Summary
The United States District Court for the Middle District of Pennsylvania denied William H. Lane Incorporated’s motion to dismiss a petition seeking to vacate or modify an arbitration award, holding that Federal Rule of Civil Procedure 12 does not apply to such an FAA motion. The court also denied WHL’s motion for Rule 11 sanctions, finding that Glenn O. Hawbaker, Inc.’s petition and arguments were not frivolous or objectively unreasonable. The court directed the parties to submit additional briefing before deciding the merits of the FAA petition.
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Practice areas
Questions Presented
- Whether a petition to vacate or modify an arbitration award under the Federal Arbitration Act must be filed as a complaint and may be subjected to a Rule 12 motion to dismiss.
- Whether the defendant established that the plaintiff's FAA petition or related conduct warranted sanctions under Federal Rule of Civil Procedure 11.
- Whether the court should decide the merits of the FAA petition immediately or after limited supplemental briefing.
Holdings
- A petition seeking to vacate or modify an arbitration award under the Federal Arbitration Act may be treated as a motion rather than a complaint, and Federal Rule of Civil Procedure 12 does not apply to such an FAA motion. The defendant's motion to dismiss was therefore denied.
- Rule 11 sanctions were not warranted because WHL failed to show that GOH's petition or conduct was objectively unreasonable, careless, frivolous, or otherwise sanctionable. The motion for sanctions was denied.
- The court deferred decision on the merits of the FAA petition and directed the parties to submit supplemental briefing under a schedule established in an accompanying order.
Key quotations
“Because Rule 12 does not apply to motions to dismiss like the one currently before the Court, that motion is denied.” (Section II.B)
“After reviewing the petition and briefing accompanying the motion for sanctions, the Court cannot say that any of GOH’s statements or conduct was unreasonable or demonstrated any level of carelessness.” (Section IV)
“For the foregoing reasons, the motion to dismiss is denied and the motion for sanctions is denied.” (Section V)
Factual background
William H. Lane Incorporated, the general contractor, and Glenn O. Hawbaker, Inc., the subcontractor, disputed payment and performance issues involving concrete services for a public safety center and associated building in Susquehanna County, Pennsylvania. After WHL suspended and terminated GOH's work, GOH initiated American Arbitration Association proceedings asserting breach of contract, unjust enrichment, and violation of the Pennsylvania Procurement Code Prompt Payment Act. Following eight days of evidentiary hearings, the arbitrator found that WHL improperly suspended GOH's performance but also found that GOH's performance defaults caused WHL $586,282.71 in expenses, ultimately determining that WHL was owed $81,098.75.
Procedural history
After an arbitrator issued an award arising from a construction subcontract dispute, Glenn O. Hawbaker, Inc. filed this action seeking to vacate or modify the award. William H. Lane Incorporated moved to dismiss and sought sanctions under Federal Rule of Civil Procedure 11. The court held that the petition should be treated as a motion, denied the motion to dismiss because Rule 12 does not apply to FAA motions, denied sanctions, and deferred determination of the merits of the FAA petition pending supplemental briefing.