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WRW Chocolates, LLC v. Moonstruck Chocolatier

May 31, 2006

WRW CHOCOLATES, LLC F/K/A MOONSTRUCK EAST, LLC, PLAINTIFF,
v.
MOONSTRUCK CHOCOLATIER, INC., MOONSTRUCK CONFECTIONS COMPANY, WILLIAM SIMMONS, MOONSTRUCK CHOCOLATE COMPANY AND MOONSTRUCK CHOCOLATE CO., DEFENDANTS.



The opinion of the court was delivered by: Hurley, District Judge

MEMORANDUM OF DECISION AND ORDER

Defendants Moonstruck Confections Company ("Confections"), Moonstruck Chocolatier, Inc. ("Chocolatier") and William Simmons ("Simmons") (collectively, "Confections Defendants") and defendant Moonstruck Chocolate Company a/k/a Moonstruck Chocolate Co. ("MCC") (collectively, "Defendants") move for an Order confirming the Arbitration decisions issued on July 29, 2004 and February 4, 2005. For the reasons that follow, Defendants' motions are granted.

BACKGROUND

On April 25, 2000, plaintiff WRW Chocolates, LLC ("Plaintiff") and Confections entered into a License Agreement (the "Agreement") granting Plaintiff an exclusive license to establish and operate chocolate café boutique stores selling products manufactured by Confections. (See Decl. of Daniel S. Moretti, dated July 20, 2005 ("Moretti Decl."), Ex. D.) The Agreement provides that "any dispute or disagreement between the parties arising out of or in relation to this Agreement . . . shall be settled by arbitration." (Id. ¶ 19(f).)

On March 27, 2002, Plaintiff initiated the instant action against Defendants seeking, inter alia, rescission of the Agreement and damages arising from breach thereof. By Memorandum Decision and Order dated January 7, 2003, the Court granted Defendants' motions to stay this action pending arbitration.

On April 5, 2004, the Arbitrator issued an abbreviated decision indicating that he was denying Plaintiff's motion for summary judgment in its entirety and granting Defendants' motions for summary judgment. On July 29, 2004, he issued another decision which set forth in detail the reasons for his legal and factual conclusions. Plaintiff does not contest the July 29, 2004 decision nor Defendants' right to confirmation thereof.

Thereafter, consistent with the Arbitrator's retention of jurisdiction for this purpose, Defendants submitted motions seeking recovery of attorneys' fees and costs from Plaintiff. These motions were based on paragraph 19(b) of the Agreement, which provides in pertinent part:

If any arbitration, suit, or action is instituted to interpret or enforce the provisions of this Agreement, to rescind this Agreement, or otherwise with respect to the subject matter of this Agreement, the party prevailing on an issue shall be entitled to recover with respect to such issue, in addition to costs, reasonable attorney's fees incurred in preparation or in prosecution or defense of such arbitration, suit, or action as determined by the arbitrator . . . . (Moretti Decl., Ex. D ¶ 19(b).)

On February 4, 2005, the Arbitrator rendered a decision on these motions, finding that the Confections Defendants were entitled to $594,242.51 in attorneys' fees and costs as well as an additional $11,790.27 for the fees and costs associated with the Arbitration. He also found that MCC was entitled to $195,10.96 in attorneys' fees and costs as well as an additional $11,789.94 for the fees and costs associated with the Arbitration. The Arbitrator noted that Plaintiff's claims were "factually and legally complex," "involved alleged violations of the franchise laws of several states, misrepresentation claims and opaque damage assertions apparently totaling several million dollars," and that Plaintiff "unsuccessfully attempted to circumvent the arbitration process contemplated in the Agreement and thereafter embarked upon a contentious discovery path particularly with respect to identification of its damage claims." (Moretti Decl., Ex. B at 2-3.)

Defendants now move to confirm the July 29, 2004 and February 4, 2005 awards. Plaintiff opposes confirmation of the February 4, 2005 award only, arguing, inter alia, that the Arbitrator exceeded his authority by: (1) awarding fees that were unreasonable; (2) by awarding fees on issues that Defendants did not necessarily prevail; (3) by awarding fees for work on Defendants' cross-claims, which Plaintiff contends are outside the scope of the Agreement; (4) by awarding fees for the retention of local counsel even though out of state counsel could have performed all the tasks necessary in the arbitration; (5) by awarding fees for the retention of an expert who neither testified nor submitted a report setting forth what services he provided; and (6) for awarding fees for work done on behalf of Simmons, who was not a signatory to the Agreement. For the reasons stated below, Plaintiff's arguments are rejected and the arbitration awards are confirmed in their entirety.

DISCUSSION

I. Applicable Legal Standard

Under the Federal Arbitration Act, a district court may vacate an ...


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