Schwartzman v. Harlap ( 2010 )

09-1784-cv
Schwartzman v. Harlap
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 TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for
2 the Second Circuit, held at the Daniel Patrick Moynihan United
3 States Courthouse, 500 Pearl Street, in the City of New York, on
4 the 18th day of May, two thousand ten.
5
6 PRESENT:
7 RALPH K. WINTER,
8 JOSEPH M. McLAUGHLIN,
9 DEBRA ANN LIVINGSTON,
10 Circuit Judges.
11 _____________________________________
12
13 Betzalel Schwartzman,
14
15 Petitioner-Appellee,
16
17 v. 09-1784-cv
18
19 Yaakov Harlap, also known as Jacob
20 Charlap,
21
22 Respondent-Appellant.
23
24 _____________________________________
25
26
27 FOR PETITIONER-APPELLEE: Avi M. Peison, Brooklyn, New York.
28
29 FOR RESPONDENT-APPELLANT: Jacob Harlap, pro se, Flushing, New
30 York.
31 Appeal from a judgment of the United States District Court
1 for the Eastern District of New York (Cogan, J.).
2 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
3 DECREED that the judgment of the district court is AFFIRMED in
4 part and VACATED and REMANDED in part.1
5 Appellant Jacob Harlap, proceeding pro se, appeals both the
6 district court’s judgment confirming an arbitration award issued
7 in Israel and the denial of his motion to vacate that award. We
8 assume the parties’ familiarity with the underlying facts, the
9 procedural history of the case, and the issues on appeal.
10 This Court reviews a district court’s decision to confirm an
11 arbitration award de novo to the extent it turns on legal
12 questions and for clear error with respect to any findings of
13 fact. See Zeiler v. Deitsch, 500 F.3d 157, 164 (2d Cir. 2007).
14 The Convention on the Recognition and Enforcement of Foreign
15 Arbitral Awards (the "Convention"), as implemented at 9 U.S.C.
16 § 201 et seq., authorizes United States courts to recognize and
17 enforce non-domestic arbitration awards. See 9 U.S.C. § 203
18 (granting original jurisdiction to district courts over
19 proceedings arising under the Convention); 9 U.S.C. § 207
20 (providing for confirmation of awards). The district court is
21 required to “confirm [such an] award unless it finds one of the
1
We also deny Schwartzman’s request that Harlap be
required to post a bond pursuant to Federal Rule of Appellate
Procedure 7, and note that such a bond must be sought from
the district court in the first instance.
2
1 grounds for refusal or deferral of recognition or enforcement of
2 the award specified in the said Convention.” 9 U.S.C. § 207.
3 Article V of the Convention provides seven exclusive grounds
4 upon which courts may refuse to recognize an award. See
5 Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc.,
6 403 F.3d 85, 90 (2d Cir. 2005) (citing Convention on the
7 Recognition and Enforcement of Foreign Arbitral Awards, June 10,
8 1958, 21 U.S.T. 2517, at Art. V). One of the enumerated grounds
9 allows non-recognition if “recognition or enforcement of the
10 award would be contrary to public policy of [the country where
11 recognition or enforcement is sought].” Convention, 21 U.S.T.
12 2517, at Art. V(2)(b). As neither party challenges it, we assume
13 without deciding that the district court correctly presumed that
14 “[i]t is a fundamental aspect of United States[] policy
15 concerning arbitration that arbitrators must disclose material
16 relationships with the parties that could impact their
17 impartiality.” Schwartzman v. Harlap, No. 08 Civ. 4990, 2009 WL
18 1009856 (E.D.N.Y. Apr. 13, 2009) at *2 (citing Commonwealth
19 Coatings Corp. v. Cont’l Cas. Co., 393 U.S. 145 (1968)).
20 This Court has “viewed the teaching of Commonwealth Coatings
21 pragmatically, employing a case-by-case approach in preference to
22 dogmatic rigidity,” and has “not been quick to set aside the
23 results of an arbitration because of an arbitrator’s alleged
24 failure to disclose information.” Matter of Andros Compania
3
1 Maritima, S.A., 579 F.2d 691, 700 (2d Cir. 1978). Arbitrators
2 have an obligation to “disclose dealings of which the parties
3 cannot reasonably be expected to be aware,” id. at 700 (quoting
4 Cook Indus., Inc. v. C. Itoh & Co. (Am.), 449 F.2d 106, 108 (2d
5 Cir. 1971)) (internal quotation marks omitted), but a party
6 cannot avoid recognition of an award based on its discovery of a
7 non-disclosed relationship where the party “could have made such
8 a review just as easily before or during the arbitration rather
9 than after it lost its case.” Id. at 702. Here, the district
10 court did not clearly err in concluding that Harlap should have
11 known that Rabbi Stern could be employed by Schwartzman to
12 certify the orchards at the time he entered the sales contract in
13 2005, since this was specified in one of the terms of that
14 contract. As the district court concluded, moreover, it was
15 Harlap’s knowledge of the potential conflict of interest, not
16 whether it had actually materialized, that is significant. At
17 the time the parties agreed to arbitrate before Rabbi Stern in
18 September 2006, Harlap knew that Schwartzman could hire Rabbi
19 Stern and, thus, he had the information he needed to investigate
20 their relationship before or during the arbitration proceedings
21 and could have easily done so, rather than waiting until after he
22 lost his case. See id. at 702. Accordingly, we affirm the
23 district court’s confirmation of the award.
24 Harlap argues that Schwartzman mistranslated the arbitration
4
1 award and that the award should be paid directly to the
2 arbitration court to pay Schwartzman’s judgment creditors. With
3 respect to mistranslation, we note that Harlap raises the issue
4 for the first time on appeal, and that the well-established
5 general rule is that a court of appeals will not consider an
6 issue raised for the first time on appeal. See Virgilio v. City
7 of New York, 407 F.3d 105, 116 (2d Cir. 2005). However, Harlap
8 raised a form of this argument during the district court
9 proceedings when he argued that Schwartzman fraudulently obtained
10 an Israeli court judgment requiring direct payment of the $66,000
11 to Schwartzman despite Rabbi Stern’s requirement that the payment
12 be made to the arbitration court.
13 Although there is no support in the record for Harlap’s
14 claim that the Israeli court’s judgment requires direct payment
15 to Schwartzman of anything other than an attorneys’ fee award,
16 Harlap’s argument does identify a potential error: the district
17 court’s judgment, unlike the arbitration award and the Israeli
18 court judgment, appears to require Harlap to pay Schwartzman
19 directly. Because there is nothing in the record indicating that
20 the district court considered this issue, we vacate the judgment
21 insofar as it requires direct payment to Schwartzman, and remand
22 to the district court for further proceedings to consider whether
23 such direct payment is appropriate in light of the arbitration
24 award’s direction that payment be made “only into the hands of
5
1 the court secretary.”
2 Finally, we deny Schwartzman’s request for attorneys’ fees.
3 Federal Rule of Appellate Procedure 38 provides that sanctions
4 may be imposed “when one party proceeds with an argument ‘totally
5 lacking in merit, framed with no relevant supporting law,
6 conclusory in nature, and utterly unsupported by the evidence.’”
7 T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329,
8 341 (2d Cir. 2010) (quoting In re Drexel Burnham Lambert Group
9 Inc., 995 F.2d 1138, 1147 (2d Cir. 1993)) (internal quotation
10 mark omitted). Here, although Harlap’s arguments in support of
11 non-recognition of the arbitration award fail on the merits, the
12 issue was not so clear cut as to prevent Harlap “from making a
13 colorable argument to the contrary.” Id. at 342.
14 We have considered Harlap’s remaining arguments and find
15 them to be without merit. Accordingly, the judgment of the
16 district court is VACATED insofar as it requires direct payment
17 to Schwartzman, and we REMAND to the district court to conduct
18 further proceedings in accordance with this decision.
19
20
21 FOR THE COURT:
22 Catherine O’Hagan Wolfe, Clerk
23
6