Palmco Administration, LLC v. Flower Payment, Inc.

Background

Palmco sought confirmation under the Federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of an arbitration award against Flower Payment. The dispute arose from a Membership Interest Purchase Agreement involving Palmco, Flower Payment, and their respective subsidiaries. Under that agreement, Flower Payment guaranteed that its subsidiary, GQA Holdings LLC, would return $1,646,690.02 in collateral to Palmco. The collateral was not repaid.

Palmco commenced arbitration against Flower Payment and GQA Holdings LLC. GQA did not participate, while Flower Payment participated and presented defenses. After a merits hearing, the three-member arbitration tribunal found Flower Payment and GQA jointly and severally liable for breaching 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 fees and costs.

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 specified defenses. Flower Payment withdrew its motion to dismiss for lack of personal jurisdiction and did not oppose Palmco’s petition. It also did not dispute the award’s merits or damages and asserted no Convention defense.

The court found that the tribunal acted within the scope of its authority and found no other ground to set aside the award. It therefore granted Palmco’s petition to confirm the non-domestic arbitration award. The court ordered judgment against Flower Payment for $1,646,690.02 in damages, the specified interest and daily post-award interest, $350,275.11 in fees and costs from the arbitration, and $110,662.50 in arbitration fees and arbitrator compensation.

Fees and Costs for the Federal Proceeding

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

The court found the requested law-firm hourly rates unreasonably high for a petition to confirm an arbitral award. It reduced the rates for the attorneys, paralegal, and managing clerk. Although it found the overall number of hours reasonable, it reduced Silvia Ostrower’s hours by 25% because she performed most of the work and the court believed that an associate could have performed more of the research and initial drafting. The court awarded $108,565 in attorney fees and approved the $10,550 service expense, for a total federal-proceeding award of $119,115. Accordingly, Palmco’s request for federal-proceeding fees and costs was granted in part and denied in part.

Disposition

Judge Victor Marrero ordered the Clerk of Court to terminate all pending motions and close the case. The opinion’s discussion repeatedly states that the interest award was $604,180.08, but the final order appears to contain a typographical error stating “$604,1880.08.”