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R.M.F. Global, Inc. v. Cattan

March 6, 2006

R.M.F. GLOBAL, INC., INNOVATIVE DESIGNS, INC., PLAINTIFFS,
v.
ELIO D. CATTAN, ELIOTEX SRL, DEFENDANTS.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

Electronically Filed

MEMORANDUM OPINION

I. Introduction

Defendants Elio D. Cattan ("Cattan") and Eliotex, SRL ("Eliotex") have filed a motion to confirm an Italian Arbitration Award ("Award") and for judgment implementing the Award (Document No. 35) against plaintiffs R.M.F. Global, Inc., ("RMF") and Innovative Designs, Inc. ("IDI"). Plaintiffs oppose enforcement of the Award on several grounds, including that they were denied an opportunity to participate in the Italian Arbitration Association ("IAA") Proceedings ("Proceedings") in any meaningful capacity because they allegedly received insufficient notice. Additionally, plaintiffs contend that filing a motion to compel is a prerequisite to enforcement of an arbitration award, and because defendants did not initiate proceedings to enforce the Award by filing such a motion, this Court should decline the relief requested. Plaintiffs also raise other alleged procedural irregularities in the IAA Proceedings, challenge the validity of the agreement to arbitrate, and contend that enforcement of the award would violate the public policy of the United States.

II. Procedural History

On April 20, 2004, RMF and IDI filed a five count complaint against Elio D. Cattan and Eliotex asking this Court to: (1) declare that they did not infringe on U.S. Patent No. 6,083,999 (the "'999 patent"), entitled "Process for the Preparation of a Super Lightweight Foamed Sheet;" (2) declare that the '999 patent is invalid and unenforceable; (3) declare that plaintiffs have not infringed on defendants' rights in the Eliotex trademark; (4) enjoin defendants from further tortious interference with plaintiffs' business and contractual relations; and (5) enjoin defendants from engaging in unfair competition. Plaintiffs sought equitable relief, monetary damages and attorney's fees.

Defendants filed a motion to dismiss or to stay the action pending arbitration, based upon the "exclusive agency, distribution and marketing agreement" ("the Agreement"), executed by the parties or their agents, which contains a clause compelling arbitration pursuant to IAA rules. In pertinent part, the Agreement stated:

In the event of a dispute between the parties as to the terms and conditions of this Agreement, and in the event that such dispute does not prove susceptible to amicable resolution, the parties hereto agree to accept binding arbitration in accordance with the rules of the Italian Arbitration Association in order to promptly and efficiently effectuate a resolution of said dispute.

Letter motion by Elio D. Cattan for James O. Guy, Esq. to appear pro hac vice (Doc. No. 5), Exhibit 2, clause 11.

This Court held that plaintiffs' claims at count (4), tortious interference with business and contractual relations, and count (5), unfair competition, were within the scope of the arbitration clause because they necessarily flow from an alleged breach of the "terms and conditions" of the Agreement. The Court deemed counts (1), (2), and (3) to be "likely outside the scope of the agreement to arbitrate." Memorandum Opinion, November 24, 2004 at 7.

Where some (but not all) of plaintiffs' claims must be resolved through arbitration, the Federal Arbitration Act ("FAA") 9 U.S.C. §§ 1-14, provides that a court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration." 9 U.S.C. § 3. When any issue is raised that is within the scope of a valid arbitration agreement the Court is required to stay federal court proceedings. Lloyd v. Hovensa, LLC., 369 F.3d 263, 270 (3d Cir. 2004). On September 21, 2004 this Court denied defendants' motion to dismiss without prejudice, and stayed the federal court action pending the arbitration.

On May 6, 2005, a three attorney panel of the IAA issued an award assessed in the amount of $4,176,000 plus legal interest accrued from the date of the Award, i150,000, plus tax to be paid to the 3 attorney arbitration panel, and i50,000 plus tax to be paid to the attorney for the defendants against plaintiffs and Joseph Ricelli.*fn1

III. Discussion

"The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, shall be enforced in United States courts in accordance with this chapter." 9 U.S.C. § 201. Title 9, United States Code, sections 201-208, provides for implementation and limited judicial review of arbitration awards rendered under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"). 9 U.S.C. §§ 201-208. The Convention reflects a presumption that foreign arbitration awards will be confirmed. 9 U.S.C. § 207 ("Within three years after an arbitral award falling under the Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless ...


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