Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-02926/USCOURTS-cand-5_04-cv-02926-3/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:2201 Declaratory Judgement

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United States District Court

For the Northern District of California

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*E-FILED 3/26/07*

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

STEPHEN E. SNYDER, AS TRUSTEE FOR THE

LIQUIDATION OF CONSOLIDATED INVESTMENT

SERVICES, INC, 

Plaintiff,

 v.

WAVECREST CORPORATION, ET AL.,

Defendants. /

NO. C 04-02926 RS

REPORT AND

RECOMMENDATION AND

ORDER THAT CASE BE

REASSIGNED

I. INTRODUCTION

Plaintiff Stephen E. Snyder, in his capacity as Trustee for the liquidation of Consolidated

Investment Services, Inc, moves to confirm the award of an arbitrator entered in this dispute and to

enter judgment thereon. Snyder further moves for certification of the judgment under 28 U.S.C

§1963 to permit it to be registered and enforced in other states immediately. Because of an issue

relating to defendant’s consent to the jurisdiction of the undersigned to decide these issues, the Court

will proceed by report and recommendation, and order that this action be assigned for disposition by

a district court judge.

The primary legal issue presented is whether a federal court, having compelled parties to

arbitrate their dispute, thereafter has jurisdiction to confirm the award and enter judgment thereon

where the arbitration provision does not expressly provide for such jurisdiction. The Court

concludes that, at least under the particular facts of this case, such jurisdiction does exist, and

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 More precisely, the assignment appears to have been made to a company owned by

Snyder, followed by a subsequent assignment to Snyder. The details of the assignment history,

however, are not relevant to the issues presented in these motions.

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therefore will recommend that plaintiff’s motions be granted.

 II. BACKGROUND

A. The Underlying Dispute

Stanford Square, LLC (“Stanford Square”) owned a commercial office building located at

100 Hamilton Avenue in Palo Alto, California. Under Stanford Square’s operating agreement, the

property was managed by Stanford Square Management Company (“Stanford Management”). In

March of 2002, Snyder and Stanford Management entered into a settlement agreement pertaining to

a dispute otherwise unrelated to this action. In that agreement, Stanford Management assigned all of

its rights, titles, and interests under the Stanford Square operating agreement to Snyder.1

It apparently was Snyder’s intent to become the new manager under the operating agreement,

but Lewis Graham, a member of Stanford Square, challenged Snyder’s right to do so without

approval of the membership. Ultimately an election was held, and a majority of Stanford Square’s

membership voted for Graham’s company, defendant Floworks, Inc, to assume the management

position from Stanford Management.

Under the terms of the operating agreement, any “substitute” manager was required to

compensate the “retiring” manager for taking over the position. The amount of such compensation

was to be “agreed upon” between the parties, and if no agreement could be reached, then “the

dispute shall be submitted to arbitration.” (Operating Agreement ¶ 10.5, Decl. of S. Snyder in

Support of Motion for Summary Judgment, filed December 28, 2004, [Docket No 18-1], Exh. A.)

Floworks has apparently never denied that by accepting election as the new manager of

Stanford Square, it became liable under the operating agreement to negotiate for an amount to be

paid to the prior manager and to arbitrate the amount of that payment if no agreement could be

reached. Floworks denied, however, that the assignment by Stanford Management to Snyder created

any obligation on Floworks’ part to negotiate or arbitrate a payment amount with Snyder as opposed

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to with Stanford Management. As a result, Snyder filed this action against Floworks in July of 2004,

seeking (1) a declaratory judgment that the assignment to Snyder of Stanford Management’s right to

be paid the value of the manager’s interest was valid and binding on Floworks; (2) an order

compelling Floworks to arbitrate the value of the interest or, in the alternative, a money judgment for

the value of the interest, and; (3) imposition of a constructive trust and equitable lien on Floworks’

interest as manager of Stanford Square as a means for securing the alleged obligation to pay the

arbitrated amount. 

B. The Partial Summary Judgment Proceedings

On November 10, 2004, Snyder and Floworks filed their first joint case management

conference statement in these proceedings. (Docket No. 11.) In that statement, the parties agreed

that there were no factual issues to be resolved as to the validity and effect of the assignment

between Stanford Management and Snyder, rather the issue was “solely a question of contractual

interpretation.” (Docket No. 11, p.3.) The parties further jointly represented that “[t]he principal

factual issue in the case will be the value of the [the amount to be paid], but this issue will be

addressed through the binding arbitration which will follow if [Snyder] is successful on the

interpretation issue. (Id., emphasis added.)

The parties went on to state expressly that they “agree[d] that if [Snyder] prevails on this first

claim [for declaratory relief as to the validity and effect of the assignment], the Operating

Agreement for [Stanford Square] requires binding arbitration as to the amount of the Payment.” (Id.

at p.4, emphasis added.) Accordingly, the joint case management conference statement proposed

that Snyder would file a motion for partial summary judgment on the assignment issue, and that the

Court would “depending upon the result [of the summary judgment motion], enter further orders

compelling arbitration or other matters as appropriate.” (Id.)

Snyder thereafter filed his motion for partial summary judgment. Floworks’ opposition to

the motion did not contend material facts were in dispute, but argued that the assignment between

Stanford Management and Snyder was not effective as a matter of law to create any obligation on

Floworks’ part to negotiate or arbitrate a payment amount with Snyder. On February 11, 2005, this

Court entered its order rejecting Floworks’ arguments and granting Snyder’s motion. (Docket

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No.25.) The Court expressly found that under the operating agreement “Floworks must submit the

amount of the payment to arbitration.” (Id. at p.7.)

The parties then filed a second joint case management conference statement in which they

proposed procedures for selecting an arbitrator. (Docket No. 26, p. 2.) The parties jointly

represented that, upon appointment of an arbitrator, they “agree[d] that this civil action may be

stayed . . .pending any request by either party for . . . further proceedings to enforce any award

[that] is entered upon completion of arbitration.” (Id. at p.3, emphasis added.)

Subsequently, the parties were unable to reach agreement on appointment of an arbitrator,

and further motions were filed. In response, on May 4, 2005, the Court entered an order appointing

the Hon. Read Ambler (Ret.), an arbitrator whom both sides had agreed would be acceptable.

C. The Arbitration Award

On February 13, 2007, Judge Ambler entered his final arbitration award in favor of Snyder in

the amount of $1.5 million, plus prejudgment interest of $266,671.11 through the date of the award,

and costs of $44,997.97. Judge Ambler’s decision was set forth in 21 pages detailing his evaluation

of the evidence and the parties’ legal arguments. Although Floworks’ opposition to the present

motion stated an intent to move to “vacate” the award, it has not done so to date. In opposing

confirmation, Floworks has made no arguments that Judge Ambler’s decision was legally or

factually flawed or that he in any manner exceeded his jurisdiction. Rather, Floworks has argued

only that the arbitration was non-binding and that this Court lacks jurisdiction to confirm the award

and to enter judgment thereon.

D. Consent to Jurisdiction of the Magistrate Judge

In the first joint case management conference statement, Floworks expressly consented in

writing to the jurisdiction of the undersigned “for resolution of the issue concerning the validity and

effectiveness of the assignment of the right to receive the Payment.” Floworks further expressly

consented that if Snyder prevailed on that issue, it “would stipulate to orders compelling and

directing arbitration.” (Docket No. 11, p.3.) Under 28 U.S.C. § 636 (c) a magistrate judge may

conduct “any or all proceedings” in a civil proceeding upon “consent of the parties.” Accordingly, it

is beyond dispute that Floworks consented, and that the undersigned had jurisdiction, to decide the

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2

 In view of the ambiguities presented by the interlineation, the consent form was not filed.

3

 As discussed in Section C below, Floworks filed no opposition specifically addressed to

Snyder’s motion to certify the judgment under 28 U.S.C. § 1963 to permit it to be registered for

enforcement in other jurisdictions. The propriety of granting that motion, therefore, stands or falls

with Floworks argument that there is no jurisdiction to confirm the award and enter judgment in the

first instance.

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motion for partial summary judgment and to compel arbitration herein.

Upon reviewing Snyder’s present motions, the Court became aware that defendant had not

filed a general consent to the jurisdiction of a magistrate judge in this action on the forms provided

by this District for that purpose. Accordingly, prior to the hearings on this motion, the Court,

through its law clerk, presented Floworks’ counsel with both a form to consent to jurisdiction and a

form to decline jurisdiction, and requested that Floworks make an election. Counsel for Floworks

signed the form consenting to jurisdiction, but interlineated that standard consent form with

language that appeared to be an attempt to clarify that Floworks was not abandoning its substantive

arguments made in opposition to these motions.

Unfortunately, the language of the interlineation served only to confuse, rather than to clarify

matters.2

 Given all the circumstances, the Court is unwilling to permit even the possibility of a

subsequent argument that it acted in excess of its jurisdiction under 28 U.S.C. § 636 with respect to

the present motions. Accordingly, although the Court regrets imposing on the District Court judges

in circumstances where the parties did intend to consent to the jurisdiction of the undersigned and

attempted to express that consent in writing, the Court concludes that the most prudent course of

action is to proceed by means of report and recommendation, with reassignment to a United States

District Judge for further proceedings.

III. DISCUSSION

A. The Arbitration Was Binding

In opposition to these motions,3 Floworks first contends that even assuming this Court was

correct in concluding that Floworks was obligated to arbitrate the underlying dispute, Floworks

never understood or agreed that the arbitration would be binding as opposed to non-binding. In

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 The operating agreement actually states, “the dispute shall be submitted to arbitration as

provided herein.” (Operating Agreement ¶ 10.5, Decl. of S. Snyder in Support of Motion for

Summary Judgment, filed December 28, 2004, [Docket No 18-1], Exh. A, emphasis added.) 

Unfortunately, as Floworks correctly points out, there appear to be no further provisions in the

operating agreement as to the nature or conduct of the arbitration.

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 Although there is no dispute that Floworks’ answer contained the admission described, the

answer itself apparently was never filed and does not appear on the docket.

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support of this argument, Floworks relies on the fact that the arbitration clause in the operating

agreement states only, “the dispute shall be submitted to arbitration,” without using either the word

“binding” or “non-binding.”4

At the hearing Floworks candidly admitted that it was making this argument because the

result of the arbitration was unfavorable to it; Floworks suggested that had the arbitration gone the

other way, Snyder likely would be making the same argument now. It failed, however, to review the

record adequately to determine whether this argument was tenable. Even at the hearing, Floworks

insisted that it had never used the word “binding” to describe the arbitration in prior representations

to this Court. As set out above, that is simply not accurate. The initial joint case management

conference statement, signed by Floworks’ counsel, stated, “this issue will be addressed through the

binding arbitration which will follow if [Snyder] is successful on the interpretation issue.” (Docket

No. 11, p.3, emphasis added.) The same document declared that the parties were in agreement that

the operating agreement “requires binding arbitration as to the amount of the Payment.” (Id. at p.4,

emphasis added.) 

The second joint case management conference statement, also signed by Floworks’ counsel,

may not have used the word “binding” per se, but it expressly provided that the parties anticipated

“further proceedings to enforce any award [that] is entered upon completion of arbitration.” (Docket

No. 26, p. 3.) In a similar vein, there is no dispute that Floworks’ answer stated “ADMIT” to an

averment of the complaint herein that, if Snyder prevailed in arbitration, he would be entitled to “a

money judgment in [his favor] against Floworks confirming the amount of any such arbitration

award.” (Complaint ¶ 46; see also Dunbar Decl. in Opposition to Motion to Confirm [Docket No.

52] (seeking relief from “inadvertent” admission to averment).)5

Finally, in addition to representing to this Court on multiple occasions that it agreed the

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 Floworks’ passing request that it be permitted to amend its answer to omit the admission

should be denied. Had that admission been the only instance where Floworks admitted in a pleading

that the arbitration was binding or subject to judicial confirmation, a motion for leave to amend on

grounds of inadvertence might be properly entertained. Under these circumstances, though,

Floworks has not shown and cannot show that leave to amend is warranted.

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arbitration was to be binding or that a judgment confirming any award would be appropriate, the

record shows that Floworks made a similar representation to a third party. In April of 2005,

Floworks entered into a written assignment agreement with Langenberg Research, Inc. whereby

Floworks transferred it rights and interests under the Stanford Square operating agreement to

Langenberg. In that document, Floworks warranted that it owned the rights it was assigning “free

and clear” of any claims except for the claims made by Snyder, which were “to be decided through

binding arbitration under [the] auspices of District Court for Northern California [sic].” (Decl. of S.

Snyder in Support of Order Permitting Immediate Registration for Enforcement, Exh. 3.)

It may be true that Floworks took the position that it had not agreed to arbitrate with Snyder

at all. On this record, however, its argument that it did not agree or understand that if it lost that

argument the arbitration would be binding and subject to judicial confirmation borders on the

frivolous.6

B. The District Court Has Jurisdiction to Confirm the Award and Enter Judgment

As intuitive as it might appear that a court that compels a binding arbitration thereafter has

jurisdiction to confirm the award and enter judgment, the question of whether a federal court has

such jurisdiction is surprisingly close. Section 9 of the Federal Arbitration Act (“FAA”) (9 U.S.C. §

9) provides, in relevant part,

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. If no court is specified in the

agreement of the parties, then such application may be made to the United States

court in and for the district within which such award was made. 

(Emphasis added.)

Here, Floworks argues (correctly) that the arbitration clause in the operating agreement

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 Floworks also argues that neither it, nor Snyder, are signatories to the operating agreement

and that therefore there is no arbitration agreement between them at all. As mentioned above,

however, Floworks never contested that by accepting the benefits of its election as manager under

the operating agreement, it was bound by the arbitration provision; it only argued that its obligation

under that provision was to negotiate and arbitrate with Stanford Management, not Snyder. 

Floworks lost that argument on summary judgment and it will not be revisited here. 

8

 Snyder, in turn, has filed a “motion to strike” Floworks’ notice of rejection of the award

[Docket No. 56]. Given that Floworks’ notice has no legal effect, a specific ruling on the motion to

strike is discretionary.

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 The Court does not suggest that any statutory or non-statutory grounds to vacate the award

appear to exist and Floworks should not file such a motion unless it has good faith arguments to the

contrary.

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contains no express provision for entry of judgment by this or any other court.7

 Floworks contends,

as a result, that no judge of this court has jurisdiction to grant Snyder’s pending motions. In

conformance with California state statutes and practice, Floworks has filed a formal “rejection” of

the arbitration award and a request for trial de novo [Docket No. 54], as if the arbitration were

conducted under California’s procedures for non-binding judicial arbitration. (See Cal. Code Civ.

P. §§ 1141.10, et seq.)

8

 As noted above, Floworks has not filed a motion to vacate the award,

despite some indication that it intended to do so.9

Snyder argues that notwithstanding the language of Section 9 of the FAA, federal courts

have consistently held that jurisdiction to confirm an award and enter judgment flows from any order

compelling arbitration, whether or not the arbitration clause so specifies. It appears, however, that

Courts in only one circuit–the Second Circuit–have ever reached such a conclusion, and that the

reasoning behind those decisions is open to question. As an initial matter, when first confronted

with an arbitration clause that did not call for court confirmation, the Second Circuit concluded that

Section 9 of the FAA precluded confirmation of the award in federal court:

 It does not follow however that simply because the contract in issue involves

interstate commerce, a federal court has jurisdiction to confirm the award and enter

judgment. The Act provides that confirmation of an arbitration award is appropriate

only where the parties “in their agreement have agreed that a judgment of the court

shall be entered upon the award . . .” 9 U.S.C. § 9. There was no such explicit

agreement here . . . .

Varley v. Tarrytown Associates, Inc., 477 F.2d 208, 210 (2d Cir. 1973). The trial court in Varley 

had confirmed the arbitration award and entered judgment, but the Circuit held, “[i]n view of the

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explicit language of § 9 of the Act requiring such agreement and finding none, we have no

alternative but to reverse.” Id. In Varley, the arbitration had gone forward without any order to

compel arbitration by a court.

Some years later, the Second Circuit again examined the meaning and effect of Section 9 in

Smiga v. Dean Witter Reynolds, Inc., 766 F.2d 698 (2d Cir. 1985), the case on which Snyder most

heavily relies. The Smiga court acknowledged the Varley precedent, and did not expressly

distinguish it. Smiga, however, found jurisdiction to confirm an arbitration award existed because

the trial court had previously denied a motion to stay the arbitration, which, it found, “was

essentially the equivalent of an order by the district court to compel arbitration.” 766 F.2d at 705. 

Although the conclusion that denying a motion to stay an arbitration is equivalent to compelling

arbitration appears sound, Smiga’s finding that jurisdiction therefore existed is less well-founded. 

Smiga asserted that the Second Circuit had previously “held that a court which orders

arbitration retains jurisdiction to determine any subsequent application involving the same

agreement to arbitrate, including a motion to confirm the arbitration award.” 766 F.2d at 705 (citing

Marchant v. Mead-Morrison Mfg. Co., 29 F.2d 40, 43 (2d Cir.1928).) The Smiga court, however,

appears to have misread Marchant, which neither involved nor discussed Section 9 of the FAA. 

Rather, the question in Marchant was only whether a petition to confirm an arbitration award filed in

New York state court was a new and separate proceeding from the original motion to compel

arbitration that had also been filed in state court, so as to give defendant a new right to remove the

matter to federal court based on diversity jurisdiction. The Marchant court concluded only that the

original application to appoint an arbitrator and compel arbitration, the arbitration itself, and the

subsequent application to confirm the award, “was all one arbitration proceeding, to settle the

controversies which had arisen between the parties . . . . [t]hey were not separable controversies.” 29

F.2d at 43.

As a result, according to Marchant, the filing of the petition to confirm the award did not trigger the

running of a new period to remove the matter to federal court.

Although the rationale of the Marchant court that matters such as this involve “all one

arbitration proceeding,” rather than “separable controversies” certainly supports a conclusion that, as

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10 Somewhat oddly, the Smiga court also cited a case from the Southern District of

California for the proposition that jurisdiction to confirm an award follows from an order compelling

arbitration. 766 F.2d at 705 (citing Lesser Towers, Inc. v. Roscoe-Ajax Construction Co., 258

F.Supp. 1005, 1007 (S.D.Cal.1966).) Lesser Towers, however, considered only the same basic

question (and reached the same result) as in Marchant–i.e. that a petition to confirm an arbitration

award filed in state court does not trigger a right to remove to federal court.

11 Snyder cites the following cases in support of his contention that the Smiga rule has been

widely followed. Each, however, is distinguishable or otherwise not on point for one reason or

another: T&R Enterprises v. Continental Grain Co., 613 F.2d 1272, 1274 (5th Cir. 1980) (arbitration

clauses expressly provided that arbitration was “final and binding”); Balt. & O. Chi. Terminal R.R.

10

a practical matter, a court having jurisdiction to compel an arbitration ought to have jurisdiction to

confirm the award, Marchant neither considered nor decided what jurisdiction a federal court has

under Section 9 of the FAA where the terms of that provision are not satisfied. Accordingly, the

Smiga court’s reliance on Marchant as a basis for departing from the language of the statute or the

Second Circuit’s holding in Varley is uncertain, at best.10

Snyder asserts that Smiga has been followed in numerous other circuits, including by district

courts in this circuit. A closer reading of the authorities Snyder cites, however, reveals that apart

from Smiga itself and other cases in the Second Circuit, there do not appear to be any cases that have

squarely held that a federal court obtains jurisdiction to confirm an arbitration award merely from

having granted a motion to compel the arbitration. Rather, as explained by the Tenth Circuit, it

appears that courts will find jurisdiction to confirm an award in the absence of an arbitration clause

that expressly provides for such confirmation where at least one of two further conditions exist:

In addition to explicit language evidencing a consent to judgment, courts have

recognized two other methods by which parties can manifest consent to judicial

confirmation of arbitration awards. If the parties to an arbitration clause agree that

their arbitration shall be final and binding, some courts have held that the parties have

consented to judicial confirmation of awards, because judicial involvement is the only

way to make arbitration awards final and binding. [Citations.} This “finality

exception” has been criticized, however, because “without more, it is equally

plausible that a finality clause could be interpreted to mean [that] the parties intended

to have the award enforced in state rather than federal court.” [Citation.] 

Similarly, courts have also held that parties who agree that their arbitration shall be

governed by the rules of the AAA [American Arbitration Association] have implicitly

consented to judicial confirmation, because AAA Rule 47 (c) states that “[p]arties to

these rules shall be deemed to have consented that judgment upon the arbitration

award may be entered in any federal or state court having jurisdiction thereof.”

P & P Industries, Inc. v. Sutter Corp., 179 F.3d 861, 867 (10th Cir. 1999).11

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v. Wisconsin Central, Ltd., 154 F.3d 404, 407 (7th Cir. 1998) (Smiga rule cited but without analysis

of Section 9 of the FAA or any discussion of the arbitration clause at issue); Public Serv. Co. v.

Burlington N. R.R., 1995 WL 640375, *3-4 (10th Cir. 1995) (unpublished decision finding

jurisdiction where arbitration agreement expressly called for court involvement in appointment of

arbitrators and that arbitration would be “final and binding”); Collins v. D.R. Horton, Inc., 361 F.

Supp. 2d 1085, 1091 (D. Ariz. 2005) (Smiga cited as basis for jurisdiction where court had

previously dismissed case after compelling arbitration; no analysis of Section 9 of the FAA or any

discussion of the arbitration clause at issue); Pacific Bell v. Covad Communs. Co., 1999 WL 390840

(N.D. Cal. 1999)(Smiga principle cited but rejected as basis for jurisdiction where court had not

ordered arbitration in the first instance); Grammar v. Artists Agency, 2000 WL 1897256, *6 (C.D.

Cal. 2000) (party that invokes court’s jurisdiction to vacate award cannot challenge court’s

jurisdiction to confirm award; no analysis of Section 9 of the FAA or discussion of arbitration clause

in dispute.)

11

Here, the arbitration clause in the operating agreement does not expressly provide that the

arbitration is to be final or binding, nor does it refer to or incorporate the rules of the American

Arbitration Association. Nevertheless, one clear principle that can be distilled from the precedents

is that Section 9 of the FAA has consistently been interpreted and applied as not necessarily

requiring an express reference to court confirmation of the award and entry of judgment within the

four corners of the document containing the arbitration clause. Rather courts will look beyond the

clause itself in an effort to determine whether the parties intended that the arbitration would be

binding and subject to court confirmation. As stated by the P & P court, the critical issue is whether

“the parties have agreed, explicitly or implicitly, that any eventual arbitration award shall be subject

to judicial confirmation.” 179 F.3d at 866 (emphasis added.)

The facts of this case are perhaps unusual given that there was nothing in the text of the

operating agreement that would have precluded a party from taking the position from the outset that

any arbitration would be non-binding or that any award would not be subject to confirmation in this

Court. As set out above, however, both parties clearly, unequivocally, and repeatedly expressed

their understanding and agreement that the operating agreement should be interpreted as calling for

arbitration that would be binding and subject to confirmation in this court. Most significantly, the

parties jointly represented to the Court that: (1) “The parties agree that if the Trustee [Snyder]

prevails on this first claim, the Operating Agreement for [Stanford Square] requires binding

arbitration as to the amount of the Payment.” [Docket No. 11, p. 4 (emphasis added)], and, (2) “the

parties agree that this civil action may be stayed . . . pending . . . further proceedings to enforce any

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12 In Home Ins. Co., only a petition to confirm the award was pending and the court required

amendment of petition to seek confirmation under state law. Here, such a procedural step would not

be necessary because there is an underlying complaint, not merely a petition to confirm the award.

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award [that] is entered upon completion of arbitration.” [Docket No. 26, p.3 (emphasis added)]

Accordingly, Floworks may be correct that the face of the operating agreement would allow

for an interpretation that any arbitration thereunder was non-binding and not subject to confirmation,

but Floworks is bound by its prior representation and agreement that the operating agreement should

be interpreted as requiring binding arbitration and permitting subsequent court enforcement of any

award. For this reason alone, jurisdiction appears proper here, regardless of whether or not the rule

enunciated in Smiga is sound.

Finally, as a separate and independent basis for exercising jurisdiction, California Code of

Civil Procedure §§ 1285 et seq. provides for judicial confirmation of arbitration awards without any

requirement that the arbitration agreement refer to such confirmation. Although Snyder has not

expressly invoked the California statute, there appears to be no reason that would preclude the Court

from applying it. See Home Ins. Co. v. RHA/Pennsylvania Nursing Homes, Inc.,127 F.Supp.2d 482

(S.D.N.Y. 2001) (after initially concluding there was no jurisdiction to confirm award under FAA,

district court allowed party to seek to confirm award under state law).12 Notwithstanding the

discussion of section 9’s “jurisdictional” requirements above, it is undisputed that the Court has

jurisdiction over this action on grounds of diversity, rather than by virtue of any provision of the

FAA. Indeed, it is well-settled that a federal court must have such independent basis for jurisdiction

prior to acting under the FAA. Moses H. Cone Mem’l Hospital v. Mercury Construction Corp., 460

U.S. 1, 25 n.32 (1983). Additionally, although California’s statutes governing confirmation of

arbitration awards appear in the state’s Code of Civil Procedure and certainly include procedural

aspects, the question of whether an award is subject to judicial confirmation is substantive in nature. 

Thus, there appears to be no barrier to this Court confirming the award pursuant to California law,

regardless of whether or not confirmation is also proper under the FAA.

As Floworks has not suggested that there is any reason that the award should not be

confirmed and judgment entered other than its arguments considered and rejected above, and

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confirmation and entry of judgment otherwise appearing proper, the undersigned recommends that

Snyder’s motion to confirm the award and enter judgment be granted.

C. The Judgment Should be Certified Under 28 U.S.C §1963

28 U.S.C. § 1963, provides, in relevant part,

A judgment in an action for the recovery of money or property entered in any . . .

district court . . . may be registered by filing a certified copy of the judgment in any

other district . . . when the judgment has become final by appeal or expiration of the

time for appeal or when ordered by the court that entered the judgment for good

cause shown.

(Emphasis added.)

To show “good cause” for immediate certification, a party need establish only “an absence of

assets in the judgment forum, coupled with the presence of substantial assets in the registration

forum” Columbia Pictures Indus. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1197-98

(9th Cir. 2001). Here, Snyder has made that showing. See Decl. of S. Snyder in Support of Order

Permitting Immediate Registration for Enforcement, and exhibits thereto. Floworks has not

attempted to rebut this showing or even to oppose the motion to certify, apart from its general

opposition that confirmation and entry of judgment is improper. Accordingly, the undersigned

recommends that Snyder’s motion to certify the judgment under 28 U.S.C. §1963 for immediate

registration in other districts be granted.

IV. CONCLUSION

For the reasons set forth above, this action shall be reassigned to a district court judge with

the recommendation that plaintiff’s motions be granted, and judgment entered and certified

accordingly.

IT IS SO ORDERED.

Dated: March 26, 2007 

RICHARD SEEBORG

United States Magistrate Judge

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THIS IS TO CERTIFY THAT NOTICE OF THIS ORDER HAS BEEN GIVEN TO:

Spencer T Denison spencer.denison@hro.com, jan.diggles@hro.com

J. Mark Dunbar mdunbar@dunbarlaw.com,

James Wesley Kinnear wesley.kinnear@hro.com, alice.tam@hro.com; molly.morris@hro.com

Adria Yvonne LaRose larosea@hro.com

Paula Quintiliani paula.quintiliani@hro.com, jill.wilkinson@hro.com

Counsel are responsible for distributing copies of this document to co-counsel who have not

registered for e-filing under the Court's CM/ECF program. 

Dated: 3/26/07 Chambers of Judge Richard Seeborg

By: /s/ BAK 

Case 5:04-cv-02926-RMW Document 59 Filed 03/26/07 Page 14 of 14