Palmco Administration, LLC v. Flower Payment, Inc.

Background

Palmco sought confirmation of a non-domestic arbitration award under the Federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The underlying dispute concerned a Membership Interest Purchase Agreement under which Flower Payment’s subsidiary, GQA Holdings LLC, was required to return $1,646,690.02 in collateral to Palmco, with Flower Payment guaranteeing that obligation.

After Palmco did not receive the collateral, it began arbitration against Flower Payment and GQA Holdings. Flower Payment participated and asserted defenses, while GQA did not appear. After a merits hearing, the three-member arbitration tribunal found Flower Payment and GQA jointly and severally liable for breach of the agreement. The tribunal awarded $1,646,690.02 in damages, $604,180.08 in interest, post-award interest of $541.38 per day beginning December 10, 2022, and $576,037.61 in costs and fees.

Confirmation of the Arbitration Award

The court explained that confirmation under the Convention is generally required unless the opposing party proves one of the Convention’s defenses. Flower Payment withdrew its motion to dismiss for lack of personal jurisdiction, and the court treated the petition as unopposed. Neither party disputed the award’s merits or damages, and Flower Payment asserted no Convention defense.

The court reviewed whether the tribunal acted within the scope of its authority and concluded that it did. The court found no other basis to set aside the award and therefore granted Palmco’s petition to confirm it. The court also confirmed the arbitration award’s interest and the $350,275.11 in attorneys’ fees and costs, plus $110,662.50 in arbitration administration fees and arbitrator compensation.

Fees and Costs for the Federal Proceeding

The court held that the agreement’s fee-shifting provision covered attorneys’ fees incurred in the federal confirmation proceeding. Palmco requested $186,686.50 in attorneys’ fees and $10,550 in costs for a vendor that served Flower Payment in Japan under the Hague Convention.

The court found the requested hourly rates unreasonably high for a petition to confirm an arbitration award. It reduced the hourly rates for the attorneys, associate, paralegal, and managing clerk, and reduced Silvia Ostrower’s hours by 25 percent because she performed most of the work even though an associate could have handled some research and initial drafting. These adjustments resulted in $108,565 in attorneys’ fees. The court also approved the $10,550 service expense, for a total federal-proceeding award of $119,115. Accordingly, Judge Victor Marrero granted in part and denied in part Palmco’s request for federal-proceeding attorneys’ fees and costs.

Disposition

The petition to confirm the non-domestic arbitration award was granted. The order directed entry of judgment against Flower Payment for $1,646,690.02, plus $604,180.08 in interest and $541.38 per day in post-award interest from December 10, 2022, until the award was paid in full; $350,275.11 in attorneys’ fees and costs from the arbitration; $110,662.50 in arbitration fees and arbitrator compensation; and $119,115 in attorneys’ fees and costs for the federal petition. The clerk was directed to terminate pending motions and close the case.