Absolute Nevada, LLC v. Grand Majestic Riverboat Company LLC

Background

Absolute Nevada and Grand Majestic entered into a bareboat charter agreement for the vessel M/V Americana in September 2019. The charter was automatically canceled after Grand Majestic did not accept delivery or extend the cancellation date. The agreement required disputes to be arbitrated in New York and allowed a court to enter judgment on an arbitration award.

Absolute Nevada later began arbitration concerning the charter and sought relief against Grand Majestic and Captain Joseph Baer. The parties entered a January 6, 2020 stipulation and court order providing, among other things, that claims related to the charter or vessel would be limited to damages and arbitrated in New York. The court previously determined that this order applied to Baer as an individual legally identified with Grand Majestic and later held him in civil contempt for violating it. The Second Circuit affirmed the contempt finding.

Baer subsequently asserted a claim of lien for $17,095.00 for work he said he performed on the vessel. The arbitration panel issued a July 6, 2021 award declaring that Grand Majestic and/or Baer had waived liens and encumbrances relating to the charter, declaring Baer’s lien invalid, and directing that it be removed from the vessel’s record. An August 5, 2021 award ordered Grand Majestic and/or Baer to pay Absolute Nevada attorneys’ fees and arbitrators’ fees. The court had already confirmed the awards against Grand Majestic; the remaining issue was confirmation against Baer.

Baer’s participation in arbitration

Baer signed the charter as Grand Majestic’s president, not expressly in his personal capacity. The court nevertheless held that he became bound by the arbitration under the assumption theory. Under that theory, a person who did not sign an arbitration agreement may accept its obligations through conduct.

The court found that Baer voluntarily and actively participated in the arbitration for several months. At a January 3, 2020 conference, Grand Majestic’s counsel stated that Baer’s personal claim for services was subject to the arbitration clause and that Baer was asserting the claim personally and through Grand Majestic. The court found no evidence that Baer timely objected to those statements. Baer also submitted a detailed affidavit about his work on the vessel and sent numerous emails to the arbitration panel. Although he later argued that his personal claim was not subject to arbitration, the court found those objections too late, particularly because he did not use an opportunity provided by the panel to submit final arguments on arbitrability.

The court therefore concluded that Baer had waived his right to object to arbitration and was bound by the July 6 and August 5 awards.

Personal jurisdiction and service

The court held that it had personal jurisdiction over Baer for the confirmation motion. Because Baer had consented to arbitration in New York, the court concluded that he had also consented to personal jurisdiction in New York for related proceedings.

The court further held that service was proper. Absolute Nevada emailed Baer the motion papers on August 10, 2021, and a process server left copies at Baer’s home with a suitable resident on August 12, 2021. The court also stated that, even if service had been inadequate, Baer had actually received notice, opposed confirmation, and sought to vacate the awards in the same action.

Motion to intervene

Baer filed documents titled “Notice of Special Appearance.” The court treated those filings as a motion to intervene under Rule 24 of the Federal Rules of Civil Procedure. The court concluded that Baer had already become a party to the action when he was properly served with the confirmation motion, making intervention ordinarily unnecessary. As an alternative basis for personal jurisdiction, however, the court granted the motion to intervene. The conclusion section states that Baer’s motion to intervene was denied. The opinion does not explain this apparent inconsistency between the discussion and the final disposition.

Motion to vacate

Baer’s motion referred to an arbitration award dated June 9, 2021, but the court was not aware of an award issued on that date. The court liberally construed the motion as challenging the July 6 and August 5 awards. The court declined to decide whether the motion was timely under the Federal Arbitration Act’s three-month deadline because it concluded that the motion failed on the merits.

The court rejected Baer’s arguments under each statutory ground for vacating an arbitration award. Baer offered no supporting evidence for his claims that the awards resulted from corruption, fraud, or undue means; that the arbitrators were partial or corrupt; or that the arbitrators committed misconduct. His claim that the arbitrators exceeded their authority was also unsupported, and the court had already determined that his personal services claim was subject to arbitration. The court likewise found no basis for Baer’s unsupported public-policy argument.

Disposition

The court concluded that Baer was bound by the awards, that the court could hear the confirmation motion against him, and that Baer had not shown a legal basis to vacate either award. Baer’s Motion to Vacate was denied. Baer’s motion to intervene was also denied in the conclusion. Absolute Nevada’s Motion to Confirm was granted as against Baer. The court stated that a separate order would address Absolute Nevada’s request for other relief concerning the lien.