Green Renewable Organic and Water Holdings, LLC v. Bloomfield Investments, LLC

Background

Bloomfield Investments, LLC moved for an order recognizing and confirming two related arbitration awards against W. Quay Hays, Grow Land and Water LLC, Kings County Ventures LLC, and Green Renewable Organic and Water Holdings, LLC, which does business as Grow Holdings LLC. The opinion refers to these parties collectively as the Respondents.

The Respondents argued under Article V(1)(a) of the New York Convention that the awards were unenforceable against Hays and Grow Holdings because those parties did not sign the underlying Capital Provision Agreements and were not alter egos of the parties that did. They sought a new review of the tribunal’s determination that Hays and Grow Holdings were personally liable under New York law based on alter-ego and corporate-veil-piercing doctrines.

Governing-law dispute

The court explained that determining who is bound by an arbitration agreement is an arbitrability question. Courts generally review an arbitrator’s decision on that issue independently unless there is clear and unmistakable evidence that the parties agreed to let the arbitrator decide it.

Without deciding whether such evidence existed here, the court identified the next issue as the law governing whether Hays and Grow Holdings are bound by the arbitration clause. Bloomfield argued that Section 23 of the Capital Provision Agreements selects New York law. The Respondents argued that the choice-of-law provision does not apply to the separate arbitration agreement under the separability doctrine. Because the arbitration clause itself does not identify governing law, they contended that English law, as the law of the arbitral seat, applies.

The court also noted Ninth Circuit authority applying federal substantive law to determine whether nonsignatories are bound by arbitration agreements covered by the Federal Arbitration Act. The existing briefing did not address whether federal substantive law should apply.

Order

The court directed the parties to file supplemental briefs addressing what law governs whether Hays and Grow Holdings are parties bound by the arbitration agreements. Each brief could be no more than five pages, and the parties were told not to repeat arguments already made in their opening papers. The briefs were due by 5:00 p.m. on July 25, 2022, after which Bloomfield’s motion would be deemed submitted unless the court ordered otherwise.

Judge Haywood Gilliam did not decide the governing-law issue, the Respondents’ enforcement arguments, or whether the arbitration awards should be recognized and confirmed. This was an interim briefing order.