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Streamline Consulting Group LLC v. Legacy Carbon LLC

United States District Court, D. Hawaii

May 10, 2019

STREAMLINE CONSULTING GROUP LLC, Plaintiff,
v.
LEGACY CARBON LLC, dba HAWAIIAN LEGACY CARBON; HAWAIIAN LEGACY REFORESTATION INITIATIVE, dba HAWAIIAN LEGACY HARDWOODS, dba HAWAIIAN LEGACY FORESTS, dba, LEGACY FORESTS, dba LEGACY TREES; HLH LLC, aka HAWAIIAN LEGACY HARDWOODS, LLC; LEGACY HARDWOODS, INC., aka HAWAIIAN LEGACY HARDWOODS, INC, ; LEGACY HOLDINGS LLC, aka HAWAIIAN LEGACY HOLDINGS, LLC; JEFFREY DUNSTER; and JOHN DOES, Defendants.

          ORDER DENYING PLAINTIFF'S MOTION TO VACATE OR MODIFY ARBITRATION AWARD AND GRANTING DEFENDANTS' COUNTERMOTION TO CONFIRM ARBITRATION AWARD

          Susan Oki Mollway, United States District Judge.

         I. INTRODUCTION

         In 2016, this court referred to arbitration all claims arising under the Services Agreement and Non-Circumvention Agreement, reserving for later adjudication which parties had to arbitrate the claims at issue. The parties subsequently stipulated to stay this proceeding pending arbitration and to refer all claims against all Defendants to arbitration. In November 2018, the arbitrator awarded $273, 930.14 to Defendants. The stay of this case has been lifted, and Plaintiff Streamline Consulting Group now moves to vacate or modify that award. Defendants have filed a countermotion to confirm the award. The court denies Plaintiff's motion and grants Defendants' motion to confirm the arbitration award without a hearing pursuant to Local Rule 7.2(d).

         II. FACTUAL BACKGROUND.

         The factual background for this case was set forth in this court's order of January 27, 2016. See ECF No. 36. That background is incorporated herein by reference. In the order, this court determined that all claims arising under the Servicing Agreement and Non-Circumvention Agreement had to be arbitrated, but left for further determination which Defendants had to participate in arbitration. See Id. After this court declined to reconsider that order, the parties stipulated to having all claims against all parties arbitrated. See ECF No. 59.

         At the beginning of 2018, the parties signed an Agreement to Participate in Binding Arbitration with Jerry Hiatt as the arbitrator. See ECF No. 73-1, PageID #s 722-24. The agreement stated:

Unless the parties' agreement provides otherwise, the Arbitrator shall determine all issues submitted to arbitration by the parties and may grant any and all remedies that the Arbitrator determines to be just and appropriate under the law. In the Award of the Arbitrator, the Arbitrator shall issue a determination on the issue of all arbitration-related fees and costs, including: Arbitrator's compensation and expenses; [Dispute Prevention & Resolution, Inc.'s] fees and expenses; and, if provided for in the parties' agreement, the Submission to Arbitration, or applicable laws or statutes, attorney's fees and costs.

Id., PageID # 722, 723.

         According to the Pre-Hearing Stipulation and Order Number 2, the arbitration was to be “governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.” ECF No. 73-1, PageID # 729.

         Streamline asserted five claims against all Defendants in the arbitration proceeding: Breach of the Services Agreement (Count I); Breach of the Non-Circumvention Agreement (Count II); Use of Photograph Without Giving Credit (Count III); Breach of Implied Covenant of Good Faith and Fair Dealing (Count IV); Misappropriation of Name and Likeness (Count V); Intentional Interference with Economic Advantage (Count VI); and Unjust Enrichment (Count VII). See ECF No. 76-6. Apparently, Legacy Carbon filed contract and tort counterclaims against Streamline for allegedly deficient services. See ECF No. 76-3, PageID #s 1000-01 (Final Award of Arbitrator discussing counterclaims).

         At the arbitration hearing on October 9, 2018, all parties agreed that the arbitrator was to award attorneys' fees to prevailing parties with respect to contract claims and that such attorneys' fees were awardable under Hawaii's assumpsit statute. See ECF No. 73-1, PageID # 779. At the arbitration hearing on October 12, 2018, the arbitrator confirmed with the parties that, unless a different amount was provided for in the parties' contracts, attorneys' fees would be awarded under Hawaii's assumpsit statute, which he said was limited to 25% of the amount in controversy. ECF No. 73-1, PageID # 742. Counsel for Defendants corrected him, stating that the amount should be “25 percent of the judgment awarded or 25 percent of the claim you successfully defend.” Id. The arbitrator responded, “Yes, I think we have a common basic understanding.”

         On or about October 22, 2018, Streamline argued in arbitration its entitlement to an award of attorneys' fees under Hawaii's assumpsit statute, section 607-14 of Hawaii Revised Statutes. See ECF No. 73-3, PageID # 897. The same day, Defendants argued that they were the parties entitled to attorneys' fees under section 607-14 of Hawaii Revised Statutes. See ECF No. 73-2, PageID # 791. Given these circumstances, the parties agreed that the arbitrator should award attorneys' fees pursuant to Hawaii's assumpsit statute, section 607-14.

         On or about November 28, 2018, the arbitrator issued his Final Award of Arbitrator. See ECF No. 76-3. The arbitrator determined that $263, 000 represented a total reasonable amount of attorneys' fees for each side. See ECF No. 76-3, PageID # 1001. The arbitrator determined that each side incurred at least $10, 930.14 in costs. Id.

         With respect to the portion of Count I asserting “Breach of the Services Agreement--failure to pay invoice, ” the arbitrator ruled that Legacy Carbon had breached the agreement by failing to pay invoices. The arbitrator awarded to Streamline from Legacy Carbon $47, 387.43 in damages and, pursuant to section 607-14 of Hawaii Revised Statutes, awarded 25% of that amount ($11, 846.86) for attorneys' fees. The arbitrator also awarded to Streamline from Legacy Carbon $10, 930.14 in costs. See ECF No. 76-3, PageID # 1007. However, the arbitrator determined that the remaining five Defendants had not breached the Services Agreement and awarded each of them 25% of the award ($11, 846.86) plus 1/6 of the total costs of $10, 930.14 ($1, 821.69), for a total of $13, 668.55 in ...


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