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Inc. v. Alzheimer's Disease and Related Disorders Association of San Diego, Inc.

United States District Court, S.D. California

March 29, 2018

ALZHEIMER'S DISEASE AND RELATED DISORDERS ASSOCIATION, INC., Petitioner,
v.
ALZHEIMER'S DISEASE AND RELATED DISORDERS ASSOCIATION OF SAN DIEGO, INC., Respondent.

          ORDER GRANTING IN PART PETITIONER'S MOTION TO STRIKE AND GRANTING PETITION TO CONFIRM ARBITRATION AWARD [ECF NOS. 1-2, 7]

          BARRY TED MOSKOWITZ, CHIEF JUDGE.

         Presently before the Court are Petitioner Alzheimer's Disease and Related Disorders Association, Inc.'s (“National”) petition/motion to confirm an arbitration award (ECF Nos. 1-2) and motion to strike Respondent Alzheimer's Disease and Related Disorders Association of San Diego Inc.'s (“Chapter”) answer (ECF No. 7.) For the reasons discussed below, Petitioner's motion to strike is granted in part and its petition/motion to confirm an arbitration award is granted.

         I. BACKGROUND

         In 1998, Petitioner and Respondent entered into a contractual Statement of Relationship (“SOR”) to memorialize their affiliation. (ECF No. 1 (“Petition”) ¶ 6.)

         The parties modified the SOR on June 1, 2012. (Id. ¶¶ 6-7.) Under section 9.1 of the Amended SOR, the parties agreed to the following provision:

2. Disaffiliation: Section 9.1 of the SOR shall be deleted in its entirety and the following language shall be added as a new Section 9.1:
“Upon the determination of either party to sever the relationship established by this Agreement, the disposition of Chapter Assets shall be determined by mutual agreement of the parties, or, in the absence of such mutual agreement, through binding arbitration.
The disposition of such assets through binding arbitration is limited to: (a) transfer of all Chapter Assets to national; (b) funding Alzheimer's Association research; (c) some combination of the above options”

(Id., Ex. 2 at 12.)

         On December 2, 2015, Respondent served Petitioner with a Notice of Disaffiliation, effective December 3, 2015. (Id. ¶ 9.) On May 16, 2016, Respondent commenced arbitration proceedings with JAMS because the parties were unable to reach an agreement regarding the disposition of chapter assets. (Id. ¶ 11.) On January 19, 2017, the arbitrator issued a partial final award. (Id. ¶ 13, Ex. 3.) The partial final award ordered Respondent to remit to Petitioner approximately $1.7 million in chapter assets, which were previously placed with two donor-advised funds, and the net cash in the amount of $578, 547.50. (Id., Ex. 3 at 26.) The partial award was intended to be final as to the issues and claims submitted for decision. (Id.) The arbitrator, however, retained “jurisdiction to make any additional awards as may be necessary and appropriate to supervise, enforce, carry out, or complete the disposition of assets ordered here.” (Id.)

         On March 20, 2017, Respondent remitted what remained of the $1.7 million to Petitioner. (Petition ¶ 15.) Respondent transferred no other assets to satisfy the partial award. (Id. ¶ 16.) On June 7, 2017, the arbitrator incorporated by reference the January 19, 2017 partial final award and issued a final award. (Id., Ex. 4 at 29-30.) The final award noted that Respondent had failed to remit the net cash it was previously ordered to pay and ordered Respondent to “immediately transfer its Currently Available assets up to the amount of $578, 547.50 to [Petitioner] to partially satisfy the Net Cash remittance order.” (Id. at 30.) The arbitrator also enjoined Respondent from “dissipating or otherwise encumbering Currently Available Assets before such transfer for any purpose, including to satisfy outstanding bills, invoices or other debts, whether for attorney fees or for any other purpose.” (Id.) On June 26, 2017, Respondent sent a wire transfer to Petitioner in the amount of $173, 547.80. (Petition ¶ 21.) To date, Petitioner has not received any further payment to satisfy the award. (Id. ¶ 22.)

         On August 22, 2017, Petitioner filed a petition to confirm an arbitration award against Respondent to ensure that it may collect the remainder of the award. On November 6, 2017, Respondent filed an answer asserting fourteen affirmative defenses including two grounds for modifying and vacating the arbitration award. (ECF No. 5.) On November 27, 2017, Petitioner filed a reply and a motion to strike Respondent's answer. (ECF Nos. 6-7.)

         II. DISCUSSION

         A. ...


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