. A, Lease
Agreement ¶ 6, Docket Entry 21-1. Plaintiffs did so, though many of those payments were made
late. Stip. ¶ 6 and Ex. C, Lease Agreement Payment Statement, Docket Entry 21-1. As a result,
defendant declared plaintiffs in default and repossessed the car, sold it at a commercial auction,
and claimed a deficiency balance. Compl. ¶¶ 40-41.
1. The Federal Action
Plaintiff Kevin Love filed this action in the Supreme Court of New York in Richmond
County, claiming a violation of the federal Fair Credit Reporting Act (“FCRA”), 29 U.S.C.
Although Maria Love is styled in the case caption and various docket entries as a Third-Party Defendant, for the
sake of simplicity she is referred to as a plaintiff in this Order.
The stipulation of uncontested facts referenced in the text was submitted in connection with defendant’s motion to
§ 1681s-2, and also asserting various state law tort and contract claims. Compl. at 1, 12-20.
Defendant then removed the case to this Court. Notice of Removal, Docket Entry 1. On April
28, 2016, I granted defendant leave to file a third-party complaint against Maria Love, and
defendants did so, asserting a claim for breach of contract and seeking to compel arbitration and
recover attorney’s fees. Third-Party Complaint at 2-4, Docket Entry 34; Order dated April 28,
2. The Underlying Arbitration
Each of the parties to this action are also parties to the underlying lease agreement. Lease
Agreement ¶ 1; Stip. ¶¶ 1-3. The lease agreement between the parties contains an arbitration
clause, which reads as follows:
PLEASE REVIEW - IMPORTANT - AFFECTS MY LEGAL RIGHTS
NOTICE: Either you or I may choose to have any dispute between us decided by
arbitration and not in a court or by jury trial . . . .
Any claim or dispute, whether in contract, tort, statute or otherwise (including the
interpretation and scope of this clause, and the arbitrability of the claim or dispute),
between me and you or your employees, agents, successors or assigns, which arise out of
or relate to my credit application, lease, purchase or condition of this Vehicle, this Lease
or any resulting transaction or relationship (including any such relationship with thirdparties who do not sign this Lease) shall, at your or my election, be resolved by neutral,
binding arbitration and not by a court action . . . .
Any arbitration under this Arbitration Clause shall be governed by the Federal Arbitration
Act (9 U.S.C. § 1 et. seq.) and not by any state law concerning arbitration; however, the
governing law as to the substantive issues of the Lease and Vehicle shall be the law of the
state in which this Lease was executed.
Lease Agreement ¶ 41. Invoking this clause, defendant successfully moved to compel
arbitration. See Order to Compel Arbitration, Docket Entry 24. The parties subsequently
stipulated that the claims asserted against Maria Love would be arbitrated in the same proceeding
as those involving plaintiff Kevin Love. Stipulation Regarding Referral of Third-Party Claims to
Arbitration ¶ 3, Docket Entry 46.
The case then proceeded before an arbitrator selected by the American Arbitration
Association (“AAA”) in March and May of 2017. June 29, 2017 Letter, Docket Entry 49. On
July 18, 2017, the arbitrator found in favor of defendant. The arbitrator concluded that plaintiffs
Kevin and Maria Love were jointly and severally liable to defendant for a deficiency balance of
$34,826.64, the amount plaintiffs owed under the lease agreement after deducting the value
realized by defendant when the car was sold. The arbitrator also awarded 9 percent interest per
annum on the deficiency from April 30, 2013, and $50,000 in attorney’s fees. Finally, after
concluding that the information reported to credit agencies by defendant about plaintiffs was
“substantially accurate” and that plaintiffs presented no evidence of harm, the arbitrator denied
plaintiff Kevin Love’s FCRA claim. See Award.
Defendant now moves to confirm the arbitrator’s award pursuant to 9 U.S.C. § 9. Motion
to Confirm ¶¶ 26-27, Docket Entry 54. Defendant also moves under paragraph 26(e)(5) of the
lease agreement for attorney’s fees incurred in connection with moving to confirm the award. Id.
¶¶ 30-36. Plaintiff Kevin Love cross-moves to vacate the award. Docket Entry 57. Plaintiff
Maria Love has not challenged the arbitrator’s award or otherwise participated in the pending
a. Arbitration Award/Plaintiff Kevin Love.
The lease agreement provides that “any arbitration under [the] Arbitration Clause shall be
governed by the Federal Arbitration Act 9 U.S.C. §1 et seq.” Lease Agreement ¶ 41. Section 9
of the Federal Arbitration Act provides that “any party to the arbitration may apply to the
court . . . for an order confirming the award, and [that] the court must grant such an order unless
the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of [9 U.S.C.].
Federal Arbitration Act, § 1, 9 U.S.C. § 9.
Confirmation of an arbitration award is a “summary proceeding that merely makes what
is already a final arbitration award a judgement of the court.” D.H. Blair & Co., Inc., v.
Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (internal quotation marks omitted). In general, a
court “is required to enforce the arbitration award as long as there is a barely colorable
justification for the outcome reached.” Leeward Constr. Co., Ltd. v. Am. Univ. of Antigua-Coll.
of Medicine, 826 F.3d 634, 638 (2d Cir. 2016) (internal quotation marks and citation omitted).
In the award itself, the arbitrator’s rationale “need not be explained, and the award should be
confirmed if a ground for the arbitrator’s decision can be inferred from the facts of the case.”
D.H. Blair, 462 F.3d at 110 (internal quotation marks and citation omitted).
A party moving to vacate an arbitrator’s award “‘bears the heavy burden of showing that
the award falls within a very narrow set of circumstances delineated by statute and case law’ that
warrant vacatur.” Leeward, 826 F.3d at 638 (quoting Duferco Int’l Steel Trading v. T. Klaveness
Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003)). Section 10 of the Federal Arbitration Act
provides that a court may vacate an award in the following situations:
(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.
The Second Circuit recognizes two additional grounds for vacatur: a court may vacate an
arbitration award if it was rendered in “manifest disregard” of the law or of the terms of the
parties’ agreements. Tully Constr. Co., Inc. v. Canam Steel Corp., 684 Fed. Appx. 24, 26 (2d
Cir. 2017) (internal quotation marks and citations omitted). Vacatur for manifest disregard of the
law “is a doctrine of last resort, reserved for ‘those exceedingly rare instances where some
egregious impropriety on the part of the arbitrators is apparent but where none of the provisions
of the [Federal Arbitration Act] apply.’” Yosemite Ins. Co. v. Nationwide Mut. Ins. Co., 2016
WL 6684246, at *5 (S.D.N.Y. Nov. 10, 2016) (quoting Duferco, 333 F.3d at 389). This narrow
ground for vacatur is available only where: (1) “the law that was allegedly ignored was clear, and
in fact explicitly applicable to the matter before the arbitrators,” (2) “the law was in fact
improperly applied, leading to an erroneous outcome,” and (3) “the arbitrator . . . kn[ew] of its
existence, and its applicability to the problem before him.” Id. (quoting Duferco, 333 at F.3d at
390) (alteration in original). The Second Circuit, however, does not recognize “manifest
disregard of the evidence” as a grounds for vacatur. Stolt-Nielsen SA v. AnimalFeeds Int’l Corp.,
548 F.3d 85, 91 (2d Cir. 2008), rev’d on other grounds, 559 U.S. 662 (2010).
Here, the arbitrator concluded that “[t]he evidence establishes that [plaintiffs] were
delinquent on the payments under the lease and after abandoning the automobile at a BMW
dealership (which was not owned or managed by [defendant]) the automobile was deemed
repossessed by [defendant] and later sold at auction. The evidence also establishes that
[defendant’s] actions with respect to the sale of the car were handled in a commercially
reasonable manner.” Award at 1. Accordingly, the arbitrator awarded defendant the deficiency
balance of $34,826.84, an amount calculated after deducting the amount realized from the sale of
the vehicle, plus interest at the rate of 9 percent per annum, from April 30, 2013. Id. at 2.
Defendant also requested $141,859.88 in attorney’s fees and costs. Id. at 1. Of that
amount, $60,306.05 was related to the proceedings in this federal case that were held before the
arbitration and not to the arbitration itself. The arbitrator found that the lease agreement did “not
clearly allow for recovery of attorney’s fees and costs associated with the Federal Court action,”
at least in part because the federal action primarily concerned plaintiff Kevin Love’s FCRA
claim. Id. at 2.Accordingly, the arbitrator awarded defendant fees and costs totalling $50,000.
Finally, the arbitrator denied plaintiff Kevin Love’s FCRA claim, finding “the evidence
submitted . . . far from compelling.” Id. The arbitrator found that the information defendant
reported to credit agencies was “substantially accurate” and that “there [was] no evidence of
harm” to plaintiffs. Id.
Plaintiff Kevin Love’s opposition and cross-motion raise none of the grounds for vacatur
available under 9 U.S.C. § 10. Rather, Love attacks the size of the award, arguing that the
arbitrator “should not have granted the full amount of the award as I was not possession [sic] of
the [car].” Affidavit of Kevin Love (“Love Aff.”) ¶ 15, Docket Entry 57-2. More specifically,
plaintiff Kevin Love argues that the arbitrator failed to take into account that he turned the
vehicle over to mechanics for repairs, that the vehicle was not properly repaired, and that
defendant eventually repossessed the car. Affirmation in Support of Notice of Cross-Motion
(“Love Mem.”) ¶¶ 31-34, Docket Entry 57-1. As noted above, though, even manifest disregard
of the evidence is not a ground for vacatur of an arbitrator’s award. See Stolt-Nielsen SA, 548
F.3d at 91. The arbitrator’s determination of when and for how long the car was unavailable to
plaintiff Kevin Love is a factual finding not to subject to review in this court. Moreover, to the
extent Love argues that the arbitrator failed to account for the repossession of the car and its sale
by defendant, he is mistaken. The award explicitly references the “deficiency balance” due after
deducting the “realized value” from the sale of the car. Award at 1.
Plaintiff Kevin Love also seeks vacatur of the arbitrator’s award dismissing his FCRA
claim. Love Mem. ¶ 46. Love’s argument in support of vacatur is not clearly stated; he argues
both that defendant failed to report that it was in possession of the car, and that defendant
wrongfully “continued to report the repossession.” Love Aff. ¶¶ 17-18. In any event, whether
the reporting by defendant was accurate or caused plaintiffs harm is, like the amount owed, a
factual question that was determined by the arbitrator based upon the evidence. Even if those
determinations were made in error, they provide no basis for vacating the award or declining to
b. Arbitration Award/Plaintiff Maria Love.
As noted above, the Clerk of Court entered a certificate noting the default of Maria Love
on June 22, 2016. Docket Entry 43. Subsequently, the parties stipulated that defendant’s claims
against Maria Love would be heard in the underlying arbitration and that Maria Love would be
represented by counsel for plaintiff Kevin Love, Richard Luthmann. Stipulation Regarding
Referral of Third-Party Claims to Arbitration ¶ 3, Docket Entry 46. The award thus imposes
joint and several liability on plaintiffs.
Although she was apparently represented in connection with the arbitration, plaintiff
Maria Love has not submitted any opposition to defendant’s motion to confirm the arbitration
award. An unopposed motion to confirm an arbitration award should be treated “as akin to a
motion for summary judgement based on the movant’s submissions.” D.H. Blair, 462 F.3d at
109; Trs. of the New York City Dist. Council of Carpenters Pension Fund v. Interior Cinema
Inc., 2017 WL 4444525, at *2-3 (S.D.N.Y. Oct. 4, 2017) (treating an unopposed motion to
confirm an arbitration award as an unopposed motion for summary judgement under Federal
Rule of Civil Procedure 56).
Based on defendant’s motion and the accompanying arbitration order, I conclude that
there are no triable issues of material fact and that defendant is entitled to judgement as a matter
of law. The defendant’s submissions, and in particular the lease agreement itself and the
arbitrator’s award, clearly demonstrate the following: (1) that plaintiffs Maria and Kevin Love
were parties to the lease agreement; (2) that plaintiffs were delinquent on the payments due to
defendant under the lease agreement; (3) that the lease agreement required the parties to resolve
their disputes via arbitration; (4) that a deficiency balance of $34,826.84 was due and owing after
deducting the proceeds realized when the car was sold; and (4) that the lease agreement provided
for recovery of attorney’s fees incurred as result of efforts to collect sums due under the lease.
Award at 1-2.
c. Attorney’s Fees.
In general, the American Rule precludes a “prevailing party from recovering attorneys’
fees except where such an award is authorized by ‘agreement between parties, statute, or court
rule.’” New York City Dist. Council of Carpenters Pension Fund v. Timberline Interiors, Inc.,
2011 WL 6425098, at *3 (S.D.N.Y. Aug. 24, 2011) (quoting Oscar Gruss & Son, Inc. v.
Hollander, 337 F.3d 186, 199 (2d Cir. 2003)). In the context of proceedings brought to confirm
arbitration awards, “it is well established law that if the underlying agreement provides for
attorneys’ fees, the prevailing party will be awarded such fees.” Timberline, 2011 WL 6425098,
Defendant seeks $12,690.02 in attorney’s fees and costs, comprised of $7,066.32 incurred
to prepare defendant’s motion to confirm and $5,623.70 incurred to oppose plaintiff Kevin
Love’s cross-motion to vacate. Motion to Confirm ¶¶ 33-36; Maider Affidavit in Opposition to
Cross-Motion (“Maider Aff.), Docket Entry 58-1, ¶¶ 14-15, 21-22. These figures are supported
by contemporaneously prepared invoices that defendant has submitted to the Court. Motion to
Confirm, Ex. E, Docket Entry 54-1 at ECF pages 22-26; Maider Aff., Ex. C, Docket Entry 58-4,
at ECF pages 34-36. The invoices indicate that counsel billed at the reasonable rate of $310 per
hour. Plaintiff Kevin Love does not specifically challenge defendant’s application for fees.
Paragraph 26(e)(5) of the lease agreement provides for “all fees and costs of collections,
including reasonable attorneys’ fees, court costs, interest, and other related expenses for all
losses [defendant] incur[s] in connection with [plaintiffs’] default of [the] Lease.” Lease
Agreement ¶ 26. Thus, the lease agreement between the parties clearly provides for the award of
attorney’s fees in the instant action. Accordingly, I find that defendant is entitled to recover a
total of $12,690.02 in attorney’s fees incurred as a result of its collection efforts under the lease
agreement. See, e.g., Universal Comput. Services., Inc. v. Dealer Services, Inc., 2003 WL
21685567, at *2-3 (E.D.N.Y. July 18, 2003) (awarding fees where contract stated that parties
were entitled to “any and all expenses . . . including reasonable attorney’s fees [incurred] in
collection of amounts due under this agreement” (alteration in original)).
For the above reasons, I grant defendant’s motion to confirm the arbitration award with
respect to both plaintiffs, and deny plaintiff Kevin Love’s cross-motion to vacate. Accordingly,
judgment shall enter in favor of defendant BMW Financial Services, NA, LLC and against
plaintiffs Kevin B. Love and Maria Love, jointly and severally, for $34,826.84 owed under the
lease agreement, together with interest at 9 percent per annum from April 30, 2013; $50,000 in
attorney’s fees awarded by the arbitrator; and $12,960.02 in attorney’s fees and costs incurred in
connection with defendant’s motion to confirm and its opposition to plaintiff Kevin Love’s
cross-motion. The Clerk of Court is respectfully requested to enter judgment accordingly.
Steven M. Gold
STEVEN M. GOLD
United States Magistrate Judge
Brooklyn, New York
December 5, 2017
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