The opinion of the court was delivered by: Joel Schneider United State Magistrate Judge
This Opinion addresses the following application and motions:
(1) plaintiff's application to strike defendant Joel Hoffman's ("Hoffman") appeal of the September 28, 2010 Arbitration Award [Doc. No. 109]*fn1 ; (2) Plaintiff's Motion for Legal Fees and Costs Associated with Trial De Novo Demand of Defendant Joel Hoffman [Doc. No. 118]; and (3) Nevele Hotel, LLC's Motion for Attorney's Fees and Sanctions [Doc. No. 123]. The Court held one conference and two evidentiary hearings to address plaintiff's application and the outstanding motions.*fn2 Hoffman filed written opposition to the request to strike his appeal but did not specifically respond to the requests for fees and costs. For the reasons to be discussed, the Court DENIES the request to strike Hoffman's appeal but GRANTS in part and DENIES in part the motions for sanctions filed by plaintiff and Nevele.
The undulying dispute in the case is not complicated. On August 30, 2007, plaintiff and Getaway Weekend Vacations, Inc. d/b/a Adventure Unlimited ("Adventure") entered into a contract for the rental of 350 rooms at the Nevele for the weekend of February 22-24, 2008. When plaintiff's group of 700 people arrived at the hotel the group learned there was no heat and hot water in any of the rooms. Plaintiff alleges Nevele and Hoffman did not arrange for the delivery of heating oil on the weekend of its visit. Due to the cold and other problems at the hotel, plaintiff and his group ended their visit after only one night. Plaintiff sued Adventure, Nevele and Hoffman on May 29, 2008, for a refund of his money and other damages allegedly incurred. Plaintiff's damage claim is approximately $264,785.
At one time Hoffman and Matthew Wolff ("Wolff") owned the Nevele. However, at the time of the relevant underlying events Hoffman had contracted to buy most of Wolff's interest. Hoffman, however, defaulted on most of his payments which resulted in a judgment in favor of Wolff and against Hoffman in an amount in excess of $2 million. Over Hoffman's objection, on March 24, 2010, the Supreme Court of New York, Ulster County, appointed Wolff Nevele's receiver to protect Wolff's judgment and to protect the interests of other lien holders and creditors. See March 24, 2010 Decision in Wolff v. Hoffman, et al., Index No. 09-2279, RJI No. 55-09-01923 (Supreme Court of the State of New York, County of Ulster), attached as Exhibit C to Nevele's February 17, 2011 Letter Brief, Doc. No. 126.
At the early stage of the case Hoffman was represented by counsel. On March 19, 2009, the Court granted Hoffman's counsel's Motion to Withdraw [Doc. No. 49]. Since the entry of the Order, Hoffman has been representing himself.
Due to the nature of the parties' dispute and the amount in controversy, the parties' dispute was designated for arbitration pursuant to the applicable Local Rules of Civil Procedure. See L. Civ. R. 201.1(d) and (e). On August 25, 2010, Alan C. Grossman, Esquire ("Grossman"), was appointed as the arbitrator and the arbitration hearing was scheduled for September 27, 2010. At or prior to the arbitration, plaintiff Nevele and Adventure agreed to a Consent Judgment that was entered on November 4, 2010 [Doc. No. 108]. Pursuant to their agreement a judgment of $275,000 was entered in plaintiff's favor against Nevele and a $75,000 judgment was entered in favor of Adventure against Nevele.
Despite Hoffman's absence, the parties' arbitration was held on September 27, 2010. All interested parties and their counsel appeared at the arbitration except for Hoffman. At the arbitration plaintiff and Adventure argued that Nevele was the alter ego of Hoffman and that Hoffman was otherwise personally responsible for failing to buy heating oil on the relevant weekend. The Arbitration Award was entered on September 28, 2010. The Award found in favor of plaintiff against Hoffman individually in the amount of $264,785, and in favor of Adventure and against Hoffman individually in the amount of $75,000. The award also found "joint and several liability against Nevele Grand Resort, LLC and Nevele Hotel, LLC." Thereafter, Hoffman filed a timely de novo appeal of the arbitration decision pursuant to L. Civ. R. 201.1(h)(1).
Plaintiff's present application seeks to strike Hoffman's appeal on the ground that he did not "meaningfully participate" at the September 27, 2010 arbitration hearing. Plaintiff relies upon L. Civ. R. 201.1(f)(3) which provides: The arbitration hearing may proceed in the absence of any party who, after notice, fails to be present. In the event that a party fails to participate in the arbitration process in a meaningful manner, the arbitrator shall made that determination and shall support it with specific written findings filed with the Clerk. Thereupon, the Judge to whom the action is assigned shall conduct a hearing upon due notice to all counsel and personal notice to any party adversely affected by the arbitrator's determination and may thereupon impose any appropriate sanctions, including,but not limited to, the striking of any demand for a trial de novo filed by that party.
Plaintiff also relies upon Section IV of Appendix M to the Local Rules, Guidelines for Arbitration, which provides:
Attendance of Parties; Participation in a "Meaningful Manner".
Although L. Civ. R. 201.1(e)(3) provides for the arbitration hearing to proceed in the absence of any party, the Court has determined that the attendance of the parties and/or corporate representatives is essential for the hearing to proceed in a meaningful manner. The goals of the arbitration program and the authority of the Court will be seriously undermined if a party were permitted to refuse to attend an arbitration hearing and then demand a trial de novo. Accordingly the Court has, in the same Rule, allowed for the imposition of "appropriate sanctions, including, but not limited to, the striking of any demand for a trial de novo" filed by a party who fails to participate in the arbitration process in a "meaningful manner." Failure by a party or counsel to follow these Guidelines will also be considered in determining whether there was been meaningful participation in the process.
The essence of plaintiff's argument is that Hoffman's failure to appear and defend himself at the September 27, 2010 arbitration should result in a finding that he failed to meaningfully participate. Plaintiff argues the Court should strike Hoffman's de novo appeal as a sanction. In support of his application plaintiff relies upon Grossman's September 28, 2010 Findings of Fact and Conclusions of Law which states:
Joel Hoffman failed to meaningfully participate in the arbitration proceeding and in accord with Local Rule 201.1(f)(3), the Arbitrator respectfully requests sanctions against Joel Hoffman ...