Court Opinion

ID: 6113443
Source: CourtListenerOpinion
Date Created: 2022-01-27 22:02:18.276066+00
Date Added: 2024-06-11T08:02:37.903698
License: Public Domain

COURT OF CHANCERY
                                        OF THE
                                  STATE OF DELAWARE
PAUL A. FIORAVANTI, JR.                                           LEONARD L. WILLIAMS JUSTICE CENTER
  VICE CHANCELLOR                                                    500 N. KING STREET, SUITE 11400
                                                                    WILMINGTON, DELAWARE 19801-3734

                               Date Submitted: October 12, 2021
                                Date Decided: January 27, 2022

   Neal C. Belgam, Esquire                          Thomas A. Uebler, Esquire
   Robert K. Beste, III, Esquire                    Joseph L. Christensen, Esquire
   Smith Katzenstein & Jenkins LLP                  McCollom D’Emilio Smith Uebler LLC
   1000 West Street, Suite 1501                     Little Falls Centre Two
   Wilmington, DE 19801                             2751 Centerville Road, Suite 401
                                                    Wilmington, DE 19808

                 Re:      Astrum Fund I GP, LP v. Sylvie Maracci et al.,
                          C.A. No. 2020-0919-PAF

                          Sylvie Maracci et al. v. Astrum Fund I GP, LP et al.,
                          C.A. No. 2021-0073-PAF

  Dear Counsel:

          This Letter Opinion addresses three motions in two related cases concerning

  an arbitration decision issued on July 20, 2020. First, in C.A. No. 2020-0919,

  Petitioner Astrum Fund I GP, LP (“Astrum GP”) seeks to vacate the arbitration

  decision. Astrum GP has moved for summary judgment on its petition. Respondents

  Sylvie Maracci, Farhad Bahar, Carole Filley, Sharon Carz, and Joshua Penn

  (collectively the “Limited Partners”) have moved to dismiss Astrum GP’s petition.

  Second, in C.A. No. 2021-0073, the Limited Partners have filed a petition to confirm

  the arbitration decision. The Limited Partners have moved for summary judgment
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in their action. The parties have briefed all three motions in one series of briefs.1

For the reasons stated below, the motions are denied.

I.    BACKGROUND 2

      Unless otherwise specified, the facts recited in this Letter Opinion are drawn

from the Verified Petition to Vacate Arbitration Decision (the “First Vacatur

Petition” or “First Vacatur Pet.”), 3 the Amended Verified Petition to Vacate

1
  The parties briefed all three motions in a single series of four briefs pursuant to a
stipulated scheduling order. Dkt. 7. For ease of reference, this is how the briefing
proceeded and how the court will refer to each brief in this Letter Opinion: On March 12,
2021, the Limited Partners filed their opening brief (the “LPs’ Opening Br.”). Dkt. 26. On
April 9, 2021, the Astrum Parties filed their combined opening and answering brief (the
“Astrum Parties’ Ans. Br.”). Dkt. 27. On May 7, 2021, the Limited Partners filed their
combined answering and reply brief (the “LPs’ Reply Br.”). Dkt. 28. On May 21, 2021,
the Astrum Parties filed their reply brief (the “Astrum Parties’ Reply Br.”). Dkt. 29.
2
  C.A. No. 2020-0919-PAF is referred to as the “Astrum Parties’ Action” and C.A. No.
2021-0073-PAF is referred to as the “Limited Partners’ Action.” Unless otherwise
specified, docket references refer to the Astrum Parties’ Action.
3
  Dkt. 1. The First Vacatur Petition was filed by Astrum Fund I Manager, LP (“Astrum
Manager”) “as the “managing partner of Astrum Fund I, LP.” First Vacatur Pet. ¶ 6. The
Amended Vacatur Petition was filed by Astrum Fund I GP, LP in its alleged capacity as
“the general partner of Astrum Fund I LP. Am. Vacatur Pet. ¶ 6. In their combined opening
and answering brief with respect to all three motions, counsel for the Astrum Parties
indicated that they had learned the First Vacatur Petition “inadvertently named Astrum
Manager as the petitioner rather than Astrum GP. When Astrum GP discovered this issue,
[Astrum GP] was promptly revived and filed an Amended Petition substituting itself as the
petitioner.” Astrum Parties’ Ans. Br. 21. Except for substituting Astrum GP for Astrum
Manager, the Amended Vacatur Petition is nearly identical to the First Vacatur Petition.
According to the Limited Partners, Astrum Manager “managed Astrum for a discrete
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Arbitration Decision (the “Amended Vacatur Petition” or “Am. Vacatur Pet.”),4 and

the Verified Petition to Confirm Arbitration Award and Resolve Damages (the

“Confirmation Petition” or “Confirmation Pet.”),5 and documents integral thereto.6

          A.     The Parties
          Astrum Fund I LP (“Astrum”), a real estate investment vehicle, is a Delaware

limited partnership that was formed on May 27, 2011.7 Astrum’s general partner is

Astrum GP, a Delaware limited partnership, with its primary place of business in

California.8      Astrum GP’s general partner is Astrum I.M., LLC (“Astrum

California”), a California limited liability company formed on July 10, 2010. 9

          Nevin Sanli, a California resident, “is the founder, majority owner, and

managing director of Astrum California.” 10 The Limited Partners allege that,

period of time at inception, but not beyond.” LPs’ Opening Br. 1. As of the date of
argument, Astrum Manager was no longer a named party in either case.
4
    Dkt. 22.
5
    Limited Partners’ Action, Dkt. 1.
6
    Exhibits attached to the Limited Partners’ Opening Brief will be cited as “Ex.”
7
    LPs’ Opening Br. 1. See Ex. A (“Partnership Agreement” or “LPA”).
8
    Am. Vacatur Pet. ¶ 6.
9
    Confirmation Pet. ¶¶ 18–19.
10
     Id. ¶ 20.
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through counsel, Sanli has controlled Astrum, Astrum GP, and Astrum California in

this litigation and in the arbitration giving rise to this litigation. 11 Astrum, Astrum

GP, Astrum California, and Sanli are together the “Astrum Parties.”12

         Sylvie Maracci, Farhad Bahar, Carole Filley, Sharon Carz, and Joshua Penn

invested in and became limited partners of Astrum in June 2011. Astrum is governed

by an Amended and Restated Limited Partnership Agreement (the “Partnership

Agreement” or “LPA”).

11
     Id. ¶¶ 8–9, 16–17, 26–27. The Astrum Parties do not dispute this allegation.
12
   There are several allegations as to the viability of some of the Astrum entities and their
authority to act at various times in this action. For example, the Delaware Secretary of
State canceled Astrum’s existence on October 24, 2017, due to Astrum’s failure to appoint
a registered agent. Confirmation Pet. ¶ 4. Astrum GP filed a Certificate of Revival with
the Delaware Secretary of State on February 3, 2021, to revive Astrum. Ex. O. The
Delaware Secretary of State canceled Astrum GP’s existence on June 1, 2017, due to its
failure to pay taxes. Confirmation Pet. ¶ 12. Astrum GP’s general partner, Astrum
California, filed a Certificate of Revival with the Delaware Secretary of State on February
3, 2021, to revive Astrum GP. Ex. P. Astrum California was dissolved and had its
existence canceled when, on February 16, 2018, Sanli filed a Certificate of Dissolution and
a Certificate of Cancellation with the California Secretary of State. Ex. Q. Some of these
facts are disputed, and the implications of those events—including the timing of the filing
of the Amended Vacatur Petition—are among other grounds for the Limited Partners’
opposition to the Astrum Parties’ efforts to vacate the Arbitrator’s decision. I need not
address those issues here, because I deny all three motions on the grounds that the
Arbitrator’s decision is not final.
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          B.        The Limited Partnership Agreement

          Upon investing Astrum, each of the Limited Partners signed the Partnership

Agreement. 13 At that time, Sanli was Astrum’s Original Limited Partner. 14 Sanli

executed the LPA on behalf of Astrum GP. 15

          The Partnership Agreement exculpates Astrum GP from liability for any

losses suffered by Astrum or any of the limited partners, except for losses

attributable to “Disabling Conduct.”16 Disabling Conduct is defined as “a final

adjudication, by binding arbitration in accordance with [the LPA’s dispute resolution

provisions], of the occurrence of fraud, willful misconduct, reckless disregard of

duties, uncured gross negligence, or an uncured material breach of this Agreement,

in each case causing material damage to the Partnership.” 17

          The dispute resolution section of the Partnership Agreement contains both a

forum selection provision and an arbitration provision. Section 16.4 provides in

pertinent part:

13
     Confirmation Pet. ¶ 29.
14
     LPs’ Opening Br. 5.
15
     LPA.
16
     Id. § 6.l(a)
17
     Id. § 1.1.
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          Except as provided in Section 16.5, any action or proceeding against the
          parties relating in any way to this Agreement may be brought and enforced
          only in the courts of the State of Delaware or the United States District Court
          for the District of Delaware, to the extent subject matter jurisdiction exists
          therefore . . . . 18

Section 16.5 provides in pertinent part:

          Any dispute between the General Partner and the Limited Partners with
          respect to any Disabling Conduct or any conflict of interest between the
          General Partner and [Astrum], or any interpretation of this Agreement shall
          be submitted to expedited arbitration as provided below (but any damages
          must be resolved in a court described in Section 16.4). The prevailing party
          in any arbitration or litigation shall be reimbursed for its arbitration costs
          (including attorneys’ fees) by the non-prevailing party.

          If any dispute arises concerning the interpretation, validity or performance of
          this Agreement or any of its terms and provisions . . . then the parties shall
          submit such dispute for binding determination before a retired judge selected
          from the American Arbitration Association (‘AAA’) (pursuant to the
          commercial rules) . . . . The arbitrator shall apply Delaware substantive law to
          the [arbitration] proceeding. The arbitrator shall, to the fullest extent
          permitted by law, have the power to grant all legal and equitable remedies and
          award compensatory damages provided by law . . . . The arbitrator shall award
          costs and attorneys’ fees in accordance with the terms and conditions of this
          Agreement . . . . Any Delaware court having jurisdiction may enter judgment
          on the award rendered by the arbitrator, or correct or vacate such award as
          provided by applicable law . . . .

          Notwithstanding any provision of the Agreement to the contrary, this Section
          16.5 shall be construed to the maximum extent possible to comply with the
          laws of the State of Delaware, including the Uniform Arbitration Act (10 Del.
          C. 5701 et seq.) (the ‘Delaware Arbitration Act’). If, nevertheless, it shall be

18
     Id. § 16.4.
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           determined by a court of competent jurisdiction that any provision or wording
           of this Section 16.5, including any rules of the American Arbitration
           Association, shall be invalid or unenforceable under the Delaware Arbitration
           Act, or other applicable law, such invalidity shall not invalidate all of this
           Section 16.5. In that case, this Section 16.5 shall be construed so as to limit
           any term or provision so as to make it valid or enforceable within the
           requirement of the Delaware Arbitration Act or other applicable law, and, in
           the event such term or provision cannot be so limited, this Section 16.5 shall
           be construed to omit such invalid or unenforceable provision.19

           C.      The Arbitration

           In 2013, Astrum purchased a portfolio of five properties from American

Forest Products, LLC, which Astrum then leased back. 20 The leasee defaulted,

leading to Astrum’s ultimate failure.21          The Limited Partners lost their entire

investment except for a “few dividend payments.”22 On September 15, 2016,

Maracci, Bahar, Filley, Carz, and others filed an action against Astrum, Astrum GP,

Astrum California, Sanli and others in California state court, alleging breach of the

Partnership Agreement and other claims (the “California Action”). 23 On January 6,

2017, the California court dismissed the California Action without prejudice on

19
     Id. § 16.5.
20
     LPs’ Opening Br. 5.
21
     Id. at 7.
22
     Id.
23
     See Ex. I (A) at 1–2.
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grounds of forum non conveniens.24 By then, the Limited Partners had initiated

arbitration proceedings against the Astrum Parties, Astrum Manager, and Sanli

Pastore & Hill, a California partnership (“SPH”), before the American Arbitration

Association (the “Arbitration Action”).25 The Honorable Nicholas J. Dibiaso (Ret.)

served as the arbitrator (the “Arbitrator”). 26 On April 13, 2018, the Arbitrator

granted the motion of Astrum Manager, Astrum California, and SPH to dismiss on

the grounds that they were not signatories to the LPA and, therefore, the Arbitrator

lacked arbitral jurisdiction. 27

          On July 20, 2020, the Arbitrator issued a 51-page Final Interim Decision

containing findings of fact and conclusions of law.28 On August 3, 2020, the

Arbitrator issued an Interim Partial Award (or “IPA”). 29 The Interim Partial Award

24
     Id. at 1.
25
     LPs’ Opening Br. 1–2; Ex. B at 26 (noting action initiated in September 2016).
26
   Judge Dibiaso previously served as trial appellate court judge in the California State
courts.         Justice            Nickolas       J.          Dibiaso            (Retired),
https://www.fedarb.com/professionals/justice-nickolas-j-dibiaso-retired-ca-justice-of-the-
court-of-appeal/ (last visited Jan. 27, 2022).
27
     Ex. K at 1.
28
     Ex. B.
29
     Ex. C.
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held that Astrum GP had committed Disabling Conduct by breaching the LPA and,

separately, by breaching the fiduciary duty of care. 30 The Arbitrator stopped short

of issuing a final award because of language in Section 16.5 of the LPA that states

“any damages” with respect to a Disabling Conflict “must be resolved” in a

Delaware court:

          Because Part I of Section 16.5 of the [LPA] is a specific provision that controls
          over the general provisions in Part II of Section 16.5 of the Limited
          Partnership Agreement, the Arbitrator does not have arbitral jurisdiction to
          ‘resolve’ the damages, if any, resulting from either [Astrum GP’s] breach of
          the contract or [Astrum GP’s] breach of the fiduciary duty of care, and, under
          Part I of Section 16.5 of the [LPA], all such damages, if any, must be
          ‘resolved’ by an appropriate Delaware Court.31

          On October 27, 2020, Astrum Manager filed the First Vacatur Petition

challenging the Interim Partial Award (C.A. No. 2020-0919).32 On December 15,

2020, the Limited Partners moved to dismiss the First Vacatur Petition in its

entirety. 33 On December 29, 2020, Astrum Manager moved for summary judgment

as to the claims in the First Vacatur Petition.34 On February 9, 2021, Astrum GP

30
     Id. ¶¶ 4–5.
31
     Id. ¶ 6.
32
     Dkt. 1.
33
     Dkt. 15.
34
     Dkt. 16.
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filed the Amended Vacatur Petition.35 On March 3, 2021, the Limited Partners

moved to dismiss the Amended Vacatur Petition in its entirety. 36

         On January 28, 2021, the Limited Partners filed their Confirmation Petition to

confirm the IPA (C.A. No. 2021-0073).37 On March 3, 2021, the Limited Partners

moved for summary judgment as to the claims in the Confirmation Petition. 38 The

parties briefed the motions, and the court heard argument via remote video on

October 12, 2021. 39

         The parties’ arguments are briefly summarized as follows. The Limited

Partners contend the Arbitrator’s decision is final, and in any event, the court should

“resolve” damages based upon the Arbitrator’s decision and confirm the Interim

Partial Award under the Delaware Uniform Arbitration Act (“DUAA”).                 The

Limited Partners also argue that the petitions to vacate are untimely and

unauthorized because the entities that filed the petitions had been canceled when

they asserted their challenges to the Arbitrator’s decision. The Limited Partners also

35
     Dkt. 22.
36
     Dkt. 25.
37
     Limited Partners’ Action, Dkt. 1.
38
     Limited Partners’ Action, Dkt. 7.
39
     Dkt. 34.
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argue that the Astrum Parties have not established grounds to vacate the Arbitrator’s

decision under the criteria set forth in Section 5714 of the DUAA. The Astrum

Parties contend that the Arbitrator’s decision is not final and that the decision must

be vacated pursuant to the DUAA because the Arbitrator exceeded his authority.

II.      ANALYSIS

         Astrum GP’s Amended Vacatur Petition seeks to vacate the Interim Partial

Award under the DUAA.40 The Confirmation Petition likewise states that the

Limited Partners “bring this action” “[p]ursuant to the Delaware’s Uniform

Arbitration Act, Sections 5701 through 5725 of Title Ten.”41

         The Limited Partners seek to dismiss the Amended Vacatur Petition under

Rule 12(b)(1) for lack of subject matter jurisdiction and under Rule 12(b)(6) the

Amended Vacatur Petition for failure to state a claim. 42 Both sides have moved for

summary judgment on their respective petitions—Astrum GP seeking to vacate the

Arbitrator’s decision, and the Limited Partners to confirm it.

 Am. Vacatur Pet. ¶ 5 (“10 Del. C. 5714(a)(3) authorizes the Court to vacate awards in
40

which an arbitrator exceeds his or her authority. The Court should do so here.”).
41
     Confirmation Pet. at 1.
42
     LPs’ Opening Br. 10.
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      A.       The Interim Partial Award Is Not a Final Award Subject to
               Confirmation or Vacatur Under the Delaware Uniform
               Arbitration Act.

      “The Court of Chancery is proudly a court of limited subject matter

jurisdiction. The Court defends that boundary and has a duty to examine issues of

subject matter jurisdiction sua sponte.”         Crown Castle Fiber LLC v. City of

Wilmington, 2021 WL 2838425, at *1 (Del. Ch. July 8, 2021). “The Court of

Chancery will dismiss an action for want of subject matter jurisdiction if it appears

from the record that the Court does not have jurisdiction over the claim.” Medek v.

Medek, 2008 WL 4261017, at *3 (Del. Ch. Sept. 10, 2008) (cleaned up). “The

burden of establishing the court’s subject matter jurisdiction rests with the party

seeking the Court’s intervention” and the “court may consider documents outside

the complaint.” Maloney-Refaie v. Bridge at Sch., Inc., 2008 WL 2679792, at *7

(Del. Ch. July 9, 2008) (cleaned up). “It is settled law that parties may not confer

subject matter jurisdiction by agreement.” Thompson v. Lynch, 990 A.2d 432, 434

(Del. 2010).

               1.   The DUAA Applies.

      When parties have expressly provided in their contract for the DUAA to

govern their dispute, the DUAA applies. See 10 Del. C. § 5702(a) (“The making of
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an agreement described in § 5701 . . . specifically referencing the [DUAA] and the

parties’ desire to have it apply to their agreement confers jurisdiction on the Court

[of Chancery] to enforce the agreement under this chapter . . . .”). 43

         Section 16.5 of the LPA provides that it “shall be construed to the maximum

extent possible to comply with the laws of the State of Delaware, including the

Uniform Arbitration Act (10 Del. C. 5701 et seq.) . . . .” The DUAA plainly and

unambiguously applies, and no party contends otherwise.

                2.     The Court’s Authority to Confirm, Vacate, or Modify
                       Awards Under the DUAA

         Where a party petitions to confirm, vacate, or modify an award under the

DUAA, the court is strictly bound by the requirements of the statute and lacks subject

matter jurisdiction to do anything else. See SC&A Constr., Inc. v. Potter, 2016 WL

70901, at *2 (Del. Ch. Jan. 6, 2016) (denying motion to vacate as time-barred and

holding “I am therefore without jurisdiction to entertain such a request here, and

must confirm the Arbitration Award under Section 5713”), aff’d, 147 A.3d 748 (Del.

2016). Under 10 Del. C. § 5713, the court “shall confirm an award upon complaint

or application of a party in an existing case made within [one] year after its delivery

43
     10 Del. C. § 5702(a).
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to the party” 44 unless a motion to vacate, modify, or correct the award is, subject to

certain exceptions, “made within 90 days after delivery of a copy of the award to the

applicant.”45 “If the application to vacate is denied and no motion to modify or

correct the award is pending, the Court shall confirm the award.” 46

          If a party does not move to vacate, modify, or correct a final award within 90

days of the award’s delivery, the court lacks jurisdiction to vacate or modify the

award; “the courthouse doors are closed.” Gulf LNG Energy, LLC v. Eni USA Gas

Mktg. LLC, 242 A.3d 575, 584 (Del. 2020). This court interprets the DUAA to be

consistent with the Federal Arbitration Act (the “FAA”) because “Delaware

arbitration law mirrors federal law.” James & Jackson, LLC v. Willie Gary, LLC,

906 A.2d 76, 79 (Del. 2006). As with the FAA, if the parties have agreed the DUAA

controls their arbitration, then Sections 5713, 5714, and 5715 “provide the exclusive

means to vacate, modify, or correct the award.” Gulf LNG Energy, 242 A.3d at 583

(discussing the analogous provisions of the FAA). “In considering an application to

vacate an arbitration award, the Court is limited to a determination of whether there

44
     10 Del. C. § 5713.
45
     Id. §§ 5714(b), 5715(a).
46
     Id. § 5714(d).
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exists any of the five statutory grounds for vacating an award, as set forth in 10 Del.

C. § 5714.” Malekzadeh v. Wyshock, 611 A.2d 18, 21 (Del. Ch. 1992) (citing federal

cases applying the FAA); accord Mansoory v SC&A Const., Inc., 2009 WL

2140030, at *3 (Del. Ch. July 9, 2009) (“In considering an application to vacate and

arbitration award, the court is limited to determining whether there exists any of the

five statutory grounds for vacating an award as set forth in 10 Del. Ch. § 5714.”);

see Capron v. Buccini, 2001 WL 237929, at *2 (Del. Super. Ct. Feb. 28, 2001) (“the

[DUAA] is the exclusive remedy now available to the appellant to confirm an

arbitration award”).

      Section 5714 of the DUAA allows the court to vacate an award under five

specific statutory grounds. In general, Section 5714 “allows the court to vacate an

award when corruption, fraud partiality, or an invalid arbitration agreement is

present. The court can also vacate an award if an arbitrator exceeded his power or

the award was procured by other undue means.” Worldwide Ins. Gp. V. Klopp, 603

A.2d 788, 791 n.4 (Del. 1992).
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             3.     Under the DUAA, the Court Confirms, Modifies, or Vacates
                    Final Decisions.

      As a general matter, the DUAA contemplates confirmation or vacatur of

awards that constitute a final arbitral decision. “Although the term ‘award’ is not

defined by the DUAA, it is not ambiguous either. The multiple sections of the

DUAA that use the term ‘award’ all logically contemplate ‘final’ and not

interlocutory or procedural orders.” Fidelity & Deposit Co. of Md. v. State Dep’t of

Admin. Servs., 830 A.2d 1224, 1231 (Del. Ch. 2003); see also Blank Rome, LLP v.

Vendel, 2003 WL 21801179, at *5 (Del. Ch. Aug. 5, 2003) (“Under Delaware law,

an ‘award’ is a decision or determination that an arbitrator intends to be a final

adjudication of a controversy submitted to arbitration.”).47

      In this respect, the DUAA also mirrors federal arbitration law. The FAA “also

uses ‘award’ in conjunction with finality,” Publicis Commc’n v. True N. Commc’ns,

Inc., 206 F.3d 725, 729 (7th Cir. 2000), and “[f]ederal courts may only review

47
  See also 10 Del. C. § 5716 (“Upon the granting of an order confirming . . . an award,
except in cases where the award is for money damages, a final judgment or decree shall be
entered in conformity therewith and be enforced as any other judgment or decree.”); 10
Del. C. § 5718(a) (requiring an award confirming an award for money damages to be filed
with the prothonotary of the Superior Court, who then must enter the amount of the award
and the parties on the docket, which “shall constitute a judgment or decree on the docket
with the same force and effect as if rendered in an action at law”).
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arbitration awards that are final.” Seneca Nation of Indians v. New York, 420 F.

Supp. 3d 89, 99 (W.D.N.Y. 2019), aff’d, 988 F.3d 618 (2d Cir. 2021). 48 That is

because Section 10(a)(4) of the FAA—the analogue to Section 5714(a)(3) of the

DUAA 49—“requires that an award be ‘mutual, final and definite’ as a prerequisite

to confirmation.” Home Ins. Co. v. RHA/Pennsylvania Nursing Homes, Inc., 127 F.

Supp. 2d 482, 486 (S.D.N.Y. 2001).

              4.     What Makes an Award Final?

       “The prerequisite of finality promotes the role of arbitration as an expeditious

alternative to traditional litigation.” Hart Surgical, Inc. v. Ultracision, Inc., 244 F.3d

231, 233 (1st Cir. 2001). “In order to be ‘final,’ an arbitration award must be

intended by the arbitrators to be their complete determination of all claims submitted

to them.” Michaels v. Mariforum Shipping, S. A., 624 F.2d 411, 413 (2d Cir. 1980).

48
   See also Aerojet-Gen. Corp. v. Am. Arb. Ass’n, 478 F.2d 248, 251 (9th Cir. 1973)
(“[J]udicial review prior to the rendition of a final arbitration award should be indulged, if
at all, only in the most extreme cases.”).
49
   Compare 9 U.S.C.A. § 10(a)(4) (providing that an arbitration award may be vacated
“upon the application of any party to the arbitration” where “the arbitrators exceeded their
powers, or so imperfectly executed them that a mutual, final, and definite award upon the
subject matter submitted was not made”), with 10 Del. C. § 5714(a)(3) (providing that an
arbitration award may be vacated “[u]pon complaint or application of a party” if “[t]he
arbitrators exceeded their powers, or so imperfectly executed them that a final and definite
award upon the subject matter submitted was not made”).
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In general, “[a]n arbitration award is not final if it reveals that the arbitrators have

yet to resolve each issue that the parties have empowered the arbitrators to decide.”

PG Publ’g, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308, 322 (3d Cir. 2021).

Moreover, an arbitration award will not be considered final unless it resolves “all the

issues submitted to arbitration . . . definitively enough so that the rights and

obligations of the two parties, with respect to the issues submitted, do not stand in

need of further adjudication.” Rocket Jewelry Box, Inc. v. Noble Gift Packaging,

Inc., 157 F.3d 174, 176 (2d Cir. 1998) (emphasis omitted). Finality is a legal

determination that courts make based on the “terms of the contract”50 and “attributes

of the award and arbitration record.”51

       “Generally, a claim is completely determined when the arbitrators decide both

liability and damages.” Corp. Printing Co. v. New York Typographical Union No.

50
  Sperry Int’l Trade, Inc. v. Gov’t of Israel, 532 F. Supp. 901, 909 (S.D.N.Y.), aff’d, 689
F.2d 301 (2d Cir. 1982); see also Zeiler v. Deitsch, 500 F.3d 157, 160–61, 169 (2d Cir.
2007) (noting that the “confirmable nature” of various accounting orders in an arbitration
proceeding “stems from the unique character of this arbitration, as agreed by the parties”).
51
  PG Publ’g, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308, 321 & n.15 (3d Cir.
2021) (collecting cases).
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6, No. 93 CIV. 6796 (SS), 1994 WL 376093, at *4 (S.D.N.Y. July 18, 1994).52 There

are narrow exceptions. An interim award that decides liability alone may be

considered final for purposes of judicial review if the contract or the arbitration

record reflects the parties’ intent to have the dispute resolved in a series of distinct

arbitration proceedings. In those circumstances, the arbitrator was to decide both

liability and damages, but in distinct phases of the arbitration. 53 Courts have also

reviewed interim awards resolving time-sensitive issues where the failure to approve

the interim award would impede the resolution of the dispute or render the final

52
  See also, e.g., Kerr-McGee Ref. Corp. v. M/T Triumph, 924 F.2d 467, 471 (2d Cir. 1991)
(holding that award was not final because it “merely decided the issue of liability and
partial damages” and left open whether plaintiff was also entitled to “punitive or RICO
damages, costs and attorneys’ fees”).
53
   See Univ. of Notre Dame (USA) in England v. TJAC Waterloo, LLC, 861 F.3d 287, 292
(1st Cir. 2017) (holding award was final because “the parties have agreed to submit the
issue of liability to the arbitrator for a distinct determination prior to a separate [arbitral]
proceeding to assess damages”); Hart Surgical, 244 F.3d at 235–36 (holding interim award
was final because contract provided for a “formal, agreed-to bifurcation at the arbitration
stage”); Providence J. Co. v. Providence Newspaper Guild, 271 F.3d 16, 20 (1st Cir. 2001)
(noting the “parties and the arbitrator agreed to bifurcate the arbitral proceeding and
understood the determination of liability to be a final award”); Corp. Printing, 1994 WL
376093, at *4 (explaining the “parties agreed to bifurcate the liability and remedy issues,
and submitted to [the arbitrator] the liability portion of their dispute, for immediate
resolution”); Trade & Transp., Inc. v. Nat. Petroleum Charterers Inc., 931 F.2d 191, 195
(2d Cir. 1991) (involving parties that sought a bifurcated decision “and asked the panel to
decide the issue of liability immediately, a decision that was expressly intended to have
immediate collateral effects in the judicial proceeding”).
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award “meaningless and frustrate[] exercise of the Arbitrators’ powers.” Sperry,

532 F. Supp. at 909.54

       Although an award need not specify a precise damages amount to be

considered final, it must at least provide sufficient information for the parties to

quantify the award. See Blank Rome, 2003 WL 21801179, at *5 (holding arbitrator’s

letters, which provided sufficient information to “enable[] the parties themselves to

quantify the Final Award,” constituted an arbitral “award”); Norsworthy v. NYS

Consulting, LLC, 2021 WL 4149877, at *8 (Del. Ch. Sept. 10, 2021) (Order) (“’If

an arbitrator’s decision is clear enough to indicate unequivocally what each party is

required to do, it will be considered a final award even if arithmetical or accounting

calculations or similar technical acts remain to be completed. The arbitrator need

not award a specific sum and the actual amount of damages may remain to be

computed.’” (quoting 2 Martin Domke et al., Domke on Commercial Arbitration §

54
   See id. at 903–05 (holding that interim award “requiring both parties to escrow in a joint
account the amount of the proceeds of the Letter of Credit” pending resolution of contract
claims was final award); Publicis, 206 F.3d at 729–31 (deeming as final arbitration
tribunal’s order to turn over tax records for discovery that the tribunal agreed was
“extremely urgent”); Pac. Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 935 F.2d
1019, 1022–23 (9th Cir. 1991) (holding that temporary equitable relief “essential to
preserve assets or enforce performance” is reviewable if non-review “may render a final
award meaningless”).
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33:7 (2014))). Nevertheless, an award “should be certain and must leave open no

loophole for future dispute and litigation.” 2 Domke § 33.7.

                  5.   The IPA Is Not a Final Decision.

          In this case, the Arbitrator determined that the Limited Partners are “entitled

to relief in the form of rescission of the Limited Partnership Agreement under both

law and equity with respect to [Astrum GP’s] breach of contract and with respect to

[Astrum GP’s] breach of the fiduciary duty of care.”55 The Arbitrator stated,

however, that he “does not have arbitral jurisdiction to ‘resolve’ the damages, if any,

resulting from” Astrum GP’s breach of contract or breach of the duty of care under

Section 16.5 of the LPA. 56

          The Arbitrator did, however, articulate how relief would logically be

determined. In the Interim Final Decision, the Arbitrator stated:

          It is unnecessary to go further and recap the only possible measure and
          amount applicable . . . with respect to rescissory damages or equitable
          restitution – that is, the dollar amounts of each Claimant’s investment,
          less distributions received by the Claimant, with interest accrued to date
          on the balance.57

55
     Ex. C ¶ 7.
56
     Id. ¶ 6.
57
     Ex. B at 45.
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         The Arbitrator further noted that the amounts of the Limited Partners’

investments and the amounts of distributions received were in the record, “can easily

be presented to a Delaware Court,” and “should be, if necessary, a matter of another

stipulation among the parties.”58

         It is apparent that the Arbitrator recognized the conundrum that Section 16.5

presented—affording the Arbitrator broad authority to determine all disputes, and

the power “to grant all legal and equitable remedies including . . . compensatory

damages provided by law,” except for any Disabling Conduct, in which case “any

damages must be resolved in a court” 59 As the Arbitrator put it: “What am I to do,

given my lack of contract jurisdiction to ‘resolve’ damages, a necessary preliminary

condition to the entry of a final award by me in this Arbitration?” 60

         One reading of the IPA—which the Limited Partners seem to promote—is

that the Arbitrator’s decision was sufficiently clear enough to allow the final

damages amount to be resolved through a straightforward calculation. 61 The Astrum

58
     Id. at 45–46.
59
     Ex. A § 16.5.
60
     Ex. B at 49.
61
     LPs’ Opening Br. 30–31.
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Parties dispute that reading, both as a matter of law and fact.62 Faced with the

contract language, the Arbitrator acknowledged the Limited Partners’ concern that

this court may determine that it lacks subject matter jurisdiction to resolve damages

and send the matter back to the arbitrator. The Arbitrator explained:

         If that is what occurs, then I will “resolve” damages as well as
         prevailing party fees and costs and any other issues brought before me.
         I do not presume to instruct a Delaware court about how it might or
         should address the issue. I have some ideas about what I might do if I
         were a judge of a Delaware or California court faced with the problem,
         but I am not in the position of an advocate for any party in this
         Arbitration. 63

         To be sure, Section 16.5 is an unusual provision. As the Astrum Parties read

it, and how the Arbitrator seems to have read it, the LPA not only seems to bifurcate

the liability and damages issues as to a Disabling Conflict issue, but also assigns

those separate tasks to separate tribunals. The parties have not cited, and the court

has not located, any case that has considered and upheld such a provision.

Separating the liability and damages determinations is inherently inefficient and

contrary to a primary purpose of arbitration, which “is to avoid the expense and delay

62
     Astrum Parties’ Ans. Br. 8, 11–12.
63
     Ex. B at 50. Frankly, the arbitrator’s ideas as to this gnarly issue would be welcome.
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of court proceedings.” Gulf LNG Energy, 242 A.3d at 584 n.44 (quoting Foster v.

Turley, 808 F.2d 38, 42 (10th Cir. 1986).

         I am not, at this stage, deciding whether the court or the Arbitrator must

“resolve” damages or, what that provision means in the context of the LPA and the

DUAA. For that, the court must await additional input from the parties and, perhaps,

the Arbitrator.64 What is clear, and is ripe for decision, is whether the Interim Partial

Award can be confirmed or vacated. It cannot.

         The Interim Partial Award expressly states that the award is not final and that

there are open issues for further litigation beyond resolving damages. The Arbitrator

wrote:

         This Interim Partial Award is not intended to be, and it does not
         constitute, the Arbitrator’s “Final Award” in this Arbitration. The
         Arbitrator instead retains jurisdiction to decide, in a subsequent
         proceeding or proceedings in this Arbitration when scheduled at an
         appropriate future time, any remaining issues subject to arbitration
         under the Limited Partnership Agreement, including but not limited to
         the still open and undecided issues of prevailing party status and
         consequent awardable fees and costs, if any, as well as any arbitrable

64
  Section 16.5 provides that in the event of “any dispute . . . concerning the interpretation,
validity, or performance of the [LPA],” the arbitrator has “to the fullest extent permitted
by law . . . the power to grant all legal and equitable remedies . . . provided by law.”
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         issues involving alter ego claims that may hereinafter be raised in this
         Arbitration. 65

         Because the Interim Partial Award is not a final decision of the Arbitrator, it

is not an award that can be confirmed or vacated under the DUAA. See Fidelity &

Deposit, 830 A.2d at 1231. Accordingly, the parties’ competing motions for

summary judgment and to dismiss as to confirming and vacating the Interim Partial

Award are denied.

         IT IS SO ORDERED.

                                                 Very truly yours,

                                                 /s/ Paul A. Fioravanti, Jr.

                                                 Vice Chancellor

65
     Ex. C ¶ 11.