This motion and cross-motion arise out of an earlier order entered by this court, which granted the underlying petition to confirm an arbitration award.

Petitioners, Steve Higgs and Dave Ferebee, signed franchising agreements with respondent, Sun Knowledge Services, Inc. (Sun). Higgs and Ferebee each paid Sun a $25,000 licensing fee. They both later sought refunds of the $25,000 fee, which Sun refused to provide.

Higgs and Ferebee brought an arbitration proceeding against Sun under the terms of their contracts. The arbitrator ruled for Higgs and Ferebee. He awarded each of them the full $25,000 they had paid to Sun, plus interest at 9% and $1,062.50 in costs.

Higgs and Ferebee then brought this petition to confirm the arbitral award. The petition was originally made returnable on July 26, 2019. (See NYSCEF No. 3.) On July 24, the parties executed a stipulation adjourning the return date to August 9. (See NYSCEF No. 9.) The parties did not notify this court of this stipulation when it was executed. They also inadvertently did not e-file the stipulation on NYSCEF until August 2. On August 2 (consistent with the stipulation), respondent cross-moved to dismiss the petition for lack of subject-matter jurisdiction. (See NYSCEF Nos. 10-16.)

Unfortunately, in the absence of information about the parties' stipulation this court entered an order on July 29 that granted the petition as unopposed and confirmed the award. This court's order "adjudged that petitioner is awarded a judgment for $25,000, with interest from 5/29/18, plus costs and disbursements." (NYSCEF No. 8.)

After entry of this court's order, the parties asked this court to so-order their stipulation vacating the order and providing for the court's consideration of the petition and cross-motion on their merits. (See NYSCEF No. 19.) This court declined to so-order the stipulation. The court concluded that the appropriate course would instead be for the parties to file a fresh motion to vacate (or otherwise modify) the order, to avoid potential confusion about whether the original order remained in place and ensure clarity as to the motion papers that were properly before the court. (See NYSCEF No. 20.)

Petitioners now move for leave to reargue this court's July 29, 2019, order; respondent cross-moves to vacate the order and for leave to renew.

A motion for leave to reargue under CPLR 2221 (d) may be granted only upon a showing "that the court overlooked or misapprehended the facts or the law or for some reason mistakenly arrived at its earlier decision." (William P. Pahl Equip. Corp. v Kassis, 182 AD2d 22, 27 [1st Dept 1992] [quotation marks omitted].) A motion for leave to renew "should be based on newly discovered facts that could not be offered on the prior motion." (Mejia v Nanni, 307 AD2d 870, 871 [1st Dept 2003].) To warrant the grant of leave to renew, the movant must also establish that these new facts "would change the prior determination." (CPLR 2221 (e).)

In seeking leave to renew, petitioners understandably do not contest this court's conclusion that their petition to confirm should be granted. Rather, they contend that this court's prior order misconstrued the underlying arbitral award, and thereby failed to award petitioners all the relief to which they were entitled. Petitioners are correct.

The arbitrator concluded that both petitioner Hicks and petitioner Ferebee were each entitled to refunds of $25,000 licensing fees (with 9% interest), plus $1,062.50 in costs. (See NYSCEF No. 2 at 1-2.) This court's prior order, though, awarded $25,000 only to a petitioner—without saying whether the award was to Hicks or to Ferebee—and did not mention the $1,062.50 in arbitral costs. (See NYSCEF No. 8.)

This court thus misapprehended the facts of the case, which warrants the grant of leave to reargue. On reargument, the court concludes that under the petition to confirm, Hicks and Ferebee should each be awarded $25,000, plus interest on those sums at 9%, plus $531.25 each in arbitral costs.

II. Respondent's Renewal/Vacatur Cross-Motion

Respondent cross-moves for leave to renew and to vacate this court's July 29, 2020, order in light of the parties' adjournment stipulation discussed above. This court agrees that the existence of the adjournment stipulation warrants vacatur of the July 29, 2020 order as it was originally entered. But this court denies leave to renew because renewal would not alter the court's determination on the merits of the petition.

As an initial matter, petitioners are correct that respondent's cross-motion papers neither respond to the motion to reargue nor put forward reasons why this court should decline on reargument to confirm the underlying arbitral award. (See NYSCEF No. 46 at 2.) This court exercises its discretion, though, to construe respondent's papers as seeking to incorporate by reference respondent's previously filed arguments for dismissal of the petition. Upon consideration now of those arguments, the court finds that they do not provide a basis to dismiss or deny the petition.

Respondent's argument for dismissal is simple. The arbitration clause in each petitioner's contract provides that confirmation of any arbitral award is governed by the Federal Arbitration Act. (See NYSCEF No. 16.) Section 9 of the FAA, governing the procedure for confirming awards, states that if the parties' contract does not specify a venue for a petition to confirm, "such application may be made to the United States court in and for the district within which such award was made." (9 USC § 9.) Therefore "the Petition should have been filed in the United States District Court for the Eastern or Southern District of New York," such that this court lacks subject-matter jurisdiction. (NYSCEF No. 11 at 2.) This court is not persuaded.

Respondent's argument faces an uphill battle as a matter of precedent. The Appellate Division, First Department, has issued multiple decisions in the past decade affirming the grant of petitions brought under FAA § 9 to confirm arbitral awards. These decisions would seem to undermine an argument that this court lacks jurisdiction to entertain such petitions. (See Tullett Prebon Fin. Servs. v BGC Fin., L.P., 111 AD3d 480, 482-483 [1st Dept 2013]; U.S. Elecs., Inc. v Sirius Satellite Radio, Inc., 73 AD3d 497, 498 [1st Dept 2010].) The respondents in these proceedings admittedly did not raise the particular jurisdictional argument based on FAA § 9 that respondent now advances here. One might thus hesitate to consider the First Department's decisions to have definitively resolved the issue. But even considered in the first instance, this court does not agree with respondent's argument.

FAA § 9 is framed permissively: it provides that a petition to confirm "may be made" to the appropriate federal district court, not that the petition must be made there. (9 USC § 9 [emphasis added].) In addressing the related provisions governing petitions to vacate or modify arbitral awards (FAA §§ 10 and 11), the U.S. Supreme Court has held that these three sections of the FAA were intended to liberalize venue for petitions relating to arbitral awards, not contract it. (Cortez Byrd Chips, Inc. v Bill Harbert Constr. Co., 529 US 193, 199-201 [2000].)

Moreover, reading FAA § 9 to require FAA-based petitions to be brought in federal court (as respondent would have it) would potentially lead to absurd results. A basic principle of [*2]federal arbitration law is that the FAA "creates a substantive body of law but does not, by itself, confer federal question subject matter jurisdiction" to hear claims brought under the Act—including petitions to confirm under § 9. (Perpetual Secs., Inc. v Tang, 290 F3d 132, 140 [2d Cir 2002].) Thus, on respondent's argument, if an arbitration clause incorporated the substantive law of the FAA but for some reason federal subject-matter jurisdiction turned out to be lacking (for example, due to an absence of complete diversity of parties), the prevailing party in the arbitral forum would have nowhere to go to get its award confirmed.^[FN1]

This court instead concludes that FAA § 9 should be read as its language would indicate: A party seeking to obtain confirmation of an arbitral award may bring its petition to confirm in an appropriate federal district court (assuming subject-matter jurisdiction otherwise exists), or may choose to bring the petition in an appropriate state trial court (as Higgs and Ferebee have done here). To be clear, in either case the substantive body of law to be applied on the petition to confirm would be supplied by the FAA. But respondent has not identified any distinctions between the FAA and CPLR article 75 that might affect whether petitioners should be entitled to confirmation of their arbitral award. Nor has respondent provided any other reason for this court to decline to confirm.

Accordingly, for the foregoing reasons, it is hereby

ORDERED that this court's order in this matter dated July 29, 2019 (NYSCEF No. 8) is vacated; and it is further

ORDERED that petitioners' motion for leave to reargue is granted, and on reargument the arbitration award is confirmed, and petitioner Hicks and petitioner Ferebee are each awarded separate judgments for (i) $25,000; (ii) 9% interest on $25,000 running from May 29, 2018; (iii) $531.25 each in arbitral costs; and (iv) one-half of petitioners' costs and disbursements in this action, to be taxed by the Clerk upon submission of an appropriate bill of costs; and it is further

ORDERED that respondent's cross-motion for leave to renew is denied; and it is further

ORDERED that petitioners are to serve notice of entry on respondent and on the office of the County Clerk, which shall enter judgment accordingly.