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Doral Financial Corp. v. Garcia-Velez

United States Court of Appeals, First Circuit

July 31, 2013



Roberto A. Cámara-Fuertes, with whom José L. Ramírez-Coll and Fiddler, González & Rodríguez, PSC, were on brief for appellant.

José Luis González-Castañer, with whom González Castañer, C.S.P., was on brief for appellees.

Before Lynch, Chief Judge, Torruella and Selya, Circuit Judges.

TORRUELLA, Circuit Judge.

Plaintiff-Appellant Doral Financial Corp. ("Doral") filed this appeal after the district court denied its petition to vacate an arbitral award. According to Doral, the district court incorrectly rejected its contention that the arbitration tribunal engaged in misconduct by denying the issuance of pre-hearing and hearing subpoenas. Doral also argues that the district court erred in its determination that the tribunal had authority to order the payment of pre-award interest. After carefully considering the record, we affirm.

I. Background

When Doral terminated Defendant-Appellee Calixto García-Vélez as the President of its Consumer Banking Division, García-Vélez began the arbitration proceedings underlying this appeal seeking the severance compensation that he felt was contractually due.[1] Doral opposed the filing and argued that García-Vélez's employment contract required no severance payment because the termination was "for cause." Shortly thereafter, García-Vélez accepted a top executive position at the Miami branch of a bank with whom Doral competed in Puerto Rico. He notified Doral by letter about his new employment, and Doral responded with an amendment to its submission to the arbitration tribunal, adding the claim that it owed no severance to García-Vélez because he had breached the non-competition clause of his employment contract. Doral also moved the tribunal for injunctive relief against García-Vélez and commenced parallel litigation in state court against his employer.[2]

The arbitration tribunal held a preliminary arbitration conference on March 23, 2009. It subsequently issued a scheduling order reflecting the agreements of the parties at the conference. As relevant here, the order established May 15, 2009, as the deadline for final requests for information, and August 7, 2009, for the submission of a final witness list. The order also stated that, "if a party wishes to issue a subpoena to a third party . . . the parties shall first confer and determine if there is any disagreement to the date and propriety of the subpoena. . . . Any dispute, as to a subpoena, shall be resolved by the Tribunal . . . ."

On September 4, 2009, five days before the first arbitration hearing was scheduled to begin, Doral filed an "Urgent Motion to Stay the Arbitration Proceedings, " stating that the Miami branch of the bank for which García-Vélez allegedly worked had merged with its Puerto Rico holding company. According to Doral, the merger proved the falsity of García-Vélez's contention that he exclusively worked for the Miami branch. The tribunal, however, denied the stay, and the arbitration hearings commenced as scheduled on September 9, 2009.

García-Vélez testified during the first days of the arbitration hearings. However, on September 14, 2009, due to a medical situation afflicting Doral's counsel, his testimony was interrupted and the hearings were postponed until December 14, 2009. Doral took advantage of the two-month recess to serve García-Vélez with a first set of interrogatories and a request for production of documents. Doral also notified García-Vélez's counsel that it intended to request pre-hearing third-party subpoenas from his employer. García-Vélez did not respond, and Doral filed a formal application with the tribunal to issue the pre-hearing subpoenas.[3]

García-Vélez immediately opposed the formal request. He argued that the subpoenas were untimely and that they sought to change the schedule agreed upon by the parties. García-Vélez also argued that the granting of the subpoenas would likely require the arbitration to be further delayed. The tribunal agreed with García-Vélez and denied Doral's requests as untimely.

Doral remained undeterred. On December 2, 2009, it filed an application for hearing subpoenas directed at García-Vélez's employer, seeking information and documents of the same nature as those sought through the pre-hearing subpoenas. Doral also moved the tribunal to reconsider its decision on the pre-hearing subpoenas, explaining that it had learned about García-Vélez's possible involvement with the merged Puerto Rico holding company well after the discovery deadline had lapsed.[4]

The tribunal denied the issuance of hearing subpoenas as well as Doral's reconsideration motion. As to the motion for reconsideration, it found "the subpoenas . . . significantly broader in scope than it would have permitted had the request been timely submitted and the deadline for requesting such subpoenas has long past." The tribunal held the same regarding the hearing subpoenas and added that Doral "could have/should have determined the witnesses it needed during the exchange of information process; and, it ...

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