Finn v. Estate of Schiavo

          LAW OFFICE OF JEREMY SPIEGEL By: Jeremy S. Spiegel, Esq. Counsel for Plaintiff.

          COHEN SEGLIAS PALLAS GREENHALL & FURMAN, P.C. By: Jonathan A. Cass, Esq. Counsel for Defendants.

          OPINION

          Noel L. Hillman, U.S.D.J.

         Plaintiff Thomas Finn alleges that his former business partner, now-deceased Gennaro “Jerry” Schiavo, Jr., stole from their limited liability company, Temp-Rite. Plaintiff further alleges that Defendant Sharon Schiavo - Jerry's wife, and Temp-Rite's Operations Manager / bookkeeper - aided and abetted Jerry Schiavo's misappropriations. The Court previously granted Defendants' Motion to Dismiss the claims against Jerry Schiavo's estate, holding that those claims are subject to arbitration. Finn v. Schiavo, 2016 U.S. Dist. LEXIS 16622 (D.N.J. Feb. 11, 2016). The Court also stayed the claims against Defendant Sharon Schiavo pending the resolution, in arbitration, of the claims against the estate. Id. The case was administratively terminated pending the disposition of the arbitration.

         Since the Court's decision, Plaintiff has filed with the American Arbitration Association (“AAA”) an arbitration demand which includes both the claims against the Defendant estate and the claims against Defendant Schiavo. The arbitration is scheduled for October, 2017.

         Schiavo asks this Court to: (A) enjoin Plaintiff and the AAA from proceeding with the arbitration against her; and (B) impose sanctions against Plaintiff's counsel pursuant to 28 U.S.C. § 1927.^[1] For the reasons stated herein, the Court will grant the motion to the extent that it seeks to enjoin only Plaintiff (not the AAA) from pursuing arbitration of the claims asserted against Schiavo. The Motion will be denied in all other respects.

         I.

         It is undisputed that Sharon Schiavo is not a signatory to the arbitration agreement at issue, which is contained in Temp-Rite's Operating Agreement. Indeed, in the previous briefing on the Motion to Dismiss the parties seemed, at least implicitly, to assume that the claims against Sharon Schiavo were not arbitrable under any legal theory.

         Here, in opposition to the instant motion, Plaintiff asserts that the claims against Schiavo are subject to arbitration. Plaintiff relies upon a single footnote in Defendant Schiavo's brief in support of her previous motion to dismiss wherein she stated she “is willing to consent to the jurisdiction of the arbitrator, ” and that she “is willing to stipulate as such.” (Docket #9, Moving Brief, p. 12 n.3)(emphasis added). However, nothing in the papers before this Court indicates that Defendant Schiavo ever signed anything consenting to arbitrate the claims against her. Indeed, all of her other actions in this litigation and the arbitration suggest that she has not, and does not, consent to arbitration.

         II.

         A.

         Pursuant to Fed.R.Civ.P. 65(a), the Court may issue preliminary injunctions. It is well established that a court is “obliged to enjoin an arbitration” where it is determined “that a valid arbitration agreement does not exist or that the matter at issue clearly falls outside the substantive scope of the agreement . . . .” PaineWebber Inc. v. Hartmann, 921 F.2d 507, 511 (3d Cir. 1990), abrogated on other grounds by Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002).

         B.

         “An attorney or other person admitted to conduct cases in any court of the United States . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses and attorneys' ...