Deer Crest Janna et al v. Davide
Filing
16
MEMORANDUM DECISION and Order-granting 2 Motion to Affirm; granting 10 Motion. The court confirms the arbitration award and directs the clerk of court to enter judgment against Mr. Davide in the amount of $220,950.55. Signed by Judge Clark Waddoups on 5/31/16. (jmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH CENTRAL DIVISION
DEER CREST JANNA, LLC, a Delaware
limited liability company, and DEER CREST
ASSOCIATES I, LC, a Utah limited liability
company
MEMORANDUM DECISION AND
ORDER
Petitioners,
Case No. 2:16-cv-27
vs.
ANTHONY V. DAVIDE, an individual,
Judge Clark Waddoups
Respondent.
This matter came before the court on petitioner’s petition (Dkt. No. 2) and motion (Dkt.
No. 10) to confirm an arbitration award relating to a dispute arising from a Real Estate Purchase
Contract for respondent’s purchase of a condominium in Park City, Utah. After obtaining an
extension of time to respond, respondent filed objections and a request for hearing on March 22,
2016 and on April 1, 2016. The court has carefully reviewed the motions, memoranda, and
objections submitted by the parties. Pursuant to civil rule 7-1(f) of the United States District
Court for the District of Utah Rules of Practice, the court elects to determine the motion on the
basis of the written memoranda and finds that oral argument would not be helpful or necessary.
See DUCivR 7-1(f). After careful consideration, the court GRANTS petitioner’s motion to
confirm the arbitration award and enter a judgment for $220,950.55 and DENIES petitioner’s
motion for an award of additional attorney’s fees for this proceeding.
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JURISDICTION
Petitioner Deer Crest Janna, LLC is a Delaware limited liability company with a place of
business in Summit County, Utah. Deer Creek Associates I, LC is a Utah limited liability
company. Respondent Anthony L. Davide is an individual residing and domiciled in Florida.
Petitioners sought relief pursuant to 28 U.S.C. § 1331 and 9 U.S.C. § 9; however, petitioners did
not allege a federal question, and the Federal Arbitration Act at 9 U.S.C. § 1 et seq. does not
“confer independent subject matter without an independent jurisdictional basis.” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983); Oklahoma City Assocs. v. Wal-Mart
Stores, Inc., 923 F.2d 791, 793 (10th Cir. 1991) (identifying a twofold subject matter
jurisdictional inquiry under the Federal Arbitration Act). Nonetheless, petitioners preliminarily
alleged facts supporting diversity jurisdiction under 28 U.S.C. § 1332, and subsequently
supplemented those facts, in response to the court’s orders, such that the court was able to satisfy
itself that none of the members or entities that comprise Deer Crest Janna, LLC and Deer Crest
Associates I, LC have a principal place of business in Florida or are otherwise Florida residents
for the purpose of diversity jurisdiction, and that the jurisdictional amount in controversy has
been satisfied. Accordingly, the court concludes that it has jurisdiction to hear this matter.
BACKGROUND FACTS
On December 5, 2005, Mr. Davide entered into a Real Estate Purchase Contract
(“REPC”) with the petitioners, agreeing to purchase a condominium unit in Park City, Utah at
the St. Regis Resort and Residences at Deer Crest for $1,780,000. (See REPC [Dkt. No. 2-2]).
Mr. Davide paid a total of $356,000 in deposits, leaving a balance due of $1,424,000. (Id. at §
3). The REPC contained a mandatory binding arbitration agreement pursuant to the Judicial
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Arbitration and Mediation Services (JAMS) Comprehensive Arbitration Rules and Procedures.
(Id. at § 18). The United States District Court for the District of Utah was designated as a court
having in personam jurisdiction and authority to enter as a final judgment an award rendered
pursuant to the arbitration proceeding. (Id. at § 18(f)). Section 18(h) provided that “[a]ny
arbitration award shall include an award of costs and attorneys’ fees to the prevailing party from
the non-prevailing party,” and set forth the method for paying the costs of arbitration pending the
final ruling.
After experiencing difficulty obtaining financing to close on the completed
condominium, Mr. Davide notified petitioners in September 2009 that he wished to rescind the
REPC. (Award [Dkt. No. 2-1]). He also asserted various claims related to the REPC. (Id.). As a
result and as required by the REPC, petitioners initiated arbitration proceedings with JAMS on
October 9, 2009. (Id.). Rather than participating, Mr. Davide filed suit in the Third Judicial
District Court in Summit County, Utah, and procured a temporary stay of the arbitration. (Id.).
Following litigation on the contractual disputes, on February 12, 2010 the Utah district court
dismissed Mr. Davide’s lawsuit because of its mandatory and binding contractual arbitration
provision. (Id.). Mr. Davide appealed the trial court’s decision to the Utah Court of Appeals.
(Id.). Mr. Davide did not attend mandatory, court-ordered mediation despite a court order to do
so, and the mediation was unsuccessful. (Id.). On May 8, 2012, two years after Mr. Davide filed
his appeal, the appellate court dismissed the appeal due to Mr. Davide’s failure to file a required
opening brief. (Id.). On remand, as the prevailing party, petitioners sought an award of
attorney’s fees and litigation costs pursuant to the REPC. (Id.). Mr. Davide objected to the trial
court determining attorney’s fees because of the court’s order requiring that all contractual issues
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would be resolved through arbitration. (Id.). Thereafter, the arbitration process recommenced.
(Id.).
The arbitration process was slow, “in no small part due to failure on the part of [Mr.
Davide] to timely comply with process obligations.” (Id. at 6). While arbitration was pending,
Mr. Davide unsuccessfully attempted to initiate a separate, Florida-based arbitration. (Id. at 12).
At the “eleventh hour,” shortly before the arbitration hearing was scheduled to occur on
December 14, 2015, Mr. Davide challenged the “conduct of the instant Arbitration which had to
be independently resolved.” (Id.). The arbitrator had previously ordered that Mr. Davide be
“precluded from asserting affirmative claims pursuant to the JAMS rules for repeated violations”
of his arbitration obligations, “including repeated failures to comply with orders to provide proof
of competency to arbitrate” and failing to timely pay his share of the arbitration expenses. (Id. at
2). Nevertheless, at the hearing, the arbitrator determined that Mr. Davide “had every right to
endeavor to establish [petitioners] as the breaching party, and, if such occurred, argue the
appropriate remedy.” (Id.).
At the hearing, Mr. Davide asserted affirmative claims that petitioners breached the
REPC on the basis of (1) a purported violation of the Utah Land Sales Act (ULSA), (2) alleged
delays in completion of the unit, and (3) an alleged reduction in the size of the unit as built
compared to the architectural rendering.” (Id. at 6). In response, petitioners argued that they did
not breach the REPC or violate the ULSA, that Mr. Davide’s failure to comply with his
contractual obligations entitled them to an award pursuant to the REPC, and that Mr. Davide’s
violations of the arbitration provision entitled them to an award of attorney’s fees. (Id. at 7-11).
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On December 16, 2015, the arbitrator entered an award in petitioner’s favor on all issues.
The arbitrator found that the ULSA did not apply because “[a]ll of the requirements for local (as
opposed to state) regulation and oversight were applicable to the Park City development at
issue,” and thus the development was automatically exempted from state regulation under the
ULSA. (Award [Dkt. No. 2-1] at 7). The arbitrator found no material delay in completion of the
project that would establish a finding that petitioners had breached the REPC. (Id. at 8.) And
the arbitrator found that not only had petitioners substantially complied with the contract
provisions regarding the size of the unit, but that the unit was actually slightly larger than
contemplated, rather than smaller as Mr. Davide alleged. (Id. at 9.)
The arbitrator next addressed petitioner’s claims, finding that Mr. Davide had breached
the REPC by failing to comply with his contractual obligations and that, as a result and as
liquidated damages pursuant to the REPC, Mr. Davide’s deposit was forfeited. (Id. at 10.)
Finally, the arbitrator awarded petitioner attorney’s fees of $220,950.55, after a discussion
addressing the length of the proceedings (6 years), a review of petitioner’s itemized billings
submitted from the inception of the process through the date of the award, an evaluation of the
quality of the representation and experience of the attorneys along with consistency of rates
charged by similarly situated counsel in the area, and petitioner’s compliance with the litigation
and arbitration rules and orders compared to Mr. Davide’s frequent neglect, refusal, or failure to
comply. (Id. at 10-12.) Petitioners now seek confirmation of the arbitrator’s award, for
judgment to be entered in their favor pursuant to the award, and an additional award of attorney’s
fees for these proceedings.
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ANALYSIS
The Federal Arbitration Act provides for confirmation of an arbitrator’s award as follows:
If the parties in their agreement have agreed that a judgment of the court shall be entered
upon the award made pursuant to the arbitration, and shall specify the court, then at any
time within one year after the award is made any party to the arbitration may apply to the
court so specified for an order confirming the award, and thereupon the court must grant
such an order unless the award is vacated, modified, or corrected as prescribed in sections
10 and 11 of this title.”
9 U.S.C. § 9.
The REPC entered into by the parties specifies that this court may enter a final award rendered
pursuant to arbitration as a final judgment. (REPC ¶ 18(f).) The motion to confirm the award
was timely filed within one year of the time the award was made. 9 U.S.C. § 9. Notice of such
motion has been served on Mr. Davide. Id. (requiring service upon adverse parties).
Additionally, consistent with the requirements of 9 U.S.C. § 13, petitioners have attached to their
motion for confirmation and judgment copies of the arbitration agreement, copies of papers
related to the selection or appointment of an additional arbitrator or umpire, copies of each
written extension of the time within which to make the award, and a copy of the award.
As noted above, upon compliance with the provisions of the Federal Arbitration Act, the
court “must grant” an order confirming an arbitration award “unless the award is vacated,
modified, or corrected” pursuant to §§ 10-11. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S.
576, 587 (2008). “Section 10 lists grounds for vacating an award, while § 11 names those for
modifying or correcting one.” Id.
Mr. Davide filed two objections to confirmation of the arbitration award, but each
pleading raises only one issue. Mr. Davide asserts that the award should be vacated because the
arbitrator was biased against him, as evidenced by (1) the arbitrator entering orders prohibiting
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him from asserting affirmative defenses, (2) the arbitrator “punishing” him because his check for
payment of the arbitration fees bounced, (3) the arbitrator’s failure to continue a sanctions
hearing, and (4) because his request to remove/substitute the arbitrator on the grounds of bias
was denied. Section 10 of the Federal Arbitration Act provides that the court “may make an
order vacating the award” when it finds “evident partiality . . . in the arbitrators,” “misconduct in
refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; or any other misbehavior by which the rights of any
party have been prejudiced.” 9 U.S.C. § 10. Accordingly, the court evaluates Mr. Davide’s
objections to the award on these statutory grounds.
The court finds no merit in Mr. Davide’s argument that the arbitrator’s award reflected
“evident partiality” due to entry of an order prohibiting him from asserting affirmative claims
against petitioners at the arbitration. The record reflects that the arbitrator entered the order
consistent with JAMS rules that the parties agreed to follow, and after providing Mr. Davide
with ample opportunity to comply with procedural requirements set for the arbitration. (Dkt. 23, 2-4, 2-5.) Even assuming, arguendo, that entry of the order was improper, it is irrelevant to
Mr. Davide’s argument because the arbitrator did not enforce the order to preclude Mr. Davide
from raising any and all of his affirmative claims at the arbitration. The award specifically
stated:
“Although the Arbitrator had ordered [Mr. Davide] precluded from asserting affirmative
claims pursuant to the JAMS rules for repeated violations of [Mr. Davide’s] Arbitration
obligations, including repeated failures to provide proof of competency to arbitrate as
ordered and “bouncing” the check to JAMS for Arbitration fees, the Arbitrator advised all
parties that the Arbitrator really saw no difference between ‘offense’ and ‘defense’ and
that in his own defense [Mr. Davide] had every right to endeavor to establish [petitioners]
as the breaching party, and, if such occurred, argue the appropriate remedy.”
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(Award [Dkt. No. 2-1] at 2).
At the arbitration, Mr. Davide raised at least four affirmative claims against petitioners, each of
which was considered fully by the arbitrator in the award. Accordingly, there is no evidence that
the arbitrator refused to hear material and pertinent evidence or that Mr. Davide did not receive a
fundamentally fair hearing.
Similarly, the court finds no merit in Mr. Davide’s claim that the arbitrator was biased or
exhibited “evident partiality” against him because his check for payment to the arbitrator
“bounced.” Non-payment of fees was grounds for the order prohibiting Mr. Davide from raising
affirmative claims pursuant to JAMS Comprehensive Arbitration Rules and Procedures Rule
31(b). As noted above, however, the arbitrator did not enforce the order and permitted Mr.
Davide to raise affirmative claims, specifically noting that the “bounced” check would not
interfere with Mr. Davide’s right to present any claims.
Moreover, as for Mr. Davide’s claim that the arbitrator was biased because he failed to
postpone the sanctions hearing after Mr. Davide made good faith efforts to comply with
procedural requirements, the court notes that the arbitrator’s order identified that the
requirements Mr. Davide was finally attempting to satisfy had been “outstanding for months and
months” and that Mr. Davide had previously acknowledged that “he should have provided such
months earlier and had no bona fide excuse for not doing so.” (Dkt. No. 2-3, pp. 14-15.) Based
on these findings, Mr. Davide did not offer “sufficient cause” to postpone the hearing. See 9
U.S.C. § 10. Even though the hearing was not postponed at Mr. Davide’s request, the sanction
entered by the arbitrator was the order precluding Mr. Davide from asserting affirmative claims.
And as discussed previously, this order was not enforced at the arbitration hearing. Mr. Davide
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was permitted to raise his affirmative claims at the arbitration, and the arbitrator considered all of
them.
Finally, Mr. Davide’s request to remove or substitute the arbitrator due to bias and
partiality was supported by a 74-page letter and exhibits addressed to the JAMS office pursuant
to Rule 15 of those rules. (Dkt. No. 2-3). Petitioners were given an opportunity to respond, and
did so in a four-page letter. (Dkt. No. 2-4). Mr. Davide’s request was then referred to the
National Arbitration Committee for review and decision. Jay Welsh, Executive Vice President
& General Counsel, Co-Chair of the National Arbitration Committee, denied Mr. Davide’s
request to remove the arbitrator, finding that no specific evidence of bias had been shown, and
particularly, that “[t]he existence of adverse rulings against a party is not evidence of bias to
justify removal of an arbitrator.” (Dkt. No. 2-5.) This court agrees that Mr. Davide has failed to
show evidence of bias by the arbitrator. Bixler v. Foster, 596 F.3d 751, 762 (10th Cir. 2010)
(“Adverse rulings alone do not demonstrate . . . bias.”). Furthermore, the adverse ruling which
formed the basis of Mr. Davide’s objection and request to remove the arbitrator was the
unenforced order that did not ultimately preclude him from presenting all of his affirmative
claims at the arbitration. See Johnson v. Directory Assistants, Inc., 797 F.3d 1294, 1301 (11th
Cir. 2015) (stating that a complaining party must demonstrate prejudice caused by an arbitrator’s
exclusion of evidence). With the record demonstrating that Mr. Davide received a
fundamentally fair hearing, and in the absence of evident partiality, misconduct or misbehavior
by which the arbitrator refused to hear pertinent and material evidence regarding the controversy,
this court declines to vacate the arbitration award.
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As for petitioner’s request for an additional award of attorney’s fees for this proceeding,
the court notes that the parties’ REPC provides that attorneys’ fees and costs will be determined
pursuant to the arbitration proceeding. Petitioners have provided no authority nor argument
supporting their request that this court award additional attorney’s fees to confirm the arbitration
award or enter the judgment, nor does the arbitration award suggest that petitioners should be
entitled to additional fees to confirm their award and obtain a judgment. Accordingly, the court
declines to award petitioners attorney’s fees for this proceeding.
CONCLUSION
For the reasons stated above, the court confirms the arbitration award and directs the
clerk of court to enter judgment against Mr. Davide in the amount of $220,950.55.
DATED this 31st day of May, 2016.
BY THE COURT:
______________________________
Clark Waddoups
United States District Court Judge
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