Wedi Corp. v. Wright et al

Filing 111

ORDER granting in part and denying in part Defendants Sound Product Sales LLC and Brian Wright's 101 Motion to Correct or Modify the Arbitral Award, signed by Judge Thomas S. Zilly.(SWT)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 HYDRO-BLOK USA LLC, et al., 10 11 Plaintiffs, v. WEDI CORP., 12 13 Defendant. C15-671 TSZ ORDER WEDI CORP., Plaintiff, 14 v. 15 BRIAN WRIGHT, et al., Defendants. 16 17 THIS MATTER comes before the Court on a motion, docket no. 101, brought by 18 Brian Wright and Sound Product Sales L.L.C. (collectively, “Wright”), to correct or 19 modify the arbitral award issued on June 23, 2017, docket no. 101-3. Having reviewed 20 all papers filed in support of, and in opposition to, the motion, the Court GRANTS the 21 motion in part and DENIES the motion in part for the following reasons. 22 23 ORDER - 1 1 Discussion 2 Pursuant to agreements between wedi Corp. and Wright, docket nos. 101-1 & 3 101-2, the parties were directed to arbitrate wedi’s breach of contract, breach of fiduciary 4 duty, civil conspiracy, and unjust enrichment claims against Wright. See Order (docket 5 no. 26); see also Am. Compl. at Counts I-IV (docket no. 17). The parties also arbitrated 6 wedi’s allegation that Wright had violated Washington’s Uniform Trade Secrets Act, 7 which had been pleaded as a counterclaim in this matter. See 1st Am. Counterclaims at 8 Count VII (docket no. 64). The arbitrator found against wedi and in favor of Wright on 9 all claims other than breach of contract; on the contract claim, the arbitrator awarded to 10 wedi only nominal damages of $1.00. See Ex. C to Wright’s Mot. (docket no. 101-3). 11 The arbitrator denied wedi’s request for attorneys’ fees, concluding that the “fair and just 12 result is to leave the parties where they stand.” Id. (docket no. 101-3 at 17). 13 The arbitrator further indicated that, although “Wright alluded to the possibility of 14 seeking the recovery of his attorneys’ fees against wedi,” he “waived making that request 15 at the hearing or in his post-hearing brief.” Id. (docket no. 101-3 at 5). Wright asks that 16 the Court strike this passage from the arbitral award pursuant to Federal Arbitration Act 17 (“FAA”), which authorizes the Court to modify or correct an award when it “is imperfect 18 in matter of form not affecting the merits of the controversy.” 9 U.S.C. § 11(c); see also 19 Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000) (FAA’s venue 20 provisions are permissive, allowing a motion to modify to be brought in either the district 21 in which the award was made or any district proper under the general venue statute). 22 According to Wright, the reason that he did not address the issue of attorneys’ fees during 23 ORDER - 2 1 the hearing or in his post-hearing brief was because the arbitrator instructed the parties to 2 wait until after the award issued to submit a fee petition. See Tr. (Vol. X) at 2547 (docket 3 no. 101-4 at 6); see also Ex. E to Wright’s Mot. (docket no. 101-5). 4 The Court agrees that Wright cannot be viewed as having waived the ability to 5 pursue attorneys’ fees relating to the arbitration proceedings. The arbitrator, however, 6 also made clear in other provisions of the award that attorneys’ fees and costs, including 7 the expenses associated with the arbitration, would not be awarded to either side, as a 8 matter of fairness. See Ex. C to Wright’s Mot. (docket no. 101-3 at 17-18). The parties’ 9 agreement delegates to the arbitrator the authority to decide whether a party is entitled to 10 attorneys’ fees, and it indicates that the parties shall bear their own expenses incurred in 11 connection with the arbitration unless otherwise determined by the arbitrator. See Exs. A 12 & B to Wright’s Mot. (docket nos. 101-1 & 101-2). Thus, the Court will modify the 13 award to omit the last sentence of the Background section, see docket no. 101-3 at 5, 14 lines 10-13, because such language is inconsistent with the arbitrator’s direction to the 15 parties and renders the award “imperfect” in form, but the Court leaves unchanged the 16 arbitrator’s decision on the merits of the attorneys’ fees issue. Contrary to the suggestion 17 in his motion, Wright may not seek reimbursement of the legal costs of arbitration via 18 subsequent motion to this Court. 19 Conclusion 20 For the foregoing reasons, Wright’s motion to correct or modify arbitral award, 21 docket no. 101, is GRANTED in part and DENIED in part. The parties are DIRECTED 22 to file a Joint Status Report within twenty-one (21) days of the date of this Order 23 ORDER - 3 1 indicating what, if any issues, remain for trial in this matter. The Clerk is DIRECTED to 2 send a copy of this Order to all counsel of record. 3 IT IS SO ORDERED. 4 DATED this 2nd day of October, 2017. 6 A 7 Thomas S. Zilly United States District Judge 5 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ORDER - 4

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