Hird v. Storesonline, Inc. et al

Filing 57

MEMORANDUM OPINION AND ORDER: The plaintiff's April 25 motion to confirm the April 15 arbitration award is granted. Pre-judgment interest shall be calculated at the rate of 10% per annum, pursuant to Utah Code §§ 15-1-1. The Clerk of Court shall close the case. (Signed by Judge Denise L. Cote on 9/9/2011) Copies Sent By Chambers. (jfe)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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JOSIANE HIRD,
:
Plaintiff,
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:
-v:
:
IMERGENT, INC., STEVEN G. MIHAYLO,
:
CLINT SANDERSON, BRANDON B. LEWIS,
:
ROBERT M. LEWIS, DONALD L. DANKS, DAVID :
L. ROSENVALL, DAVID T. WISE, PETER
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FREDERICKS, THOMAS SCHEINER,
:
Defendants.
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:
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10 Civ. 166 (DLC)
MEMORANDUM OPINION
& ORDER

Appearances:
For Plaintiff:
Josiane Hird, pro se
150 West End Avenue
Apt.# 6-D
New York, NY 10023
For Defendants Imergent, Inc., Clint Sanderson, Brandon B.
Lewis, Donald L. Danks, David L. Rosenvall, David T. Wise, Peter
Fredericks:
Ryan James Donohue
Akin Gump Strauss Hauer & Feld LLP (NYC)
One Bryant Park
New York, NY 10036

DENISE COTE, District Judge:
Pro se plaintiff Josiane Hird seeks confirmation of an
arbitration award dated April 15, 2011 (the “April 15 Award”)
against StoresOnline, Inc. (“StoresOnline”).

The parties

dispute the proper pre-judgment interest rate to be applied to

the April 15 Award.

For the following reasons, the motion is

granted and pre-judgment interest shall be calculated at the
rate of 10% per annum.

BACKGROUND
On January 11, 2010, plaintiff filed this lawsuit against
StoresOnline, a Utah corporation; iMergent, Inc. (“iMergent”), a
Delaware corporation; and, two individuals who are executive
officers of StoresOnline and iMergent (the “Officer
Defendants”).

On March 3, 2010, StoresOnline was voluntarily

dismissed from this action at plaintiff’s request, and the
plaintiff initiated an arbitration proceeding against
StoresOnline before the American Arbitration Association
(“AAA”).
An amended complaint was filed on March 30.

On April 23,

iMergent and the Officer Defendants moved to dismiss the amended
complaint (the “April 23 Motion”).

By Order dated July 1, Hird

was granted leave to file a second amended complaint no later
than July 23 and defendants were instructed that they could make
a further submission in support of the April 23 Motion by July
30.

On July 27, the plaintiff filed a second amended complaint

which retained all existing defendants and added seven
individuals, all of whom were described as current or former
directors of iMergent (the “Director Defendants”).

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In an

Opinion dated January 6, 2011 (the “January 6 Opinion”), a
motion to compel arbitration made by iMergent and four
individual defendants was granted.1

Hird v. iMergent, Inc., 10

Civ. 166 (DLC), 2011 WL 43529, at *1 (S.D.N.Y. Jan. 6, 2011).
To date, the Court’s docket sheet indicates that both
iMergent and the two Officer Defendants have been served.

It

also appears that three of the seven Director Defendants have
been served, namely:

David L. Rosenvall (“Rosenvall”), David T.

Wise (“Wise”), and Donald L. Danks.

Four of the named Director

Defendants, however, have not been served:

Brandon B. Lewis

(“B. Lewis”), Robert M. Lewis (“R. Lewis”), Peter Fredericks
(“Fredericks”), and Thomas Scheiner (“Scheiner”).

On January

13, 2011, the United States Marshal filed three process receipts
and returns of service unexecuted, which indicate that service
on B. Lewis, Fredericks, and Scheiner had been unsuccessfully
attempted on December 6, 2010.

Finally, although the United

States Marshal has confirmed that plaintiff delivered a summons
and complaint for service on R. Lewis, there is no record of
whether service has been attempted.

1

The January 6 Opinion observed that while a number of the
Director Defendants had not yet been served and therefore, did
not participate in motion practice, “[i]t appears . . . that . .
. the plaintiff’s claims against these defendants will also be
subject to arbitration pursuant to the arbitration clause in the
contract.” Hird v. iMergent, Inc., 10 Civ. 166 (DLC), 2011 WL
43529, at *2 n.4 (S.D.N.Y. Jan. 6, 2011).
3

On April 11, 2011, an AAA hearing was conducted before
arbitrator Carol M. Luttati (“Lutatti”).

On April 15, Lutatti

entered an Award ordering that
RESPONDENT StoresOnline, Inc. shall pay to CLAIMANT
the sum of $10,918.46 . . . plus pre-judgment
interest on the aforesaid sum from December 29, 2006
and post-judgment interest until the date this AWARD
is satisfied as permitted in accordance with the
applicable laws, if any, of the State of Utah at the
interest rate specified thereunder.
The administrative expenses of the American
Arbitration Association totaling $7,625.00 and the
compensation and expenses of the arbitrator totaling
$10,830.00 shall be borne as incurred by the parties.
On April 25, Hird filed a motion to confirm the April 15
Award against StoresOnline.

Attached to the motion to confirm

was an affirmation of service indicating that the motion had
been served on Jeffrey Korn, who Hird identified as counsel to
StoresOnline.

There was no indication that the motion to

confirm was served on iMergent or any of the individual
defendants who remain in the action.

On May 31, however,

iMergent, the Officer Defendants, and four of the Director
Defendants -- Rosenvall, Wise, B. Lewis, and Fredericks –(collectively, the “Represented Defendants”) submitted an
opposition to the plaintiff’s motion.

On June 7, the motion

became fully submitted and, by letter dated June 30, counsel to
the Represented Defendants indicates that they “do not object if
Plaintiff Josiane Hird is not able to or otherwise does not

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serve the additional named defendants (the ‘Unrepresented
Defendants’) with a copy of Plaintiff’s motion to confirm the
arbitration award . . . and any related motion papers that have
been filed by Plaintiff.”
An Order dated July 11 instructed the Represented
Defendants to advise the Court, no later than July 15, 2011,
whether they were taking responsibility for the April 15 Award.
By letter dated July 14, counsel for the Represented Defendants
notified the Court that iMergent “will assume responsibility for
payment of the arbitration award issued against former entity
defendant StoresOnline . . ., including the obligation to pay
Plaintiff an award in the amount of $10,918.46, plus interest in
an amount to be determined by this Court, as iMergent is the
corporate parent of StoresOnline.”

DISCUSSION
“A court reviewing an arbitration order ‘can confirm and/or
vacate the award, either in whole or in part.’”

Robert Lewis

Rosen Associates, Ltd. v. Webb, 473 F.3d 498, 504 (2d Cir. 2007)
(quoting D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 104
(2d Cir. 2006)).

“Normally, confirmation of an arbitration

award is a summary proceeding that merely makes what is already
a final arbitration award a judgment of the court, and the court
must grant the award unless the award is vacated, modified, or

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corrected.”
omitted).

D.H. Blair & Co., 462 F.3d at 110 (citation

A court’s review of an arbitration award is “severely

limited” so as not to frustrate unduly the “twin goals of
arbitration, namely, settling disputes efficiently and avoiding
long and expensive litigation.”

Willemijn Houdstermaatschappij,

BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997)
(citation omitted).

Indeed, “the showing required to avoid

confirmation is very high,” and “[o]nly a barely colorable
justification for the outcome reached by the arbitrators is
necessary to confirm the award.”

D.H. Blair & Co., 462 F.3d at

110 (citation omitted).
The Represented Parties do not contest the authenticity of
the April 15 Award or the validity of its reasoning, but they
dispute how pre-judgment interest should be calculated.

Section

15-1-1 of the Utah Code, titled “Interest rates -- Contracted
rate -- Legal rate,” provides in relevant part that “[u]nless
parties to a lawful contract specify a different rate of
interest, the legal rate of interest for the loan or forbearance
of any money, goods, or chose in action shall be 10% per annum.”
Utah Code Ann. § 15-1-1(2) (West 2011).

Neither party suggests

that there was an ex ante agreement concerning a pre-judgment
interest rate in the event of a breach of contract; therefore,
under Utah law, the default interest rate of 10% per annum must
be used to calculate pre-judgment interest.

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