Dreamtex, Inc. v. Alva Advance, LLC

Background

Alva Advance, LLC obtained a $483,783.75 arbitration award against Dreamtex, Inc. and Evan Young on August 1, 2022. Dreamtex and Young had entered into two merchant cash advance agreements with Alva Advance in 2021. After Dreamtex could not make the required daily payments, Alva Advance demanded arbitration through Mediation and Civil Arbitration, Inc., one of the arbitral forums allowed by the agreements.

The petitioners argued that they had agreed to use a neutral and unbiased arbitration forum, but Mediation and Civil Arbitration, Inc. appointed Ira David, Esq. as arbitrator without input from the parties. They objected to the appointment and requested disclosures, but the arbitration organization issued the final award. The petitioners asked the court to vacate the award under Section 10 of the Federal Arbitration Act, citing alleged denial of due process, evident partiality, fraud, misconduct, and disregard of the law. They also asked that the arbitration be sent to a newly appointed neutral arbitration organization.

Venue Argument

Alva Advance argued that the case should have been filed in Florida under the agreements’ venue provision. The court rejected that argument. It found that the Southern District of New York was a proper venue because the arbitration award was made in New York, New York, and the agreements allowed an action to enforce an award or collect amounts due in any court with proper jurisdiction.

Ruling

After initially opposing the motion, Alva Advance informed the court that it consented to vacating the award. The court therefore granted the now-unopposed motion to vacate the arbitration award. The court did not make separate findings on the petitioners’ allegations of due-process violations, partiality, fraud, misconduct, or disregard of the law.

Alva Advance did not oppose the petitioners’ separate request to send the arbitration to a newly appointed arbitration organization. The court treated that failure to oppose the request as a waiver and granted the request. The parties were ordered to confer and submit a joint letter selecting a new arbitrator within 14 days. If they could not agree, they were directed to submit a joint letter asking the court for further assistance. The Clerk of Court was directed to terminate pending motions and close the case.