BlockApps, Inc. v. Blockskye, Inc.

Background

BlockApps, Inc. and Blockskye, Inc. entered into a Statement of Work in September 2019. Under that agreement, Blockskye agreed to pay BlockApps for license and software-development work. The agreement required disputes to be arbitrated in New York City.

BlockApps later brought an arbitration to collect money it asserted Blockskye owed under the agreement. After a hearing and written submissions, the arbitrator, the Honorable Frank Maas, issued an award in April 2021 directing Blockskye to pay BlockApps $731,230.75 in damages. The award also directed BlockApps to surrender certain deliverables created under the first three Statements of Work that existed in unaltered form.

BlockApps petitioned the court under Section 9 of the Federal Arbitration Act to confirm and enforce the award. Blockskye moved to dismiss the petition.

The Parties’ Arguments

Blockskye did not challenge the award’s validity. Instead, it argued that its obligation to pay the damages was conditioned on BlockApps first turning over the required deliverables, which Blockskye maintained BlockApps had not done.

The court explained that federal law generally requires confirmation of an arbitration award unless the award is vacated, modified, or corrected on one of the limited grounds identified in the statute. Those grounds include fraud, corruption, arbitrator misconduct, an arbitrator exceeding the arbitrator’s authority, or a serious disregard of the law.

Ruling

The court found that the award’s payment and deliverable obligations operated independently. It also concluded that Blockskye’s argument was irrelevant to the confirmation request because the award was not legally enforceable unless and until the court confirmed it. The court therefore confirmed the entire award, requiring each party to fulfill its respective obligations.

The court also considered BlockApps’s request for attorney’s fees and costs incurred in bringing the confirmation petition. The arbitration agreement allowed the prevailing party to recover reasonable expenses, and the arbitrator had determined that BlockApps was the sole prevailing party. The court interpreted that provision to cover the confirmation proceeding, approved an hourly rate of $500, and awarded BlockApps $4,900 in attorney’s fees and $493 in costs.

Judge Oetken granted the petition to confirm the award, granted the application for attorney’s fees and costs, and denied Blockskye’s motion to dismiss. The clerk was directed to close the motions and the case.