Eaton Partners, LLC v. Azimuth Capital Management IV, LTD. ( 2021 )

19-4365-cv
Eaton Partners, LLC v. Azimuth Capital Management IV, LTD.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 20th day of April, two thousand twenty-one.
PRESENT: AMALYA L. KEARSE,
JOSÉ A. CABRANES,
ROSEMARY S. POOLER,
Circuit Judges.
EATON PARTNERS, LLC,
Petitioner-Appellee, 19-4365-cv
v.
AZIMUTH CAPITAL MANAGEMENT IV, LTD.,
Respondent-Appellant.
FOR PETITIONER-APPELLEE: GARY S. KLEIN (Todd R.
Michaelis, on the brief),
Carmody Torrance Sandak &
1
Hennessey LLP, Stamford,
CT.
FOR RESPONDENT-APPELLANT: VINCENT P. SHERMAN, New
York, NY.
Appeal from the December 2, 2019 judgment of the United States District Court for the
Southern District of New York (Edgardo Ramos, Judge).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the District Court be, and hereby is,
AFFIRMED.
Petitioner-Appellee Eaton Partners, LLC (“Eaton Partners”), an investment placement
agent, filed a demand for arbitration against Respondent-Appellant Azimuth Capital Management
IV, LTD. (“Azimuth”), a private equity fund. Eaton Partners alleged that Azimuth breached the
placement agreement between the parties. After a five-day hearing, the Arbitrator issued an opinion
and award in favor of Eaton Partners, and Eaton Partners filed a petition to confirm the award.
Azimuth filed a motion seeking to vacate the award. In an amended opinion and order dated
October 18, 2019, the District Court confirmed the award in favor of Eaton Partners, denied
Azimuth’s motion to vacate the award, and further declined to grant Azimuth’s request to “enter
judgment in its favor on breach of contract, fraudulent inducement of contract, and/or other
claims.” 1
The District Court rejected Azimuth’s claims that the Arbitrator was guilty of misconduct
for failing to postpone the hearing when one of Azimuth’s witnesses became unavailable due to a
death in his family and for denying Azimuth’s request to include a new witness. The District Court
reasoned that the unavailable individual was not a key witness because Azimuth made no argument
that a crucial part of its case went unrebutted because of the witness’s absence, and noted that
Azimuth’s counsel said, when voluntarily withdrawing the witness, “I don’t think that he is going to
be needed.” 2 The District Court further noted that Azimuth never requested postponement, instead
choosing to voluntarily withdraw Azimuth’s now-unavailable witness. As to the Arbitrator’s denial
of Azimuth’s request to add a witness, the District Court concluded that it was untimely, in light of
procedures to which both sides agreed, thus rendering it procedurally deficient. The District Court
1 Joint App’x 95.
2 Special App’x 7.
2
also concluded that the topics Azimuth wished to cover with the proposed witness were cumulative
of testimony it had already presented.
Azimuth now appeals, arguing principally that the District Court erred in upholding the
arbitration award because the Arbitrator was guilty of misconduct in failing to postpone the hearing
and in refusing to hear and admit material evidence. We assume the parties’ familiarity with the
underlying facts, the procedural history of the case, and the issues on appeal.
A district court’s decision upholding or vacating an arbitration award is reviewed “de novo on
questions of law and for clear error on findings of fact.” 3 The Federal Arbitration Act provides that
a district court may vacate an arbitration award upon the application of any party to the proceeding
“where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient
cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any
other misbehavior by which the rights of any party have been prejudiced[.]” 4
We conclude that the District Court properly granted Eaton Partners’ petition to confirm
the arbitration award and denied Azimuth’s motion to vacate the award. We affirm for substantially
the same reasons given by the District Court in its amended opinion and order dated October 18,
2019. 5
3 Nat’l Football League Mgmt. Council v. Nat’l Football League Players Ass’n, 820 F.3d 527, 536 (2d Cir.
2016).
4 9 U.S.C. § 10(a)(3).
5 Azimuth contends for the first time on appeal that the award should be vacated under 9 U.S.C.
§ 10(a)(3) as well as under “relevant and controlling state law” because of the Arbitrator’s purported failure to
consider Azimuth’s fraudulent inducement of contract claim. Azimuth Br. 21. However, Azimuth waived its
fraudulent-inducement claim by conceding in the arbitration proceeding that arbitration was proper and
urging the Arbitrator to find Eaton was liable for breach of contract. Although Azimuth’s motion in the
district court to vacate the arbitration award stated that if the placement agreement were void ab initio because
of fraudulent inducement there could not have been any arbitration, see Joint App’x 116 n.10, Azimuth had
not pressed for an immediate resolution of that threshold issue. See generally Moseley v. Elec. & Missile Facilities,
Inc., 374 U.S. 167, 171 (1963) (if there is a substantial allegation of fraudulent inducement that would negate
the existence of an agreement to arbitrate, “it seems clear that the issue of fraud should first be adjudicated
before the rights of the parties . . . can be determined”). Instead, “Azimuth[’s]” answering statements and
counterclaims in the arbitration “admit[ted] that the present dispute is arbitrable and state[d] no objections to
jurisdiction under the Arbitration Agreement.” Joint App’x 54 (Arbitrator’s partial final award ¶ 15)
(emphases added)). We do not see that Azimuth ever disputed the Arbitrator’s finding as to that admission.
Since there could be no arbitrability without a contract, see, e.g., Moseley, 374 U.S. at 171, and Azimuth
admitted that the dispute was arbitrable, the Arbitrator was entitled to treat any fraud-in-the-inducement
claim as waived by that admission, and we conclude that it was waived.
3
CONCLUSION
We have reviewed all of the arguments raised by Azimuth on appeal and find them to be
without merit. The December 2, 2019 judgment of the District Court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
4