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MILBERG LLP v. DRAWRAH LIMITED HWB HWB HWB HWB HWB NW UTE (2021)

United States Court of Appeals, Second Circuit.2021-02-09No. 20-2500-cv

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Opinion

SUMMARY ORDER

Petitioner-Appellant Milberg, LLP, appeals from the judgment of the district court, entered on July 8, 2020, dismissing its petition to vacate an arbitration award rendered in favor of Respondents-Appellees. The district court dismissed the petition for lack of subject matter jurisdiction, on the theory that Milberg had failed to adequately plead diversity of the parties, and for failure to serve notice of its petition within the three-month deadline established by the Federal Arbitration Act, 9 U.S.C. § 12. Milberg appeals, challenging both holdings. We assume the readers familiarity with the record.

I. Subject Matter Jurisdiction

Milberg initially filed its petition to vacate the arbitration award on May 6, 2019, alleging (among other things) that the district court had subject matter jurisdiction based on diversity of citizenship among the parties under 28 U.S.C. § 1332. The district court twice noted deficiencies in Milbergs allegations of its partners’ citizenship, and twice ordered Milberg to amend its petition. The court ultimately dismissed the petition, reasoning that (1) the amended diversity allegations remained ambiguous and (2) the supporting declaration did not indicate that it was based on the declarants personal knowledge. See Milberg LLP v. HWB Alexandra Strategies Portfolio, No. 19-CV-4058, 2020 WL 3833829, at *3 (S.D.N.Y. July 8, 2020).

Although the question is close, we conclude that Milberg adequately pled diversity. The district courts contrary conclusion was understandable, given the inadequacy of the first two petitions and the inartful drafting of the third. But “tak[ing] all facts alleged in the complaint as true and draw[ing] all reasonable inferences in favor of plaintiff,” Sweet v. Sheahan, 235 F.3d 80, 83 (2d Cir. 2000), we conclude that Milberg plausibly alleged that it had two partners at the time the action was commenced, that both were then citizens of the United States, and, therefore, that complete diversity existed between Milberg and the respondents, all of whom were citizens of Germany, Liechtenstein, or Luxembourg. See Universal Licensing Corp. v. Paola del Lungo S.p.A., 293 F.3d 579, 581 (2d Cir. 2002) (“diversity must exist at the time the action is commenced”). The declaration of a longtime Milberg attorney (who was part of firm management for many years), when read in the light most favorable to plaintiff, can be understood to state personal knowledge of the relevant facts and, thus, should not have been struck. See Fed. R. Civ. P. 56(c)(4); Fed. R. Evid. 602. We therefore hold that Milberg carried its burden of establishing subject matter jurisdiction. See Herrick Co., Inc. v. SCS Commcns, Inc., 251 F.3d 315, 322–23 (2d Cir. 2001).

II. Timeliness Under the Federal Arbitration Act

Nevertheless, we hold that Milberg failed to comply with the timing provisions of the Federal Arbitration Act (the “FAA”). Section 12 of the FAA states that “[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.” 9 U.S.C. § 12. In holding that this deadline applies to a motion to vacate even if interposed as a defense against a motion to confirm an arbitral award, this Court has stated that “there is no common law exception to the three month limitations period.” Florasynth, Inc. v. Pickholz, 750 F.2d 171, 175 (2d Cir. 1984).

Milberg does not contend that it met the three-month deadline. It effected service under the Hague Convention months after the FAAs three-month mark passed. Rather, Milberg asserts that it should be deemed to have complied with that deadline, invoking concepts of fairness and equity which Milberg argues apply to service under the FAA when foreign respondents must be served, and citing In re Arbitration Between InterCarbon Bermuda, Ltd. and Caltex Trading and Transport Corp., 146 F.R.D. 64 (S.D.N.Y 1993). We need not reach the question of whether there are any exceptions to the rule of strict compliance with the FAAs three-month deadline because the facts advanced by Milberg would not support even the equitable exception that it hypothesizes. Milberg did not even notify opposing counsel of its petition to vacate the arbitral award until § 12’s three-month window closed, and only after opposing counsel stated it was not authorized to accept service did Milberg set the wheels in motion for service overseas. Such circumstances do not demonstrate diligence within the FAAs three-month service period warranting a possible equitable extension. We therefore uphold the district courts dismissal of Milbergs petition as untimely.

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Accordingly, we AFFIRM the judgment of the district court.