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Amaprop Limited v. Indiabulls Financial

March 16, 2011

AMAPROP LIMITED,
PETITIONER,
v.
INDIABULLS FINANCIAL SERVICES LIMITED AND INDIABULLS FINANCE COMPANY PRIVATE LIMITED, RESPONDENTS.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:

MEMORANDUM OPINION & ORDER

Before this Court is Petitioner Amaprop Limited's motion for an award of attorneys' fees and non-taxable costs against Respondent Indiabulls Financial Services Limited ("Indiabulls").*fn1 Previously, this Court: (1) granted Amaprop's petition to compel arbitration;(2) enjoined Respondents from prosecuting certain actions they filed against Amaprop in India; (3) instructed Respondents to dismiss or cause to be dismissed any actions currently pending in India arising from a "Share Subscription and Shareholders Agreement" between Amaprop's predecessor and Respondents (the "Agreement"); and (4) enjoined Respondents from commencing any new legal actions in India arising from the Agreement. Amaprop Ltd. v. Indiabulls Financial Services Ltd., No. 10 Civ. 1853(PGG), 2010 WL 1050988, at *10 (S.D.N.Y. Mar. 23, 2010) (Docket No. 20).

For the reasons stated below, Amaprop's motion for attorneys' fees and costs will be granted.

BACKGROUND

As set forth in this Court's previous Memorandum Opinion,*fn2 on May 31, 2005, Amaranth LLC entered into a "Share Subscription and Shareholders Agreement" with Indiabulls and the Finance Company. On June 6, 2005, the Agreement was amended "so as to replace Amaranth with Amaprop as a party," and "[a]ll of Amaranth's rights and obligations under the . . . Agreement . . . [were] vest[ed] with Amaprop." (Matano Decl., Ex. B at 4) The Agreement contained a broad arbitration clause, requiring that "[a]ny action arising [out of or] relating to this Agreement or the other Transaction Documents shall be settled by arbitration in the State of New York." (Id., Ex. A, Section 12.11)

In January 2010, a dispute arose between Amaprop and Indiabulls as to certain rights Amaprop wished to exercise under the Agreement. Accordingly, Amaprop filed a notice of arbitration and statement of claim with the International Centre for Dispute Resolution of the American Arbitration Association (the "ICDR"). (Cmplt. ¶ 13; Matano Decl. ¶¶ 16-18; Ex. G) The parties made initial appearances in the arbitration proceeding, and Respondents sought additional time to file their Statements of Defense. On March 4, 2010, however, before such Statements of Defense were due, Respondents obtained ex parte injunctions from the High Court of Judicature at Bombayenjoining Amaprop from proceeding with the arbitration. (Matano Decl., Ex. U, V)

Amaprop filed this action on March 9, 2010, a hearing was held on March 17, 2010, and on March 23, 2010, this Court granted Amaprop's petition to compel arbitration and motion for a preliminary anti-suit injunction, finding that the underlying dispute "[fell] within the Agreement's arbitration clause" and that it was "clear that Respondents have refused to arbitrate." Amaprop Ltd., 2010 WL 1050988, at *3. The Court further found that Respondents had submitted a brief with a "misleading redaction of the Agreement's arbitration clause" and had "proceeded in the utmost bad faith." Id. at *6. The Court found that there was "overwhelming evidence . . . that the pending litigation in India [would] cause Amaprop delay, inconvenience, and expense," and that "[b]ecause of the Indian court's orders enjoining arbitration, Amaprop has been forced to expend considerable resources in briefing the issues currently before this Court." Id. at *7.

Amaprop now seeks an award of its attorneys' fees and costs through March 17, 2010, the date of the hearing on its petition to compel arbitration and motion for a preliminary injunction.

DISCUSSION

I.LEGAL BASIS FOR AN ATTORNEYS' FEE AWARD

Under Federal Rule of Civil Procedure 54(d)(2), "[a] claim for attorney's fees and related nontaxable expenses must be made by motion" and must "specify the judgment and the statute, rule, or other grounds entitling the movant to the award." Fed. R. Civ. P. 54(d)(2). While parties typically must bear their own attorneys' fees under the "American Rule," see U.S. Fidelity and Guar. Co. v. Braspetro Oil Services Co., 369 F.3d 34, 74 (2d Cir. 2004) (citing Summit Valley Indus., Inc. v. United Bhd. of Carpenters & Joiners, 456 U.S. 717, 721 (1982)), there are three generally recognized exceptions: "(1) where a statute or enforceable contract provides for an award of attorneys' fees; (2) where the prevailing plaintiff confers a common benefit upon a class or fund; and (3) where a party wilfully disobeys a court order or 'when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Alcatel Space, S.A. v. Loral Space & Communications, Ltd., No. 02 Civ. 2674(SAS), 2002 WL 1391819, at *6 (S.D.N.Y. June 25, 2002) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257-60 (1975)). Amaprop argues that it is entitled to an attorneys' fee award both under the Agreement and under this Court's inherent power to award fees where a losing party has litigated in bad faith or vexatiously. (Pet. Br. 2-7)

A.Amaprop's Right to Attorneys' Fees under the Agreement

Parties to a contract may, of course, "agree by contract to permit recovery of attorneys' fees, and a federal court will enforce contractual rights to attorneys' fees if the contract is valid under applicable state law." McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1312-13 (2d Cir. 1993) (citing Alland v. Consumers Credit Corp., 476 F.2d 951, 956 (2d Cir. 1973); United States v. Carter, 217 U.S. 286, 322 (1910)). Here, Section 10.1 of the parties' Agreement requires Indiabulls to indemnify Amaprop for losses it suffers as a result of a breach by Indiabulls or the Finance Company: [Indiabulls] shall indemnify [Amaprop] . . . and hold [Amaprop] harmless from and against, any and all Losses suffered, incurred or sustained . . . resulting from, arising out of or relating to any breach or . . . non-fulfillment of or failure to perform any covenant or agreement on the part of either [Indiabulls] or [the Finance Company] contained in any of the Transaction Documents. (Matano Decl., Ex. A, Section 10.1) "Loss" is defined in the Agreement to include any loss, liability, claim, damage, fine, fee, penalty, deficiency, and expense (including without limitation interest, court costs, fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment) . . . ." (Id. Section 13.1) (emphasis added).

Amaprop argues that Indiabulls breached the Agreement's broad arbitration clause by bringing an ex parte action in India -- in which Indiabulls obtained a court order enjoining Amaprop from proceeding with the New York arbitration (see Matano Decl., Ex. V; Amaprop Ltd., 2010 WL 1050988, at *2) -- and that accordingly it is entitled to recover the attorneys' fees it expended in litigating Indiabulls' wrongful breach. (Pet. Br. 2-4)

Indiabulls -- which previously took extraordinary steps to derail the New York arbitration proceeding -- now argues that Amaprop's request for attorneys' fees "should be submitted to arbitration." (Resp. Br. 1) Indiabulls contends that to the extent that Amaprop is relying on the Agreement for its attorneys' fee claim, that claim must be submitted to arbitration in accordance with the Agreement's broad arbitration clause, which covers "[a]ny action arising [out of or] relating to this Agreement or the other Transaction Documents." (Matano Decl., Ex. A, Section 12.11) In light of the breadth and scope of the ...


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