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Geo-Logic Associates, Inc. v. Metal Recovery Solutions, Inc.

United States District Court, D. Nevada

January 6, 2020




         I. SUMMARY

         This action stems from the parties' dispute relating to contracts for engineering and technical services in connection with the mining of precious metals. The Court stayed this action to allow the parties to arbitrate their dispute, which resulted in an award that Defendant now challenges. There are two substantive motions pending before the Court. First, Plaintiff Geo-Logic Associates, Inc. (“GLA”) moves to (1) confirm the arbitration award, asking the Court to enter judgment regarding the same, and (2) seeks attorneys' fees and expenses (“GLA Motion”).[1] (ECF. No. 25.) Second, Defendant Metal Recovery Solutions, Inc. (“MRS”) moves to partially vacate the final arbitration award before the Court rules on the GLA Motion (“Motion to Vacate”). (ECF. No. 30.)[2] For the reasons discussed below, the Court confirms the arbitration award and accordingly denies the Motion to Vacate. GLA's request for attorneys' fees is denied.


         GLA is a geologic, geotechnical, civil and environmental firm with 25 offices in eight states and an affiliate office in Peru. (ECF No. 1 at 2.) MRS is metallurgical engineering firm based in Reno, Nevada. (ECF No. 32 at 5.) Dr. Thomas Seal is the CEO, CTO and majority owner of MRS. (Id.) Goldcorp Inc. (“Goldcorp”) is a gold production company with headquarters in Vancouver, British Columbia, Canada. (ECF No. 25-1 at 6.)

         In June 2015, MRS entered an agreement with Goldcorp to provide services and equipment at Goldcorp's Los Filos gold mine (“Mine”) project in central Mexico. (Id.) In October 2015, MRS retained the services of GLA to provide personnel and manage the project. (Id.) Per a Master Services Agreement (“MSA”) between the parties, the work would be carried out in designated phases. (ECF No. 25-1 at 6.) At a meeting on September 23, 2016 (“Meeting”), MRS and GLA discussed a 70/30 profit split between MRS and GLA for Phase 3 of the project. (ECF No. 32 at 15.) In December 2016, MRS began work on Phase 3 without GLA's services. (ECF No. 1 at 8; ECF No. 39-1 at 44-45.)[3]

         On September 23, 2017, GLA filed this action, asserting claims against MRS and Dr. Seal. (ECF No. 1.) In lieu of proceeding in this Court, the parties stipulated to binding arbitration as to claims against MRS. (ECF No. 20.) During arbitration, MRS asserted counterclaims against GLA. (ECF No. 25-1 at 4.) The arbitrator ultimately found in GLA's favor, awarding GLA $2, 037, 586, plus prejudgment interest at the lawful rate accruing from September 13, 2017-the date of commencement of this action.[4] (ECF No. 25-1 at 4-13.)

         GLA's Motion seeks confirmation of the arbitration award and an executable judgment against MRS. MRS argues in response that the arbitrator improperly decided certain terms of the award and has separately moved to vacate those terms.


         Review of an arbitration award is “both limited and highly deferential”. Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1288 (9th Cir. 2009). Upon application for confirmation of an arbitration award, “the court must grant such an order unless the award is vacated, modified, or corrected . . ..” 9 U.S.C. § 9. “The Federal Arbitration Act enumerates limited grounds on which a federal court may vacate, modify, or correct an arbitral award. Neither erroneous legal conclusions nor unsubstantiated factual findings justify federal court review of an arbitral award.” Kyocera Corp. v. Prudential-Bache Trade Serv. Inc., 341 F.3d 987, 994 (9th Cir. 2003) (internal citations omitted). Vacatur is permitted “where the arbitrator[] exceeded [his] powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4). An arbitrator exceeds his powers “not when [he] merely interpret[s] or appl[ies] the governing law incorrectly, but when the award is completely irrational, or exhibits a manifest disregard of law.” Kyocera, 341 F.3d at 997 (internal citations omitted). However, “if, on its face, the award represents a plausible interpretation of the contract, judicial inquiry ceases and the award must be enforced.” McKesson Corp. v. Local 150 IBT, 969 F.2d 831, 833 (9th Cir. 1992).

         “The completely irrational standard is extremely narrow and is satisfied only where the arbitration decision fails to draw its essence from the agreement.” Comedy Club, 553 F.3d at 1288 (quoting Hoffman v. Cargill Inc., 236 F.3d 458, 461-62 (8th Cir. 2001)). To determine if an arbitration award draws its essence from the agreement, courts view the agreement in light of its “language and context, as well as other indications of the parties' intentions.” Bosack v. Soward, 586 F.3d 1096, 1106 (9th Cir. 2009) (quoting McGrann v. First Albany Corp., 424 F.3d 743, 749 (8th Cir. 2005)). Additionally, if there is a basis in the record for the arbitrator's decision, it will not be deemed completely irrational. See Comedy Club, 553 F.3d at 1289.

         Manifest disregard of the law requires more than an error in interpretation or application of the law. Thompson v. Tega-Rand Int'l, 740 F.2d 762, 763 (9th Cir. 1984) (per curiam). “[M]ere allegations of error are insufficient.” Collins v. D.R. Horton, Inc., 505 F.3d 874, 879 (9th Cir. 2007) (quoting Carter v. Health Net of California, Inc., 374 F.3d 830, 838 (9th Cir. 2004)). Instead, it must be “clear from the record that the arbitrator[] recognized the applicable law and then ignored it.” Mich. Mut. Ins. Co. v. Unigard Sec. Ins. Co., 44 F.3d 826, 832 (9th Cir. 1995).


         MRS asserts that the portion of the award finding that MRS and GLA entered into an oral contract for Phase 3 of the Mine is irrational and manifestly disregards the law. (ECF No. 30 at 2-3.) As to the former, MRS claims the arbitrator disregarded a requirement in the MSA that work orders for the Mine had to be in writing. (ECF. No. 30 at 2.) As to the latter, MRS argues that the arbitrator ignored the requirement that there must be a meeting of the minds on ...

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