United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS U.S. DISTRICT COURT JUDGE
On January 29, 2016, the University of Notre Dame (USA) in England (“Notre Dame”) filed a Complaint in Suffolk Superior Court against TJAC Waterloo, LLC (“TJAC”) and ZVI Construction Co., LLC (“ZVI”). Notre Dame sought injunctive relief to temporarily restrain TJAC and ZVI (collectively, the “Defendants”) from dissipating their assets until the parties completed an ongoing arbitration in London, England. [ECF No. 1-1 at 3-16]. Along with its filing of the complaint, Notre Dame filed an Emergency Motion for a Temporary Restraining Order and Preliminary Injunction. [ECF No. 1-1 at 17-38]. On February 1, 2016, ZVI removed the action to federal court under Section 203 of the Federal Arbitration Act. 9 U.S.C. § 203. Notre Dame did not object to the removal, and on February 10, 2016, the Court held oral argument on the Motion for a Temporary Restraining Order and Preliminary Injunction.
On February 16, 2016, before the Court had issued a decision on the pending motion, Notre Dame filed an Amended Complaint. [ECF No. 28]. While the original state court complaint contained only two counts (for injunctive relief and declaratory judgment), the Amended Complaint contained five: Confirmation of Foreign Arbital Award under 9 U.S.C. § 207 (Count I); Attachment (Count II); Temporary and Preliminary Injunctive Relief (Count III); Recognition of Foreign Judgment Pursuant to Mass. Gen. L. ch. 235, § 23A (Count IV); and Declaratory Judgment (Count V). The day after it filed the Amended Complaint, Notre Dame filed a “Motion to Confirm Foreign Award and to Issue Security Pursuant to the Convention and Fed.R.Civ.P. 64, 65, and for Expedited Consideration.” [ECF No. 30]. The Court denied Notre Dame’s pending motion for a Temporary Restraining and Preliminary Injunction as moot, [ECF No. 32], ordered briefing on the newly filed motion, and held oral argument on March 8, 2016. In opposing Notre Dame’s motion, the Defendants also filed a joint Motion to Dismiss the Amended Complaint [ECF No. 44], which is now ripe.
II. Factual Background
This case involves the purchase and renovation of Conway Hall in London, England. On October 25, 2010, Notre Dame and the Defendants entered into a contract (the “P&S Agreement”) whereby Notre Dame agreed to purchase Conway Hall from TJAC for $58, 833, 700 after TJAC’s affiliated contractor ZVI renovated the building. [ECF No. 28 (“Complt.”) ¶ 17]. In December 2011, after ZVI completed the renovations, Notre Dame purchased Conway Hall from TJAC. Id. ¶ 1.
Notre Dame now alleges that after it purchased Conway Hall, numerous defects became apparent, including malfunctioning fire detectors, falling tiles, and unsafe secondary glazing. Id. ¶¶ 20-23. As a result, in February 2014, Notre Dame invoked the P&S Agreement’s dispute resolution procedure and “brought suit for an expert determination of Defendants’ liability and corresponding money judgment.” [ECF No. 11 at 9]. Under Section 17 of the P&S Agreement, “any dispute arising between the parties” as to their “respective right duties and obligations” must be determined by an “independent duly experienced surveyor appointed . . . by the President or other proper officer of the Royal Institution of Chartered Surveyors.” [ECF No. 12-2 § 17.1 (the “Disputes Clause”)]. Notre Dame, TJAC, and ZVI agreed to appoint an expert (Anthony Bingham, hereinafter, the “Expert”) to resolve their dispute regarding liability for the alleged defects. [ECF No. 12-9].
In an effort to efficiently resolve the dispute, the parties agreed to “decide liability first, ” and any damages later. [ECF No. 12-1 ¶ 14; see also ECF No. 12-10 at 4 (“The Respondents have agreed on terms to hearings split between liability and quantum.”)]. On December 30, 2014, Notre Dame submitted a list of over one hundred alleged defects to the Expert. [ECF No. 12-1 ¶ 14]. Notre Dame contended that TJAC and ZVI breached their contractual obligations with respect to each of the identified defects. [ECF No. 12-10 at 8]. Defendants submitted their responsive submissions on liability on January 23, 2015; the parties presented oral argument on February 12, 13, and 19, 2015; and they submitted closing submissions on March 26, 2015. [ECF No. 11 ¶ 11].
On May 30, 2015, the Expert issued “A Document of Preliminary Indications on Liability For Comment In Reply By Parties.” [ECF No. 29-4 (“Preliminary Determination”)]. The first page of this Preliminary Determination stated that it was “Expert’s Indications Only, ” and the last page invited comment from the parties, stating that “[n]one of the answers are the final answers. All and any may be commented upon in any way seen fit.” [ECF No. 29-4 at 80-81]. The Expert wrote that it was “not the final Decisions on Liability. The parties may now make a final comment. Thereupon liability will be determined and published.” [ECF No. 29-4 at 3].
On July 21, 2015, after receiving comments from the parties, the Expert issued “An Expert Determination on Liability.” [ECF No. 12-10 (the “Determination on Liability”)]. The Expert noted that the Determination on Liability constituted the “binding decision as to Liability” and that it “then remain[ed] for the parties to argue Causation and Loss (Quantum).” [12-10 at 4]. In the 81-page Determination on Liability, the Expert analyzed each alleged defect one-by-one and found Defendants liable for many of the defects identified by Notre Dame.
Notre Dame submitted to the Expert its “Statement of Case on Quantum” on October 16, 2015, in which it argued that it is entitled to more than $8.5 million in damages. [ECF No. 29-6]. This over 8, 000-page submission included Notre Dame’s legal arguments, a schedule of its alleged losses, an expert report, witness statements, and documentary evidence. [ECF No. 29-6 at 5-6]. Five days after receiving this submission, Defendants requested a stay of the damages proceeding, citing “serious health issues” affecting an individual within the Defendants’ businesses. [ECF No. 11 ¶ 15]. Notre Dame consented to the request, and a damages hearing is now scheduled for May 2016. Id. ¶ 23.
Notre Dame brought the instant action primarily to obtain interim relief pending the Expert’s determination on damages. According to Notre Dame, when Defendants asked for a stay of the damages proceeding, Notre Dame made two requests, both of which were rejected. Notre Dame asked that the Defendants:
(1) agree not to dissipate, encumber or transfer their assets outside of the normal course of business dealings unless reasonable prior notice is given to [Notre Dame], and (2) provide confirmation that they continue to comply with clause 12.1 of the parties’ contract, which requires ZVI and others to maintain professional indemnity insurance for not less than £5 million ($7.2 million) for a minimum of 12 years following practical completion of the project.
[ECF No. 11 ¶ 16]. Defendants would not consent to a non-dissipation agreement and until recently, would not confirm whether they held the required liability insurance. Id. ¶ 18-20. At the February 10, 2016 oral argument, counsel for Defendants confirmed that they had allowed the insurance to lapse.
III. Notre Dame’s Motion to Confirm Foreign Award and to Issue Security Pursuant to the Convention and ...