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Manios v. Zachariou

United States District Court, S.D. New York

March 31, 2015

VASSILIOS MANIOS, Petitioner,
v.
EVANGELIA MANIOS ZACHARIOU, Respondent.

MEMORANDUM OPINION AND ORDER

LAURA TAYLOR SWAIN, District Judge.

Petitioner Vassilios Manios ("Petitioner" or "Manios") moves to vacate an arbitration award rendered by a tribunal of the American Arbitration Association in favor Evangelia Manios Zachariou ("Respondent" or "Zachariou"). Zachariou cross-moves for confirmation of the arbitration award, and for an award of attorneys' fees incurred in litigating this motion. The Court has jurisdiction of this action pursuant to 9 U.S.C. § 203. The Court has considered the parties' arguments carefully. For the reasons stated below, the Court denies Manios' petition to vacate the award, grants Zachariou's cross-motion for confirmation, and denies Zachariou's cross-motion for attorneys' fees.

BACKGROUND[1]

This case arises from a long-running family dispute between Petitioner and Respondent, who are brother and sister, over the distribution of assets left by their late brother who died intestate in 1995. (Final Award at p. 1.) Over the course of several years, the parties entered into a series of agreements with an eye towards efficiently dividing the assets and providing for the effective management of the properties and businesses included in the estate. (Final Award at p. 1.) In 1999, the parties entered into an agreement establishing their joint, equal ownership of the familial assets. (Id.) Thereafter, in March of 2002, the parties entered into an agreement known as the "London Agreement, " which provided that Manios would purchase Zachariou's 50% interest in an aggregate of American businesses and properties referred to as the "U.S. Companies." (Id. at p. 2.) The London Agreement was governed by Greek law, and any disputes arising thereunder were to be litigated in Greece. (Id.)

The parties simultaneously entered into an agreement known as the "U.S. Agreement, " which set out a process for: "(1) an accounting of the affairs of the... [U.S. Companies] during the relevant time period leading to a report detailing [an] auditor's findings; (2)... [setting] a period in which the Parties would confer amicably and in good faith to agree on the amount of any distributions or payments that should be made in order to' realize the objective of equal distribution of the assets or their proceeds and of the earnings of the assets in the relevant period; (3) [and making] a determination as a result of this process as to the extent to which [either Party] has received a disproportionate share of prior income or other distributions in respect of [the U.S. Companies] and the amount of such excess benefit (such amount the Party Distribution').'" (Id. at pp. 2-3.) The U.S. Agreement further provided that, if the parties failed to agree on the amount of the Party Distribution by way of the auditor's report, "the amount of the Decana Distribution, the Prestige Distribution, the Texas Distributions and/or the Party Distribution as applicable shall be determined by an arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, " subject to confirmation by any court having appropriate jurisdiction. (See U.S. Agreement, Kissane Dec., Ex. 5 ¶ 10.)[2]

The audit contemplated in the U.S. Agreement was never completed, and the parties were unable to come to reach an agreement on the amount of the Party Distribution. (Final Award at p. 3.) After several years of litigation in both federal and state courts, Zachariou instituted the subject arbitration in 2009. (See First Amended Petition to Vacate Arbitration Award ¶¶ 14-16.) The arbitration panel issued its Final Award on March 20, 2014, finding in favor of Zachariou in the amount of approximately $10.8 million, inclusive of approximately $4.8 million of prejudgment interest. (See Kissane Dec., Ex. 3, "Disposition of Applications for Modification/Clarification of Final Award" at p. 1.)

Manios filed a petition to vacate the Final Award on June 16, 2014 (Docket Entry No. 2), and on August 29, 2014, he filed the instant motion in support of that petition. (Docket Entry No. 14.) On September 30, 2014, Zachariou filed a cross-motion to confirm the Final Award, and for attorneys' fees. (Docket Entry No. 25.)

DISCUSSION

Legal Standards

The showing required to avoid summary confirmation of an arbitration award is a lofty one, and the party moving to vacate an award bears a heavy burden of proof. See e.g., Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997). Arbitration awards are "subject to very limited review in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation." Id. (internal quotation marks and citation omitted). "A party petitioning a federal court to vacate an arbitral award bears the heavy burden of showing that the award falls within a very narrow set of circumstances delineated by statute and case law." Duferco Intern. Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003). "[C]ourts are not authorized to reconsider the merits of an award even though the parties may allege that the award rests on errors of fact or on misinterpretation of the contract." United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 36 (1987).

Because the award at issue arises from a commercial arbitration involving foreign parties, this motion practice is brought pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (the "New York Convention"). See 21 U.S.T. 2517, 330 U.N.T.S. 38; codified in part at 9 U.S.C. §§ 201 et seq. Therefore, the award at issue here must be vacated if it violates one of the principles enumerated in Article V of the New York Convention. Since the award was rendered in New York, the grounds for vacatur under the Federal Arbitration Act ("FAA") are also applicable to the extent that they do not conflict with the New York Convention. See 9 U.S.C. § 208; see also Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997) ("The Convention specifically contemplates that the state in which, or under the law of which, the award is made, will be free to set aside or modify an award in accordance with its domestic arbitral law and its full panoply of express and implied grounds for relief").

Article V(1)(c) of the New York Convention provides that a court may vacate an arbitration award if it "deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration." See New York Convention Article V(1)(c); see also Parsons & Whittemore Overseas Co., Inc. v. Societe Generale De L'Industrie Du Papier (RAKTA), 508 F.2d 969, 976 (2d Cir. 1974). A "narrow construction [of this provision] would comport with the enforcement-facilitating thrust of the Convention." Id. Manios does not claim here that any of the statutory grounds provided by the FAA for vacatur of an award is applicable, [3] but argues that vacatur is appropriate under the implicit grounds of manifest disregard of the parties' agreement or of the law. See Yusuf Ahmed Alghanim, 126 F.3d at 23.

The Second Circuit has articulated a three-part test for determining whether there has been manifest disregard of the law: (1) the law must have been clear and explicitly applicable to the matter before the arbitrators; (2) disregard of the law must have led to an erroneous outcome; and (3) the arbitrators must have known of the law's existence and its applicability to the case, and must have disregarded it intentionally. See T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339 (2d Cir. 2010). "A federal court cannot vacate an arbitral award merely because it is convinced that the arbitration panel made the wrong call on the law. On the contrary, the award should be enforced, despite a court's disagreement with it on the merits, if there is a barely colorable justification for the outcome reached." Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004) (internal quotation marks and citation omitted) (emphasis in original). Although manifest disregard of the parties' agreement is recognized as an implied ground for vacatur, "[t]he arbitrator's factual findings and contractual interpretation are not ...


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