HENRY R TERRY, Member of HMW GROUP, LLC, Petitioner, - against - WAYNE CARAVELLO and MARK JURLANDO, Members of the HMW Group LLC, and JTC WORKS LLC, Respondents.
CV 09-3173 (JS) (AKT)
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
A. KATHLEEN TOMLINSON, Magistrate Judge
A. KATHLEEN TOMLINSON, Magistrate Judge:
I. PRELIMINARY STATEMENT
Petitioner Henry R. Terry, appearing pro se, commenced this action against Respondents Wayne Caravello and Mark Jurlando (together, “Respondents“) to vacate an award issued in the arbitration entitled Henry R. Terry v. Wayne Caravello and Mark Jurlando. See Pet. to Vacate Arbitration Award (“Pet.“) [DE 1].1 Plaintiff filed this action pursuant to the Federal Arbitration Act,
II. BACKGROUND
A. Alleged Facts2
Petitioner Henry R. Terry (“Terry” or “Petitioner“) and Respondents Wayne Caravello (“Caravello“) and Mark Jurlando (“Jurlando“) (Caravello and Jurlando together, “Respondents“) entered into agreements to form two limited liability companies, HMW Group, LLC (“HMW“) and JTC Works LLC (“JTC“), both of which were engaged in the business of buying, selling and renting properties in New York State. Am. Pet., ¶¶ 9-13; Affirm. of Constantine C. Giannakos, Esq. in Supp. of Mot. to Dismiss [DE 19] (“Giannakos Affirm.“), Ex. H. Terry, Caravello and
Terry, Caravello and Jurlando also formed JTC, and executed the JTC Limited Liability Company Operating Agreement (“JTC Operating Agreement“) on or about April 7, 2005. Id., ¶¶ 39.4 On a date prior to May 2006, Petitioner sold his interest in JTC to Respondents. Id., ¶ 141. Both the HMW Operating Agreement and the JTC Operating Agreement contained a dispute resolution clause requiring “any claim controversy or dispute aris[ing] out of, or in connection with, this Agreement” to be submitted “to binding arbitration.” HMW Op. Ag., Art. VII, ¶ 7; JTC Op. Agr., Art. VII, ¶ 7.
Respondents served their Answering Statement and Counterclaims on June 2, 2008. Id., ¶ 84. Petitioner alleges that, “[o]n or about June 15, 2008, [he] filed answer to Respondents’ AAA Answering Statement and Counterclaims.” Id., ¶ 85. Petitioner further asserts that “[o]n or about July 16, 2008, the Arbitrator determined that there was no need for the Petitioner to file an answer to Respondents’ counterclaims prior to the Arbitration Hearing and refused to allow the Petitioner to file his answer to Respondents’ Counterclaims . . . demand[ing instead] that the Petitioner wait on until the first day of the Arbitration Hearing to present his answer and defense against counterclaims.” Id., ¶ 86. On August 20, 2008, Petitioner served upon Respondents a list of records which were not produced during discovery prior to the Arbitration hearing but which, according to Petitioner, should have been produced. Giannakos Affirm., Ex. H. Petitioner also contends that on October 3, 2008, during a conference, the Arbitrator requested additional compensation. Am. Pet., ¶ 99.
On April 27, 2009, the Arbitrator issued an Award finding in favor of Respondents and (1) distributing the real properties owned by HMW among the Petitioner and Respondents, (2) appointing Caravello as the member to effect the dissolution of HMW, and (3) setting forth specific directives for such dissolution. See Pet., Ex. 1.
B. Procedural History
On July 23, 2009, Petitioner initiated this action by filing a Motion to Vacate the Arbitration Award. See DE 1. By motion dated September 8, 2009, Respondents sought to “remove” the action to New York State Supreme Court, Nassau County, and to extend Respondents’ time to answer the Petition in this action. See DE 10. Judge Feuerstein referred Respondents’ Motion to me for a Report and Recommendation. By Report dated November 16, 2009, I recommended that Respondents’ motion be denied in its entirety. See DE 28. None of
In the meantime, during a status conference before me on November 3, 2009, Plaintiff advised that he intended to submit an amended petition to vacate the arbitration award. In the Civil Conference Minute Order for the November 3, 2009 status conference, I noted that Respondents had not yet answered the Complaint and, consequently, under the Federal Rules of Civil Procedure, Petitioner could still amend his pleading as of right. See DE 18, ¶ 2. On the same date, Plaintiff filed an Amended Motion to Vacate the Arbitration Award [DE 15], alleging, inter alia, that the Arbitration Award should be vacated on the grounds set forth in Section 10 of the FAA, including that (1) the Award is contrary to public policy (Am. Pet., ¶¶ 67-83); (2) the arbitrator refused to hear evidence pertinent and material to the controversy by which Plaintiff‘s rights were prejudiced (id., ¶¶ 118-122); (3) the arbitrator was partial in favor of Respondents in the arbitration (id., ¶¶ 84-96); (4) the arbitrator would not allow Plaintiff to submit pretrial statements (id., ¶¶ 97-98); and (5) the arbitrator committed misconduct which prejudiced Plaintiff‘s rights (id., ¶¶ 99-100).6
III. STANDARD OF REVIEW
Respondents move for dismissal of Terry‘s Amended Petition to Vacate the Award for lack of subject matter jurisdiction. See DE 19; see also Giannakos Affirm., ¶ 3; Resp‘t Mem. at 5. Although Respondents do not specify the statute or rule pursuant to which they seek relief, in
“Determining the existence of subject matter jurisdiction is a threshold inquiry and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Morrison v. Nat‘l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (citation omitted); Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 295 (2d Cir. 2000) (“dismissal is mandatory” when subject matter jurisdiction is lacking). A plaintiff asserting subject matter jurisdiction bears the burden of proving by a preponderance of the evidence that such jurisdiction exists. See Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005); Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). In considering a motion to dismiss under Rule 12(b)(1), “[t]he court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff . . . but jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.” Morrison, 547 F.3d
Where, as here, a plaintiff is proceeding pro se, the court “is obliged to construe his pleadings liberally.” Giardina, 2009 WL 910386, at *6 (quoting Sealed Plaintiff v. Sealed Defendant, 537 F.3d 185, 191 (2d Cir. 2008)); see also Weixel v. Bd. of Educ. of the City of New York, 287 F.3d 138, 145-46 (2d Cir. 2002) (holding that when plaintiff is appearing pro se, the Court shall “construe [the complaint] broadly, and interpret [it] to raise the strongest arguments that [it] suggests.“) (quoting Cruz v. Gomez, 202 F.3d 593, 597 (2d Cir. 2000) (internal quotation marks omitted).
IV. DISCUSSION
In the Amended Petition, Petitioner asserts that this Court has subject matter jurisdiction based upon federal question jurisdiction, diversity, and admiralty law. Am. Pet., ¶¶ 6, 38, 43, 44. The Court will analyze each of these in turn.
First, however, the Court must address the identities of the actual parties in this case. The Amended Petition is designated as “In the Matter of Arbitration between HENRY R. TERRY, Member of HMW GROUP LLC, Petitioner, and WAYNE CARAVELLO and MARK JURLANDO, Members of the HMW GROUP LLC, and JTC WORKS LLC, Respondents.” See DE 15. Respondents appear to argue that Terry brings this case in his capacity as a member of HMW Group, rather than in his individual capacity. For example, in the Memorandum of Law, Respondents contend that “Petitioner has no standing to sue as a member of HMW, LLC[,]” because HMW has been dissolved. See Resp‘t Mem. at 10. The Court does not, however, understand Terry to be bringing this suit in his capacity as a member of HMW Group. Terry confirms this point in his Affidavit in Response to Respondent‘s Motion to Dismiss Petition to Vacate Award (“Terry. Aff.“) [DE 21], in which he avers as follows:
- “I bring this action on my behalf and I am not bringing this action on behalf of HMW.” Terry Aff., ¶ 13.
- “The Caption identifying the Petitioner above, as an individual is sufficient to bring this law suit.” Id. ¶ 14.
- “Any further identifying remarks placed after a comma in the caption, i.e. [t]hat I am and/or was a Member of HMW, does not limit my capacity to bring this law suit, in this instant, as an individual.” Id., ¶ 15.
- “The Petitioner is bringing this action in his individual capacity and nowhere in his motion to vacate the award does he say he is brining this complaint in his capacity as Member of HMW Group LLC (‘HMW‘). The title ‘HMW Member’ does not deny the Petitioner a right, as an individual, to bring his motion to vacate the award forward.” Pet.‘s Mem. at 4.
Reading the pleadings liberally, the Court finds that Terry brings this action in his individual capacity and is suing Respondents in their individual capacities. Accordingly, there are three
B. The Jurisdictional Issues
1. Federal Question Jurisdiction
In a section labeled “Subject Matter Jurisdiction,” Petitioner argues that jurisdiction “is invoked under” the HMW Operating Agreement, the FAA, the “Federal Uniform Commercial Code,” interstate commerce, international treaties, and “the Constitution, laws, or treaties of the United States.” Here the Court understands Petitioner to be arguing in favor of federal question subject matter jurisdiction under
The parties to this matter executed consent to enable federal jurisdiction when they executed the arbitration agreements and consented to the [] AAA rules of commercial disputes. Moreover, when the Petitioner and Respondents, then Members of HMW, signed the HMW Operating Agreement they signed that “The Members understand that should any claim controversy or dispute arise out of, or in connection with this Agreement the matter may be submitted by any Member to binding arbitration, commercial arbitration rules of the Forum.”
Am. Pet., ¶ 36. Terry further contends that this Court has subject matter jurisdiction pursuant to the FAA and the Federal Uniform Commercial Code, which he claims was breached “[w]hen the Arbitrator allowed oral agreements to supersede[] the HMW Operating Agreement[,] thereby “exceed[ing] his powers” under the FAA. Id., ¶ 71.
Under the applicable statute, district courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”
In the instant case, Petitioner asserts the existence of jurisdiction on the grounds that, inter alia, he has brought this action to vacate the Arbitration Award under Section 10 of the FAA and that he, Caravello and Jurlando entered into the HMW Operating Agreement, which contains a clause obligating the parties to bring a dispute arising under the Agreement to arbitration. See Am. Pet., ¶ 36; Terry Aff., ¶¶ 28-29, 71. Petitioner further contends that this Court has jurisdiction because HMW -- the company at issue in the underlying arbitration, to the
as a result of Respondents’ wrongdoing, [Petitioner] lost his capacity to further participate in interstate commerce, continue to invest in real estate and continue to participate in the Federal programs for Housing and Urban Development. The loss from Respondents’ behavior truncated the petitioner‘s ability to [] further engage in interstate commerce.”
Am. Pet., ¶ 52; see also Terry Aff., ¶ 49. Petitioner further asserts that “‘subject matter jurisdiction’ is invoked under acts international treaties” (Terry Aff., ¶ 40), and on the grounds that the Arbitrator violated the FAA in the way he conducted the Arbitration, including violations of public policy and federal law such as the “Federal Uniform Commercial Code” (Am. Pet., ¶ 71; 73-98; Terry Aff., ¶¶ 55-59).
These assertions are not, however, sufficient to establish federal question subject matter jurisdiction. First, “[i]t is well settled that the FAA, including section 10, does not confer subject matter jurisdiction on a district court.” Perpetual Secs ., Inc. v. Yu Min Wang, 99 Civ. 335, 1999 U.S. Dist. LEXIS 12639, at *2 (S.D.N.Y. Aug. 16, 1999) (citing United States v. American Soc. of Composers, Authors & Publishers, 32 F.3d 727, 731 (2d Cir. 1994); Harry Hoffman Printing, Inc., 912 F.2d at 611). In other words, for an action brought under Section 10 of the FAA to be
Moreover, the fact that Terry, Caravello and Jurlando, in the HMW Operating Agreement, agreed to arbitrate any disputes arising out the Agreement does not create a jurisdictional basis for bringing the instant action in federal court. See Hall Street Assocs., LLC, 552 U.S. at 582, n.2 (“Because the FAA is not jurisdictional, there is no merit in the argument that enforcing the arbitration agreement‘s judicial review provision would create federal jurisdiction by private contract.“). In making this argument, Petitioner misapprehends the applicable law. Section 2 of the FAA provides that “in cases falling within a court‘s jurisdiction, the [FAA] makes contracts to arbitrate ‘valid irrevocable and enforceable,’ so long as their subject involves commerce.‘” Hall Street Assocs., LLC, 552 U.S. at 582 (quoting
Likewise, although Petitioner seeks to vacate the Arbitration Award based upon the Arbitrator‘s alleged violations of the FAA (Am. Pet., ¶¶ 79-99), such claims, without more, do not suffice to bring this action within the purview of federal question subject matter jurisdiction. See Giardina, 2009 WL 910386, at *8 (dismissing petition to vacate arbitration award for lack of subject matter jurisdiction) (citing Minor v. Prudential Sec., Inc., 94 F.3d 1103, 1105 (7th Cir. 1996) (finding a “motion to vacate [an arbitration decision] on grounds of fraud, corruption, undue means, evident partiality, and failure to consider pertinent and material evidence, does not require the resolution of any federal issue, let alone a ‘substantial question of federal law.‘“);
Finally, the law is somewhat unsettled as to whether, in determining a motion to dismiss for lack of jurisdiction, the Court should look only at the issues raised in instant action (i.e., in the Amended Petition to Vacate the Arbitration Award and the Motion to Dismiss), or if the Court should “look through” the petition and consider the parties’ underlying dispute (i.e., in the arbitration proceedings) to determine whether federal question jurisdiction exists. See Bittner, 331 Fed. Appx. at 871 (citing Vaden, 129 S. Ct. at 1273-75); see also Kirby Morgan Drive Sys. v. Hydrospace Ltd., 09-4934, 2010 U.S. Dist. LEXIS 9657, at *8-9 (C.D.Ca. Jan. 13, 2010). In Vaden v. Discover Bank, 129 S. Ct. 1262, 173 L. Ed. 2d. 206 (2009), the Supreme Court, addressing the jurisdiction of federal courts to hear motions to compel arbitration brought under Section 4 of the FAA, held that while Section 4 of the FAA requires a court to have independent subject matter jurisdiction over suits “arising out of the controversy between the parties,” the term “controversy” referenced in the FAA is “the parties’ underlying substantive controversy.” Vaden, 129 S. Ct. at 1273. Thus, as the Supreme Court found, district courts considering whether they have jurisdiction over an action brought to compel arbitration must “look through” the case brought under the FAA to the underlying controversy. See Cytec Indus., Inc. v. Powell, 630 F. Supp. 2d 680, 686 n.2 (N.D.W.Va. 2009) (discussing and citing Vaden, 129 S. Ct. at 1273).
For the foregoing reasons, the Court finds that Petitioner has not met his burden of establishing by a preponderance of the evidence that this Court has federal question subject matter jurisdiction over this action.
Petitioner maintains that diversity jurisdiction exists here because he is a citizen of Florida and Respondents are citizens of New York. Terry Aff., ¶ 6. In opposition, Respondents argue that there is no diversity because Petitioner is actually a citizen of New York and not of Florida.10 In the Amended Petition, Terry states as follows:
Petitioner, Henry R. Terry . . . resides at 16 Bransford Street, P.O. Box 2148, Patchogue, New York, 11772. . . . In accordance with
9 U.S.C. § 1, et seq. , the petitioner asserts diversity jurisdiction in this action as a citizen of both the United States of America and, upon information and belief, as a citizen of the State of Florida. Upon information and belief the petitioner asserts his rights to citizenship standing in the State of Florida via his domicile located at Garrison Bight Marina 1800 Roosevelt Boulevard, Tarpon 29 Pier, Key West, Florida and his intent to live there.”
Am. Pet., ¶ 6. In his Affidavit in Opposition to Respondent‘s Motion to Dismiss, Terry repeats these same statements. Terry Aff., ¶ 6. In the Memorandum of Law in Opposition to the Motion to Dismiss, Terry similarly asserts that “[u]pon information and belief I am a citizen of Florida because I have a domiciled within the State of Florida, and conduct business there. The Petitioner intends to live and carries out business in Florida.” Pet.‘s Mem. at 10. Respondents, on the other hand, argue that Petitioner is not, in fact, a citizen of Florida but rather, only has a boat that he docks at a marina in Florida during holidays. See Caravello Reply Aff., ¶¶ 18-19. Respondents further contend that Petitioner “is a full-time resident of New York[.]” Id., ¶ 17.
This Court has original jurisdiction “of all civil actions where the matter in controversy
An individual‘s citizenship for purposes of the diversity statute is determined by his domicile. Leonard J. Strandberg & Assocs., 2010 WL 1565485, at *4 (quoting Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 42 (2d Cir. 2000)). The Second Circuit has repeatedly stated that domicile is “the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning.” Palazzo, 232 F.3d at 42 (quoting Lindaros v. Fortuna, 157 F.3d 945, 948 (2d Cir. 1998). “At any given time, a person has but one domicile.” Palazzo, 232 F.3d at 42 (citation omtted).
There are two requirements to effect a change of domicile: (1) residence in a new domicile, and (2) the intention to remain there. Id. (emphasizing that both factors must be
Here, it is undisputed that Petitioner was domiciled in New York. Petitioner‘s argument is that he subsequently moved to Florida, where he is now domiciled, and diversity jurisdiction therefore exists in this action. Petitioner has not, however, presented the Court with any documentary evidence to show that he has made his “true fixed home and principal establishment” in Florida, and that he does not intend to return his domicile to New York. See Palazzo, 232 F.3d at 42. In the both the Amended Petition and his sworn affidavit, Terry asserts that he is a citizen of Florida only “upon information and belief.” Respondents, on the other hand, provide a printout from the website of Terry‘s business, Anything Marine, on which the “Contact Information” is listed as Terry‘s Patchogue address. See Caravello Reply Aff., Ex. D. There is no mention of any contact information in Florida. Moreover, in a sworn affidavit, Respondent Caravello avers as follows:
Petitioner has a boat which he docks in Florida during his holidays. He does not live in “Garrison Bight Marine” in Key West. Mr. Terry docks his boat at a rental unit on site and avails himself of the rental facilities available there. (See Exhibit “E“). Mr. Terry is presently attempting to sell the boat. (See, Exhibit “E.“).
In determining whether Petitioner is domiciled in Florida, the Court has considered myriad information, including that (1) Petitioner provided his Patchogue address when he filed this action (and such address is listed on the docket); (2) he states in all submissions that he resides at the Patchogue address; and (3) he owns at least one business which is based in New York and for which he provides the Patchogue address as his contact information. Regarding the two requirements to establish a new domicile -- residence in a new domicile and the intention to remain there -- Petitioner has not provided the Court with the address of his new Florida domicile nor has he provided any proof of an intention to remain there. Likewise, Petitioner has not supplied the Court with any documentary evidence to show the same. Respondents, on the other hand, have provided specific information showing that Petitioner’s purported address is actually a boat marina where he rents a slip. In light of the information presented here, the Court finds that Petitioner has not carried his burden of proving “by clear and convincing evidence” that he has established a new domicile in Florida and that he intends to remain there. Accordingly, diversity jurisdiction is lacking in this action.11
Finally, Petitioner appears to be attempting to establish subject matter jurisdiction based upon admiralty provisions,
- “JTC owned vessels, purchased from the petitioner, the Holiday Mansion Coastal Barracuda, and a small runabout.” Am. Pet., ¶ 37.
- Further, the JTC vessels, were used in which the Petitioner and Respondents conducted both JTC and HMW business meetings, and while conducting meetings the Holiday Mansion Coastal Barracuda was located in federal inland waterways, maintained pursuant to Federal laws and policies to promote the rules of admiralty (65 Cong.Rec. 1931 (1924) (the Act “affects contracts relating to interstate subjects and contracts in admiralty“)). As a result this Court has subject matter jurisdiction pursuant to the Commerce Clause of the United States Constitution and Admiralty.” Id., ¶ 38.
- “A meeting between the members [of JTC] was conducted while aboard Terry’s Vessel the Renaissance, his domicile, while afloat in a federally maintained channel in the inland waterways.” Id., ¶ 39.
Terry states nearly identical allegations in his Affidavit in Opposition to the Motion to Dismiss. See Terry Aff., ¶¶ 31-33.
District courts have original jurisdiction over “(1) [a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled. (2) Any prize brought into the United States and all proceedings for the condemnation of property taken as prize.”
4. The Court Lacks Subject Matter Jurisdiction
In sum, Plaintiff has not satisfied his burden of establishing, by a preponderance of the evidence, federal question jurisdiction, diversity jurisdiction, or admiralty jurisdiction in this action. Accordingly, the Court finds that there is no basis upon which this Court may exercise subject matter jurisdiction over the claims asserted by the Petitioner. “Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.” Altissima Ltd. v. One Niagra LLC, 08-CV-756, 2010 U.S. Dist. LEXIS 11718, at *15-16 (W.D.N.Y. Feb. 8, 2010) (quoting Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998)) (additional citation omitted). Thus, in view of my finding that there is no basis for the assertion of subject matter jurisdiction over this action, I respectfully recommend to Judge Feuerstein that Respondent’s Motion to Dismiss be GRANTED, and that Petitioner’s Amended Petition to Vacate the Award be DENIED.
I now turn to the issue of whether the Petition to Vacate should be denied with or without prejudice. The Second Circuit has ruled that “where a court lacks subject matter jurisdiction, it also lacks the power to dismiss with prejudice.” Hernandez v. Conriv Realty Assocs., 182 F. 3d 121, 123 (2d Cir. 1999). Accordingly, I respectfully recommend to Judge Feuerstein that the Amended Petition to Vacate be denied without prejudice. In doing so, however, I note that Petitioner has already been given the opportunity to file an Amended Petition in order to amplify his allegations regarding the existence of jurisdictional facts, and leave the final determination of this issue to Judge Feuerstein’s discretion. Further, I point out to that “in the interest of finality, collateral attacks on subject matter jurisdiction are not permitted. Accordingly, a party cannot seek to avoid the res judicata effect of an earlier judgment by arguing that the court entering the judgment had lacked subject matter jurisdiction over the case.” Id. at 123 n.3 (citing Willy v. Coastal Corp., 503 U.S. 131, 137 (1999)).
V. Rule 11 Sanctions
Respondents move for an Order “[i]mposing sanctions upon the Petitioner, pursuant to Rule 11, for commencement of a federal action without federal jurisdiction over the subject matter[.]” See DE 19. Respondents do not make any argument in their moving papers regarding their request for Rule 11 sanctions. In their Reply papers, Respondents assert that Petitioner should be sanctioned for his “bad faith conduct” in this action, including claiming to be “a citizen of Florida in the face of his admissions against interest that he is not a citizen of Florida[,]” and the “‘intention’ of the Parties to engage in commerce outside New York.” Resp’t Reply Mem. at 11; see also Caravello Reply Aff., ¶¶ 9-24, 29-30. Respondents further maintain that such
Notwithstanding the finding that there is no basis upon which to exercise subject matter jurisdiction in this action, this Court may adjudicate the portion of Respondents’ motion seeking Rule 11 sanctions. See Willy v. Coastal Corp., 503 U.S. 131, 138 (1999) (holding that imposition of monetary sanctions pursuant to Rule 11 remained valid despite a determination that federal subject matter jurisdiction did not exist) (discussed in Hernandez v. Conriv Realty Assocs., 182 F.3d 121, 123 (2d Cir. 1999)).
A motion for sanctions “must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b).”
VI. RESPONDENTS’ MOTION FOR COSTS AND FEES
Respondents also move for an Order requiring Petitioner to reimburse Respondents for the costs and legal fees incurred in bringing the Motion to Dismiss. See DE 19. Respondents assert that the HMW Operating Agreement and the JTC Operating Agreement “impose upon the losing party the expenses of the prevailing parties’ attorneys fees and disbursements, following compulsory arbitration of disputes among the parties.” Resp’t Mem. at 13; see also Caravello Aff., ¶ 18; Jurlando Aff., ¶ 18. In support of this request, Respondents have submitted copies of the Operating Agreements and their attorney’s bill for legal services rendered and costs and
The provision of the HMW Operating Agreement at issue here provides, in pertinent part, as follows:
It is the express intent of the Members that, under all circumstances punitive damages and the right of a jury trial shall be waived and the prevailing Member may be entitled to recover reasonable attorney’s fees, court costs and expenses actually incurred in enforcing any arbitration award. Any Member seeking to set aside this arbitration agreement by judicial action shall be responsible for all of the fees and costs, without limitation, of the Members defending against such action, irrespective of the outcome of such judicial action.
Giannakos Affirm., Ex. D, Art. VII, ¶ 7. The relevant provision in the JTC Operating Agreement is identical. Giannakos Affirm., Ex. E, Art. VII, ¶ 7. In moving for reimbursement of costs and fees from Petitioner, Respondents are attempting to enforce a provision within the HMW Operating Agreement, the terms of which were the subject of the underlying Arbitration. In light of the Court’s finding that subject matter jurisdiction does not exist here, the Court is not authorized to make any ruling on the merits with respect to a provision in a contract that is not properly before it. This Court therefore lacks jurisdiction to adjudicate Respondents’ request for enforcement of the costs and fees provision set forth in the HMW Operating Agreement. See Altissima Ltd. v. One Niagra LLC, 08-CV-756, 2010 U.S. Dist. LEXIS 11718, at *15 (W.D.N.Y. Feb. 8, 2010) (“Without jurisdiction the court cannot proceed at all in any cause.“) (citation and
VII. PETITIONER’S CROSS-MOTION TO DISQUALIFY COUNSEL
In their moving papers, Respondents oppose Petitioner’s ”anticipated motion to disqualify” Constantine C. Giannakos as counsel for Respondents in this action. See Giannakos Affirm., ¶ 24 (emphasis added); Resp’t Mem. at 12 (Mr. Terry’s motion to disqualify, if made, must be denied in its entirety on the grounds that his claim of conflict of interest is purely speculative.“) (citations omitted) (emphasis added). Although Petitioner makes certain claims regarding an alleged conflict of interest with respect to Attorney Giannakos -- including that Giannakos was “associated and worked within rooms in the office with HMW’s attorney Jeffrey Stern, Esq” (Am. Pet., ¶ 128; id., ¶¶ 129-133) -- pursuant to the Court’s directive, Petitioner did not file a cross-motion to disqualify counsel. Rather, in his Opposition papers, Petitioner briefly addressed the issue and stated he has “been instructed by this court to leave this issue until after the jurisdictional issues are resolved.” Terry Aff., ¶ 73. Notably, Respondents annexed to their Motion this Court’s Civil Conference Minute Order stating: “Plaintiff indicated today that he may wish to make a motion to disqualify Defendants’ counsel. That issue will be taken up after a decision is rendered on the anticipated motion to dismiss.” See Giannakos Affirm., Ex. M.
Regarding the issues raised by Petitioner with respect to Giannakos’s representation of Respondents in this action, there is no motion pending and, therefore, no issue for the Court to adjudicate. The Court will not address the merits of the points raised by Respondents “in anticipation of” Petitioner’s cross-motion. Even if Petitioner had filed the cross-motion (which
VIII. PETITIONER’S MOTION TO FILE A SUR-REPLY
Petitioner filed a letter motion seeking (1) leave to file a surreply in response to Respondents’ Reply; (2) leave to file an amended affidavit in opposition to Respondents’ motion to dismiss; (3) a hearing in order to submit evidence on “subject matter jurisdiction;” (4) a hearing “pursuant to the FAA’s venue provisions;” (5) permission to correspond with counsel for Respondents via email; (6) leave to file a second amended Petition to Vacate the Award, in the event the request to file a surreply is denied; (7) leave to object to Respondents’ moving papers on the grounds that Respondents’ attorney has failed to state the authority under which he is moving and that Respondents have improperly moved for Rule 11 sanctions; (8) leave to move to strike portions of Respondent Caravello’s Reply Affidavit; (9) a stay of the deadline by which to answer Respondents’ counterclaims and further amend the Petition until 20 days after the resolution of the instant action; and (10) “a telephone conference to address these matters and for such other further relief the Court deems just and proper.” See DE 30. In light of the findings regarding the lack of subject matter jurisdiction in this matter, and as a matter within the Court’s discretion regarding a sur-reply, I respectfully recommend to Judge Feuerstein that Petitioner’s Motion be denied as moot.
In light of the analysis set forth above, I respectfully make the following recommendations to Judge Feuerstein:
- that Respondents’ motion to dismiss [DE 19] for lack of subject matter jurisdiction be granted;
- that Respondents’ request for Rule 11 sanctions [DE 19] be denied;
- that Respondents’ request for reimbursement of costs and legal fees be denied;
- that Petitioner’s motion for leave to file a sur-reply [DE 30] be denied as moot; and
- that Petitioner’s Amended Petition to Vacate the Arbitration Award be denied in its entirety and that this action be dismissed, without prejudice.
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Pursuant to
Defendants’ counsel is directed to serve a copy of this Report and Recommendation forthwith upon Plaintiff Pro Se by overnight mail and first class mail. Defendants’ counsel is further directed to file proof of service on ECF.
SO ORDERED.
Dated: Central Islip, New York
August 31, 2010
/s/ A. Kathleen Tomlinson
A. KATHLEEN TOMLINSON
U.S. Magistrate Judge