such limitations on its ability to consider SBA action resulting from the investigation into NIE, but should have postponed the hearing. While this Court is ever mindful of its duty to ensure that civil litigation is "resolved not only fairly, but also without undue cost or delay," Fed. R. Civ. P. 1, Adv. Comm. Notes, neither this Court nor the arbitration panel can allow the pursuit of an expedient adjudication to outweigh its obligation to ensure a just and fair one. Yet, by refusing to wait for a reasonable period upon SBA action on the NIE investigation, the panel did just that.
This Court finds Matter of Insurance Co. of North America, 215 A.D.2d 386, 626 N.Y.S.2d 232, directly on point. In that case, the Fire Marshal, the agency charged with investigating suspected arson, was involved in a criminal investigation regarding the incident at issue in the private arbitration. The appeals court held that it was error for the arbitrators to have denied a postponement of the arbitration to await the results of that investigation, and vacated the arbitration award on that ground. Similarly, the SBA in this case should have been allowed to conclude its investigation of NIE before the arbitrators conducted the hearing. Regardless of whether the results of the investigation would have exonerated or condemned NIE, the arbitrators' conclusions clearly were less informed without the SBA's conclusions in the record. So much so, that the arbitration award must be vacated.
3. The Arbitration Panel's Never Considered Evidence That NIE Was Negotiating With the SBA For Its Voluntary Withdrawal From the Section 8(a) Program.
Even though NIE argued during arbitration, and continues to argue, that its eligibility in the Section 8(a) Program is immaterial to the contract dispute herein, it was well aware during arbitration that EAI and Mrs. Ellsworth considered NIE's eligibility in the program and the SBA's investigation therein central to the dispute. In addition, NIE was aware that the arbitration panel left the record open for the parties to submit documentation of any SBA action related expressly to NIE's 8(a) status.
While the matter was in arbitration, NIE's counsel began discussions with the SBA, contemplating the possible voluntary withdrawal of NIE from the program. Even though NIE's 8(a) status was germane to the arbitration proceedings, counsel did not disclose to the arbitration panel nor the respondents that such discussions were taking place. Tr. of March 21, 1997 Hearing at 61. Indeed, NIE was taking the tack before the panel that there was still the possibility that NIE would be able to maintain its 8(a) status. Specifically, the panel was told by counsel that there were "no grounds to terminate" NIE from the Section 8(a) Program. Id. at 62.
Certainly, counsel should have disclosed to the panel that NIE was contemplating voluntary withdrawal from the Section 8(a) Program and was in active discussions with the SBA at that time. This is particularly so where at the very time the discussions are ongoing, counsel for NIE was asserting to the arbitration panel that there were no grounds for NIE's termination from the program. Id. ; R2068, ln. 22 - R2071, ln. 17. It should be noted that in fact NIE did voluntarily withdraw from the program on July 19, 1996.
The portrait of NIE offered to the panel was of a company being unjustly investigated by the SBA, and, as it had warranted in the Merger Agreement, had done nothing to justify termination from the Section 8(a) Program. The arbitration panel was not made aware that the very same company was engaged in active discussions with the SBA about a "quiet" departure from the program, which an impartial arbiter might conclude was to avoid the stigma of being involuntarily terminated from the program. On this record, the arbitration proceeding should be re-opened so that the arbitration panel can consider these facts not previously disclosed to it.
B. The Respondents Did Not Waive Their Request For Postponement When They Failed to Renew the Request after NIE Presented its Case in Chief.
NIE claims that the respondents waived their request for a postponement when they failed to renew the request at the appropriate time during the hearings as expressly allowed by the arbitrators. NIE's Verified Response to Application to Vacate Arbitration Award at 5. EAI's written motion with the arbitrators seeking a postponement was denied "without prejudice to its renewal at an appropriate time after Claimant has finished its case in chief." Denial of Motion to Postpone & Scheduling Order No. 3 at P1. On the opening day of the hearing, EAI and Mrs. Ellsworth moved again for a postponement, but they did not renew the motion for a postponement after NIE finished its case in chief. According to NIE, this failure to renew their motion forecloses the respondents from using the arbitrators' initial refusal to postpone as a basis to vacate the award.
The record shows, however, that at the arbitration hearing, the panel denied not only the respondents' motion to postpone the arbitration hearing, but their request to renew that motion after presentation of NIE's case in chief. R457, ln. 19-22 - R458, ln. 1-18; R496, ln. 12-16. The following colloquy evinces the foregoing conclusion:
COUNSEL FOR THE RESPONDENTS: With the Panel's permission we would ask that we could renew the motion after the presentation of the Claimant's case in chief, as I belief (sic) your order --
THE PANEL: No. The order was to renew the motion or it was without prejudice to your renewal at an appropriate time during your case. What we are interested in seeing at the time was the information apart from that which is dependent upon primarily the SBA decision.