Gravelle v. Kaba Ilco Corp, et al
Filing
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ORDER denying 23 Amended Motion to Vacate; granting 28 Motion for Leave to Exceed Page Limitation; granting 10 Motion to Confirm Abitration Award; and denying 1 Motion to Vacate - Signed by District Judge Louise Wood Flanagan on 09/16/2013. (Baker, C.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-160-FL
GORDON GRAYELLE o/a CodePro
Manufacturing,
Plaintiff,
V.
KABA ILCO CORP. and CHUCK
MURRAY,
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ORDER
Defendants.
This matter is before the court on various motions (DE 1, 10, 23, 28). Pending before the
court is plaintiffs motion to vacate arbitration award, as recently supplemented. Also pending is
defendants' responsive motion to confirm the award. There also is a motion by plaintiff for leave
to file reply that exceeds page limitations. Plaintiffs reply at issue (DE 28) is accepted in the record
by the court. For reasons that follow, plaintiffs motion to vacate is denied, and defendants' motion
to confirm is allowed.
BACKGROUND
This civil action was filed under Section 10 of the Federal Arbitration Act ("FAA") on March
1, 2012, by a pro se plaintiff who resides in Canada. Plaintiff is owner and operator of a
manufacturing company in the business of making electronic key -cutting machines, which is named
"CodePro Manufacturing." Plaintiff did not initiate the action with the filing of a complaint.
Instead, he filed a motion to vacate arbitration award, which motion recently was supplemented.
Plaintiff refers to the fact that the American Arbitration Association ("AAA") issued a
partial final award ("Partial Final Award") on December 4, 2012, now made final, in his motion as
originally filed. Plaintiff argued in that filing that the arbitrator "exceeded and/or imperfectly
executed his powers such that a mutual, final, and definite award about the subject matter was not
made; and/or because the arbitrator acted with a manifest disregard for the law; and/or because the
award clearly violates public policy; and/or because there was no valid and enforceable agreement
to properly invoke the arbitration process; and/or the arbitration unjustly refused to hear evidence,
and acted in such a way as to prejudice the claimant." Pl.'s Mot. to Vacate, p. 1. His recent
submissions amplify on these contentions in the context of a final award.
The corporate defendant is in the key business on a global basis. The individual defendant
acted as manager of the corporate defendant during the time period at issue. The parties interacted
beginning in 2004, at a trade show. Plaintiff and the individual defendant later began to explore a
professional relationship, which initially matured in late 2006, when agreement was entered into as
between plaintiff and the corporate defendant for defendant's purchase of rights in a specific keycutting machine and its source code, together with plaintiff's related services.
Problems in
development accrued, leading in 2008 to further agreements as the business relationship between
the parties evolved.
The dispute at issue between the parties arises over enforceability of that agreement plaintiff
entered into with defendants April 21, 2008 (sometimes the "April 2008 Addendum"), which
contains a mandatory arbitration clause. Binding arbitration administered by the AAA in accordance
with the FAA is provided for in that agreement as to a laundry list of disputes therein specified, with
venue for any arbitration being in Nash County, North Carolina. Ultimately, in 2011, plaintiff
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invoked arbitration, targeted towards invalidation of the non-competition agreement as between the
parties.
Defendants' response in arbitration included their position that the arbitration agreement is
valid and binding, and their contention that the arbitrator should decide all disputes between the
parties. The parties later executed a stipulation, referred to as the "June 2011 Stipulation." It was
agreed therein that if the arbitration agreement was valid and binding, it applied to any and all
disputes, including those which were the subject of the case then ongoing in Canada. That issue of
enforceability, the parties decided, would be submitted as a threshold issue in arbitration. The
individual defendant stipulated to having plaintiffs claims against him also resolved in arbitration.
Defs.' Response, Ex. 10.
Plaintifflater stipulated to enforceability ofthe arbitration agreement, and agreed to dismissal
of his suit brought in Canada, subject to certain conditions. That stipulation, referred to as the
"October 2011 Stipulation," was derived as a result of substantial, continued negotiations between
the parties, during which time plaintiff had benefit of counsel. The October 2011 Stipulation recites
in part:
1. The arbitration clause ("Arbitration Clause") contained in the
April2008 Addendum to the Software Purchase and Sale Agreement
between Kaba Ilco Corp. and Gordon Gravelle, personally and as sole
proprietor of CodePro Manufacturing, dated November 10, 2006
(collectively, "Agreement") is (a) valid and enforceable under
applicable law, and (b) applies to any and all disputes between the
parties arising therefrom, including all claims and causes of action
alleged (or that could have been alleged) in the [Ontario lawsuit].
Defs.' Response, Ex. 11.
Plaintiff followed with his amended arbitration claim on October 28, 2011, seeking rescission
and damages due to alleged wrongdoings by defendants. Alternatively, he sought damages for
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breach. Additionally, a claim under the North Carolina Unfair and Deceptive Trade Practices Act
("UDTP A") was asserted. Plaintiff also sought to invalidate contractual restraints on his competition
and solicitations. The arbitrator agreed with plaintiff that those restraints were invalid. Defs.'
Response, Ex. 15. This was not contested by defendants.
Defendants however successfully challenged most of plaintiffs claims in a motion to
dismiss, resulting in that Partial Final Award issued December 4, 2012. The one claim of breach
related to alleged failure by the corporate defendant to purchase circuit boards was withdrawn and
the final arbitration award ("Final Award") eventually issued. Defs.' Response, Ex. 22.
In mid June of this year, during pendency ofthe action, each side noticed the court that on
May 29,2013, the arbitrator issued his Final Award in this matter. In that notice filed by defendants
June 13, 2013, defendants presented that:
The Final Award expressly incorporates the Arbitrator's Partial Final Award of
December 2012, which is the subject of Petitioner's pending Motion to Vacate and
Respondent's pending Motion to Confirm. Additionally, the Final Award (1) reflects
Petitioner's withdrawal ofhis sole remaining claim in the arbitration proceeding, (2)
holds that the administrative fees and expenses of the ICDR as well as the
compensation and expenses of the Arbitrator shall be borne one-half by Petitioner
and one-half by Respondents, and (3) constitutes a 'full settlement of all claims
submitted in th[e] Arbitration. As such, the Final Award does not impact the
substance of the Partial Final Award.
Defs.' Notice of Issuance of Final Arbitration Award 1. The Final Award conforms to this
recitation. Pl.'s Notice, Ex. 1
Plaintiff sought leave to supplement his motion to vacate filed March 1, 2013, which request
was allowed. Plaintiffs request that the court to impose a fixed briefing schedule, in avoidance of
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confusion and piecemeal responsive briefs, also was agreed to by the court in its order entered
August 1, 2013. 1
On August 14,2013, plaintiff sought more time to make his supplemental filing, where the
deadline was set to expire that day. He made mention of being rushed to the local emergency
department for life saving treatment August 9, 2013. A modest two-day extension was requested,
which extension was unopposed. This was allowed.
On August 16, 2013, plaintiff filed his amended motion to vacate arbitration award and
response to defendants' motion to confirm, in supplement to the one which started this case, filed
March 1, 2013. Defendants' response was received August 30, 2013.
On September 5, 2013, plaintiff sought more time up to and until September 11, 2013, within
which to make his reply. Necessity for time extension was rooted in his health condition, travel
issues, and work constraints. Over defendants' objection, the motion was allowed. On September
11, 2013, plaintiff made his reply. Embedded in that reply is a motion to exceed page limitations,
and while response time has not yet run, that motion the court does now allow, where the extra pages
are minimal and no prejudice accrues to defendants.
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In that August 1, 2013, order, the court also addressed a certain series of motions where plaintiffhad collapsed onto
his opposition to the motion to confirm a motion seeking the court to dispose simultaneously of his motion and
defendants' contrary one. As noted, lodged in a notice filed by plaintiff, were several more motions. Plaintiff sought
to withdraw the one filed earlier, requesting a stay, in light of issuance of the Final Award, and requested leave to
supplement his pending motion to vacate, which request, the court noted, had sounded in several filings. There also was
that motion by plaintiff urging the court to address the motions and, if his request to supplement was allowed, to set a
briefing schedule. The court allowed in its order entered August I, 2013, plaintiffs request to withdraw motion to stay.
As noted, plaintiff was allowed to supplement his motion to vacate, and a briefing schedule therein outlined was
established. The court indicated it would take up and decide remaining motion to vacate and that one in response,
seeking the court to confirm the award, pending further briefing.
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COURT'S DISCUSSION
The court turns to the motions at issue, of or relating to enforceability of the Final Award
under the FAA. Plaintiff seeks to vacate the Final Award issued by the arbitrator which award
incorporates the arbitrator's earlier Partial Final Award. The arbitrator granted defendants' motion
to dismiss as to all but one of plaintiffs claims in arbitration. The Final Award also reflects
plaintiffs decision to withdraw his final, remaining claim. Fee issues also are addressed therein.
Plaintiff amplifies upon arguments in his recent filings which have resonated throughout the
course of the litigation. He asserts vigorously that the parties' arbitration agreement is void and
unenforceable and, therefore, the arbitrator was without authority to issue the award. Plaintiff would
seek to show that the arbitration agreement is unconscionable and unenforceable. He complains he
was under economic duress at the time he entered into the June 2011 Stipulation. Plaintiff also
asserts procedural irregularities including failure of the arbitrator to hold any evidentiary hearing.
Plaintiff, proceeding pro se, expends much effort in his briefs to describe his views of the
actions and conduct of defendants in business dealings in 2008, and legal ones following, and the
physical and mental affects upon him. Plaintiffs angst is plainly etched on his case filings.
In supplemental affidavits, entered into the record August 16, 2013, plaintiff offers his own
testimony of events, including with regard to the personal anguish he suffered. He also relies on the
testimony of his former lawyer, Barry Leon, who provided counsel in connection with plaintiffs
claims against defendants and ensuing legal negotiations. Among other things, Leon refers to the
dismissal by stipulation of the parties of the Canadian action. After negotiations failed, another suit
was brought on plaintiffs behalf, he notes. Apparently, plaintiff sought to show in that proceeding
that the arbitration agreement was unenforceable. Leon offers sworn statements also concerning
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initiation by plaintiff of arbitration. Leon described Canadian legal procedures. He offers certain
hypotheticals bearing on processes and costs. Plaintiff's other affidavit was made by Laurie Waters.
Waters presents herself as a good, concerned friend, who witnessed plaintiff's erratic behaviors, due
in her opinion to his financial status.
Defendants seek to confirm the award under the FAA. Defendants lay out in comprehensive
briefing deficiencies in plaintiff's claims, also supported by the parties' documentation. Defs.'
Response, Exs. 1-23. Defendants' detailed argument correctly begins with the correct standard of
review, and moves into a point by point refutation of plaintiff's claims and why they must fail under
law. Defs.' Response 12-22. In his amendment filed August 16,2013, plaintiff would seek to meet
some of the deficiencies pointed out by defendants, but his salvos fall far from the marks set by
defendants, with reliance on largely inapposite case law.
Plaintiff's showing includes calculation of arbitration expenses incurred and projected.
Defendants do not directly meet his argument that the agreement should not be enforced because of
the expense of arbitration. In light of the record developed here, the argument is worthy of
consideration. It should be noted that in this case, plaintiff's status is very different from that of the
alleged aggrieved party in Green Tree Financial v. Randolph, 531 U.S. 79 (2000). Plaintiff here
invoked arbitration and engaged in it, with benefit of counsel, for a lengthy time period. Ultimately,
this also goes against plaintiff's companion arguments that the agreement was unconscionable. In
the Green Tree decision on which plaintiff relies, the Supreme Court addressed enforceability of an
arbitration agreement where federal claims were involved. In Green Tree, the Court stated "In
considering whether respondent's agreement to arbitrate is unenforceable, we are mindful of the
FAA's purpose 'to reverse longstanding judicial hostility to arbitration agreements ... and to place
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arbitration agreements upon the same footing as other contracts."' Id. at 89 (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)). In its holding, the Supreme Court also
made reference to the "'liberal federal policy favoring arbitration agreements."' Id. at 91 (quoting
Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).
Plaintiff has not and indeed cannot in this instance sustain the burden of showing a set of
costs, existing and/or anticipated, that would render invalid the agreement here to arbitrate. The
court places the arbitration agreement at issue in this case upon the same footing as other contracts.
Where the parties were sophisticated business players who bargained with benefit of counsel at key
junctures for the agreement which plaintiff himself sought to enforce, the facts fail to support
plaintiffs arguments that the parties' arbitration agreement is void and unenforceable and, therefore,
the arbitrator was without authority to issue the award.
Plaintiff cannot show in these circumstances, for those reasons also detailed by defendants,
that the arbitration agreement is unconscionable and unenforceable. The court does not minimize
plaintiffs complaints of economic duress at the time he entered into the June 2011 Stipulation, but
these afford in this case insufficient grounds to invalidate the agreement. Plaintiffs complaints of
procedural irregularities including failure of the arbitrator to hold any evidentiary hearing also must
fail, again for reasons noted by defendants.
Plaintiff, proceeding prose, has expended much effort to advance his views of the actions
and conduct of defendants in business dealings in 2008, and the legal ones following, and the
physical and mental affects the maneuverings of the parties had upon him.
However, these
recitations, and the record as a whole, cannot under law propel plaintiffs long litigated complaints
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now forward. His motion must be denied. Under law, defendants' motion to confirm arbitration
award must be allowed.
CONCLUSION
For reasons stated, plaintiffs motion for leave to file reply brief exceeding established page
limitations (DE 28) is ALLOWED. Plaintiffs motion to vacate arbitration award, as supplemented
(DE 1, 23) is DENIED. Defendant's motion to confirm the award (DE 10), deemed directed to the
May 29, 2013, Final Award is ALLOWED.
Judgment is entered in favor of defendants in
accordance with that award. The clerk is DIRECTED to close the case.
SO ORDERED, this the 16th day of September, 2013.
UnitedvStates District Court Judge
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