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ARBITRABLE CLAIMS WHICH ARE INEXTRICABLY TIED TO CLAIMS ALREADY IN COURT SHOULD BE LITIGATED IN COURT.

The First Department, over a two-justice dissent, reversing Supreme Court, determined the contract disputes should be litigated, despite arbitration clauses in some of the related agreements. One of the agreements, the Quennington Agreement, included a forum selection clause which designated the courts as the sole forum for dispute resolution. The First Department held that the forum selection clause demonstrated the intent of the parties, and the fact the Quennington Agreement had been terminated by a subsequent agreement did not contradict that intent. The issues which were arguably subject to arbitration under the other agreements were deemed to be intertwined with the issues which were already in court pursuant to the Quennington Agreement:

Although this Court does not appear to have directly addressed the issue, the other Departments have held that, where some of a group of claims are covered by an arbitration agreement, it is appropriate to litigate the entire group in court if all of the claims were already asserted in court and the claims not subject to arbitration would be “inextricably bound together” with the claims that are subject to arbitration … .

Here, one could argue that all of the claims in the complaint arose under the Quennington Agreement … . … [E]ven if some of the claims could be said to arise out of the Quennington Agreement, and others out of [another agreement], they are cut from the same cloth, and are, unquestionably, inextricably bound together and therefore should be litigated in court. Garthon Bus. Inc. v Stein, 2016 NY Slip Op 03102, 1st Dept 4-26-16


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