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Floridians for Solar Choice, Inc. v. PCI Consultants, Inc.

United States District Court, S.D. Florida

June 8, 2018

FLORIDIANS FOR SOLAR CHOICE, INC. a Florida not for Profit corporation, Plaintiff,
v.
PCI CONSULTANTS, INC. and ANGELO PAPARELLA, individually, Defendants.

          ORDER

          BETH BLOOM, UNITED STATES DISTRICT JUDGE

         THIS CAUSE is before the Court upon three motions: Defendants PCI Consultants, Inc. and Angelo Paparella's Motion to Vacate Arbitral Award, ECF No. [17], filed on October 18, 2017; Plaintiff Floridians for Solar Choice, Inc.'s (“FSC”) and Claimant in Arbitration Southern Alliance for Clean Energy, Inc.'s (“SACE, ” together with FSC, “Solar”) Motion to Confirm Arbitration Award, with Supporting Memorandum of Law, ECF No. [20] (“Motion to Confirm”), filed on November 1, 2017; and a separately filed motion entitled “Defendant PCI's Supplemental Memorandum in Support of the Motion to Vacate”, ECF No. [29], filed on November 21, 2017. The Court has reviewed the motions, the filings in support and opposition, the record, and is otherwise fully advised. For the reasons stated below, the Motion to Confirm, ECF No. [20] is granted and the Motion to Vacate, ECF No. [17], and Supplemental Motion to Vacate, ECF No. [29] (together, the “Motions to Vacate”), are denied.

         I. PROCEDURAL BACKGROUND

         Plaintiff FSC initially filed its Complaint on December 23, 2015 against Defendants PCI Consultants, Inc. (“PCI”), and PCI's principal, Angelo Paparella (“Paparella”). ECF No. [1]. FSC amended its complaint on January 13, 2016, ECF No. [8] (“Amended Complaint”). In the Amended Complaint, FSC alleged causes of action for breach of contract, fraud in the inducement, conversion, and unjust enrichment against PCI, and fraud in the inducement and conversion against Paparella. Id. at 7-9. Simultaneous to filing its Complaint, FSC filed a Motion to Compel Arbitration, ECF No. [4], arguing that the claims asserted relate to contracts under which Defendants agreed to arbitrate. Defendants opposed the motion. ECF No. [7]. The Court granted the motion to compel on January 22, 2016 and administratively closed the case. ECF No. [11].

         On October 13, 2017, Defendants filed their Motion to Reopen Case, ECF No. [13], advising the Court that the parties had participated in an arbitration administered by the American Arbitration Association (“AAA”) in April 2017. Defendants further advised the Court that the “sole arbitrator issued a non-final award on July 20, 2017 and on October 10, 2017, the arbitrator, retired Broward Circuit Court Judge Jeffrey Streitfeld (“Arbitrator”), issued a ‘Final Award' adopting the non-final award.” Id. at 1. In the Motion to Reopen, Defendants stated that they planned to move to vacate the award. The Court granted the Motion to Reopen. ECF No. [16].

         Now before the Court are the Motions to Vacate, ECF Nos. [17] and [29], as well as Plaintiff's Motion to Confirm, ECF No. [20], along with their attached exhibits and notices, as follows:

1. Defendants PCI Consultants, Inc. and Angelo Paparella's Motion to Vacate Arbitral Award, ECF No. [17];
2. Declaration of Christian S. Molnar in Support of PCI Consultants, Inc.'s Petition to Vacate the July 20, 2017 and October 10, 2017 Arbitration Awards, ECF No. [17-1];
3. Declaration of Angelo Paparella in Support of PCI Consultants, Inc.'s Petition to Vacate the July 20, 2017 and October 10, 2017 Arbitration Awards, ECF No. [17-2];
4. Declaration of Levi Lesches in Support of PCI Consultants, Inc.'s Petition to Vacate the July 20, 2017 and October 10, 2017 Arbitration Awards, ECF No. [17-3] and attached Exhibits A-O, ECF No. [17-4];
5. Notice of Filing of Arbitration Hearing Transcripts in Support of the Motion to Vacate Arbitral Award (ECF No. 17), ECF No. [18], and attached hearing transcripts for April 25, 2017 (ECF No. [18-1]), April 26, 2017 (ECF No. [18-2]), and April 28, 2017 (ECF No. [18-3]);
6. Florida for Solar Choice, Inc.'s and Claimant in Arbitration, Southern Alliance for Clean Energy, Inc.'s Memorandum in Opposition to PCI Consultant, Inc.'s Motion to Vacate Arbitral Award, ECF No. [22], and attached exhibits, ECF Nos. [22-1]-[22-19];
7. Reply in Support of Motion to Vacate Arbitral Award, ECF No. [23], and attached exhibits, ECF Nos. [23-1]-[23-7];
8. Defendant PCI's Supplemental Memorandum in Support of the Motion to Vacate, ECF No. [29], and attached exhibits, ECF Nos. [29-1]-[29-5];
9. Solar Parties' Response to PCI Consultants, Inc.'s Supplemental Memorandum in Support of Its Motion to Vacate, ECF No. [31];
10. Defendant PCI Consultants' Rebuttal to Plaintiffs' Opposition to the Supplemental Memorandum [sic] in Support of Motion to Vacate, ECF No. [32];
11. Plaintiff Floridians for Solar Choice, Inc.'s and Claimant in Arbitration, Southern Alliance for Clean Energy, Inc.'s Motion to Confirm Arbitration Award, with Supporting Memorandum of Law, ECF No. [20], and attached exhibits, ECF Nos. [20-1]-[20-5] and ECF No. [21-1];
12. Defendants [sic] Response in Opposition to the Solar Parties' Motion to Confirm Arbitration Award, ECF No. [25]; and
13. Solar Parties' Reply to PCI Consultants, Inc.'s Response in Opposition to Solar Parties' Motion to Confirm Arbitration Award, ECF No. [30], and attached exhibits, ECF Nos. [30-1] and [30-2].

         In their Motions, Defendants make five arguments in favor of vacatur. First, Defendants argue that the award must be vacated because Solar employed “fraud and/or undue means” to procure an arbitration award in its favor. ECF No. [17] at 12. Second, Defendants argue that the Arbitrator, lacked jurisdiction to enter an award exceeding one million dollars. Id. at 18. Third, Defendants argue that the Arbitrator had “irrefutable bias” against Defendants. Id. at 21. Fourth, Defendants claim that the Arbitrator failed to hear evidence related to Solar's “surprise damages claim.” Id. at 22. Lastly, Defendants argues that the AAA Rules barred entry of the October 10, 2017 final award (“October Final Award”) in favor of Solar because the July 20, 2017 award (“July Award”) was a “final award” that terminated the Arbitrator's jurisdiction. Id. at 23.

         On November 21, 2017, Defendants filed a Supplemental Memorandum in Support of the Motion to Vacate, ECF No. [29]. There, Defendants further argue that the July Award was a “final award” precluding entry of the October Final Award because (1) according to an email from the AAA to the parties, after the July Award was issued, AAA administratively closed the case, ECF No. [29-1], and (2) the file name of the uploaded PDF of the July Award on the AAA's Webfile System read “Final Award.” ECF No. [29-5] at 3. Defendants additionally argue that Solar conceded that the July Award was a final award because after the Arbitrator issued the October Final Award, Plaintiff moved to reopen the case to correct a typographical error in the October Final Award. ECF No. [29] at 7-8.

         In response, Solar argues that the Arbitrator's award is supported by the record evidence and that Defendants have failed to meet their burden on their claim of fraud or undue means under Bonar v. Dean Witter Reynolds Inc., 835 F.2d 1378 (11th Cir. 1988) and on their claim of arbitrator bias under Gianelli Money Purchase Plan & Tr. v. ADM Inv'r Servs., Inc., 146 F.3d 1309 (11th Cir. 1988). See ECF No. [22]. Solar further argues that the Arbitrator had jurisdiction to issue an award above one million dollars and enter the October Final Award. Id.

         On November 1, 2017, Solar moved to confirm the arbitration award. ECF No. [20] (“Motion to Confirm”). In the Motion, Solar argues that the Court should confirm the July Award, as amended by the October Final Award and November 1, 2017 Corrected Final Award (“Award”), based on the presumption of validity under the FAA, which Defendants have failed to refute. Defendants oppose the Motion to Confirm, reiterating their arguments in the Motions to Vacate and also arguing that the Motion to Confirm is mooted by Defendants' Motions to Vacate, that the Court should apply the “ ‘no-blue-penciling rule . . . [applied by n]umerous states (although, admittedly, not Florida) [to] make overly-broad noncompete agreement unenforceable in toto” to the Award, and that Plaintiff's Motion to Confirm is procedurally improper because it is missing required documents under 9 U.S.C. § 13. ECF No. [25].

         II. FACTUAL BACKGROUND

         This case stems from a failed initiative to qualify a solar energy constitutional amendment for the 2016 election in Florida. ECF No. [22-12]. Based on the Court's grant of the motion to compel arbitration, ECF No. [11], FSC filed a Demand for Arbitration with the AAA against Defendants PCI and Paparella seeking damages of $500, 000-$1, 000, 000, plus punitive damages, attorneys' fees, interest, and arbitration costs. ECF No. [20] at 3. Defendants subsequently filed a separate Statement of Claim with AAA seeking $212, 479.67, plus punitive damages, attorneys' fees, interest, and arbitration costs against FSC, as well as two of FSC's officers, Stephen Smith (“Smith”) and George Cavaros, and Southern Alliance for Clean Energy Action Fund, Inc. (“SACEAF”). ECF No. [20] at 3. The two matters were consolidated, and during the pendency of the arbitration, Defendants added SACE as a respondent. Id. SACE counterclaimed against PCI and Paparella. Id.

         The Arbitrator held a three-day hearing on April 25, 26, and 28, 2017 during which the parties presented witness testimony and numerous exhibits. On July 20, 2017, the Arbitrator issued the July Award in favor of Solar. ECF Nos. [17-4], [20-1] (“July Award”). The following facts were found by the Arbitrator or elicited through uncontroverted testimony, unless otherwise noted:

         FSC is a not-for-profit corporation formed for the purpose of qualifying a solar energy amendment in Florida's general election in 2016. ECF No. [17-4] at 2. PCI is a “national leader in obtaining signed petitions for ballot initiatives.” Id. at 3. In order to be included on the ballot, Florida law required FSC to seek prior approval by the Supreme Court of Florida of the amendment's language and nearly 700, 000 signed voter petitions. Arbitration Transcript (“Tr.”)[1]at 12, 41, 80, 261, 282-83. The parties entered into several contracts through which PCI agreed to obtain a fixed amount of signed petitions for the solar energy initiative based on a price per signature. ECF No. [17-4] at 2. The Arbitrator highlighted three provisions of the contracts that he found of particular importance:

1. PCI was to be paid per signature, with all signature collection expenses to be the ...

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