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PLAINTIFF COMMENCED A MALPRACTICE ACTION AGAINST DEFENDANT ATTORNEYS; THE ATTORNEYS COMMENCED AN ARBITRATION PROCEEDING AGAINST PLAINTIFF, BASED ON THE RETAINER AGREEMENT, FOR UNPAID ATTORNEY’S FEES; BOTH THE ARBITRABLE FEE DISPUTE AND THE NONARBITRABLE MALPRACTICE ACTION ARE SUBJECT TO ARBITRATION WHILE THE MALPRACTICE ACTION IS STAYED (FIRST DEPT).

The Frist Department, reversing Supreme Court, determined the retainer agreement which required arbitration of any attorney’s-fee dispute, which was entwined in the plaintiff’s malpractice action against the attorneys, required that both the arbitrable fee dispute and the nonarbitrable malpractice action be addressed in the arbitration:

There is no dispute that there is a valid agreement between the parties to arbitrate any dispute regarding unpaid fees. Thus, the court must compel arbitration of defendants’ claim for unpaid fees and stay this action pending completion of the arbitration (CPLR 7503[a]). Moreover, because plaintiff’s nonarbitrable malpractice claim is inextricably intertwined with the arbitrable claim for unpaid fees, the proper course is to stay the action pending completion of the arbitration … . …

To the extent plaintiff argues that it cannot be forced to arbitrate its malpractice claim because it did not explicitly agree to do so, both the First and Second Departments have clearly found that a nonarbitrable issue can be decided in an arbitration when it is inextricably intertwined with an arbitrable issue, particularly where, as here, the determination of the arbitrable unpaid fees claim may dispose of the nonarbitrable malpractice claim … . Protostorm, Inc. v Foley & Lardner LLP, 2021 NY Slip Op 02227, First Dept 4-8-21

 

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