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American Contractors Indemnity Co. v. Fernandez

United States District Court, D. Hawaii

May 29, 2019

AMERICAN CONTRACTORS INDEMNITY COMPANY, Plaintiff,
v.
FRANK M. FERNANDEZ and JANIS H. FERNANDEZ, Defendants.

          ORDER (1) GRANTING IN PART AND DENYING IN PART MOTION TO CONFIRM IN PART AND MODIFY IN PART FINAL AWARD OF ARBITRATOR DATED APRIL 1, 2019, AND (2) CONFIRMING AWARD OF ARBITRATOR

          DERRICK K. WATSON UNITED STATES DISTRICT JUDGE.

         On April 17, 2019, Plaintiff American Contractors Indemnity Company (“ACIC” or “Plaintiff”) filed the pending motion to confirm in part and modify in part final award of arbitrator dated April 1, 2019 (“the motion”), pursuant to Sections 9 and 11 of Title 9 of the U.S. Code. Dkt. No. 51. Because no party provides a valid legal basis for the Court to do anything other than confirm the arbitration award in its entirety, the motion is granted to the extent it seeks confirmation of the award, but denied to the extent it seeks modification of the same. As a result, this Court confirms the arbitration award in its entirety without modification.

         PROCEDURAL BACKGROUND

         On February 28, 2017, ACIC initiated this action by filing a complaint against Defendants Frank M. Fernandez and Janis H. Fernandez (collectively, “Defendants”), alleging that Defendants had breached several contracts between the parties when they failed to indemnify ACIC with respect to various bail bonds for which ACIC was the surety. Dkt. No. 1.

         After default against Defendants was set aside, Dkt. No. 30, Defendants, proceeding pro se, each filed an answer and counterclaims against ACIC, Dkt. Nos. 35-36. Among other things, Defendants asserted that ACIC had failed to mitigate damages in connection with a bail bond provided in a State criminal case involving non-party Dietrich Washington (“the Washington Case”).

         On November 6, 2017, ACIC filed a motion to stay this case pending arbitration (“the motion to stay”). Dkt. No. 41. On January 9, 2018, the parties entered a stipulation agreeing to stay this case so that they could resolve their disputes through arbitration (“the stipulation”). Dkt. No. 47. The stipulation provided that the arbitration award would be deemed binding, and could be confirmed, in this case. The stipulation further provided that the arbitration would be conducted through Dispute Prevention & Resolution, Inc. (“DPR”).

         On April 17, 2019, ACIC filed the pending motion. Attached thereto is a Final Award of Arbitrator, dated April 1, 2019 (“the Arbitration Award”). Dkt. No. 51-3. The Arbitration Award provides that the arbitrator found for ACIC in the principal amount of $398, 378.06. ACIC was also awarded $42, 387.50 in attorney's fees and $544.02 in costs. In addition, ACIC was ordered “to attempt to pursue recovery of all forfeitures incurred in the Dietrick [sic] Washington bail forfeiture within ninety (90) days of the date of [the Arbitration Award].” The Arbitration Award provided that, to the extent there was any reimbursement from the Washington Case, that amount, less reasonable fees and costs incurred, would be credited against the principal amount awarded to ACIC. The Arbitration Award further provided that, if ACIC failed to “initiate the required proceeding, ” Defendants would be entitled to a $250, 000 credit. Finally, the Arbitration Award provided that the fees and costs of the arbitrator would be shared equally by the parties and paid as directed by DPR.

         A hearing was scheduled to take place on May 31, 2019 with respect to the motion. Dkt. No. 52. On May 10, 2019, Defendants filed a response to the motion. Dkt. No. 54. ACIC did not file a reply until May 22, 2019. Dkt. No. 55.[1] On that same day, the Court vacated the May 31, 2019 hearing, pursuant to Local Rule 7.2(d). Dkt. No. 56.

         LEGAL STANDARD

         A court's review of an arbitration award is limited by the Federal Arbitration Act (FAA). Biller v. Toyota Motor Corp., 668 F.3d 655, 661-662 (9th Cir. 2012). Pursuant to the FAA, a court must grant an order confirming the arbitration award “unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11….” 9 U.S.C. § 9.

         Here, while ACIC asks this Court to confirm in part the Arbitration Award, ACIC also asks the Court to modify the award in part. Dkt. No. 51-1 at 1. Pursuant to the FAA, a court may only modify an arbitration award on the following grounds:

(a) Where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award.
(b) Where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the ...

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