Court Opinion

ID: 146635
Source: CourtListenerOpinion
Date Created: 2010-05-18 14:18:55+00
Date Added: 2024-06-11T09:33:51.972629
License: Public Domain

09-1784-cv
         Schwartzman v. Harlap

                                 UNITED STATES COURT OF APPEALS
                                     FOR THE SECOND CIRCUIT

                                        SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.    CITATION TO A SUMMARY ORDER
     FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
     APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
     IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”).    A PARTY CITING TO A SUMMARY
     ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals for
 2       the Second Circuit, held at the Daniel Patrick Moynihan United
 3       States Courthouse, 500 Pearl Street, in the City of New York, on
 4       the 18th day of May, two thousand ten.
 5
 6       PRESENT:
 7                 RALPH K. WINTER,
 8                 JOSEPH M. McLAUGHLIN,
 9                 DEBRA ANN LIVINGSTON,
10                      Circuit Judges.
11       _____________________________________
12
13       Betzalel Schwartzman,
14
15                                Petitioner-Appellee,
16
17                        v.                                    09-1784-cv
18
19       Yaakov Harlap, also known as Jacob
20       Charlap,
21
22                                Respondent-Appellant.
23
24       _____________________________________
25
26
27       FOR PETITIONER-APPELLEE:                Avi M. Peison, Brooklyn, New York.
28
29       FOR RESPONDENT-APPELLANT:               Jacob Harlap, pro se, Flushing, New
30                                               York.

31               Appeal from a judgment of the United States District Court
1    for the Eastern District of New York (Cogan, J.).

2         UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

3    DECREED that the judgment of the district court is AFFIRMED in

4    part and VACATED and REMANDED in part.1

5         Appellant Jacob Harlap, proceeding pro se, appeals both the

6    district court’s judgment confirming an arbitration award issued

7    in Israel and the denial of his motion to vacate that award.     We

8    assume the parties’ familiarity with the underlying facts, the

9    procedural history of the case, and the issues on appeal.

10        This Court reviews a district court’s decision to confirm an

11   arbitration award de novo to the extent it turns on legal

12   questions and for clear error with respect to any findings of

13   fact.    See Zeiler v. Deitsch, 500 F.3d 157, 164   (2d Cir. 2007).

14   The Convention on the Recognition and Enforcement of Foreign

15   Arbitral Awards (the "Convention"), as implemented at 9 U.S.C.

16   § 201 et seq., authorizes United States courts to recognize and

17   enforce non-domestic arbitration awards.    See 9 U.S.C. § 203

18   (granting original jurisdiction to district courts over

19   proceedings arising under the Convention); 9 U.S.C. § 207

20   (providing for confirmation of awards).    The district court is

21   required to “confirm [such an] award unless it finds one of the

          1
            We also deny Schwartzman’s request that Harlap be
     required to post a bond pursuant to Federal Rule of Appellate
     Procedure 7, and note that such a bond must be sought from
     the district court in the first instance.

                                      2
1    grounds for refusal or deferral of recognition or enforcement of

2    the award specified in the said Convention.”   9 U.S.C. § 207.

3         Article V of the Convention provides seven exclusive grounds

4    upon which courts may refuse to recognize an award.   See

5    Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc.,

6    403 F.3d 85, 90 (2d Cir. 2005) (citing Convention on the

7    Recognition and Enforcement of Foreign Arbitral Awards, June 10,

8    1958, 21 U.S.T. 2517, at Art. V).   One of the enumerated grounds

9    allows non-recognition if “recognition or enforcement of the

10   award would be contrary to public policy of [the country where

11   recognition or enforcement is sought].”   Convention, 21 U.S.T.

12   2517, at Art. V(2)(b).   As neither party challenges it, we assume

13   without deciding that the district court correctly presumed that

14   “[i]t is a fundamental aspect of United States[] policy

15   concerning arbitration that arbitrators must disclose material

16   relationships with the parties that could impact their

17   impartiality.”   Schwartzman v. Harlap, No. 08 Civ. 4990, 2009 WL
18   1009856 (E.D.N.Y. Apr. 13, 2009) at *2 (citing Commonwealth

19   Coatings Corp. v. Cont’l Cas. Co., 393 U.S. 145 (1968)).

20        This Court has “viewed the teaching of Commonwealth Coatings

21   pragmatically, employing a case-by-case approach in preference to

22   dogmatic rigidity,” and has “not been quick to set aside the

23   results of an arbitration because of an arbitrator’s alleged

24   failure to disclose information.” Matter of Andros Compania

                                     3
1    Maritima, S.A., 579 F.2d 691, 700 (2d Cir. 1978).       Arbitrators

2    have an obligation to “disclose dealings of which the parties

3    cannot reasonably be expected to be aware,” id. at 700 (quoting

4    Cook Indus., Inc. v. C. Itoh & Co. (Am.), 449 F.2d 106, 108 (2d

5    Cir. 1971)) (internal quotation marks omitted), but a party

6    cannot avoid recognition of an award based on its discovery of a

7    non-disclosed relationship where the party “could have made such

8    a review just as easily before or during the arbitration rather

9    than after it lost its case.”      Id. at 702.    Here, the district

10   court did not clearly err in concluding that Harlap should have

11   known that Rabbi Stern could be employed by Schwartzman to

12   certify the orchards at the time he entered the sales contract in

13   2005, since this was specified in one of the terms of that

14   contract.   As the district court concluded, moreover, it was

15   Harlap’s knowledge of the potential conflict of interest, not

16   whether it had actually materialized, that is significant.          At

17   the time the parties agreed to arbitrate before Rabbi Stern in

18   September 2006, Harlap knew that Schwartzman could hire Rabbi

19   Stern and, thus, he had the information he needed to investigate

20   their relationship before or during the arbitration proceedings

21   and could have easily done so, rather than waiting until after he

22   lost his case.   See id. at 702.       Accordingly, we affirm the

23   district court’s confirmation of the award.

24        Harlap argues that Schwartzman mistranslated the arbitration

                                        4
1    award and that the award should be paid directly to the

2    arbitration court to pay Schwartzman’s judgment creditors.    With

3    respect to mistranslation, we note that Harlap raises the issue

4    for the first time on appeal, and that the well-established

5    general rule is that a court of appeals will not consider an

6    issue raised for the first time on appeal.   See Virgilio v. City

7    of New York, 407 F.3d 105, 116 (2d Cir. 2005).   However, Harlap

8    raised a form of this argument during the district court

9    proceedings when he argued that Schwartzman fraudulently obtained

10   an Israeli court judgment requiring direct payment of the $66,000

11   to Schwartzman despite Rabbi Stern’s requirement that the payment

12   be made to the arbitration court.

13        Although there is no support in the record for Harlap’s

14   claim that the Israeli court’s judgment requires direct payment

15   to Schwartzman of anything other than an attorneys’ fee award,

16   Harlap’s argument does identify a potential error: the district

17   court’s judgment, unlike the arbitration award and the Israeli

18   court judgment, appears to require Harlap to pay Schwartzman

19   directly.   Because there is nothing in the record indicating that

20   the district court considered this issue, we vacate the judgment

21   insofar as it requires direct payment to Schwartzman, and remand

22   to the district court for further proceedings to consider whether

23   such direct payment is appropriate in light of the arbitration

24   award’s direction that payment be made “only into the hands of

                                     5
1    the court secretary.”

2         Finally, we deny Schwartzman’s request for attorneys’ fees.

3    Federal Rule of Appellate Procedure 38 provides that sanctions

4    may be imposed “when one party proceeds with an argument ‘totally

5    lacking in merit, framed with no relevant supporting law,

6    conclusory in nature, and utterly unsupported by the evidence.’”

7    T.Co Metals, LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329,

8    341 (2d Cir. 2010) (quoting In re Drexel Burnham Lambert Group

9    Inc., 995 F.2d 1138, 1147 (2d Cir. 1993)) (internal quotation

10   mark omitted).   Here, although Harlap’s arguments in support of

11   non-recognition of the arbitration award fail on the merits, the

12   issue was not so clear cut as to prevent Harlap “from making a

13   colorable argument to the contrary.”   Id. at 342.

14        We have considered Harlap’s remaining arguments and find

15   them to be without merit.   Accordingly, the judgment of the

16   district court is VACATED insofar as it requires direct payment

17   to Schwartzman, and we REMAND to the district court to conduct

18   further proceedings in accordance with this decision.

19
20
21                                  FOR THE COURT:
22                                  Catherine O’Hagan Wolfe, Clerk
23

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