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Thermal Dynamics International, Inc. v. Safe Haven Enterprises LLC

United States District Court, District of Columbia

May 25, 2016

THERMAL DYNAMIC INTERNATIONAL, INC., Plaintiff,
v.
SAFE HAVEN ENTERPRISES, LLC, ALTA BAKER and JOHN BAKER, Defendants.

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY United States District Judge

         Plaintiff Thermal Dynamic International, Inc. (“TDI”), filed suit against Defendants Safe Haven Enterprises, LLC (“Safe Haven”), Alta Baker, and John Baker, alleging the Defendants failed to pay the final invoice submitted by TDI for work performed as a subcontractor at the United States embassy in Yemen. Presently before the Court are Plaintiff’s [43] Motion to Confirm Arbitration Award and Defendants’ [47] Cross Motion to Dismiss. Upon consideration of the pleadings, [1] the relevant legal authorities, and the record as a whole, the Court finds that there is no basis to vacate the arbitration award entered by the American Arbitration Association on December 30, 2014 in TDI’s favor and against Defendant Safe Haven (“the Award”). The Court further finds that there is no basis to grant Defendants’ request that this Court vacate the Award or that this Court dismiss this matter in favor of Defendants. Accordingly, the Court shall GRANT Plaintiff’s [43] Motion to Confirm Arbitration Award and DENY Defendants’ [47] Cross Motion to Dismiss.

         I. BACKGROUND

         A. Factual Background

         In September 2006, the United States Department of State (the “State Department”) awarded Defendant Safe Haven a contract to perform construction at the United States embassies in Yemen and Bahrain. See Subcontract (Sept. 7, 2006), ECF No. [47-2], at 1. Safe Haven, in turn, awarded a subcontract to Plaintiff TDI, pursuant to which TDI agreed to install certain mechanical equipment in each embassy. See Id. The subcontract referred to the two embassy projects as the “Sana’a, Yemen Embassy Environmental Security Measures” project and the “Manama, Bahrain Embassy Environmental Security Measures” project. See id.

         On May 16, 2013, TDI filed the instant action, asserting five causes of action against Defendant Safe Haven, as well as Alta Baker, the Chief Executive Officer and owner of Safe Haven, and John Baker, an officer and co-owner of Safe Haven. The Complaint alleged that TDI had fully performed its obligations under the subcontract with respect to the embassy in Yemen, but that Safe Haven refused to pay the final invoice, which was in the amount of $356, 574.96. Compl. ¶¶ 17, 19.

         On July 8, 2013, this Court granted Defendants’ motion to compel arbitration as to the claims against Defendant Safe Haven, and dismissed all claims against Defendants John and Alta Baker with the exception of an unjust enrichment claim. See Mem. Op. and Order, ECF Nos. [20], [21]. Plaintiff continued to pursue its unjust enrichment claim against the Bakers in this Court, while Plaintiff pursued its claims against Safe Haven in arbitration. In May 2014, discovery closed in the case involving the Bakers, and the Court granted a Stay pending the resolution of the associated arbitration between TDI and Safe Haven. See Minute Order (May 7, 2014) and Order (May 19, 2014), ECF No. [39].

         On December 30, 2014, the Arbitrator who heard Plaintiff’s claims against Safe Haven issued a six-page decision finding that Safe Haven had breached the Subcontract and was liable to TDI for the principal amount of $356, 574.86. See Arbitration Decision (Dec. 30, 2014), ECF No. [43-3]. The Arbitrator’s decision followed several months of discovery, a three-day, in-person hearing, and extensive pre-hearing and post-hearing briefing by the parties. See id.; see also Safe Haven’s Motion to Dismiss TDI’s Claims, ECF No. [52-6]; TDI’s Post-Hearing Brief, ECF No. [43-4], Safe Haven’s Post-Hearing Brief, ECF No. [43-5]; 10/27/2014 Email re: Arbitration Hearing, ECF No. [43-6]. On January 6, 2015, the American Arbitration Association delivered the Award to the parties.

         On November 13, 2015, Plaintiff filed the instant Motion to Confirm Arbitration Award. Plaintiff indicated in its motion that Safe Haven had not paid the Award. Plaintiff also indicated that Safe Haven did not file a motion to vacate the Award and contends that Safe Haven thereby waived its right under the Federal Arbitration Act to challenge the award at this stage. See Pl.’s Mem. in Supp. of Mot. to Confirm, ECF No. [43], 4-5.

         On December 14, 2015, Defendant Safe Haven filed its opposition to Plaintiff’s motion and filed a cross motion to dismiss Plaintiff’s claims against Defendants, arguing that Plaintiff committed “corruption and fraud” before this Court and in the arbitration proceeding. Defs.’ Cross Motion, ECF No. [47-1], at 19. Safe Haven concedes in its 43-page motion that it failed to challenge the arbitration decision within the three-month window allowed under the Federal Arbitration Act, and has provided no explanation for its failure to so challenge. See Id. Safe Haven has instead requested that the Court “create an exception in the form of a sanction to allow [Safe Haven] to raise an Affirmative Defense of ‘corruption or fraud’ under 9 U.S.C. § 12 even if [Safe Haven] did not file a Motion to Vacate within the three months (sic) required under 9 U.S.C. § 12[.]” Id. at 19-20.

         Before the Court discusses the merits of Plaintiff’s Motion to Confirm Arbitration Award and Defendants’ Cross Motion to Dismiss, the Court shall first resolve a procedural motion raised by Plaintiff during briefing.

         B. The Court shall DENY Plaintiff TDI’s Motion to Strike Defendants’ Reply Memorandum, or in the Alternative, to Request Permission to File a Surreply

         On December 21, 2015, Plaintiff TDI filed its reply memorandum in support of its Motion to Confirm Arbitration Award and in opposition to Defendants’ Cross Motion to Dismiss. On December 24, 2015, Defendants filed their reply memorandum in support of Defendants’ Cross Motion to Dismiss, contending that Plaintiff failed to respond to certain allegations in Defendants’ Cross Motion to Dismiss, and that Plaintiff conceded the allegations contained therein. See Defs.’ Reply, ECF No. [56], at 4-6.

         On December 29, 2015, Plaintiff filed a Motion to Strike Defendants’ Reply Memorandum, or, in the Alternative, to Request Permission to File a Surreply. See ECF No. [57]. In its motion, Plaintiff contends that the section entitled “Additional Statement of Facts” in Defendants’ reply brief contains new facts not previously raised in the parties’ motions. See Id. at 1-2. Plaintiff also disputes Defendants’ contentions that Plaintiff failed to respond to Defendants’ allegations in Plaintiff’s opposition brief. See Id. at 2-3. Additionally, Plaintiff requests that the Court order Defendants to pay the cost of Plaintiff’s filing any surreply addressing Defendants’ “baseless arguments.” See Id. at 3. Defendants oppose Plaintiff’s motion, arguing that Defendants did not raise any “new” factual allegations or arguments in its reply brief. See ECF No. [58], at 2-4.[2]

         At the outset, the Court notes that surreplies are generally disfavored, and the determination as to whether to grant or deny leave is entrusted to the sound discretion of the district court. Akers v. Beal Bank, 760 F.Supp.2d 1, 2 (D.D.C. 2011). In exercising its discretion, the Court should consider whether the movant’s reply in fact raises arguments or issues for the first time, whether the non-movant’s proposed surreply would be helpful to the resolution of the pending motion, and whether the movant would be unduly prejudiced were leave to be granted. Glass v. Lahood, 786 F.Supp.2d 189, 231 (D.D.C. May 20, 2011).

         Here, the Court finds that the section in Defendants’ reply memorandum entitled “Additional Statement of Facts” is a restatement of allegations already in the record, and that a surreply from Plaintiff would not be helpful to the resolution of the pending motions. See Defs.’ Reply, ECF No. [56], at 2-4. Specifically, the allegations in the “Additional Statement of Facts” section in Defendants’ reply brief merely repeat the allegations already presented in Safe Haven’s Post-Hearing Brief, which Plaintiff itself submitted as an attachment to the instant Motion to Confirm. See Exhibit C to TDI’s Motion to Confirm (ECF No [43-5]). Therefore, Defendants were within their right to rely on those allegations in their reply brief. See Simms v. Ctr. for Corr. Health & Policy Studies, 794 F.Supp.2d 173, 186 (D.D.C. 2011) (finding that a brief that “simply points to evidence already in the record” does not raise new issues for the court to resolve). In light of the foregoing, the Court finds that there is no basis in the record to strike Defendants’ reply from the record. The Court further finds that a surreply from Plaintiff would not be helpful to the resolution of the pending motions.[3] Accordingly, the Court shall, in an exercise of its discretion, DENY Plaintiff’s [57] Motion to Strike Defendants’ Reply Memorandum, or, in the Alternative, to Request Permission to File a Surreply.

         The Court shall now consider the merits of Plaintiff’s Motion to Confirm Arbitration Award and Defendants’ Cross Motion to Dismiss.

         II. LEGAL STANDARD

         The Federal Arbitration Act provides that “[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.” 9 U.S.C. § 12. The Court may vacate an award where: (1) the award was “procured by corruption, fraud, or undue means”; (2) “there was evident partiality or corruption in the arbitrators, or either of them”; (3) the arbitrators were guilty of misconduct or misbehavior “by which the rights of any party have been prejudiced”; or (4) “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” Id. at § 10(a)(1)-(4). “[A]t any time within one year after the award is made any party to the arbitration may apply ...


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