Court Opinion

ID: 2759961
Source: CourtListenerOpinion
Date Created: 2014-12-12 00:01:03.718749+00
Date Added: 2024-06-11T13:24:33.982895
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

MEDISO MEDICAL EQUIPMENT
DEVELOPING SERVICES, LTD,

                       Petitioner,                       Civil Action No. 14-1440 (BAH)

                       v.                                Judge Beryl A. Howell

BIOSCAN, INC.,

                       Respondent.

                                     MEMORANDUM OPINION

       This case arises out of Mediso Medical Equipment Developing and Services, Ltd.’s

petition to confirm an arbitration award issued by the Arbitration Court Attached to the

Hungarian Chamber of Commerce and Industry (“Arbitration Court”). Currently before the

Court is the Petitioner’s Motion for Entry of Default Judgment, ECF No. 11. For the reasons set

forth below, the petitioner’s motion is granted.

I.     BACKGROUND

       The petitioner and the respondent, Bioscan, Inc., entered into a Collaboration and

Original Equipment Manufacturer Agreement (“Agreement”) on March 17, 2005 in which they

“agreed to cooperate in developing a new SPECT and SPECT/CT system, which were to be sold

by the Respondent in the multi-pinhole small animal SPECT imaging market.” Pet. Confirm

Arbitration Award (“Petition”), at ¶ 6, ECF No. 1. The parties also entered into a Memorandum

of Understanding (“MOU”)” in which the petitioner appointed the respondent as its exclusive

distributor over a number of its products. Id. The Agreement contained an arbitration provision,

which stated: “Any dispute arising from or in connection with this [Agreement] and the MOU

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and their consummation shall be settled by the Court of Arbitration attached to the Hungarian

Chamber of Commerce and Industry . . . .” Id. at ¶ 8.

        The petitioner claims that the respondent breached the Agreement and the MOU by

“fail[ing] to fulfill payment obligations . . . , fail[ing] to meet the minimum purchase quota and

fail[ing] to fulfill payment obligations related to the invoices issued by the [Petitioner.]” Award

of the Arbitration Court Attached to the Hungarian Chamber of Commerce and Industry

(“Arbitral Award”) ¶ 7, ECF No. 1-4. The petitioner presented its claim to the Arbitration Court

but, rather than defend against the action in arbitration, the respondent notified the Arbitration

Court of its formal dissolution as of October 17, 2013 and “decline[d] to participate in the oral

hearings.” Id. at ¶ 13. Nevertheless, the Arbitration Court ordered the respondent to “pay the

amounts as claimed” by the petitioner. Id. at ¶ 39(a). Accordingly, the Arbitration Court

awarded the following itemized amounts to the petitioner:

                      Award in U.S. Dollars 1                                Post-Judgment Interest

               1      $ 46.00                                                --

               2      $ 915,596.42                                           5% per annum from August 22,
                                                                             2012 until payment
               3      $ 1,316,115.70                                         5% per annum from July 1,
                                                                             2012 until payment
               4      $ 658,057.85                                           5% per annum from August 10,
                                                                             2012 until payment
               5      $ 1,022,100.00                                         5% per annum from August 10,
                                                                             2012 until payment
               6      $ 76,708.78                                            --

               7      $ 72,243.80                                            --

1
 The Arbitration Award was issued in U.S. Dollars (Award 1, 5, and 8), Euros (Award 2, 3, 4, and 7), and
Hungarian Forint (Award 6). The amounts in the chart, and in this Court’s Order, reflect conversion to U.S. Dollars
as of the date of the Arbitral Award, using the applicable exchange rate as published by the U.S. Department of
Treasury for the preceding quarter. See Cont'l Transfert Technique Ltd. v. Fed. Gov't of Nigeria, 932 F. Supp. 2d
153, 162 (D.D.C. 2013).

                                                         2
               8      $ 25,554.00                                             --

        The Petitioner subsequently filed this action seeking to confirm the Arbitral Award

pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,

June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 (“New York Convention”) and the Federal

Arbitration Act (“FAA”), 9 U.S.C. § 207 (2012). See Mem. Supp. Pet’r’s Mot. Default J.

(“Pet’r’s Mem.”) at 2–3, ECF No. 11-1.

        The respondent was a company based in, organized, and existing under the laws of the

District of Columbia with its place of business located at 4590 MacArthur Boulevard, N.W.,

Washington, D.C. 20007. See Petition ¶ 4. Thus, this Court may exercise personal jurisdiction

over the respondent. Although the respondent is apparently now dissolved, a case may proceed

against a dissolved company. See D.C. Code § 29-312.05(b)(5) (“Dissolution of a corporation

shall not . . . prevent commencement of a proceeding by or against the corporation in its

corporate name.”); FED. R. CIV. P. 17(b). The respondent was properly served in this

proceeding, 2 but nevertheless has failed to enter an appearance, file any responsive pleadings, or

seek or receive any extension of time for filing responsive pleadings. The Clerk of this Court

entered a default against the respondent on October 21, 2014. See Default, ECF No. 10. The

petitioner thereafter filed its motion for entry of a default judgment.

2
  Since the respondent no longer maintains a registered agent, D.C. Code § 29-104.12(d) permits service to be made
upon the Mayor. See D.C. Code § 29-104.12(d) (“If an entity fails to designate or maintain a registered agent in the
District as required by law, or if an entity's registered agent in the District cannot with reasonable diligence be
found, and if the person seeking service submits a declaration under penalty of making false statements showing that
a registered agent for the entity cannot be found, the Mayor shall be an agent of the entity upon whom any process
against the entity may be served . . . .”); see also FED. R. CIV. P. 4(e)(1), (h). The petitioner served the Mayor’s
designee in accordance with this provision. See Aff. of Service, ECF No. 6; see also Declaration of Akin Alcitepe,
ECF No. 7-1.

                                                         3
II.    LEGAL STANDARD

       Federal Rule of Civil Procedure 55 provides for the entry of a default when “a party

against whom a judgment for affirmative relief is sought has failed to plead or otherwise

defend.” FED. R. CIV. P. 55(a). “Rule 55 sets forth a two-step process for a party seeking a

default judgment: entry of a default, followed by entry of a default judgment.” Swiss Inst. of

Bioinformatics v. Global Initiative on Sharing all Influenza Data, No. 13-cv-1274, 2014 WL
2810500, at *2 (D.D.C. June 23, 2014). The Court “strongly favor[s] resolution of disputes on

their merits, but default judgment is available when the adversary process has been halted

because of an essentially unresponsive party.” Cumis Ins. Society, Inc. v. Billups, No. 10–1478,

2010 WL 4384228, at *2 (D.D.C. Nov. 4, 2010) (internal quotations omitted); see also Jackson

v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980) (“The default judgment must normally be viewed

as available only when the adversary process has been halted because of an essentially

unresponsive party.” (citation and quotation marks omitted)).

       Default judgment is appropriate if defendants are “‘totally unresponsive’” and the failure

to respond is “plainly willful, as reflected by [the party’s] failure to respond ‘either to the

summons and complaint, the entry of default, or the motion for default judgment.’” Dist. of

Columbia v. Butler, 713 F. Supp. 2d 61, 64 (D.D.C. 2010) (quoting Gutierrez v. Berg

Contracting Inc., No. 99–3044, 2000 WL 331721, at *1 (D.D.C. March 20, 2000)). When there

is an “absence of any request to set aside the default or suggestion by the defendant that it has a

meritorious defense, it is clear that the standard for default judgment has been satisfied.” Int'l

Painters and Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57

(D.D.C. 2008) (internal quotations omitted).

                                                   4
III.   DISCUSSION

       The petitioner argues that the New York Convention requires this Court to confirm the

Arbitral Award issued in this case. Pet’r’s Mem. at 2. The respondent has yet to make an

appearance and has not responded to the summons, the petition, or the entry of default. As a

result, the Clerk has entered a default and the petitioner has moved this court to enter a judgment

of default. The Court will first address the requirements for the confirmation of the Arbitral

Award and then whether the petitioner should receive interest on the Arbitral Award.

       A.      Confirmation of the Arbitral Award Is Warranted

        The FAA codifies the New York Convention, a multilateral treaty addressing “the

recognition and enforcement of arbitral awards made in the territory of a State other than the

State where the recognition and enforcement of such awards are sought . . . .” New York

Convention, Art. I. The FAA authorizes the recipient of a foreign arbitral award to seek

enforcement in a federal district court within three years of the arbitral award. 9 U.S.C. § 207.

Under the FAA, a federal district court “shall confirm” an arbitral award that falls under the New

York Convention “unless it finds one of the grounds for refusal or deferral of recognition or

enforcement of the award specified in the said Convention.” Id. (emphasis added).

         “Consistent with the ‘emphatic federal policy in favor of arbitral dispute resolution,’ . . .

the FAA affords the district court little discretion in refusing or deferring enforcement of foreign

arbitral awards . . . .” Belize Soc. Dev., Ltd. v. Gov’t of Belize, 668 F.3d 724, 727 (D.C. Cir.

2012) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631

(1985)). The New York Convention permits courts to set aside the arbitral award only where the

party opposing the award’s enforcement submits “proof” to the court that the award or

underlying agreement were in certain respects improper, or where the court finds that the dispute

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was not subject to arbitration or that enforcement would otherwise violate public policy. New

York Convention, Art. V. 3 Upon this record, there are no grounds for refusing to enforce the

Arbitral Award. First, the respondent has failed to make an appearance and has therefore

provided no “proof” or other evidence to the Court on why the arbitral award should not be

enforced. Second, the underlying dispute is a typical commercial dispute appropriate for

arbitration and its enforcement does not violate public policy. As such, there are no grounds

before the Court to justify a departure from the FAA’s strict enforcement requirements.

3
  Specifically, Article V of the New York Convention sets forth the following grounds by which a district court may
refuse to enforce a foreign arbitral award:

        1. Recognition and enforcement of the award may be refused, at the request of the party against
        whom it is invoked, only if that party furnishes to the competent authority where the recognition
        and enforcement is sought, proof that:

        (a) The parties to the agreement referred to in article II were, under the law applicable to them,
        under some incapacity, or the said agreement is not valid under the law to which the parties have
        subjected it or, failing any indication thereon, under the law of the country where the award was
        made; or

        (b) The party against whom the award is invoked was not given proper notice of the appointment
        of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

        (c) The award deals with a difference not contemplated by or not falling within the terms of the
        submission to arbitration, or it contains decisions on matters beyond the scope of the submission
        to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated
        from those not so submitted, that part of the award which contains decisions on matters submitted
        to arbitration may be recognized and enforced; or

        (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with
        the agreement of the parties, or, failing such agreement, was not in accordance with the law of the
        country where the arbitration took place; or

        (e) The award has not yet become binding on the parties, or has been set aside or suspended by a
        competent authority of the country in which, or under the law of which, that award was made.

        2. Recognition and enforcement of an arbitral award may also be refused if the competent
        authority in the country where recognition and enforcement is sought finds that:

        (a) The subject matter of the difference is not capable of settlement by arbitration under the law of
        that country;

       (b) The recognition or enforcement of the award would be contrary to the public policy of that
       country.
New York Convention, Art. V, ¶¶ 1-2.

                                                          6
        B.       Post-Judgment Interest Is Appropriate

        The petitioner additionally requests post-judgment interest on those portions of the

Arbitral Award not currently subject to post-judgment interest. Pet’r’s Mem. at 6. 4 Although the

FAA provides no specific guidance regarding post-judgment interest, in general post-judgment

“[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court.”

28 U.S.C. § 1961. See Swiss Inst., 2014 WL 2810500, at *5 (awarding post-judgment interest

following default in petition to confirm arbitration award). Accordingly, courts have ordered

post-judgment interest in civil judgments confirming foreign arbitral awards. See, e.g., id.;

Global Distressed Alpha Fund I LP v. Red Sea Flour Mills Co. Ltd., 725 F. Supp. 2d 198, 203

(D.D.C. 2010); see also Tricon Energy, Ltd. v. Vinmar Int’l, Ltd., 718 F.3d 448, 457 (5th Cir.

2013) (“A judgment confirming an arbitration award—like any other civil judgment—is subject

to § 1961.”). This Court agrees with the conclusion reached by these courts and finds that

awarding post-judgment interest is appropriate and that the petitioner is entitled to post-judgment

interest on those amounts not currently receiving post-judgment interest at the rate set forth in 28

U.S.C. § 1961.

IV.     CONCLUSION

        For the foregoing reasons, the Court will grant the petitioner’s motion for entry of default

judgment. The respondent shall pay petitioner as follows: $915,596.42 plus post-judgment

interest at the rate of 5% per annum from August 22, 2012 until payment; $1,316,115.70 plus

post-judgment interest at the rate of 5% per annum from July 1, 2012 until payment; $658.057.85

4
  According to the petitioner, as of November 3, 2014, the amount owed to the petitioner on the portions of the
Arbitral Award including post-judgment interest totaled $4,354,316.85. This amount includes the original amounts
subject to post-judgment interest plus 5% per annum interest calculated from the dates established in the Arbitral
Award until November 3, 2014. In addition, the amount owed to the petitioner on the portions of the Arbitral Award
for which the Arbitration Court did not award post-judgment interest totaled $174,552.58. It is on this second
portion—the amount not previously subject to post-judgment interest—that the petitioner now seeks post-judgment
interest at the rate established by 28 U.S.C. § 1961.

                                                        7
plus post-judgment interest at the rate of 5% per annum from August 10, 2012 until payment;

$1,022,100 plus post-judgment interest at the rate of 5% per annum from August10, 2012 until

payment. In addition, the respondent shall pay the petitioner $174,552.58 plus post-judgment

interest at the statutory rate provided by 28 U.S.C. § 1961 from the date of this Judgment until

payment is made in full.

       An appropriate Order accompanies this Memorandum Opinion.

       Date: December 11, 2014
                                                                        Digitally signed by Hon. Beryl A. Howell
                                                                        DN: cn=Hon. Beryl A. Howell, o=U.S.
                                                                        District Court for the District of Columbia,
                                                                        ou=United States District Court Judge,
                                                                        email=Howell_Chambers@dcd.uscourts.
                                                                        gov, c=US
                                                                        Date: 2014.12.11 18:24:57 -05'00'
                                                     __________________________
                                                     BERYL A. HOWELL
                                                     United States District Judge

                                                8