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THE MOTION TO DISMISS THE ARBITRATION IN THIS ACTION ALLEGING NONPAYMENT FOR CONSTRUCTION WORK SHOULD NOT HAVE BEEN GRANTED; THE ARBITRATOR RULES ON PAYMENT FOR LABOR AND MATERIALS; COURTS RULE ON THE VALIDITY OF MECHANIC’S LIENS (FIRST DEPT).

The First Department noted that an arbitrator’s ruling on the value of labor an materials is conclusive for all parties, but it is not conclusive on the validity of the underlying mechanic’s lien itself. Here the contactor, Flowcon, filed mechanic’s lens alleging defendant, Andiva, failed to pay for construction work on Andiva’s townhouse. The construction contract required arbitration and granted the arbitrator broad powers. Supreme Court granted Andiva’s motion to dismiss the arbitration and the First Department reversed, compelled arbitration and stayed the LIen Law counterclaims:

The AAA’s Construction Industry Arbitration Rules provide that the arbitration tribunal shall rule on its own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement. Thus, the threshold issue of the arbitrability of Flowcon’s claims alleging nonpayment is one for the arbitrator, not the courts, particularly given the parties’ broad arbitration clause … . To the extent Andiva argues that arbitration would usurp the court’s “gatekeeper” role of ruling upon the validity of a lien and undermine the public policy underlying the remedies afforded a lienee under Lien Law §§ 39 and 39-a since its allegation of lien exaggeration would be effectively resolved by an arbitrator rather than a court, the argument is unavailing. This Court has held that an arbitrator’s decision as to the value of labor and materials is conclusive as to all parties to the arbitration but not conclusive as to the validity of the mechanic’s lien itself … . Flowcon, Inc. v Andiva LLC, 2021 NY Slip Op 06756, First Dept 12-2-21

 

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