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New York Fragrance Inc. v. Union Sales Inc.

July 24, 2008

NEW YORK FRAGRANCE INC., PLAINTIFF,
v.
UNION SALES INC., DEFENDANT.
UNION SALES INC., PLAINTIFF-PETITIONER,
v.
NEW YORK FRAGRANCE INC., DEFENDANT-RESPONDENT.



The opinion of the court was delivered by: Sifton, Senior Judge

MEMORANDUM OPINION & ORDER

New York Fragrance, Inc. ("NY Fragrance"), a New York corporation, commenced this diversity action against Union Sales, Inc. ("Union Sales") a New Jersey corporation, to recover on an unpaid loan. On May 18, 2007, this action was discontinued after the parties agreed to submit their claims to arbitration. Presently before this Court is NY Fragrance's petition to confirm the arbitration award pursuant to the Federal Arbitration Act, 9 U.S.C. § 9, and Union Sales' cross-petition to confirm in part and vacate in part the arbitration award pursuant to the Federal Arbitration Act and Article 75 of the New York CPLR. For the reasons stated below, NY Fragrance's petition is granted and Union Sale's cross-petition is granted in part and denied in part.

BACKGROUND

The following facts are drawn from the arbitration panel's January 3, 2008 decision and the parties' submissions in connection with their motions.

NY Fragrance and Union Sales are wholesale perfume distributors. Ramkrishna Cherukuri ("Cherukuri") is the principal of NY Fragrance and Abraham Askal ("Askal") and Solomon Motzen ("Motzen") are the co-principals of Union Sales. Rivka Fischman ("Fischman") is the bookkeeper/ comptroller for Union Sales. January 3, 2008 Arbitration Panel Decision ("Panel Decision") at 2, Union Sales Exhibit 3.

In 1991 NY Fragrance and Union Sales entered into a business relationship pursuant to which NY Fragrance loaned money to Union Sales for the purchase of perfumes from third parties. Id.

Any merchandise purchased by Union Sales from third parties using the proceeds of NY Fragrance's loans were to be delivered to NY Fragrance's warehouse in Staten Island, New York, where it was to be stored until Union Sales paid the balance of the loan. Id. at 4.

In 1993, the parties entered into a joint venture for the purchase of Guess products from a third party. Id. at 5-6.

In 1998, NY Fragrance offered and Union Sales accepted an opportunity to purchase Je Reviens/Worth perfumes at a low cost. Union Sales was to keep all of the income from the resale of the perfumes. Both parties realized a profit from this transaction. Id.

In January 2003, the parties terminated their relationship. As of January 2003, NY Fragrance owed Union Sales $138,139 in connection with the Guess joint venture and owed no money to Union Sales with respect to the Worth/Je Reviens transaction.

Id. at 6.

In June 2003, the parties agreed that with respect to the series of loans Union Sales owed NY Fragrance $328,998 in unpaid principal and interest and that Union Sales would make interest only payments for 18 months at an interest rate of six percent per annum. Id. at 4. As of December 1, 2004, Union Sales owed NY Fragrance a balance of $337,224 in principal and interest. Id.

Procedural History

On December 16, 2004, NY Fragrance filed a complaint against Union Sales in this district to recover the balance due on the loans made by NY Fragrance to Union Sales.

On May 10, 2007, the parties stipulated to the submission of their claims to an arbitration panel and the discontinuance of the 2004 action. On May 17, 2007, I "so ordered" the stipulation. Thereafter, the arbitration proceeded before a three member panel from National Arbitration and Mediation ("NAM") pursuant to an agreement which provided that "[t]he ...


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