PDV Sweeny, Inc. et al v. ConocoPhillips Company et al

Filing 40

MEMORANDUM & ORDER granting 33 Motion to Correct Judgment re: 32 Clerk's Judgment. For the reasons that follow, Respondents' motion is GRANTED. In conclusion, Respondents' motion to correct the Judgment is GRANTED. The correc ted Judgment will reflect that the Comi confirmed both the Partial and Final Awards. The corrected Judgment will also reflect that, subject to the conditions specified in the Awards, Respondents are entitled to: 1. Seller Damages of $5,06 4,038; 2. Pre-award interest on the Seller Damages at a rate of 4.875 percent, as calculated under Section 2.8(d) of the COSA, from the date the Seller Damages became due until the date of the Partial Award (April 14, 2014), for a total of $1 ,186,775.31. 3. Post-award interest on the Seller Damages at the rate of 4.875 percent, as calculated under Section 2.8(d) of the COSA, from April 14, 2014, until September 1, 2015. 4. Legal costs of $3,709,069.80; 5. Post-award interest on the legal costs at a rate of nine percent, starting 30 days after notification of the Final Award until September 1, 2015, for a total of $312,781.28; and 6. Post-judgment interest on the Seller Damages and legal costs at the federal statutory rate specified in 28 U.S.C. § 1961, beginning September 1, 2015. This resolves Docket No. 33. (As further set forth in this Order.) (Signed by Judge Alison J. Nathan on 12/21/2015) (tro)

USDC

DOCUMENT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

ELECTRC:l

FILED

OOC#:
DATE

FILEi)JYECLT£UT5

PDV Sweeny, Inc., et al.,
Petitioners,
14-cv-5183 (AJN)

-vMEMORANDUM &
ORDER

ConocoPhillips Co., et al.,
Respondents.

ALISON J. NATHAN, District Judge:
This case concerns two arbitration awards-the "Partial Award" and the "Final
Award"-that were issued in the wake of a commercial dispute between former joint partners in
an oil refining operation. The Petitioners, PDV Sweeny, Inc. ("PDV Sweeny") and PDV Texas,
Inc. ("PDV Texas"), served as suppliers of Venezuelan crude oil. The Respondents,
ConocoPhillips Company ("ConocoPhillips") and Sweeny Coker Investor Sub, LLC ("Sweeny
Sub"), managed the facility that processed the crude oil into saleable products. On September 1,
2015, this Court issued a Memorandum and Order denying Petitioners' request to vacate a
portion of the Partial Award and granting Respondents' cross-petition to confirm, recognize, and
enforce both the Partial Award and the Final Award. Dkt. No. 31 ("Order"). The Clerk of Court
issued a judgment in favor of Respondents on the same day. Dkt. No. 32 ("Judgment").
Three weeks after the Judgment was issued, Respondents filed a motion pursuant to
Federal Rule of Civil Procedure 60(a) to correct the Judgment. Respondents seek two changes:
first, they ask the Court to correct the Judgment to reflect confirmation of both the Partial and
Final Awards; second, they ask the Court to correct the Judgment to make explicit the monetary

1

sums awarded to Respondents by the Awards. For the reasons that follow, Respondents' motion
is GRANTED.

I.

BACKGROUND

The Court assumes the parties' familiarity with the facts as recounted in its September 1
order. See Order at 2-6. That order outlines the complex web of relationships and agreements
governing the supply and management of an oil refining operation (the "Joint Venture") that
became the subject of arbitration. The four parties before the Court in this action are the four
parties that had an ownership interest in the Joint Venture. See Pizzurro Deel., Dkt. No. 28, Ex.
1 ("Partial

Award")~

16. Petitioners, PDV Sweeny and PDV Texas, owned half of the Joint

Venture, and Respondents, ConocoPhillips and Sweeny Sub, owned the other half. See id.
In addition to the four parties to this action, there are two entities associated with
Petitioners that were involved in the arbitration: Petr6leos de Venezuela, S.A. ("PDVSA"), the
national oil company of Venezuela, and PDVSA Petr6leo, S.A. ("PPSA"), a wholly owned
subsidiary of PDVSA. Partial

Award~~

10-11. PDV Sweeney and PDV Texas are indirect

wholly-owned subsidiaries of PDVSA. Id.

~~

8-9. Collectively, these four entities are referred

to in the two arbitration awards as the "Claimants" or the "PDSV A Parties." See, e.g., id.

~

12.

Thus, there were a total of six parties before the three-member arbitration panel-the four
PDVSA Parties and the two Respondents. See id.

~~

8-16.

The first award the arbitration panel issued-the Partial Award-resolved the substantive
disputes between the PDVSA Parties and Respondents. Specifically, the Partial Award upheld a
key provision of the agreement that governed the manner in which the parties could transfer their
interests in the Joint Venture. See Partial Award ~~ 201-11. That provision, known as the "Call

2

Option," permitted Respondents to acquire Petitioners' interests in the Joint Venture if certain
"call events" occurred. Id. ~ 162. One such event was a failure to pay "Seller Damages" that
remained uncured for 90 days. Id.~ 197. In August of2009, Respondents exercised the Call
Option on the grounds that the PDVSA Parties had failed to pay Seller Damages from January
and March of 2009. Id.~~ 163-65. The arbitration panel determined that "Respondents properly
exercised the Call Option," thereby legitimizing Respondents' acquisition of 100% of the
ownership interest in the Joint Venture. Id. ~ 497(a)(ii). Finally, the Partial Award determined
that Respondents were owed $5,064,038 on the basis of three additional months of unpaid Seller
Damages. Id. ~~ 430-32; see also id. ~ 497(b)(vi).
The second arbitration award-the Final Award-dealt only with issues of costs,
expenses, and interest. The Final Award provided that Respondents were entitled to a) preaward interest on the Seller Damages at a rate of 4.875 percent, for a total of $1, 186,775.31; b)
post-award interest on the Seller Damages at a rate of 4.875 percent; c) costs and expenses of
$3,709,069.80; and d) post-award interest on those costs and expenses at the New York statutory rate
of nine percent per annum, following a 30-day grace period. Prevatt Deel., Dkt. No. 26, Ex. G
("Final Award")

~

54.

Litigation before this Court began before the Final Award was issued, when Petitioners
moved to vacate a portion of the Partial Award. See Pet. to Vacate Arbitration Award, Dkt. No.
2. PDVSA and PPSA did not join in as parties to the petition, which challenged only the
arbitration panel's ruling that Respondents' exercise of the Call Option was valid. See id. at 2,
15. After the Final Award was issued, Respondents cross-petitioned for confirmation,
recognition, and enforcement of both the Partial and Final Awards. See Mot. to Confirm
Arbitration, Dkt. No. 23. Respondents did not seek to join PDVSA and PPSA as parties in their
cross-petition. See Mem. of Law in Supp. of Mot. to Confirm Arbitration, Dkt. No. 24, at 1
3

(distinguishing between "Petitioners here" and "fellow arbitration claimants ... PDSVA ... and
PDVSA Petr6leo [PPSA]").
In its Order, the Court granted Respondents' cross-petition and held that "the Panel's
Partial Award and Final Award are both confirmed." Order at 23. The Judgment, however,
made no mention of the Final Award. Moreover, neither the Order nor the Judgment specified
the amount of damages, costs, or interest to which Respondents were entitled.

II.

LEGAL STANDARD

Under Rule 60(a), a court "may correct a clerical mistake or a mistake arising from
oversight or omission whenever one is found in a judgment, order, or other part of the record."
Fed. R. Civ. P. 60(a). As the Second Circuit has explained, the Rule permits the correction of
such errors-both clerical and inadvertent-"when correction is necessary 'not to reflect a new
and subsequent intent of the court, but to conform the order to the contemporaneous intent of the
court."' Robert Lewis Rosen Assocs., Ltd. v. Webb, 473 F.3d 498, 505 n.11 (2d Cir. 2007)
(quoting Marc Rich & Co. A.G. v. United States, 739 F.2d 834, 836-37 (2d Cir. 1984)).
Accordingly, Rule 60(a) "is not meant to provide a way for parties to ... charge errors in what a
court has deliberately done." Emp 'rs Mut. Cas. Co. v. Key Pharm., Inc., 886 F. Supp. 360, 363
(S.D.N.Y. 1995); see also 11 Charles Alan Wright et al., Federal Practice and Procedure§ 2854
(3d ed. 2012) ("Errors of a more substantial nature are to be corrected by a motion under Rules
59(e) or 60(b)."). "In short, 'a motion under Rule 60(a) can only be used to make the judgment
or record speak the truth and cannot be used to make it say something other than what originally
was pronounced."' Emp'rs Mut., 886 F. Supp. at 363-64 (quoting Wright et al., Federal Practice
and Procedure § 2854).

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A court may correct a judgment pursuant to Rule 60(a) on motion of one of the parties
"or on its own, with or without notice." Fed. R. Civ. P. 60(a).

III.

DISCUSSION

Respondents request that the Court make two corrections to the Judgment. First, they ask
the Court to add confirmation of the Final Award to the Judgment. Second, they ask the Court to
specify the monetary sums awarded by the arbitration panel in the Judgment. The Court agrees
that both corrections are warranted. Additionally, the Court determines that the federal statutory
post-judgment interest rate should apply to the amounts specified in the Awards from the date of
the Court's initial Order and Judgment.
A.

Omission of the Final Award

The omission of the Final Award from the Judgment is precisely the kind of "clerical
mistake" that is subject to correction under Rule 60(a). The Court's Order was clear that it
granted Respondents' cross-petition to confirm both the Partial Award and the Final Award. See
Order at 23 ("Respondent's Cross-Petition is GRANTED and the Panel's Partial Award and
Final Award are both confirmed."). That the Judgment refers only to the Partial Award appears
to be an oversight. Petitioners do not disagree. See Pet'rs Br. 6 ("Petitioners do not oppose
Respondents' motion to correct the judgment to the extent that it seeks to clarify that the Court
granted Respondents' cross-petition to confirm, recognize and enforce both the Partial Award
and the Final Award."). Accordingly, the Court grants Respondents' request to correct the
Judgment to reflect confirmation, recognition, and enforcement of both the Partial and Final
Awards.
B.

Omission of Monetary Sums

5

Respondents also seek to correct the Judgment to reflect the monetary sums the
arbitration panel awarded to Respondents pursuant to the two Awards. Specifically,
Respondents claim that a corrected judgment should indicate that they are entitled to: a) Seller
Damages of $5,064,038; b) pre-award interest on the Seller Damages at a rate of 4.875 percent;
c) post-award interest on the Seller Damages at the rate of 4.875 percent; d) legal costs of
$3,709,069.80; and e) post-award interest on the legal costs at a rate of nine percent.
Under Rule 60(a), a court may correct a "failure to include [a] monetary award" so long
as the amended judgment does not "affect substantive rights." Dudley ex rel. Estate of Patton v.
Penn-Am. Ins. Co., 313 F .3d 662, 665 (2d Cir. 2002); see also Capital Constr. Corp. of N. Y v.
Zaga, No. 11-CV-8112 (PKC), 2014 WL 2915882, at *1 (S.D.N.Y. June 26, 2014) ("Correction

of judgment is appropriate when the existing judgment fails to include a monetary award.").
Specifying a monetary award is appropriate when an undisputed sum is "contemplated by the
arbitral award, and the district court previously confirmed the arbitral award in full but omitted
mention of that sum in its confirmatory order." Robert Lewis Rosen Assocs., Ltd. v. Webb, 473
F.3d 498, 499-500 (2d Cir. 2007). That is precisely what happened here. Both the Partial and
Final Awards included monetary sums, and the Court confirmed them in full-holding that "the
Panel's Partial Award and Final Award are both confirmed." Order at 23. No party has
suggested that the Court's Order confirmed the Awards only in part or modified either of the
Awards in any way. See Robert Lewis, 473 F.3d at 504 (concluding that a district court
"confirmed the arbitrator's award in full" because the court "made no statement that [it] was only
partly confirming the arbitration award"); see also 9 U.S.C. § 9 (requiring a federal district court
to confirm an arbitration award "unless the award is vacated, modified, or corrected"). It is

6

therefore appropriate to add the monetary sums from both the Partial and Final Awards to a
corrected Judgment.
Petitioners disagree with this conclusion, but only to an extent. They do not oppose
correcting the Judgment to include the monetary sums specified in the Final Award for legal
costs and interest on those costs. See Pet'rs Br. 8. Petitioners do oppose, however, adding the
Seller Damages from the Partial Award and the interest on those damages from the Final Award.
See id.at 7. That is because, Petitioners argue, the "Seller Damages, together with the pre- and

post-award interest on those damages," were "not awarded against the Petitioners." Id. Rather,
Petitioners contend, those amounts were awarded against PDVSA and PPSA-the two other
Claimants who were before the arbitration panel but are not now before this Court. In support of
this position, Petitioners note that the Partial Award declared that "the Respondents are entitled
to payment by PPSA (under the COSA) and by PDVSA (under the SCOSA and the COSA
Guarantee) of Seller Damages" and awarded "Seller Damages to the Respondents in the amount
of US $5,064,038." 1 Partial Award~ 497(b)(vi) (emphasis added). Respondents, by contrast,
argue that Petitioners should be liable for all of the sums awarded by the arbitration panel
because Petitioners, PDVSA, and PPSA "are affiliated companies," are "represented by the same
counsel," and were "on notice that Respondents had moved for confirmation of the Awards in
their entirety." Reply Br. 2-3 (emphasis in original).

As an initial matter, the parties' dispute on this point is not really about adding the
amounts from the Awards to a corrected Judgment. Rather, Petitioners oppose the suggestion

that they are responsible for a specific subset of those amounts-namely, the Seller Damages and
the interest on those damages-and Respondents argue that Petitioners should be liable for all of

1

The COSA, SCOSA, and COSA Guarantee are some of the agreements that governed the rights and
obligations of the pmties involved in the Joint Venture. See Partial A ward ,-r 116-17.

7

the amounts listed in the Awards. In other words, the parties do not disagree over what
Respondents are owed, they contest who owes it. Or stated another way, they dispute what
amount of the Awards these Petitioners owe.
But the question of which of the four PDVSA Parties are responsible for which of the
sums that were awarded to Respondents is not one this Court can resolve on a Rule 60(a) motion
to correct the judgment. A Rule 60(a) motion "only can be used to make the judgment or record
speak the truth and cannot be used to make it say something other than what originally was
pronounced." Wright et al., Federal Practice and Procedure § 2854. Before Respondents filed
their Rule 60(a) motion, neither party had raised, much less briefed, the issue of whether
Petitioners could be held liable for all of the sums in the two Awards. Accordingly, the Court
never had occasion to address this issue in its initial Order. It would exceed the scope of what
"originally was pronounced" for the Court to weigh in now.
To be sure, the Partial and Final Awards each contain language that appears to assign
responsibility for specific payments to different parties. See, e.g., Partial Award ii 497(b)(vi)
("Respondents are entitled to payment by PPPSA ... and by PDVSA ... of Seller Damages.");
Final Award ii 54(c) ("The Claimants shall reimburse the Respondents for their legal costs.").
When this Court confirmed those Awards, it converted them into a judgment. See D.H Blair &
Co. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (quoting Florasynth, Inc. v. Pickholz, 750

F.2d 171, 176 (2d Cir.1984)) ("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."'). A judgment confirming an arbitration award has "the same force and effect, in all
respects, as ... a judgment in an action; and it may be enforced as if it had been rendered in an
action in the court in which it is entered." 9 U.S.C. § 13. Accordingly, ifthe parties disagree

8

over the meaning of the language in the Arbitration Awards, or over which parties may be held
liable on a judgment enforcing the Awards, they are free to litigate that disagreement as they
would any dispute over a judgment. But having failed to raise these issues before, the parties
cannot use a Rule 60(a) motion to ask the Court to clear up whatever ambiguities they now see in
the Awards.
In sum, because the Court confirmed the Partial and Final Awards in their entirety, the
Judgment should reflect the amounts specified in those Awards. But making that change to the
Judgment does not alter whatever liability the Awards assigned to Petitioners. Rather, as with
any judgment confirming an arbitration award in its entirety, the Awards should be enforced
according to their terms.
C.

Post-Judgment Interest Rate

The last remaining issue raised in the parties' briefs relates to the post-judgment interest
rate on the damages in the two Awards and when that rate should apply. The Final Award set a
post-award interest rate for each category of damages, but not a post-judgment interest rate. 2

Federal law provides a standard formula for calculating interest "on any money judgment in a
civil case recovered in a district court." 28 U.S.C. § 1961. And when an arbitration award is
enforced through a judgment, the "debt created by [the award] merges with a judgment entered
on that [award], so that the [award] debt is extinguished and only the judgment debt survives."
Westinghouse Credit Corp. v. D'Urso, 371F.3d96, 102 (2d Cir. 2004); see also Fid. Fed. Bank,
FSB v. Durga Ma Corp., 387 F.3d 1021, 1024 (9th Cir. 2004) ("[O]nce an arbitration award is

2

Specifically, the Final Award instructs "the Claimants" to pay "post-award interest on Seller Damages at
the rate ... of 4.875%," as calculated under one of the agreements between the PDVSA parties and Respondents,
"from April 14, 2014, until all Seller Damages and accumulated interest are paid in full." Final Award~ 54(b). And
it further instructs the Claimants to pay "post-award interest at the rate of9% simple interest per annum on the legal
costs ... starting 30 days after the notification of this Final Award to the Parties until the costs and interest are paid
in full." Id. ~ 54(e).

9

confirmed in federal court, the rate specified in § 1961 applies ... even if the arbitration award
purported to grant post-judgment interest.").
In their opening brief, Respondents argued that the corrected Judgment should reflect the
interest rates for Seller Damages and legal costs that were specified in the Final Award, but were
silent as to any distinction between post-award interest and post-judgment interest. See Resp'ts
Br. 6. In their Reply Brief, however, Respondents acknowledge that "the mandatory postjudgment interest rate under 28 U.S.C. § 1961" should supplant the interest rates specified in the
Final Award at some point. Reply Br. 5. Accordingly, the corrected Judgment should reflect
that Respondents are entitled to post-judgment interest, at the federal statutory rate, for all sums
specified in the Awards. See Cappiello v. !CD Publications, 868 F. Supp. 2d 55, 59 (E.D.N.Y.
2012), aff'd sub nom. Cappiello v. !CD Publications, Inc., 720 F.3d 109 (2d Cir. 2013) (holding
that a court may clarify the post-judgment interest rate under Rule 60(a) when, although the rate
was "not explicitly stated in the judgment, neither party disputes that the [prevailing party] was
statutorily entitled to an award of post-judgment interest pursuant to 28 U.S.C. § 1961 ").
The only remaining question is from what date the federal statutory rate applies, in place
of the two post-award interest rates specified in the Final Award. Respondents contend that the
rate from"§ 1961 will apply only as of the date of [a] corrected judgment," rather than the date
of the Court's initial Order and Judgment. Reply Br. at 5 (emphasis in original). Respondents
are mistaken. As the Second Circuit has explained, "post-judgment interest should be calculated
from whenever judgment was first ascertained in a meaningful way." Westinghouse, 371 F.3d at
104. Here, that is the date of the Court's original Order and Judgment-September 1, 2015.
Respondents attempt to rely on Westinghouse in arguing for a different result. They note that, in

Westinghouse, the court determined that post-judgment interest should accrue from the later of

10

two judgments because the earlier judgment had been vacated. See id. But the facts of

Westinghouse are instructive. There, the district court had confirmed an arbitration award but
had also offset the damages from that award with damages from two other judgments involving
the parties. Id. at 99. When the case first came to the Second Circuit, it rejected the district
court's holding on the issue of setoff, vacated the district court's judgment, and remanded the
case. Id. at 99-100. On remand, the district court held that post-judgment interest-rather than
the higher rate of post-award interest specified in the purchase agreement between the partiesshould be calculated from the date of the earlier, vacated judgment. Id. at 100. When that issue
came before the Second Circuit, the court again rejected the district court's approach. In
describing the district court's first (vacated) judgment, the Second Circuit explained that"[ w]hat
the district court did is analogous to a judgment that correctly determines liability, but errs in
applying the appropriate method to calculate damages." Id. at 104. The court therefore
concluded that "such a judgment was not ascertained in a meaningful way for the purposes of
post-judgment interest." Id.
Here, by contrast, nothing in Respondents' motion to correct the Judgment asks the Court
to alter its prior holding that the Partial and Final Awards are confirmed in full. Unlike in

Westinghouse, the Court's initial Order did nothing comparable to "err[ing] in applying the
appropriate method to calculate damages." Id. Instead, the Order confirmed the damages
specified in the two Awards, and the Judgment simply failed to recite those amounts. Judgment
was therefore "ascertained in a meaningful way" on September 1, 2015, and the Court will
correct the Judgment to reflect post-judgment interest, at the federal statutory rate, from that
date.

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IV.

CONCLUSION

In conclusion, Respondents' motion to correct the Judgment is GRANTED. The
corrected Judgment will reflect that the Comi confirmed both the Partial and Final Awards. The
corrected Judgment will also reflect that, subject to the conditions specified in the Awards,
Respondents are entitled to:
1. Seller Damages of $5,064,038;
2. Pre-award interest on the Seller Damages at a rate of 4.875 percent, as calculated
under Section 2.8(d) of the COSA, from the date the Seller Damages became due
until the date of the Partial Award (April 14, 2014), for a total of $1,186,775.31.
3. Post-award interest on the Seller Damages at the rate of 4.875 percent, as calculated
under Section 2.8(d) of the COSA, from April 14, 2014, until September 1, 2015.
4. Legal costs of $3,709,069.80;
5. Post-award interest on the legal costs at a rate of nine percent, starting 30 days after
notification of the Final Award until September 1, 2015, for a total of $312,781.28;
and
6. Post-judgment interest on the Seller Damages and legal costs at the federal statutory
rate specified in 28 U.S.C. § 1961, beginning September 1, 2015.
This resolves Docket No. 33.
SO ORDERED.

Dated:

\k(... \.\ ,

2015
New York, New York

United States District Judge

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