The opinion of the court was delivered by: Whitman Knapp, Senior District Judge
Petitioner Photopaint Technologies, LLC ("Photopaint") moves this Court
to confirm an arbitration award pursuant to 9 U.S.C. § 9. Respondents
Smartlens Corporation ("Smartlens") and Steven Hylen ("Hylen")
(hereinafter collectively the "Respondents") oppose the confirmation of
the arbitration award and cross-move to dismiss the petition underlying
Photopaint's motion, or in the alternative, for summary judgment, on the
grounds that the petition is time-barred.
For the reasons that follow, we grant the Respondents' cross-motion for
summary judgment, dismiss Photopaint's action, and thereby deny
Photopaint's motion to confirm the arbitration award.
In 1997, Photopaint entered into a License Agreement with Smartlens for
the purpose of developing certain patented technology. That agreement
contained an arbitration clause which provided in pertinent part that
"any dispute arising out of or relating to this Agreement . . . shall be
finally settled by arbitration to be held in New York, New York, in
accordance with the rules then applicable of the American Arbitration
Association ("AAA"), or such body as the AAA may designate." Hilliard
Aff., Ex. A.
Thereafter, in 1998, Smartlens asserted that Photopaint had breached
the License Agreement and attempted to terminate that contract. After the
parties unsuccessfully tried to resolve their dispute, Photopaint filed a
Demand for Arbitration with the AAA on approximately October 21, 1998.
Pursuant to the terms of the License Agreement, the arbitration was held
in New York, New York.
Between July 2000 and October 2000, Smartlens sent a number of letters
to the AAA wherein they, in effect, sought to reopen the arbitration
hearing based on additional evidentiary submissions. The arbitrator
considered these additional submissions and treated them collectively as
an application for the modification of the arbitration award. On October
23, 2000, after reiterating that he had rendered a final decision on May
26, 2000, the arbitrator denied Smartlens' application for the
modification of that award on the grounds that the application did not
fall within the applicable grounds for modification.
In accordance with the terms of the Final Award, either party had the
option to rescind the License Agreement "[w]ithin thirty (30) days after
receipt" of the Award. Hilliard Aff., Ex. C. If Photopaint chose to
rescind, it would be entitled to receive $319,932.55 from Smartlens. If
Smartlens elected to rescind, Photopaint would be entitled to receive
$384,141.75 from Smartlens, as well as Photopaint's share of the AAA's
On October 31, 2000, Photopaint and Smartlens agreed to extend the
recission deadline enumerated in the Final Award from November 2, 2000 to
November 16, 2000. The purpose of the extension was to allow the parties
to engage in settlement negotiations in an attempt to reach a resolution
with respect to the License Agreement and the obligations thereunder
which would not limit the parties to the consequences set forth in the
Final Award. The initial extension of time was memorialized in a letter
agreement prepared by Smartlens' counsel. The parties continued to pursue
settlement negotiations from November 2000 through July 2001 and
continued to extend the rescission deadline by a series of successive
letter agreements (including one agreement to an indefinite extension of
the rescission deadline which remained in effect from approximately
February 4, 2001 through April 17, 2001).
Despite these settlement discussions, the prospect of settlement fell
through. As such, on July 27, 2001, Photopaint notified Smartlens'
counsel that it had elected to rescind the License Agreement and demanded
payment in the amount of $319,932.55 in accordance with the terms of the
Final Award. When Smartlens failed to pay that amount, Photopaint
commenced this action by filing a petition with this Court on October 3,
2001 for the summary confirmation of the arbitration award under
9 U.S.C. § 9. Thereafter, on November 13, 2001, Photopaint acted on
that petition by moving to confirm the arbitration award on the same
grounds enumerated in its petition. Smartlens answered Photopaint's
petition with objections and simultaneously cross-moved to dismiss that
action, or in the alternative for summary judgment, on the grounds that
the petition was time-barred by 9 U.S.C. § 9.
We have diversity jurisdiction over Photopaint's petition pursuant to
28 U.S.C. § 1332 (a)(1).*fn1 Venue in this Court is proper under
28 U.S.C. § 1391 (a).
Under the Federal Arbitration Act, "a party wishing to confirm an
arbitration award may apply to the court for a confirmation order any
time within one year `and thereupon the court must grant such an order
unless the award is vacated, modified, or corrected as prescribed in'"
9 U.S.C. § 10 and 9 U.S.C. § 11. Florasynth, Inc. v. Pickholz (2d
Cir. 1984) 750 F.2d 171, 175. "`The confirmation of an arbitration award
is a summary proceeding that merely makes what is already a final
arbitration award a judgment of the Court.'" Yusuf Ahmed Alghanim &
Sons, W.L.L. v. Toys "R" Us, Inc. (2d Cir. 1997) 126 F.3d 15, 23, cert.
denied (1998) 522 U.S. 1111. Hence, "the showing required to avoid
summary confirmation is high." Ottley v. Schwartzberg (2d Cir. 1987)
819 F.2d 373, 376. "Absent a statutory basis for modification or
vacatur, the district court's task . . . [is] to confirm the arbitrator's
final award as mandated by section 9 of the Act." Id.
The Respondents do not seek to avoid the confirmation of the award
through either modification or vacatur. However, they contend that
Photopaint's action, which was commenced via the petition, is time-barred
under 9 U.S.C. § 9 and accordingly cross-move to dismiss that
petition, or in the alternative for summary judgment, on that ground.
Since both parties have introduced evidence outside the four corners of
the original petition in briefing or responding to that cross-motion and
thereby treated it, in effect, as a cross-motion for summary judgment, we
similarly treat the cross-motion as one for summary judgment. See In re
G. & A. Book, Inc. (2d Cir. 1985) 770 F.2d 288, 295, cert. denied, M.J.M
Exhibitors, Inc. v. Stern (1986) 475 U.S. 1015; German v. Pena (S.D.N.Y.
2000) 88 F. Supp.2d 216, 219.*fn2
"Summary judgment is appropriate where the Court is satisfied `that
there is no genuine issue of any material fact and that the moving party
is entitled to judgment as a matter of law.'" Celotex Corp. v. Catrett
(1986) 477 U.S. 317, 330. "The function of the district court in
considering the motion for summary judgment is not to resolve disputed
issues of fact but only to determine whether there is a genuine issue to
be tried." Eastman Machine Co., Inc. v. United States (2d Cir. 1988)
841 F.2d 469, 473. In making this determination, we "must resolve all
ambiguities and draw all reasonable inferences in the light most
favorable to the party opposing the motion [for summary judgment]."
Cifarelli v. Village
of Babylon (2d Cir. 1996) 93 F.3d 47, 51.
With these considerations in mind, we turn to the merits of the
arguments before us.
A. The Federal Arbitration Act Statute of Limitations
"Section 9 of the Federal Arbitration Act, 9 U.S.C. § 9 . . . sets
forth the procedures under which arbitration awards are to be confirmed
by district courts." Ottley, 819 F.2d at 375. That section of the ...