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Herrenknecht Corp. v. Best Road Boring

April 17, 2007


The opinion of the court was delivered by: John F. Keenan, United States District Judge


Petitioner Herrenknecht Corp. ("Herrenknecht") seeks an order, pursuant to Section 9 of the Federal Arbitration Act, confirming an arbitration award issued in its favor against the Respondent, Best Road Boring ("Best Road"). In addition, Herrenknecht seeks to recover pre-judgment interest at the rate of nine percent and an award of attorneys' fees and costs incurred in obtaining confirmation of the award. Best Road has not opposed or otherwise responded to Herrenknecht's confirmation action. For the reasons that follow, the arbitration award is confirmed, and Herrenknecht's request for pre-judgment interest is granted. Herrenknecht's application for attorneys' fees and costs is denied. However, the Court will fix reasonable attorneys' fees and costs provided that Herrenknecht submits an accounting of fees and costs to the Court within ten (10) days of the entry of this order.


The following undisputed facts are derived from Herrenknecht's Petition to Confirm Arbitration Award ("Petition"); the affidavit of Herrenknecht's attorney, Paul Keneally ("Keneally"), in support of its application for default judgment ("Keneally Affidavit"); and various documents attached thereto.

On August 24, 2004, Herrenknecht, a South Carolina corporation, entered into a contract with Best Road, a Texas corporation, whereby Herrenknecht agreed to lease micro-tunneling equipment to Best Road ("Agreement"). The Agreement provided that any dispute or claim arising from the Agreement would be submitted to binding arbitration in New York City. In addition, the Agreement stated that the prevailing party in arbitration would be "entitled to reasonable attorney's fees, costs, and expenses incurred in the course of arbitration." (Pet., Ex. A ¶ 27.) After Best Road ceased making lease payments as required under the Agreement, Herrenknecht recovered its equipment and notified Best Road that it had breached the Agreement. On November 1, 2005, Herrenknecht initiated arbitration in New York. Although Best Road was notified about the arbitration, Best Road did not participate in the subsequent proceedings. On April 18, 2006, an arbitration award ("Award") was issued in Herrenknecht's favor in the sum of $465,106.30. To date, Best Road has failed to satisfy the Award.

On July 5, 2006, Herrenknecht filed the instant Petition, seeking confirmation of the Award and a default judgment. Herrenknecht encountered considerable difficulties in locating Best Road and serving it with the Petition and summons. On January 31, 2007, Herrenknecht served Best Road through the Texas Secretary of State, after obtaining leave from the Court. Best Road did not answer Herrenknecht's Petition and has failed to appear in this action.

On March 23, 2007, Herrenknecht submitted the Keneally Affidavit, through which Herrenknecht sought a default judgment in the sum certain of $465,106.30, $407.54 in costs, and $4,417.00 in attorneys' fees. On April 3, 2007, Herrenknecht submitted a proposed order of default judgment which provided that, in addition to the aforementioned sum certain, costs, and attorneys' fees, Herrenknecht would receive pre-judgment interest at the rate of nine percent from May 18, 2006.


Confirmation of Arbitration Award

Herrenknecht has characterized its current application as a request for a default judgment, made pursuant to Federal Rule 55 of the Federal Rules of Civil Procedure. However, as the Second Circuit has noted, "Rule 55 does not operate well in the context of a motion to confirm or vacate an arbitration award."

D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 107 (2d Cir. 2006).

In D.H. Blair, the Second Circuit concluded that "default judgments in confirmation/vacatur proceedings are generally inappropriate." Id. at 109. The court reasoned as follows:

A motion to confirm or vacate an award is generally accompanied by a record, such as an agreement to arbitrate and the arbitration decision itself, that may resolve many of the merits or at least command judicial deference. When a court has before it such a record, rather than only the allegations of one party found in complaints, the judgment the court enters should be based on the record.

Id. Therefore, the Petition and accompanying record should be treated like a motion for summary judgment and, when the respondent fails to answer, like an unopposed motion for summary judgment. See id. at 109-10; see also Travel Wizard v. Clipper Cruise Lines, No. 06 Civ. 2074, 2007 U.S. Dist. LEXIS 163, at *5-6 (S.D.N.Y. Jan. 3, 2007) (stating that "even where one party altogether fails to respond to a motion to vacate or confirm ...

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