Clear Finance Technology Corporation v. I&L Distributing Inc.

Background

Clear Finance Technology Corporation, referred to in the opinion as Clearco, entered 13 revenue-sharing agreements with I&L Distributing Inc. between November 2019 and November 2020. Under the agreements, Clearco provided cash advances in exchange for I&L’s right, title, and interest in specified future receivables. Each agreement contained an arbitration provision and allowed reimbursement of attorneys’ fees and costs to the prevailing party.

Clearco claimed that I&L breached the agreements by failing to pay specified amounts. Clearco started arbitration seeking contract damages, attorneys’ fees, and costs. I&L appeared in the arbitration but refused to participate, stating that it was no longer conducting business. The arbitrator nevertheless required Clearco to submit evidence, legal authority, and argument and evaluated that material rather than relying on I&L’s absence.

The arbitrator found that I&L breached the agreements by failing to make required payments beginning March 4, 2021. The arbitrator awarded Clearco $914,339.38 in contract damages, prejudgment interest from March 4, 2021, until the award was reduced to judgment or paid, whichever came first, $11,047.50 in attorneys’ fees, $240.13 in costs, and $10,542.00 in arbitration fees and arbitrator compensation.

Federal Court Proceedings

Clearco petitioned the U.S. District Court for the Southern District of New York to confirm the arbitration award. I&L was served but never responded or otherwise appeared. Clearco first moved for a default judgment. The court denied that motion without prejudice to renewing the request as a motion for summary judgment. Clearco then filed the summary-judgment motion and a statement of undisputed facts. I&L did not oppose the motion.

The court explained that an unopposed petition to confirm an arbitration award is treated like an unopposed motion for summary judgment. Summary judgment is appropriate when the evidence shows no genuine dispute about any material fact and the moving party is entitled to judgment under the law. The court also emphasized that its review of an arbitration award is narrow: it must confirm the award unless the award is vacated, modified, or corrected, and only a barely colorable justification for the arbitrator’s result is generally required.

Analysis and Ruling

The court reviewed the agreements, the arbitration award, Clearco’s statement of facts, and the supporting evidence. It found no genuine dispute of material fact and concluded that the evidence supported judgment as a matter of law. The court determined that the arbitrator had explained the decision in detail, examined specific fund transfers in the account-reconciliation ledger, found consistent failures by I&L to make required payments, and reasonably applied Delaware law.

No motion to modify, vacate, or correct the award was filed within the statutory period or afterward. The court stated that I&L had therefore forfeited any defense to confirmation. It also found no basis to set aside the award, noting that the parties had agreed to JAMS arbitration, both had been given an opportunity to participate fully, and a final award had been issued.

The court granted summary judgment for Clearco and confirmed the Arbitration Award. It specified that Clearco was entitled to judgment for $914,339.38, plus interest at the Delaware statutory rate of 5% over the Federal Reserve discount rate, including any surcharge, accruing from March 4, 2021, through the date of judgment. The Clerk was directed to enter judgment for the specified amount and close the case.