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Krantz & Berman, Llp v. Sandeep Dalal

May 12, 2011


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


Plaintiff Krantz & Berman LLP ("K&B") has filed a motion to lift the stay imposed by the Court in this action, confirm an arbitration award, and enter judgment against defendant Sandeep Dalal ("Dalal"). Dalal has filed a motion to vacate or modify the arbitration award. For the following reasons, K&B's motion to confirm the arbitration award is granted and Dalal's cross-motion to vacate the award is denied.


1. The Dispute A detailed account of the events underlying this action can be found in the Court's Opinions of May 11 and July 2, 2010. See Krantz & Berman, LLP v. Dalal, No. 09 Civ. 9339 (DLC), 2010 WL 1875695 (S.D.N.Y. May 11, 2010); Krantz & Berman, LLP v. Dalal, No. 09 Civ. 9339 (DLC), 2010 WL 2674590 (S.D.N.Y. July 2, 2010). Briefly, this action concerns efforts by K&B to recover legal fees from its former client Dalal pursuant to a March 7, 2002 Retainer Agreement (the "Retainer Agreement") for services rendered in connection with related litigation before this Court. The Retainer Agreement contains an arbitration clause, which provides:

In the event that a dispute concerning fees arises under this agreement, any such dispute shall be resolved by arbitration and each party specifically waives its right to a jury trial. The arbitration shall be brought in New York County and the laws of the State of New York shall apply to any dispute. Following a bench trial in the related litigation, during which Dalal was represented by K&B, judgment was entered in favor of Dalal in December 2002. On November 6, 2003, while the December 2002 judgment was on appeal, Dalal discharged K&B as his counsel. On November 11, K&B sent an invoice to Dalal for $288,264.50 for legal services rendered and unreimbursed expenses.*fn1 Dalal refused to pay. On March 2, 2004, K&B filed a Demand for Arbitration with the American Arbitration Association ("AAA"). Dalal did not consent to arbitration and the AAA closed its file.

Meanwhile, Dalal continued to press his claims in the related litigation before this Court and the Court of Appeals for the Second Circuit. Pursuant to an April 28, 2009 remand from the Court of Appeals, judgment was entered in Dalal's favor for $1,482,346.75, including interest, on December 31, 2009. The December 31 judgment was affirmed by the Second Circuit on April 20, 2011. See v. Dalal, Nos. 10-438-cv & 10-612-cv, 2011 WL 1486074 (2d Cir. Apr. 20, 2011).

On November 10, 2009, K&B filed the complaint in the instant action against Dalal, asserting claims for breach of contract, quantum meruit, and for a charging lien pursuant to N.Y. Judiciary Law § 475. On November 30, Dalal filed a motion to dismiss or, in the alternative, for summary judgment. On January 29, 2010, K&B filed its opposition to Dalal's motion to dismiss and a cross-motion to compel arbitration. By an Opinion of May 11, 2010 (the "May 11 Opinion"), the Court granted K&B's cross-motion to compel arbitration and directed the parties to submit K&B's breach of contract and quantum meruit claims to arbitration under AAA rules. See Dalal, 2010 WL 1875695. The May 11 Opinion stayed K&B's claim for a charging lien pending the outcome of the arbitration. On July 2, 2010, the Court denied Dalal's motion for reconsideration. See Dalal, 2010 WL 2674590.

2. The Arbitration and Award On May 21, 2010, K&B filed a claim with the AAA seeking

judgment against Dalal, including interest, based on its final bill of services to Dalal and its share of a contingent fee arrangement. Dalal subsequently moved to dismiss K&B's claims as barred by the statute of limitations. The arbitrator denied Dalal's motion on November 3, 2010, finding that K&B had filed its complaint within six years of Dalal's breach of contract on November 13, 2003.

On February 3, 2011, the arbitrator issued an award (the "Award") in favor of K&B in the amount of $470,937.17. The arbitrator also ordered Dalal to reimburse K&B for the $9,600 in AAA fees that K&B had advanced on Dalal's behalf. The arbitrator dismissed K&B's contingent fee demand without prejudice to renewal once the December 31, 2009 judgment became final.

On February 28, 2011, K&B filed a motion to lift the stay, confirm the Award, and enter judgment against Dalal. Dalal filed a cross-motion to vacate the Award on April 4. Dalal subsequently filed supplemental papers in support of his motion to vacate; all briefing was fully submitted by April 29.


In his motion to vacate the Award, Dalal both challenges this Court's jurisdiction to confirm the Award and attacks the Award on its merits. Dalal argues that the Court lacks jurisdiction because the Retainer Agreement does not provide for judicial confirmation of any arbitral award, and because service of the notice of application to this Court to confirm the Award was improper. Dalal further cites a host of reasons why the Award should be vacated, including that the arbitrator acted in manifest disregard of the law when he held that K&B's claims were not time-barred; that the arbitrator committed misconduct when he refused to allow Dalal to take discovery on the customary billing practices of K&B; that the Award is not "final" as required by the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq.; and that the Award is arbitrary and capricious because it fails to take into account Dalal's contention that K&B inflated its billing records. This Opinion addresses each of these arguments in turn.

I. Jurisdiction to Confirm the Award The Second Circuit has held that "a court which orders arbitration retains jurisdiction to determine any subsequent application involving the same agreement to arbitrate." StoltNeilsen SA v. Celanese AG, 430 F.3d 567, 573 (2d Cir. 2005) (citation omitted). Therefore, because this Court ordered the parties to submit to ...

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