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Mark Hankin and Hanmar Associates, Mlp v. Jds Uniphase Corporation

November 6, 2012

MARK HANKIN AND HANMAR ASSOCIATES, MLP, PLAINTIFFS,
v.
JDS UNIPHASE CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Gene E.K. Pratter,j.

MEMORANDUM

Plaintiffs Mark Hankin and Hanmar Associates, MLP ("Hanmar") and Defendant JDS Uniphase Corporation ("JDSU") participated in a 2010 arbitration regarding a dispute in their landlord-tenant relationship. Hanmar subsequently filed a petition to partially confirm and partially vacate the arbitration award. In response, JDSU removed the petition to this Court and filed a cross-motion to confirm the award in its entirety. For the following reasons, the Court grants JDSU's motion, and grants in part and denies in part Hanmar's petition.

I. Factual Background

In 2010, a dispute arose between Hanmar (a landlord) and JDSU (its tenant) regarding the parties' respective obligations under their lease. The lease required Hanmar and JDSU to arbitrate disputes through a proceeding overseen by the American Arbitration Association (AAA), and provided for a so-called "baseball"-style arbitration that required the arbitrator to choose between the competing proposed awards of the parties. Specifically, Section 38 of the lease states that disputes shall "be submitted to final and binding Arbitration in the American Arbitration Association" and requires that the following standards "shall supplement the regulations of the [AAA] and shall control" in the event of a conflict with AAA rules:

(i) The aggrieved party shall request arbitration after the dispute arises and promptly serve notice of submission to the other party;

(a) The above notwithstanding, the Lessee shall be required to request such arbitration no later than thirty (30) days after the dispute arises and failure by Lessee to make such timely request shall be deemed to be a waiver of Lessee's rights, hereunder and full award shall be granted to Lessor;

(ii) Within twenty (20) days of submission, each party shall submit a proposed award ("Proposed Award") to the American Arbitration Association, each individual item of dispute may be submitted as a separate item of dispute for decision making purposes, even though they may be submitted under the same arbitration hearing;

(iii) The arbitrator shall have jurisdiction, only, to enter, as an award, the Proposed Award of one or the other party, together with all amounts payable under Paragraph 38(a)(iv), infra., and may not make any other award or finding;

(iv) All costs and expenses of the arbitration shall be paid by the non-prevailing party and shall be added to the award. Each party shall bear their own counsel fees, except that if the arbitration is brought by Lessor as a result of a default by Lessee and Lessor shall prevail in the arbitration, Lessee shall reimburse Lessor for all expenses, including reasonable attorney's fees in the same manner as provided in Paragraph 20(I) hereof, which shall be added to the award;

(v) In the event that the non-prevailing party does not make the required payment(s) within ten (10) days of the arbitration, the prevailing party shall have the right to confess judgment as provided in Paragraph 20 hereof.

On April 29, 2010, Hanmar filed a demand for arbitration with AAA and alleged that JDSU owed it unpaid rent. On May 13, JDSU filed a jurisdictional challenge to the arbitration. Five days later, Hanmar filed a proposed arbitration award with AAA.

On June 9, 2010, JDSU withdrew its jurisdictional challenge and filed an Answering Statement and Counterclaims with AAA. JDSU's first counterclaim alleged that Hanmar overcharged it under the lease, while its second counterclaim sought declaratory relief regarding its obligations to restore the premises of the leased property. Hanmar subsequently presented four additional proposed awards to AAA, and JDSU presented its proposed award to AAA on July 30.

On August 5, Hanmar filed a brief with the arbitrator and argued that the arbitrator could not consider JDSU's proposed award because it was not presented within the requisite 20-day period established by the lease. Additionally, Hanmar argued that JDSU's counterclaims were untimely because they were not submitted within 15 days of JDSU receiving notice of the arbitration. After receiving JDSU's opposition brief, the arbitrator rejected Hanmar's arguments. The arbitrator held that he could consider the proposed award because the lease failed to address what should happen if a proposed award was submitted in an untimely manner, and because AAA rules disfavor awards based on the default of a party. Moreover, the arbitrator interpreted AAA rules to allow JDSU to file a counterclaim more than 15 days after receiving notice of the arbitration.

On November 29, 2010, the first day of a four-day arbitration hearing, the arbitrator allowed Hanmar to reargue the jurisdictional issues it previously discussed in its August 5 brief. On February 7, 2011, Hanmar submitted a post-hearing brief in which it contended that the arbitrator was jurisdictionally bound to enter the award proposed by Hanmar and to dismiss JDSU's counterclaims, given that JDSU failed to timely submit its second counterclaim within 30 days of a dispute arising, failed to timely submit both of its counterclaims within 15 days of receiving notice of the arbitration, and failed to timely submit its proposed award. The arbitrator rejected ...


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