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Denver Global Products, Inc. v. Leon

United States District Court, W.D. North Carolina, Statesville Division

July 16, 2018

DENVER GLOBAL PRODUCTS, INC., Plaintiff,
v.
ROGER LEON, JEANNE HENDRIX, KEITH PIERCY, Defendants,
v.
CHONGQUING RATO POWER CO., LTD., et. al., Third Party Defendants.

          ORDER

          Max O. Cogburn, Jr. Judge

         THIS MATTER is before the Court on review of a Memorandum and Recommendation issued in this matter. In the Memorandum and Recommendation, the magistrate judge advised the parties of the right to file objections within 14 days all in accordance with 28 U.S.C. § 636(b)(1)(c). Objections have been filed within the time allowed.

         I. Applicable Standard

         The Federal Magistrates Act of 1979, as amended, provides that “a district court shall make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1); Camby v. Davis, 718 F.2d 198, 200 (4th Cir.1983). However, “when objections to strictly legal issues are raised and no factual issues are challenged, de novo review of the record may be dispensed with.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir.1982). Similarly, de novo review is not required by the statute “when a party makes general or conclusory objections that do not direct the court to a specific error in the magistrate judge's proposed findings and recommendations.” Id. Moreover, the statute does not on its face require any review at all of issues that are not the subject of an objection. Thomas v. Arn, 474 U.S. 140, 149 (1985); Camby v. Davis, 718 F.2d at 200. Nonetheless, a district judge is responsible for the final determination and outcome of the case, and accordingly the Court has conducted a careful review of the magistrate judge's recommendation.

         II. Discussion

         The Court has given careful consideration to each Objection and conducted a de novo review as warranted. Defendants Roger J. Leon and Keith Piercy have filed “Objections to Memorandum and Recommendation and Order” (#47). Plaintiff and certain third-party defendants have filed a “Response to Defendant Roger J. Leon and Keith Piercy's Objections to Memorandum and Recommendation and Order” (#48). The court will consider defendants' objections below.

         A. Objection to the Applicable Standard

         First, the court will consider defendants' objection to the standard applied in the Memorandum and Recommendation. Relevant factual disputes concerning a motion to compel arbitration generally should be evaluated similarly to a motion for summary judgment. Chorley v. Enters., Inc. v. Dickey's Barbecue Rests., Inc., 807 F.3d 553, 564 (4th Cir. 2015). Thus, a motion to compel arbitration should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Forshaw Indus., Inc. v. Insurco, Ltd., 2 F.Supp.3d 772, 785 (W.D. N.C. 2014) (quoting Fed.R.Civ.P. 56(a)).

         Turning to defendants' objections, defendants first contend that the magistrate judge applied the wrong standard to the factual findings. Defendants argue that since the formation and validity of the arbitration agreement are disputed, and the parties have introduced documents outside the pleadings, there is a genuine issue of whether there is a valid agreement to arbitrate in this case. However, no genuine dispute of fact exists merely because parties introduced documents outside the pleadings. After reviewing the documents and the evidence, Judge Cayer found no genuine disputes as to any material fact concerning Leon's assent to the Substitute Agreements and their terms. Nothing suggests that Judge Cayer failed to use the appropriate standard of review to evaluate the Motion to Compel. As such, this objection is overruled.

         B. Objections to Factual Findings

Further, defendants attempt to create disputed facts to support their previous objection regarding the applicable standard. Specifically, defendants contend, contrary to Judge Cayer's findings, that Leon (1) did not have the benefit of Chinese counsel when he signed the Substitute Agreements, (2) did not have the benefit of an honest interpreter, (3) was too sick to respond to the arbitration proceedings, and (4) did not have financial means for Chinese arbitration. The court will consider these objections below.

         Defendants' first factual argument is that, contrary to the Memorandum and Recommendation, Leon did not have the benefit of Chinese counsel when he signed the Substitute Agreements. However, Leon admits to hiring Chinese counsel to make demands to Rato Manufacturing “based on the contents of the Substitute Agreements.” 4th Leon Aff. ¶ 3 (D.E. 20-17). Leon's Chinese counsel sent a demand letter to Rato Manufacturing acknowledging that “Leon entered into an equity transfer agreement and an equity joint venture contact with the then shareholders of [Rato Manufacturing] … in November 2012.” 2nd Zhu. Aff. ¶ 8 & Ex. A (D.E. 21-9). Hence, Defendants are simply wrong as to the first factual contention.

         Next, defendants argue that Leon in fact did not have the benefit of an honest interpreter. Defendants never argue that Leon did not have an interpreter. Rather, they stress the characterization of whether the interpreter was “honest.” Defendants state “no translator ever accurately explained the Chinese documents to [Leon].” 1st Leon Aff. ¶ 58 (D.E. 20-11) (emphasis added). There is nothing in the record to explain why defendants think - many years later - that the translator may not have been honest. Additionally, multiple parties have attested that “Leon was provided explanations of the Substitute Agreements and their provisions through the assistance of an interpreter.” 1st Zhu Aff. ¶ 23 (D.E. 20-1); 1st Wang Aff. ¶ 17 (D.E. 20-5). This factual objection is overruled.

         Additionally, defendants argue Leon was too sick to respond to the arbitration proceedings because he was “close to dead.” The doctors' letters that defendants have relied on to support this contention advised only that litigation deadlines be extended to mid-July 2016 because of Leon's recovery. Def. Resp. Br. at Ex. C (D.E. 34). Defendants filed numerous responses to Rato Parties' pending ...


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