1:22-cv-09248
S.D.N.Y.Aug 22, 2023Background
- Alva Advance, LLC (respondent) provided merchant cash advances to Dreamtex, Inc. and its owner Evan Young (petitioners) under two MCA agreements in 2021.
- Dispute went to arbitration before Mediation and Civil Arbitration, Inc. (M&C, Inc.); M&C unilaterally appointed Ira David as arbitrator over petitioners' objections.
- Arbitrator issued a Final Arbitration Award dated July 28, 2022, delivered August 1, 2022, awarding $483,783.75 to Alva.
- Petitioners timely filed a petition to vacate under FAA § 10, alleging evident partiality, due‑process deprivation, fraud/misconduct, and manifest disregard of the law.
- Respondent ultimately consented to vacatur in a letter to the Court and did not oppose petitioners’ request to remand the arbitration to a new neutral forum.
- The Court vacated the award and ordered the parties to select a new neutral arbitration organization and an arbitrator within 14 days, granting remand as unopposed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be vacated for evident partiality, denial of due process, fraud/misconduct, or manifest disregard of law | Arbitrator and forum were biased; appointment process deprived petitioners of due process; award procured by misconduct/manifest disregard | Opposed vacatur in briefing but later consented to vacatur in a Court letter | Court granted vacatur (award vacated) |
| Whether arbitration should be remanded to a newly appointed, neutral arbitration organization | Requested remand to new neutral forum if award vacated | Did not oppose remand; waived any objection by failing to contest | Court granted remand and directed parties to select a new arbitrator within 14 days |
| Whether venue in SDNY was proper | Arbitration award was made in New York; SDNY is a court of competent jurisdiction to adjudicate FAA vacatur | Claimed venue improper and that Florida forum-selection clause required Florida litigation | Court rejected defense; clause permitted actions in any competent court and award was made in New York, so SDNY is proper |
Key Cases Cited
- Arista Records, LLC v. Tkach, 122 F. Supp. 3d 32 (S.D.N.Y. 2015) (where a party fails to oppose an argument, that issue is deemed waived)