The opinion of the court was delivered by: Berman, District Judge.
Petitioner United House of Prayer for All People of the Church
on the Rock of the Apostolic Faith ("Petitioner" or "Church" or
"United") moves pursuant to Section 9 of the Federal Arbitration
Act, 9 U.S.C. § 9 ("FAA"), for an order confirming a
Construction Industry Arbitration Award ("Award") issued on June
7, 1999. Under the Award, Respondent L.M.A. International, Ltd.
("Respondent" or "LMA") was directed to pay a total of
$2,596,295.26 plus $519.83*fn1 interest per day to United.
Respondent opposes confirmation of the Award, and is understood
by this Court to cross-move to vacate the Award pursuant to
Section 10 of the FAA. 9 U.S.C. § 10; see The Hartbridge,
57 F.2d 672 (2d Cir. 1932)
("Upon a motion to confirm the party opposing confirmation may
apparently object upon any ground which constitutes a sufficient
cause under the statute to vacate, modify, or correct, although
no such formal motion has been made."). The Award was made by a
panel of three arbitrators from the American Arbitration
Association ("AAA"). For the reasons set forth below, the
motion to confirm the Award is granted, and the cross-motion to
vacate the Award is denied.
Petitioner United, a non-profit church incorporated in the
District of Columbia and owner of property located at 2310
Eighth Avenue, New York, New York 10027, and Respondent LMA, a
New York construction services company, entered into an
agreement on July 10, 1996 (the "Agreement") to undertake
certain repair and other construction work at the 2310 Eighth
Avenue property. Disputes arose between the Church and LMA with
respect to the project, and on June 12, 1996, under the
Agreement's arbitration clause*fn2, LMA filed for arbitration
by (the New York City office of) the AAA. LMA demanded monies
for work allegedly performed under the Agreement. United
counterclaimed for monies for management fees, repair of
defective work, payments to subcontractors, completion costs and
overpayments to LMA.
Shortly after the arbitration was commenced, both parties
signed a Compensation Stipulation, dated September 24, 1996,
providing for payment of the arbitrators' fees at a rate of
$1,000 per arbitrator per day; an arbitration-day lasted from
approximately 10:00 AM to 4:00 PM. Affidavit of Gregory E.
Ronan, dated September 9, 1999 ("Ronan Aff.") ¶ 8. By the summer
of 1997, only ten hearing-days had been completed due to the
difficulty of coordinating the arbitrators' schedules. Counsel
for LMA apparently complained to the AAA case administrator
about the slow pace of the arbitration. Shortly thereafter, the
arbitration panel agreed to extend the length of the hearing
days, i.e., from 8:30 AM to 5:30 PM. The arbitrators pay was
increased by 50%, in accordance with the 50% (longer)
arbitration days. Both parties consented to the increase.
Affidavit of James T. Farrell, dated September 9, 1999 ("Farrell
Aff.") ¶ 5.
Sometime during the next few hearings, counsel for LMA advised
the panel that LMA was in serious financial difficulties; that
LMA was having trouble getting expert witness to appear due to
lack of funds; and that LMA itself had ceased business operation
because it had no money to pay rent or salaries. Ronan Aff. ¶
In June of 1997, the AAA sent out an (advance) invoice for
hearings to be held in September and October, 1997. On September
17, 1997, the AAA informed the parties that it would suspend
arbitration because Respondent's share of arbitration fees had
not been paid. Farrell Aff. ¶ 7; Farrell Aff. Exhibits C and D.
Petitioner, not wanting to initiate a new proceeding, offered to
advance Respondent's portion of the arbitrators' fees, and,
therefore, the AAA resumed hearings. LMA wrote, in a letter to
the AAA dated April 7, 1998, "The Respondent has stated that it
has paid all fees due for the arbitration. We expect that they
will continue to pay all fees so that there will be no further
interruption of the hearings. Under these circumstances, we
request that the Association immediately schedule hearings on
the claims and counterclaims." Reply Affidavit of Edward F.
Maluf, dated September 22, 1999 ("Maluf Reply Aff.") 4; Maluf
Reply Aff. Exhibit A.
After more than twenty arbitration sessions, the panel issued
its Award, effective June 7, 1999, providing that LMA pay to
the Church the sum of $2,566,727.41, plus interest thereon at
the rate of $519.83 per day from and after June 7, 1999.
Affidavit of Edward F. Maluf, dated June 22, 1999 (Maluf Aff.)
Exhibit C. The amount of the Award was allocated as follows:
a) $233,230.00 to LMA on its claims;
b) $2,341,425.00 to the Church on its counterclaims
for management fees, repair of defective work, direct
payment to subcontractors, excess completion costs
and overpayments; and
c) $458,532.41 to the Church as interest for 29
months (preceding the award) at nine percent (9%) per
In addition, the Church was awarded an additional $29,567.85
determined as follows:
a) $27,620.25, representing that portion of the AAA's
fees previously advanced by the Church but
attributable to LMA; b) $2,307.60 representing that
portion of the AAA's fees and expenses previously
advanced by the Church but attributable to LMA.
The motion before the Court raises four issues: (i) whether
N.Y.C.P.L.R. ("CPLR") 7511 or the FAA, 9 U.S.C.A. § 9 (1970),
governs review of the instant motion; (ii) whether ex parte
communications with the arbitrators, alleged by LMA to have
occurred, serve as grounds to vacate the Award; and ...