United States District Court, D. Utah
MEMORANDUM DECISION AND ORDER CONFIMING THE FINAL
ARBITRATION AWARD AND DENYING PLAINTIFFS' MOTION TO
TRANSFER PROPERTY TO ONE MAN BAND CORPORATION
STEWART, UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiffs' Motion to
Confirm Arbitration Award, Motion to Confirm Final
Arbitration Award, and Ex-Parte Motion to Transfer Property
to One Man Band Corporation. The Court will deny as moot
Plaintiffs' Motion to Confirm Arbitration Award as it was
superseded by Plaintiffs' Motion to Confirm Final
Arbitration Award. The Court will confirm the final
arbitration award and deny the motion to transfer property.
March 25, 2014, One Man Band Corporation and Bradley G.
Turner (Plaintiffs) filed suit against Jeff Smith and J.W.
Smith, LLC (Defendants) for continuing to operate a One Man
Band Restaurant in Santaquin, Utah, after expiration of the
Franchise Agreement. Plaintiffs allege breach of contract,
breach of the implied covenant of good faith and fair
dealing, trademark infringement, trade dress infringement,
unfair competition, intentional interference with business
relations, copyright infringement, and cybersquating.
Court ordered arbitration on several of Plaintiffs'
claims, leaving only two claims for trial: breach of the
implied covenant of good faith and fair dealing and trademark
infringement. An arbitration was held and the arbitrator
issued an interim award on July 11, 2016. A final award was
issued on September 13, 2016. The final award granted
Plaintiffs monetary damages against Defendants and included
an option to purchase the disputed property within thirty
days of the interim award. The award specified that if
Plaintiffs elect to purchase, “the closing must occur
within no more than thirty (30) days after the date of the
election.” No other requirements or specifications
were made regarding how the purchase should be conducted.
August 9, 2016, Plaintiffs sent Defendants a letter informing
Defendants that it would elect to purchase the property. On
September 8, 2016, Plaintiffs delivered to a title company,
Pro-Title, certified funds and loan commitments to cover the
purchase price of $370, 000.Plaintiffs repeatedly requested
Defendants sign the closing documents. Defendants refused to
do so. Defendants claim that through a chain of emails,
“it was made clear that funds were not presented to the
title company and that Brad Turner had not transferred money
into the title company's escrow
account.” Therefore, Defendants chose not to sign
the closing documents and the title company was unable to
complete the transaction.
submit the declaration of Jody Johnson, an employee of
Pro-Title who was in charge of preparing closing documents
for the transaction. She states that Plaintiff Brad Turner
came to Pro-Title on September 8, delivered certified funds,
and signed all of the bank loan documents. Ms. Johnson
states that expected proceeds from the certified funds and
loan documents exceeded $370, 000. Ms. Johnson also testifies
to the discovery of several liens and unpaid taxes on the
assert that under Utah Code § 31A-23(a)-406(5), the
title company must have “collected and cleared”
money in order to close. Defendants argue that the title
company had not yet been wired the funds. Defendants chose
not to sign the closing documents without evidence that
adequate money was available. Defendants request the Court
allow continuance of discovery to obtain information from the
bank and the title company about Plaintiffs' funds.
seek a “judgment confirming the arbitration
award” and request the Court transfer possession
of the property to Plaintiffs. Plaintiffs allege that Defendant
Jeff Smith has stopped paying sales taxes on the property and
his mortgage and may be filing for bankruptcy in the near
future. Plaintiffs are concerned that if the property
proceeds through a foreclosure sale, Plaintiffs will be
irreparably harm by losing its ability to purchase the
property and protect its trade dress and trademarks.
Plaintiffs request the Court transfer the disputed property
to Plaintiffs under a refinance scheme with a requirement
that the loan close within 30 days.Plaintiffs suggest that the
Court has the authority to enforce such a remedy under
Federal Rules of Civil Procedure 64 and 70.
oppose confirmation of the final award to the extent that it
includes the option to purchase the property. Defendants
argue that because Plaintiffs failed to complete the purchase
according to the terms of the arbitrator's award, that
clause is now moot and should not be included in the final
award. Defendants have also requested oral argument on the
matter. Plaintiffs oppose oral argument because it claims
that any further delay results in additional harm to
Plaintiffs. The Court will deny Defendants' request for
oral argument because it does not believe oral argument will
be helpful in resolving these disputes.
Federal Arbitration Act (“FAA”) provides that a
court “must” confirm an award “unless the
award is vacated, modified, or corrected as prescribed in
sections 10 and 11 of this title.” Section 10
allows the Court to vacate the award where the award was
procured by “corruption, fraud, or undue means”
or where there was “evident partiality or corruption in
the arbitrators.” Section 11 allows the Court to modify
or correct the award where there has been an “evident
material miscalculation, ” “evident material
mistake, ” or if the award is “imperfect in
matter of form not affecting the merits.” Sections 10
and 11 are the exclusive grounds for vacatur and modification
of an award.
oppose confirming the award because they argue that
Plaintiffs' option to purchase the disputed property is
now moot. Plaintiffs argue that whether the option to
purchase remains available is irrelevant to whether the Court
confirms the award. Plaintiffs are correct. Defendants'
opposition does not include an allegation of corruption,
fraud, mistake, miscalculation, or a condition otherwise set
forth in sections 10 and 11. Accordingly, the Court must
confirm the award.
the issue of enforcement is a separate matter. Plaintiffs
also filed an Ex-Parte Motion to Transfer Property and
request the Court seize the disputed ...