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Turkey Run Properties, L.P v. Air Structures Worldwide

February 17, 2012

TURKEY RUN PROPERTIES, L.P., PLAINTIFF
v.
AIR STRUCTURES WORLDWIDE, LTD. DEFENDANT



The opinion of the court was delivered by: William W. Caldwell United States District Judge

MEMORANDUM

I. Introduction

We are considering plaintiff's motion to confirm and enforce an arbitration award. This case arises from a breach of contract claim between plaintiff, Turkey Run Properties ("Turkey Run"), and defendant Airstructures Worldwide, Ltd. ("AWW").*fn1 This dispute proceeded to arbitration, where an award was made in plaintiff's favor. Plaintiff now seeks to confirm and enforce that award.

II. Background

In or around October 2006, AWW constructed and installed a roof dome on plaintiff's building. Plaintiff brought a breach of contract claim on February 3, 2009, alleging numerous problems related to the dome as a result of AWW's improper design, manufacturing, and installation. The defendant filed a motion on April 13, 2009 to dismiss or stay and compel arbitration. Defendant's motion was granted and the case was arbitrated. The arbitration award, issued on December 8, 2010, required plaintiff to place $145,110.08, in an escrow account within sixty days. This amount consisted of $126,039.85 from insurance proceeds received by plaintiff for the damage to the dome and another $19,071.13 for damages owed to AWW. If Turkey Run failed to escrow the funds, it would not be entitled to relief, AWW would not be required to repair the dome, and the warranty provisions of the contract would become void. If Turkey Run did escrow the money, AWW was required to repair the dome within ninety days or pay plaintiff $241,828.99 in damages. If AWW repaired the dome within the required time, it would receive the funds in the escrow account. Otherwise, Turkey Run would receive the funds.

Plaintiff filed a motion to vacate the arbitration award on January 7, 2011. On February 2, 2011, the dome collapsed as the result of a snow and ice storm. Defendant asserts that it received an email from Turkey Run's counsel on February 3, 2011, indicating that AWW was not authorized to repair the dome at this point because the cause of the collapse was under investigation by plaintiff's insurance company. On February 4, 2011, Turkey Run deposited $145,110.98 into what it alleges is an escrow account, but defendant argues that the deposit was not made pursuant to the award. On February 18, 2011, Turkey Run requested leave to file an amended motion to vacate the arbitration award based on the collapse of the dome. We denied plaintiff's request and denied the original motion to vacate the award. On December 8, 2011, plaintiff filed a motion to confirm and enforce the arbitration award. Defendant argues that the award cannot be enforced because it is ambiguous and must be remanded to the arbitrators.

III. Discussion

A. Standard of Review

This case is governed by the Federal Arbitration Act, 9 U.S.C. § 1. A district court's review of an arbitration award made pursuant to the FAA is based on an "extremely deferential" standard. An award is enforceable "if its form can be rationally derived from either the agreement between the parties or the parties' submissions to the arbitrators and the terms of the arbitral award are not completely irrational." ACandS, Inc. v. Travelers Cas. & Sur. Co., 435 F.3d 252, 258 (3d Cir. 2006) (citing Mut. Fire, Marine & Inland Ins. Co. v. Norad Reins. Co., 868 F.2d 52, 56 (3d Cir. 1989)). "An arbitrator's manifest disregard for the law is distinct from a merely erroneous application of the law. Even an arbitrator's incorrect legal conclusion is entitled to deference." Fluke v. Cashcall, Inc., 2011 U.S. Dist. LEXIS 57325, at *9 (E.D. Pa. May 26, 2011) (citing Local 863, 773 F.2d at 533). The Third Circuit "has held that there must be absolutely no support at all in the record justifying the arbitrator's determinations for a court to deny enforcement of an award." News America Publications, Inc., Daily Racing Form Div. v. Newark Typographical Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990) (citing NF & M Corp. v. United Steelworkers of America, 524 F.2d 756, 760 (3d Cir. 1975)).

B. Confirming Arbitration Award

Plaintiff requests that the court confirm and enforce the arbitration award. Pursuant to 9 U.S.C. § 9, at any time within one year after the award is made any party to the arbitration may apply to the court . . . 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.

The arbitration panel made the award on December 8, 2010. Plaintiff filed its motion to confirm the award on December 8, 2011, meeting the one-year requirement. As the language of the statute indicates, we must grant the order unless the award is vacated, modified, or corrected. We will examine whether any grounds exist under sections 10 or 11 to vacate or modify the award.

1. Vacatur, Modification, and Correction under the FAA Section 10(a) of the FAA provides four grounds where a district court ...


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