In a case emphasizing the deference courts give to factual findings of arbitrators, a magistrate judge in the Eastern District of New York has confirmed an arbitration award granting damages and attorneys’ fees to a company that repossessed a leased car when the leasee fell behind on his payments.
The case arose out of the lease of a car by plaintiff Kevin Love and his wife Maria. After the Loves failed to make timely payments on the lease, defendant BMW Financial Services repossessed the car, sold it at auction, and sought payment of a deficiency balance. Mr. Love sued BMW in state court, where he asserted Fair Credit Reporting Act, tort, and contract claims. BMW removed the case to federal court, then successfully moved to compel arbitration per the terms of the lease agreement. The arbitrator entered an award in favor of BMW, rejecting all of Mr. Love’s claims and awarding BMW $34,826.64 in damages plus interest and $50,000 in attorneys’ fees. BMW then moved in federal court to confirm the award and sought its fees incurred in connection with that proceeding, and Mr. Love cross-moved to vacate the award.
The court confirmed the award, emphasizing that courts in the Second Circuit will not vacate an arbitration award except in narrowly-defined circumstances described in the Federal Arbitration Act or if the court finds that it was rendered in “‘manifest disregard’ of the law or the terms of the parties’ agreement.” The court further emphasized that manifest disregard of the evidence is not a grounds for vacatur within the Second Circuit. Thus, the court rejected Mr. Love’s claim that the arbitration award was too large because the arbitrator failed to properly account for the time that the car was not available to Mr. Love, finding that it had no power to review such a factual finding. The court likewise rejected Mr. Love’s argument that the arbitrator’s decision dismissing his FCRA claim should be vacated, as this was also based on a non-reviewable finding of fact. The court also found that because the plain language of the lease provided for attorneys’ fees incurred in connection with a default on the lease, BMW was entitled to recover the $12,690.02 in attorneys’ fees it incurred in seeking to have the award confirmed and responding to Mr. Love’s motion for vacatur.