NWI Consulting, LLC v. Ragab (TV1)

Filing 35

ORDER that respondents objection to the R&R 33 is OVERRULED and the R&R 32 is ACCEPTED IN PART to the extent explained in this memorandum opinion. Petitioners Motion to Confirm Arbitration Award 1 is hereby GRANTED, whereby t he January 17, 2013 Award of Arbitrator is hereby AFFIRMED and ENFORCED, and respondents Notice of Motion and Motion not to Confirm the Arbitration Award and to Vacate and Arbitrator Award 18 is hereby DENIED. The Clerk is DIRECTED to close this case. Signed by Chief District Judge Thomas A Varlan on 7/21/14. (ABF)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
NWI CONSULTING, LLC,
Petitioner,
v.
ABDEL FATTAH RAGAB,
Respondent.

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No.: 3:13-MC-05-TAV-HBG

MEMORANDUM OPINION AND ORDER
This civil action is before the Court on the Report and Recommendation of
Magistrate Judge H. Bruce Guyton entered on February 28, 2014 (the “R&R”) [Doc. 32].
The R&R addresses two motions: (1) petitioner’s Motion to Confirm Arbitration Award
[Doc. 1] and (2) respondent’s Notice of Motion and Motion not to Confirm the
Arbitration Award and to Vacate any Arbitrator Award [Doc. 18]. The magistrate judge
denied respondent’s motion for an evidentiary hearing [Doc. 29] but allowed the parties
to make additional written filings to support their positions [Id.]. The magistrate judge
later issued the R&R [Doc. 32], recommending that the Court grant petitioner’s motion
and deny respondent’s motion. Respondent submitted an objection to the R&R [Doc.
33], and petitioner submitted a response in opposition to respondent’s objection [Doc.
34].
I.

Background
Petitioner and respondent entered into an agreement on or about April 1, 2010

[Doc. 2]. As part of that agreement, the parties stipulated that any disputes that arose

would be settled by arbitration in accordance with the rules of the American Arbitration
Association (“AAA”) [Id.].

A dispute subsequently arose concerning respondent’s

possible breach of the non-compete clause contained in the agreement [Doc. 19]. As a
result, petitioner filed a lawsuit against respondent in the Knox County Circuit Court and
served respondent via mail at his address in Pulaski, New York [Doc. 22-1].
Respondent’s counsel subsequently discussed the parties’ agreement to arbitrate with
petitioner, and they agreed to proceed to arbitration upon petitioner’s withdrawal of the
state-court action [Id.; Doc. 22-5].
On or about July 19, 2012, petitioner filed an arbitration claim against respondent
with the AAA [Doc. 22-1]. Petitioner and the AAA provided notice to respondent’s
counsel, who informed them that he had not been retained to defend respondent in the
arbitration claim, but would forward the notice to respondent [Doc. 22-6].

All

subsequent notices concerning the arbitration proceeding were sent to respondent’s
Pulaski, New York address [Doc. 22-1]. Petitioner also attempted to notify respondent
through electronic mail, phone communication, and by mailing letters and notice
subpoenas to respondent’s employers [Id.]. Respondent, however, did not respond to any
of the notices [Id.].
On January 17, 2013, an award of arbitrator was issued and delivered to
respondent by the AAA at his Pulaski, New York address [Doc. 1-1; Doc. 19]. Petitioner
subsequently filed the instant motion to confirm the arbitration award on May 20, 2013
[Doc. 22-1]. On October 1, 2013, respondent filed a motion to vacate the arbitration
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award [Doc. 18]. Respondent alleges that the notice of arbitration award was mailed to
his work place on May 17, 2013 [Doc. 19], and served upon him personally through the
United States Marshal Service on June 26, 2013 [Doc. 22-1].
Respondent argues that he was not given proper notice of the arbitration
proceedings and, therefore, there was no jurisdiction for the arbitrator to enter the award
and he was denied his due process rights [Doc. 19; Doc. 30]. Particularly, respondent
argues that at the time all the notices were sent to his Pulaski, New York address, he was
living and working in Minnesota, and petitioner had knowledge of his location but never
attempted to serve him there [Doc. 19]. Respondent also argues that he has grounds for
vacatur under 9 U.S.C. § 10 because the petitioner’s failure to provide proper notice of
the arbitration proceedings and petitioner’s actions in proceeding with the arbitration
while knowing that respondent had not violated the non-compete clause of their
agreement, was tantamount to fraud [Doc. 30]. In response, petitioner contends that
respondent has failed to meet the timeline requirements of the Federal Arbitration Act
(the “FAA”) contained in 9 U.S.C. § 12 [Doc. 22-1]. In the alternative, petitioner argues
that respondent received proper notice of the arbitration proceedings as required by the
AAA, respondent also failed to meet the deadlines established by this Court, and
respondent has no grounds for moving to vacate the arbitration award [Id.; Doc. 31].
In the R&R, the magistrate judge agrees with petitioner, finding that the
respondent failed to meet the requirements of a timely motion to vacate under 9 U.S.C. §

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12, that notice was proper in accordance with the AAA notice requirements, and that
respondent is unable to show any legitimate grounds for vacatur.
II.

Standard of Review
As required by 28 U.S.C. § 636(b)(1) and Rule 72(b)(3) of the Federal Rules of

Civil Procedure, the Court has undertaken a de novo review of those portions of the R&R
to which respondent has objected, considering the R&R [Doc. 32], the parties’ underlying
briefs, respondent’s objection, and petitioner’s response to the objection, all in the
relevant law. The Court “may accept, reject, or modify, in whole or in part, the findings
or recommendations” made by the magistrate judge. 28 U.S.C. § 636(b)(1).
III.

Analysis
Respondent objects to the R&R claiming that the magistrate judge erred in finding

that respondent received notice of the arbitration proceedings without, at the least,
conducting an evidentiary hearing on the limited issue of whether or not respondent
received proper notice of the pending arbitration proceedings [Doc. 33]. Relying on
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950), respondent
argues that his due process rights were violated because he was deprived of his property
through a legal proceeding without being given notice and an opportunity to be heard
[Doc. 33].
While the magistrate judge found that notice was, in fact, proper in this case and
proper in accordance with the rules of the AAA, the Court finds that it need not reach that
issue because the FAA specifically provides a timeline within which a party must file any
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motions objecting to an arbitration award. Under the FAA, “[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; see also
Nationwide Mut. Ins. Co. v. Home Ins. Co., 278 F.3d 621, 627 (6th Cir. 2002) (adopting
rule under the FAA that requires a motion to vacate to be filed within three months from
the date the decision is issued); Corey v. New York Stock Exchange, 691 F.2d 1205, 1212
(6th Cir. 1982) (same).
In addressing a similar issue, this Court previously found that its “power to review
an arbitrator’s award is significantly constrained under the FAA.” Desousa v. Jabiru
USA Sport Aircraft, LLC, No. 4:08-CV-44, 2011 WL 4062276, at *3 (E.D. Tenn. Sept. 6,
2011) (citing Hall Street Assoc., LLC v. Mattel, Inc., 552 U.S. 576, 587 (2008); Grain v.
Trinity Health Servs. Inc., 551 F.3d 374, 378 (6th Cir. 2008)). In so finding, this Court
denied the plaintiff’s motion to vacate the arbitrator’s award because the plaintiff failed
to file the motion within the three months required by the FAA. Id.
Here, respondent does not dispute that the FAA provides the exclusive remedy for
challenging acts that taint an arbitration award.

See Corey, 691 F.2d at 1212.

Respondent also does not dispute that he did not comply with the three-month notice
requirement contained in the FAA. Rather, respondent merely asserts that the arbitration
award should be vacated because he was not given proper notice of the proceedings [Doc.
33]. The record indicates that respondent did not file his motion to vacate until October
1, 2013 [see Doc. 19], which was well over three months after the arbitration award was
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entered on January 17, 2013 [See Doc. 1-1].1 Because it is well established that such
challenges to arbitration awards are to be considered within the confines of the threemonth notice requirement, the Court finds that respondent’s motion to vacate the
arbitration award was untimely. 2
IV.

Conclusion3
After reviewing the record in this case, including the R&R, the objections, the

underlying briefs, and the relevant law, the Court determines that the magistrate judge
fully and appropriately considered the arguments in support of the motions before it.
Furthermore, the Court agrees with the magistrate judge’s analysis and findings as to the
issue of the timeliness of respondent’s motion to vacate under the FAA. Accordingly,
and for the reasons previously stated, respondent’s objection to the R&R [Doc. 33] is
OVERRULED and the R&R [Doc. 32] is ACCEPTED IN PART to the extent
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The Court notes that even if it were to consider the date of delivery as May 17, 2013—
which was the date respondent claims petitioner mailed the award to his workplace—or as June
26, 2013—which is the date respondent was personally served by the United States Marshall
Service, respondent’s motion still falls outside of the statutorily designated time for service of
notice.
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Furthermore, were the Court to accept respondent’s challenge to the arbitration award
on the basis of fraud under 9 U.S.C. § 10 [see Doc. 30], the Sixth Circuit has held that such
challenges must still be addressed within the confines of the three month notice requirement of 9
U.S.C. § 12. See Corey, 691 F.2d at 1212–13; see also Sanders-Midwest, Inc. v. Midwest Pipe
Fabricators, Inc., 857 F.2d 1235, 1237 (8th Cir. 1988) (“[A] party may not assert a defense to a
motion to confirm that the party could have raised in a timely motion to vacate, modify, or
correct the award.”); Piccolo v. Dain, Kalman & Quail, Inc., 641 F.2d 598, 600 (8th Cir. 1981)
(“A party to an arbitration award who fails to comply with the statutory precondition of timely
service of notice forfeits the right to judicial review of the award.”).
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Because the Court finds that respondent’s motion to vacate should be dismissed on the
grounds that it was untimely under the FAA, the Court does not reach the other issues addressed
in the R&R.
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explained in this memorandum opinion. Petitioner’s Motion to Confirm Arbitration
Award [Doc. 1] is hereby GRANTED, whereby the January 17, 2013 Award of
Arbitrator is hereby AFFIRMED and ENFORCED, and respondent’s Notice of Motion
and Motion not to Confirm the Arbitration Award and to Vacate and Arbitrator Award
[Doc. 18] is hereby DENIED. The Clerk is DIRECTED to close this case.
IT IS SO ORDERED.

s/ Thomas A. Varlan
CHIEF UNITED STATES DISTRICT JUDGE

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