RICHARD W. STEMPIEN and EVELYN T. MULDER, Plaintiffs,
MARNIE PROPERTIES, LLC, a Delaware Limited Liability Company, Defendant.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
MONTGOMERY-REEVES, VICE CHANCELLOR.
Plaintiffs Richard W. Stempien and Evelyn T. Mulder and
Defendant Marnie Properties, LLC went to arbitration in
the arbitrator issued a final award on December 7, 2016 and
awarded Defendant $67, 434.19 in damages and $225, 755.17 in
Plaintiffs filed a Verified Complaint on January 13, 2017
seeking to vacate or modify the award in this Court;
Defendant moved to dismiss the Complaint for failure to state
a claim on May 15, 2017;
THEREFORE, THE COURT HEREBY FINDS AND ORDERS AS FOLLOWS:
Court has reviewed the parties' briefs, supporting
submissions, and applicable law.
Motion to Dismiss is GRANTED in part and DENIED in part.
considering a motion to dismiss for failure to state a claim
under Court of Chancery Rule 12(b)(6), a court must accept
all well-pleaded factual allegations in the complaint as
true, accept even vague allegations in the complaint as
"well-pleaded" if they provide the defendant notice
of the claim, "draw all reasonable inferences in favor
of the non-moving party, " and deny the motion unless
the plaintiff could not recover "under any reasonably
conceivable set of circumstances susceptible of proof."
Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del.
Under 10 Del. C. § 5714(a)(3), "the Court
shall vacate an award where . . . [t]he [arbitrator] exceeded
[his] powers or so imperfectly executed them that a final and
definite award upon the subject matter submitted was not
made." In order to vacate an arbitration award under
this section there must be "evidence that the arbitrator
acted in 'manifest disregard' of the law."
Roncone v. Phoenix Payment Sys., Inc., 2014 WL
6735210, at *4 (Del. Ch. Nov. 26, 2014). "In other
words, the Court must find 'an error that is so obvious
that it would be instantly perceived as such by the average
person qualified to serve as an arbitrator.'"
Id. (quoting Travelers Ins. Co. v. Nationwide
Mut. Ins. Co., 886 A.2d 46, 49 (Del. Ch. 2005)).
a court to find that an arbitrator showed manifest disregard
of the law, "a court must find that the arbitrator
consciously chose to ignore a legal principle, or contract
term, that is so clear that it is not subject to reasonable
debate." SPX Corp. v. Garda USA, Inc., 94 A.3d
745, 747 (Del. 2014). "[A]s long as the arbitrator is
even arguably construing or applying the contract and acting
within the scope of his authority, that a court is convinced
that he committed serious error does not suffice to overturn
his decision." United Paperworkers Int'l Union,
AFL-CIO v. Misco Inc., 484 U.S. 29, 38 (1987). "To
successfully convince the Court to vacate [an arbitration
award], the movant must show 'something beyond and
different from a mere error in the law or failure on the part
of the arbitrator to understand or apply the law.'"
TD Ameritrade, Inc. v. McLaughlin, Piven, Vogel Sec.,
Inc., 953 A.2d 726, 732-33 (Del. Ch. 2008) (quoting
Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304
F.3d 200, 208 (2d Cir. 2002)).
Under 10 Del. C. § 5715, "the Court shall
modify or correct the award where . . . [t]here was an
evident miscalculation of figures or an evident mistake in
the description of any person, thing or property referred to
in the award." An "evident miscalculation" is
one "of mathematical or computational error" rather
than "a substantive conclusion of the arbitrator"
that is "largely based on fact." Roncone,
2014 WL 6735210, at *7. If there is evidence "the
arbitrator implemented the award he intended, and without any
miscalculation, " then any argument under Section
5715(a) must fail. Id. Under 10 Del. C.
§ 5715(c) "[a]n application to modify or correct an
award may be joined in the alternative with an application to
vacate the award."
Plaintiffs argue that the arbitrator ignored the provisions
of 25 Del. C. § 2705, which rose to the level
of manifest disregard of the law. Section 2705 provides:
The owner of any structure built, repaired or altered by any
contractor or subcontractor may require such contractor or
subcontractor from time to time to furnish and submit to the
owner complete and accurate list in writing of all persons
who have furnished labor or material, or both, in connection
therewith, and who may be entitled to avail themselves of the
provisions of this chapter. Should any such contractor or
subcontractor fail to furnish such list for 10 days after
demand made there for by such owner, the contractor or
subcontractor shall be entitled to receive no further