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Windward Development, Inc. v. Thomas

United States District Court, D. Connecticut

May 17, 2018

JAMES THOMAS, Respondent.



         Before the Court are cross-petitions regarding certain arbitration awards, purportedly filed pursuant to the Federal Arbitration Act ("FAA" or "the Act"). Petitioner Windward Development, Inc. has petitioned this Court for confirmation of an arbitration award [Doc. 1], and Respondent James Thomas, by his Answer to Petitioner, has made a cross-petition to vacate that award, in part [Doc. 11].

         Both Parties assert that "[t]his Court has jurisdiction pursuant to 28 U.S.C. § 1331, [1] in that this is a civil action arising under Federal Laws." Pet. to Confirm, Doc. 1, ¶ 6. See also Pet'r's Br., Doc. 1-14 at 4 (same); Answer & Cross-Pet., Doc. 11, ¶ 21 (same). Neither Party cites the specific federal law or laws which establish this Court's jurisdiction, and, after careful review of the filings, the Court can only infer that the Parties' assertion of federal subject matter jurisdiction relies on the FAA.[2] The Court considers sua sponte whether these petitions fall within its subject matter jurisdiction.

         I. The Federal Arbitration Act

         The FAA, 9 U.S.C. §§ 1-16,

provides a streamlined process for a party seeking a judicial decree confirming an award, an order vacating it, or an order modifying or correcting it. Normally, confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court, and the court must grant the award unless the award is vacated, modified, or corrected. But arbitration awards are not self-enforcing. Rather, they must be given force and effect by being converted to judicial orders by courts.

R & Q Reinsurance Co. v. Utica Mut. Ins. Co., 18 F.Supp.3d 389, 392 (S.D.N.Y. 2014) (internal quotation marks, alterations, and citations omitted) (quoting Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008); D.H. Blair & Co. v. Gottdiender, 462 F.3d 95, 110 (2d Cir. 2006); Hoeft v. MVL Grp., Inc., 343 F.3d 57, 63 (2d Cir. 2003), overruled on other grounds by Hall St., 552 U.S. 576). § 9 of the Act provides:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.

9 U.S.C. § 9. § 10 provides that reviewing courts may vacate an arbitration award in the limited circumstances where (1) "the award was procured by corruption, fraud, or undue means; (2) [] there was evident partiality or corruption in the arbitrators . . .; (3) [] the arbitrators were guilty of misconduct . . .; or (4) [] the arbitrators exceeded their powers." 9 U.S.C. § 10. § 11 provides for judicial modification or correction of an arbitration award, in similarly limited circumstances.

         "[T]he Federal Arbitration Act . . . does not independently confer subject matter jurisdiction on the federal courts." Durant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v. Dupont, 565 F.3d 56, 63 (2d Cir. 2009). "[T]he Act is something of an anomaly in the realm of federal legislation: It bestows no federal jurisdiction but rather requires for access to a federal forum an independent jurisdictional basis over the parties' dispute." Vaden v. Discover Bank, 556 U.S. 49, 59 (2009) (internal quotation marks and alterations omitted) (quoting Hall St., 552 U.S. at 581-82). "That independent jurisdictional basis is generally either federal question or diversity jurisdiction." Hermès of Paris, Inc. v. Swain, 867 F.3d 321, 325 n. 1 (2d Cir. 2017). Federal courts' admiralty jurisdiction is a frequent source of FAA subject matter jurisdiction. 9 U.S.C. § 2 declares valid and enforceable "[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration" controversies arising out of the contract or transaction. See also Harry Hoffman Printing, Inc. v. Graphic Commc'ns., Int'l Union, Local 261, 912 F.2d 608, 611 (2d Cir. 1990) (collecting cases) ("section 10 of the Arbitration Act does not confer subject matter jurisdiction on a district court. . . .There must be an independent basis of jurisdiction before a district court may entertain petitions under the Act.").

         II. Subject Matter Jurisdiction in the Federal Courts

         Federal district courts are courts of limited jurisdiction, under Article III, Section 2, of the United States Constitution. See, e.g., Chicot Cty. Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 376 (1940), reh'g denied, 309 U.S. 695 (1940). The question of subject matter jurisdiction is fundamental, so that a court must raise the issue sua sponte, of its own accord, when the issue is not addressed by the parties. Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884). See also Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007); Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) ("[I]t is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking").

         In general, a federal district court may exercise subject matter jurisdiction over an action only if there is either: (1) "federal question" jurisdiction, applicable to "all civil actions arising under the Constitution, laws, or treaties of the United States, " 28 U.S.C. § 1331; or (2) there exists "diversity of citizenship, " complete diversity of citizenship between the plaintiff and all defendants and the amount in controversy exceeds "the sum or value of $75, 000, exclusive of interest and costs, " 28 U.S.C. § 1332(a). See also Strawbridge v. Curtiss, 7 U.S. 267, 267-68 (1806); Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir. 2000) (delineating two categories of subject matter jurisdiction).

         Unlike personal jurisdiction, "failure of subject matter jurisdiction is not waivable." Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000). If subject matter jurisdiction is lacking, the action must be dismissed. See Fed. R. Civ. P. 12(h)(3); 211 F.3d at 700-01. See also, e.g., Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) ("A district court properly dismisses an action . . . for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it . . . .") (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Manway Constr. Co. v. Housing Auth. of Hartford,711 F.2d 501, 503 (2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any ...

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