One Man Band Corporation et al v. Smith et al

Filing 70

MEMORANDUM DECISION AND ORDER denying as moot 48 Motion to Confirm Arbitration Award; granting 55 Motion to Confirm Final Arbitration Award - the Final Arbitration Award is CONFIRMED; denying 64 Plaintiffs' Ex Parte Motion to Transfer Property to One Man Band Corporation. Signed by Judge Ted Stewart on 11/21/2016. (eat)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
ONE MAN BAND CORPORATION, et al.,

MEMORANDUM DECISION AND
ORDER CONFIMING THE FINAL
ARBITRATION AWARD AND DENYING
PLAINTIFFS’ MOTION TO TRANSFER
PROPERTY TO ONE MAN BAND
CORPORATION

Plaintiffs,
v.
JEFF SMITH, et al.,
Defendants.

Case No. 2:14-CV-221 TS
District Judge Ted Stewart
This matter is before the Court on Plaintiffs’ Motion to Confirm Arbitration Award,
Motion to Confirm Final Arbitration Award, and Ex-Parte Motion to Transfer Property to One
Man Band Corporation. The Court will deny as moot Plaintiffs’ Motion to Confirm Arbitration
Award as it was superseded by Plaintiffs’ Motion to Confirm Final Arbitration Award. The
Court will confirm the final arbitration award and deny the motion to transfer property.
I. BACKGROUND
On March 25, 2014, One Man Band Corporation and Bradley G. Turner (Plaintiffs) filed
suit against Jeff Smith and J.W. Smith, LLC (Defendants) for continuing to operate a One Man
Band Restaurant in Santaquin, Utah, after expiration of the Franchise Agreement. Plaintiffs
allege breach of contract, breach of the implied covenant of good faith and fair dealing,
trademark infringement, trade dress infringement, unfair competition, intentional interference
with business relations, copyright infringement, and cybersquating.

1

The Court ordered arbitration on several of Plaintiffs’ claims, leaving only two claims for
trial: breach of the implied covenant of good faith and fair dealing and trademark infringement.
An arbitration was held and the arbitrator issued an interim award on July 11, 2016. A final
award was issued on September 13, 2016. The final award granted Plaintiffs monetary damages
against Defendants and included an option to purchase the disputed property within thirty days of
the interim award. The award specified that if Plaintiffs elect to purchase, “the closing must
occur within no more than thirty (30) days after the date of the election.” 1 No other requirements
or specifications were made regarding how the purchase should be conducted.
On August 9, 2016, Plaintiffs sent Defendants a letter informing Defendants that it would
elect to purchase the property. On September 8, 2016, Plaintiffs delivered to a title company,
Pro-Title, certified funds and loan commitments to cover the purchase price of $370,000. 2
Plaintiffs repeatedly requested Defendants sign the closing documents. Defendants refused to do
so. Defendants claim that through a chain of emails, “it was made clear that funds were not
presented to the title company and that Brad Turner had not transferred money into the title
company’s escrow account.” 3 Therefore, Defendants chose not to sign the closing documents
and the title company was unable to complete the transaction.
Plaintiffs submit the declaration of Jody Johnson, an employee of Pro-Title who was in
charge of preparing closing documents for the transaction. She states that Plaintiff Brad Turner
came to Pro-Title on September 8, delivered certified funds, and signed all of the bank loan

1

Docket No. 62, at 2.

2

Docket No. 64-5, at 3; Docket No. 64-8, at 3.

3

Docket No. 65, at 2; Docket No. 65-3.

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documents. 4 Ms. Johnson states that expected proceeds from the certified funds and loan
documents exceeded $370,000. 5 Ms. Johnson also testifies to the discovery of several liens and
unpaid taxes on the property. 6
Defendants assert that under Utah Code § 31A-23(a)-406(5), the title company must have
“collected and cleared” money in order to close. Defendants argue that the title company had not
yet been wired the funds. Defendants chose not to sign the closing documents without evidence
that adequate money was available. Defendants request the Court allow continuance of
discovery to obtain information from the bank and the title company about Plaintiffs’ funds.
Plaintiffs seek a “judgment confirming the arbitration award” 7 and request the Court
transfer possession of the property to Plaintiffs. 8 Plaintiffs allege that Defendant Jeff Smith has
stopped paying sales taxes on the property and his mortgage and may be filing for bankruptcy in
the near future. Plaintiffs are concerned that if the property proceeds through a foreclosure sale,
Plaintiffs will be irreparably harm by losing its ability to purchase the property and protect its
trade dress and trademarks. Plaintiffs request the Court transfer the disputed property to
Plaintiffs under a refinance scheme with a requirement that the loan close within 30 days. 9
Plaintiffs suggest that the Court has the authority to enforce such a remedy under Federal Rules
of Civil Procedure 64 and 70.

4

Docket No. 64-8, at 3.

5

Id.

6

Id. at 2–3.

7

Docket No. 55, at 1.

8

Docket No. 64, at 6.

9

Id.

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Defendants oppose confirmation of the final award to the extent that it includes the option
to purchase the property. Defendants argue that because Plaintiffs failed to complete the
purchase according to the terms of the arbitrator’s award, that clause is now moot and should not
be included in the final award. Defendants have also requested oral argument on the matter.
Plaintiffs oppose oral argument because it claims that any further delay results in additional harm
to Plaintiffs. The Court will deny Defendants’ request for oral argument because it does not
believe oral argument will be helpful in resolving these disputes.
II. DISCUSSION
The Federal Arbitration Act (“FAA”) provides that a court “must” confirm an award
“unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this
title.” 10 Section 10 allows the Court to vacate the award where the award was procured by
“corruption, fraud, or undue means” or where there was “evident partiality or corruption in the
arbitrators.” 11 Section 11 allows the Court to modify or correct the award where there has been
an “evident material miscalculation,” “evident material mistake,” or if the award is “imperfect in
matter of form not affecting the merits.” 12 Sections 10 and 11 are the exclusive grounds for
vacatur and modification of an award. 13
Defendants oppose confirming the award because they argue that Plaintiffs’ option to
purchase the disputed property is now moot. Plaintiffs argue that whether the option to purchase
remains available is irrelevant to whether the Court confirms the award. Plaintiffs are correct.
10

9 U.S.C. § 9.

11

9 U.S.C. § 10.

12

9 U.S.C. § 11.

13

Hall Street Assoc’s., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008).

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Defendants’ opposition does not include an allegation of corruption, fraud, mistake,
miscalculation, or a condition otherwise set forth in sections 10 and 11. Accordingly, the Court
must confirm the award.
However, the issue of enforcement is a separate matter. Plaintiffs also filed an Ex-Parte
Motion to Transfer Property and request the Court seize the disputed property under Federal
Rules of Civil Procedure 64 and 70.
Federal Rule of Civil Procedure 64 provides,
At the commencement of and throughout an action, every remedy is available
that, under the law of the state where the court is located, provides for seizing a
person or property to secure satisfaction of the potential judgment. But a federal
statute governs to the extent it applies.
In the State of Utah, Utah Rule of Civil Procedure 64 governs the process for a writ of
replevin. “A writ of replevin is available to compel delivery to the plaintiff of specific personal
property held by the defendant.” 14 A writ of replevin requires first that the movant satisfies the
requirements set forth under Rule 64A. 15 Plaintiffs have not shown that it has met all the
requirements of Rule 64 for a writ of replevin. Therefore, the Court cannot grant such a remedy.
Plaintiffs also rely on Federal Rule of Civil Procedure 70, which states,
If a judgment requires a party to convey land, to deliver a deed or other document,
or to perform any other specific act and the party fails to comply within the time
specified, the court may order the act to be done—a the disobedient party’s
expense—by another person appointed by the court. When done, the act has the
same effect as if done by the party.

14

Utah R. Civ. P. 64B.

15

Id.; Utah R. Civ. P. 64A.

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Rule 70 requires a judgment from the Court. However, the Court will not enter judgment
until all matters are adjudicated. 16 As it stands, two claims remain for trial. Plaintiffs have
submitted a motion for summary judgment on the issue of trademark infringement and have
asked the Court “augment the arbitration award and receive a final judgment disposing of all
claims” if the Court grants summary judgment. 17 Plaintiffs’ motion for summary judgment is
not yet fully briefed. Therefore, the Court will not enter judgment until all matters are resolved.
Accordingly, the Court will deny Plaintiffs’ Ex-Parte Motion to Transfer Property without
prejudice.
It is therefore
ORDERED that Plaintiffs’ Motion to Confirm Arbitration Award (Docket No. 48) is
DENIED as moot. It is further
ORDERED that Plaintiffs’ Motion to Confirm Final Arbitration Award (Docket No. 55)
is GRANTED. The Final Arbitration Award is CONFIRMED. It is further
ORDERED that Plaintiffs’ Ex-Parte Motion to Transfer Property to One Man Band
Corporation (Docket No. 64) is DENIED.
DATED this 21st day of November, 2016.
BY THE COURT:

Ted Stewart
United States District Judge

16

Fed. R. Civ. P. 54(b).

17

Docket No. 60, at 2.

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