By Laura Lefkow, J.D.
District court must provide a reasoned explanation of its denial of a post-judgment motion to clarify a judgment that was facially inconsistent with an order confirming an arbitration award.
In a dispute between real estate businesses over the name "Singh," the U.S. Court of Appeals in Cincinnati has determined that it could not review a lower court’s summary denial of a post-judgment motion to clarify a judgment that granted injunctive relief inconsistent with an order ostensibly confirming an arbitration award. Because the court could not discern the lower court’s reasoning, it could not rule out the possibility that the lower court had abused its discretion. Concerned that the district court may have abused its discretion, the court vacated the denial of the motion and remanded the case to the Eastern District of Michigan (Singh Management Co. LLC v. Singh Development Co. Inc., May 20, 2019, Larsen, J.).
A real estate development company, Singh Management Company, LLC, filed trademark infringement claims against the founder’s nephews and former employees, Darshan Singh Grewal and Pargat Singh Grewal, their various real estate business entities, and a business associate named Jasjit Takhar. The development company alleged the defendants had infringed its trademark rights in the Singh name. The court compelled arbitration pursuant to an arbitration agreement, while noting that the agreement reserved equitable claims like injunctive relief for the court, thereby retaining jurisdiction to entertain post-arbitration motions and enter injunctive relief.
Procedural history. There was extensive motion practice before the arbitrator to determine whether the prospective injunction should bar the nephews from using the ‘Singh’ name except in conjunction with their given names, or whether less-restrictive relief would be adequate to protect the development company’s interests. The arbitrator issued a 100-page opinion and award in January 2017 (the "January Order") in which he found that the nephews’ use of Singh infringed on Singh Management’s rights, but allowed that they may use the name in conjunction with their full names. The arbitrator did not make any findings against Takhar, but did not explicitly dismiss him.
The parties both asked for clarification and substantially disagreed over the scope of the arbitrator’s decision. The arbitrator twice had the parties submit proposed orders outlining the scope of the injunctive relief. In doing so, Singh Management consented to the arbitrator’s jurisdiction over injunctive relief. In July 2017, the arbitrator issued an order (the "July Order") enjoining the nephews from using Singh alone as the only identifying proper noun in their business names and dismissing the claims against Takhar with prejudice.
Back in federal court, the nephews asked for confirmation of the July Order and Singh Management asked for confirmation of the January Order. Singh Management argued the July Order was advisory in nature and the injunctive relief was insufficient to protect its trademark rights. The court ordered confirmation of the January award "including as clarified" by the July Order (the Confirmation Order) and issued an accompanying Judgment that departed from the language of the July Order and awarded more restrictive injunctive relief. It also failed to dismiss Takhar from the proceedings. The nephews moved to clarify or amend the Judgment under F.R.C.P. Rules 59(e) and 60. The court offered no explanation and summarily denied the post-judgment motion.
Abuse of discretion. The court reviews the disposition of motions brought under Rules 59(e) and 60 for abuse of discretion, which occurs when a court applies the wrong legal standard, misapplies the correct legal standard, relies on clearly erroneous findings of fact, or makes a clear error of judgment. Here, the district court’s Confirmation Order was facially inconsistent with its Judgment, yet it summarily dismissed Darshan and Pargat’s post-judgment motion which deserved careful review on the merits and warranted an explanation, the court said.
Irreconcilable orders. Singh Management argued that the Judgment was consistent with the July Order, because the July Order was intended to be a generalized summary of the January Order and that Takhar was "constructively dismissed." These were very different positions from those it took before the arbitrator and district court. The court was unpersuaded, noting that the final Judgment differed from the arbitrator’s July Order because it entered injunctive relief more restrictive than that contained in the July Order and it failed to dismiss Takhar from the proceedings.
Dismissal of Takhar. Because the court did not enter an order reflecting Takhar’s dismissal, he has not been dismissed. Arbitration awards are not self-enforcing; the fact that the arbitration award dismissed him has no effect unless committed to a judicial order. Without findings by the arbitrator or the court related to Takhar specifically, subjecting Takhar to the injunction would be a manifest injustice, the court held.
Clear error of law. If Singh Management were correct that the Judgment reflected the district court’s real intent, there was a significant possibility that the district court abused its discretion. To the extent the lower court intended to order injunctive relief more restrictive than was expressed in the July Order, it may have committed a clear error of law, the court held. The district court’s failure to enter an injunction that matched the July Order’s language would be an unauthorized vacatur of a confirmable arbitration award. That unauthorized vacatur, if it were the court’s intent, would constitute an abuse of discretion.
Holding. The court remanded for clarification as to the district court’s intent, because it was impossible to reconcile the district court’s Judgment with its Confirmation Order.
Concurrence. Circuit Judge Nalbandian questioned whether Singh Management waived its right to have the district court decide the appropriate injunctive relief, because Singh Management continued to assert that the district court retained jurisdiction over equitable relief after the arbitrator issued the January Award. Judge Nalbandian underscored that the court should not infer a waiver of contractual rights lightly.
This case is No. 18-1566.
Attorneys: Richard Matthews (Williams Mullen) for Singh Management Co., LLC. K. Scott Hamilton (Dickinson Wright PLLC) for Singh Development Co., Inc., Singh Group, LLC and Singh Group II, LLC.
Companies: Singh Management Co., LLC; Singh Development Co., Inc.; Singh Group, LLC; Singh Group II, LLC
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