United States District Court, S.D. New York
MEMORANDUM OPINION AND ORDER
GREGORY H. WOODS, UNITED STATES DISTRICT JUDGE:
Plaintiff Livewire Ergogenics Inc. executed an engagement
letter (the “Engagement Letter) for Third-Party
Defendant JS Barkats PLLC (“JSB”) (and together
with Third-Party Defendant Sunny Joseph Barkats, the
“Barkats Defendants”) to represent it as legal
counsel. The Engagement Letter contained a provision
compelling arbitration of “any dispute.” In the
early stages of this case, counsel for JSB agreed to waive
all “jurisdictional defenses” in exchange for an
extension of time to file an answer to Livewire's
third-party claims. The Barkats Defendants now move to compel
arbitration of the third-party claims against them. Because
the Engagement Letter contains an arbitration provision that
subjects this dispute to arbitration and JSB's agreement
to waive “jurisdictional defenses” does not
override the parties' agreement to arbitrate in the
Engagement Letter, the Barkats Defendants' motion to
compel is GRANTED.
November 3, 2015, Livewire entered into an agreement with JSB
for JSB to represent Livewire as legal counsel. TPC ¶
17. The relationship between JSB and Livewire was
memorialized in an engagement letter. See Engagement
Letter, Dkt No. 140-1. The Engagement Letter states that
Livewire is retaining JSB in connection with its reporting
obligations under the Securities Exchange Act of 1934,
“general corporate governance[, ]” and assistance
with financing. Id. at 1. The Engagement Letter
contains an arbitration provision concerning disputes between
JSB and Livewire.
Any dispute, shall be resolved by confidential arbitration as
follows: (1) If and to the extent that the New York Fee
Dispute Resolution Program (Part 137 of 22 NYCRR) providing
for the information and expeditious resolution of fee
disputes between attorneys and clients is applicable. (2) If
such Fee Dispute Resolution Program is not applicable to any
such dispute, controversy or claim, then the arbitration
shall be conducted in New York City in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association, and any award issued in such arbitration shall
be enforceable in any court with jurisdiction. A copy of the
New York Fee Dispute Resolution Program is available upon
Id. at 4.
after JSB and Livewire executed the Engagement Letter,
Livewire executed a note (the “Note”) with
Plaintiff American E Group LLC (AEG) that has been the
subject of extensive litigation in this action. TPC ¶
24. AEG sued Livewire to enforce the Note. Dkt No. 1.
Livewire, in turn, filed counterclaims against AEG and a
third-party action against the Barkats Defendants, who had
represented them in in connection with the negotiation and
execution of the Note. Dkt No. 54. The third-party complaint
was served on the Barkats Defendants on January 25, 2019. Dkt
result, on February 19, 2019, Jerome Noll-acting as counsel
for JSB-emailed counsel for Livewire Ryan Whalen to request
“an extension of time through March 11, 2019 to respond
to the Counterclaim and Third-Party Complaint[.]”
February 19, 2019 Emails, Ex. C to Whalen Aff., Dkt No.
154-3, at 3. On the same day, Whalen responded that
“Livewire will consent to this request on the condition
that JS Barkats, PLLC waives all jurisdictional defenses,
including, but not limited [to], improper or defective
service of the summons and complaint on JS Barkats
PLLC.” Id. at 2. Noll then responded, again on
February 19, 2019, that “JS Barkats, PLLC waives all
jurisdictional defenses, including, but not limited to,
improper or defective service of the summons and complaint on
JS Barkats, PLLC[.]” Id.
filed an amended answer with counterclaims and third-party
claims on April 10, 2019. TPC, Dkt No. 107. As against the
Barkats Defendants, the TPC raises claims for constructive
fraud, id. ¶¶ 68-72, breach of fiduciary
duty, id. ¶¶ 73-79, breach of the implied
covenant of good faith and fair dealing, id.
¶¶ 94-99, legal malpractice, id.
¶¶ 108-115, and civil conspiracy, id.
¶¶ 116-127. On July 17, 2019, the Barkats
Defendants filed a motion to compel arbitration under section
4 of the Federal Arbitration Act (“FAA”). Motion
to Compel Arbitration (“Mot.”), Dkt No. 140. On
August 6, 2019, Livewire filed a memorandum of law in
opposition to the motion to compel arbitration and an
affirmation of Ryan J. Whalen in support of its opposition.
Dkt Nos. 153-54; Whalen Aff., Dkt No. 154.
opposition, Livewire makes three arguments. First, it argues
that Livewire's claims against the Barkats Defendants are
not arbitrable under the terms of the Engagement Letter.
Memorandum of Law in Opposition to Motion To Compel
Arbitration (“Opp.”) at 9 (capitalization
altered). Second, it argues that the Barkats Defendants
waived their right to arbitrate by agreeing to waive its
jurisdictional defenses. Opp. at 7. Third, Livewire seems to
argue that waiver should be inferred because it would suffer
prejudice if the Barkats Defendants are allowed to compel
arbitration. Opp. at 8-9. The Barkats Defendants filed their
reply on August 13, 2019. Reply Memorandum of Law in Support
of Motion to Compel Arbitration (“Rep.”), Dkt No.
Section 2 of the FAA, as a general matter, arbitration
agreements “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C.
§ 2. The FAA also provides that parties can petition the
district court for an order compelling arbitration under 9
U.S.C. § 4. Section 4 of the FAA provides:
A party aggrieved by the alleged failure, neglect, or refusal
of another to arbitrate under a written agreement for
arbitration may petition any United States district court
which, save for such agreement, would have jurisdiction under
title 28, in a civil action or in admiralty of the subject
matter of a suit arising out of the controversy between the
parties, for an ...