You are here: / / Allegations of Fraud in the Inducement Did Not Invalidate the Arbitration...
, ,

Allegations of Fraud in the Inducement Did Not Invalidate the Arbitration Clause in the Agreement

The Second Department, over a dissent, determined that plaintiff’s motion to stay arbitration was properly denied. Plaintiff alleged that an agreement to sell her business and related real property was induced by fraud and, therefore, the arbitration clause in the agreement was invalid and unenforceable. The court noted that the agreement was properly signed by plaintiff’s attorney as her attorney-in-fact and plaintiff attended the closing where she signed the relevant documents. She was deemed, therefore, to have read and understood the documents. The court explained its limited role in determining whether a matter is arbitrable, and further explained that, absent fraud which permeated the entire agreement, the arbitration clause will still be enforced in the face of allegations of fraud in the inducement:

Arbitration is a favored method of dispute resolution in New York … . “[T]he announced policy of this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties” … . “New York courts interfere as little as possible with the freedom of consenting parties’ to submit disputes to arbitration” … . Parties to arbitration agreements should be prevented from using the courts as a vehicle to protract litigation … . The threshold issue of whether there is a valid agreement to arbitrate is for the courts … . Once it is determined that the parties have agreed to arbitrate the subject matter in dispute, the court’s role has ended and it may not address the merits of the particular claims … . * * *

… [T]he Court of Appeals ruled that an arbitration clause is generally separable from substantive provisions of a contract, so that an agreement to arbitrate is valid even if the substantive provisions of the contract are induced by fraud … . However, if a party can demonstrate that “the alleged fraud was part of a grand scheme that permeated the entire contract, including the arbitration provision, the arbitration provision should fall with the rest of the contract” … . “To demonstrate that fraud permeated the entire contract, it must be established that the agreement was not the result of an arm’s length negotiation or the arbitration clause was inserted into the contract to accomplish a fraudulent scheme” … . Here, the plaintiff failed to make such a showing. Ferrarella v Godt, 2015 NY Slip Op 06571, 2nd Dept 8-19-15

 

You might also like
PLAINTIFF DID NOT DEMONSTRATE FREEDOM FROM COMPARATIVE FAULT IN THIS TRAFFIC ACCIDENT CASE, PLAINTIFF’S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN DENIED (SECOND DEPT).
APPELLANT WAS SLOWING DOWN APPROACHING PLAINTIFF’S VEHICLE WHICH WAS STOPPED WHEN APPELLANT WAS STRUCK FROM BEHIND AND PUSHED INTO PLAINTIFF’S VEHICLE; APPELLANT WAS ENTITLED TO SUMMARY JUDGMENT DISMISSING THE COMPLAINT (SECOND DEPT).
ONCE PLAINTIFF’S FORECLOSURE ACTION WAS DISCONTINUED BY STIPULATION, THE FORECLOSURE COMPLAINT COULD BE AMENDED TO SEEK RECOVERY ON THE NOTE (SECOND DEPT).
ALTHOUGH DEFENDANTS MISSED THE DEADLINE AND THEREBY WAIVED THE RIGHT TO MEDICAL EXAMINATIONS OF PLAINTIFF, THE MOTION TO STRIKE THE NOTE OF ISSUE AND COMPEL AN EXAM SHOUD HAVE BEEN GRANTED (SECOND DEPT).
THE ALLEGED NEGLIGENCE IN THE PROCEDURE USED WHEN PLAINTIFF DONATED BLOOD SOUNDED IN MEDICAL MALPRACTICE, DESPITE THE FACT THAT NO DOCTOR WAS INVOLVED IN THE PROCEDURE; PLAINTIFF’S FAILURE TO PROVIDE A CERTIFICATE OF MERIT AS REQUIRED BY CPLR 3012-a WAS DUE TO THE GOOD FAITH BELIEF THE ACTION SOUNDED IN COMMON LAW NEGLIGENCE; THE ACTION SHOULD NOT HAVE BEEN DISMISSED WITHOUT AFFORDING PLAINTIFF THE OPPORTUNITY TO PROVIDE A CERTIFICATE OF MERIT (SECOND DEPT).
VIDEO SHOWED ELEVATOR DOORS OPERATED PROPERLY, PLAINTIFF ALLEGED INJURY FROM DOORS CLOSING ON HER, SUMMARY JUDGMENT GRANTED TO HOTEL AND ELEVATOR MAINTENANCE COMPANY (SECOND DEPT). ​
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT IN THIS TRAFFIC ACCIDENT CASE SHOULD NOT HAVE BEEN GRANTED; THAT PLAINTIFF PLED GUILTY TO A TRAFFIC OFFENSE DOES NOT PROVE SHE WAS NEGLIGENT; PLAINTIFF ALLEGED SHE PLED GUILTY BECAUSE SHE DID NOT HAVE THE MONEY TO DRIVE FROM HER HOME FOR COURT APPEARANCES (SECOND DEPT).
JUDGE SHOULD NOT HAVE REFUSED TO SIGN A PROPOSED ORDER TO SHOW CAUSE FOR DEFENDANTS’ MOTION TO VACATE A DEFAULT JUDGMENT IN THIS FORECLOSURE ACTION (SECOND DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

Plaintiff, a Monitor in a Golf Program, Assumed the Risk of Injury in a Golf-Cart... Defendants Demonstrated They Were Entitled to Depose Nonparty Physician Whose...