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THE HOME INSURANCE CO. v. RHA/PA. NURSING HOMES

United States District Court, Southern District of New York


October 2, 2000

THE HOME INSURANCE COMPANY, ETC., PETITIONER,
V.
RHA/PENNSYLVANIA NURSING HOMES, INC., RESPONDENT.

The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.

MEMORANDUM OPINION

This is a proceeding under Section 9 of the Federal Arbitration Act (the "Act")*fn1 to confirm an arbitration award. Respondent has cross-moved to dismiss the petition principally on the ground that the Court lacks subject matter jurisdiction.

The arbitration clauses here at issue neither provide for the entry of judgment confirming awards made pursuant to them nor incorporate any arbitration rules that so provide. The essence of respondent's position is that confirmation may not be granted because Section 9 of the Act permits confirmation only where "the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration . . ." They rely on Varley v. Tarrytown Associates, Inc.,*fn2 the continued vitality of which is disputed by petitioner.

Varley is squarely in point and requires dismissal if it still is binding on this Court. And while one judge in this district long ago concluded that Varley was a dead letter,*fn3 subsequent developments have demonstrated that reports of its demise were premature. Smiga v. Dean Witter Reynolds, Inc.*fn4 decided twelve years after Harris, demonstrates that the Circuit then still regarded Varley as alive and well.*fn5 In consequence, this Court is bound to apply Varley. The petition therefore fails to state a claim upon which relief may be granted and the cross-motion must be granted. That, however, is not necessarily the end of the matter.

It is significant to note that respondent misconceives the nature of the argument upon which it has prevailed. Subject matter jurisdiction here is conferred by Section 1332 of the Judicial Code*fn6 on the basis of diversity of citizenship, not by the Federal Arbitration Act. Hence, the respondent's argument is more properly characterized as a contention that the petition does not state a claim upon which relief may be granted than as a challenge to subject matter jurisdiction. The Court therefore must consider whether the flaw in the petition is fatal to petitioner's case or whether the petition might be amended to state a legally sufficient claim.

Petitioner no doubt invoked the Federal Arbitration Act here because the agreements containing the arbitration clauses in question involve commerce and thus come within its terms.*fn7 The Act, moreover, preempts state law to some degree.*fn8 The scope of that preemption, however, has not been addressed by the parties, and its extent is important because New York law does not appear to condition confirmation of an arbitration award upon an agreement contemplating judicial enforcement of awards.*fn9 Hence, the petition might be amended to state a legally sufficient claim for confirmation of the award under New York law. The Court therefore will dismiss with leave to amend.*fn10

For the foregoing reasons, respondent's cross-motion to dismiss the petition is granted to the extent that the petition is dismissed for failure to state a claim upon which relief may be granted. Petitioner may file an amended petition no later than October 15, 2000.

SO ORDERED.


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