Arbitration – New York Appellate Digest

Arbitration, Employment Law, Municipal Law

THE NUMBER OF FIREFIGHTERS WHICH MUST BE ON DUTY DURING A SHIFT IS A HEALTH AND SAFETY ISSUE, WHICH IS ARBITRABLE PURSUANT TO THE COLLECTIVE BARGANING AGREEMENT, NOT A JOB SECURITY ISSUE (WHICH IS NOT ARBITRABLE) (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the number of firefighters which must be on duty during a shift is not a job-security issue and is therefore arbitrable pursuant to the collective bargaining agreement (CBA):

Respondent contends that Supreme Court erred in concluding that its grievance concerned nonarbitrable job security clauses as the clauses relate only to minimum shift staffing requirements and do not guarantee employment to bargaining unit members during the life of the CBA, a hallmark of a no-layoff job security clause. Respondent further asserts that minimum staffing requirements set forth in … the CBA pertain to health and safety concerns and are properly the subject of arbitration.

… [T]he CBA “does not purport to guarantee a[n] [officer] his or her employment while the CBA is in effect, nor does it prohibit layoffs” … . “It also does not protect officers ‘from abolition of their positions due to budget stringencies'” … . … [T]he CBA only sets forth “minimum staffing on particular shifts” … . Matter of City of Ogdensburg (Ogdensburg Firefighters Assn. Local 1799, A.F.L., C.I.O., I.A.F.F), 2022 NY Slip Op 00237, Third Dept 1-13-22

January 13, 2022/0 Comments/by Bruce Freeman

Arbitration, Civil Procedure, Contract Law, Family Law

CUSTODY MATTERS ARE NOT SUBJECT TO ARBITRATION, DESPITE A PROVISION TO THAT EFFECT IN THE STIPULATION OF SETTLEMENT (SECOND DEPT).

The Second Department, reversing Supreme Court, determined: (1) despite the stipulation calling for arbitration, custody matters are not subject to arbitration; and (2) upon remittal the court must determine whether New York has jurisdiction and, if so, whether New York is an inconvenient forum. Plaintiff is a citizen of the US and defendant is a citizen of Israel. The parties lived together in New York:

The Supreme Court erred in declining to exercise jurisdiction over the parties’ custody/parental access disputes on the basis that their stipulation of settlement, which was incorporated but not merged into their judgment of divorce, contained an arbitration clause … . “Disputes concerning child custody and visitation are not subject to arbitration as ‘the court’s role as parens patriae must not be usurped'” … .

Moreover, since the Supreme Court has made previous custody determinations concerning the parties’ children, the court, prior to determining whether it has subject matter jurisdiction, must first determine whether the defendant and the children have a significant connection with New York and whether there is substantial evidence in New York … . … If, upon remittal, the court determines … that it retains exclusive, continuing jurisdiction over the custody and parental access issues, it may exercise that jurisdiction, or it may decline to do so if it determines … that New York is an inconvenient forum … . Matsui v Matsui, 2021 NY Slip Op 06843, Second Dept 12-8-21

December 8, 2021/by Bruce Freeman

Arbitration, Civil Procedure, Lien Law

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

December 2, 2021/by Bruce Freeman

Arbitration, Contract Law, Employment Law

THE ARBITRATOR EXCEEDED HIS AUTHORITY UNDER THE COLLECTIVE BARGAINING AGREEMENT BY DISMISSING TWO CHARGES BECAUSE OF THEIR PUPORTED FACIAL DEFICIENCIES AND FAILING TO ASSESSS THE EVIDENCE IN SUPPORT OF THE CHARGES (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the arbitrator’s dismissal of two of the disciplinary charges against a corrections officer (Norde) based solely on alleged defects in the charges, as opposed to the relevant evidence, exceeded the arbitrator’s authority under the collective bargaining agreement (CBA):

… [R]espondent complied with the CBA by pleading in the notice of discipline that the exception [to the usual time limits] applied, and by citing and quoting the language of the specific criminal statute that Norde had allegedly violated; respondent would then need to prove the elements of that statute at the hearing to establish the basis of the timeliness exception … . Accordingly, by requiring respondent to prove the underlying crime in the notice to support the CBA’s time exception, the arbitrator essentially added a term to the CBA and, thus, exceeded his authority … . …

… [T]he arbitrator modified the CBA and exceeded his authority by dismissing the first two charges as facially deficient due to an alleged lack of particularization in the notice of discipline. As the charges in the notice were sufficiently stated, the arbitrator should have rendered a determination as to Norde’s guilt based on the evidence presented at the hearing. Matter of New York State Corr. Officers & Police Benevolent Assn., Inc. (New York State Dept. of Corr. & Community Supervision), 2021 NY Slip Op 03504, Third Dept 6-3-21

June 3, 2021/by Bruce Freeman

Appeals, Arbitration, Attorneys, Civil Procedure, Contract Law, Debtor-Creditor

THE ARBITRATION AWARD IS VALID EVEN IF BASED ON AN ERROR OF LAW OR FACT; THE FAILURE TO PROVIDE A LETTER OF ENGAGEMENT DID NOT PRECLUDE THE ATTORNEY’S ACTION FOR BREACH OF CONTRACT; CPLR 5225 DOES NOT REQUIRE A SPECIAL PROCEEDING TO ENFORCE THE JUDGMENT (FIRST DEPT).

The First Department, reversing Supreme Court, determined (1) the arbitrator’s award was valid even if an error of law or fact was made; (2) the failure to provide a letter of engagement did not preclude the petitioner-attorney’s action for breach of contract; (3) petitioner was not required to commence a special proceeding to enforce the judgment; (4) the motions to enforce the judgement do not violate the Commercial Division rules:

… [E]ven if the arbitrator had made an error of law or fact in concluding that respondents had breached the retainer agreements, this alone would not justify vacating the award … . …

… [T]he court improperly denied the motions [to enforce the judgment] based upon its finding that petitioner had failed to commence a separate special proceeding to enforce the judgment. The language of CPLR 5225 clarifies that the court had jurisdiction to resolve the turnover motion. While CPLR 5225(a) provides that a judgment creditor seeking turnover of money or personal property “in possession or custody” of the judgment debtor does so “[u]pon motion of the judgment creditor,” CPLR 5225(b) provides that a judgment creditor seeking turnover of money or personal property in a third party’s possession or custody does so “[u]pon a special proceeding commenced by the judgment creditor” … Given that petitioner brought the motions against the judgment debtor as opposed to a third party, it was not required to commence a separate proceeding. Matter of Gibson, Dunn & Crutcher LLP v World Class Capital Group, LLC, 2021 NY Slip Op 03252, First Dept 5-20-21

May 20, 2021/by Bruce Freeman

Arbitration, Employment Law

THE MILD PENALTY IMPOSED BY THE ARBITRATOR ON AN EMPLOYEE WHO SEXUALLY HARASSED A FELLOW EMPLOYEE VIOLATED PUBLIC POLICY; MATTER REMITTED FOR IMPOSITION OF A PENALTY BY A NEW ARBITRATOR (THIRD DEPT).

The Third Department determined the mild penalty imposed by the arbitrator in this place-of-employment sexual harassment case violated public policy. The matter was remitted for imposition of a penalty by a different arbitrator. The employee, Dominie, committed several egregious acts of sexual harassment targeting another employee which led to his pleading guilty to harassment second degree. The arbitrator reinstated Dominie’s employment without conditions:

… [T]he situation here does not involve a single act of misconduct as in Barnard College. In defined contrast, we have a series of four separate, escalating and outrageous sexual harassment incidents. The events are particularly troublesome considering that Dominie engaged in annual sexual harassment training since 2013 and, when confronted by his supervisors after the two January 2017 incidents, promised not to re-offend. The events that followed were even more egregious and rise to the level of criminal conduct, as memorialized in Dominie’s guilty plea to the harassment charge. Given the extremely inappropriate nature of Dominie’s conduct, we conclude that the arbitrator’s decision violates public policy. The award fails to account for the rights of other employees to a non-hostile work environment and conflicts with the employer’s obligation to eliminate sexual harassment in the workplace … . The fact that the victimized coworker no longer worked in the office is hardly a mitigating factor. Nor is the penalty consistent with the arbitrator’s “significant concern” that Dominie failed to acknowledge his own wrongdoing. As such, we find that Supreme Court properly vacated the award as violative of the public policy prohibiting sexual harassment. We also conclude that the court was authorized to remit the matter to a different arbitrator for the imposition of a new penalty (see CPLR 7511 [d]). Matter of New York Off. for People with Dev.al Disabilities (Civil Serv. Empls. Assn., Inc., Local 1000, AFSCME, AFL-CIO), Third Dept 4-29-21

April 29, 2021/by Bruce Freeman

Arbitration, Family Law, Religion

THE ARBITRATORS’ AWARD IN THIS RELIGIOUS DIVORCE PROCEEDING WAS NOT INVALID BECAUSE THE ARBRITRATORS DID NOT STATE THE REASONS FOR THE AWARD, AND THE AWARD WAS NOT INDEFINITE AND NONFINAL; SUPREME COURT SHOULD NOT HAVE VACATED THE AWARD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the arbitration award should not have been vacated. The award, issued by a rabbinical tribunal in a religious divorce proceeding, required the respondent to arrange for the religious divorce (a Get) and required petitioner to accept the religious divorce. A lump sum award and maintenance of $10,000 per month was to be held in escrow until the Get is accepted. Supreme Court held the award was indefinite or nonfinal and the arbitrators failed to state the reasons for the award:

Contrary to the conclusion of the Supreme Court, the arbitrators were not required to give reasons for their arbitration award … . Further, the arbitration award did not leave the parties unable to determine their rights and obligations, resolved the controversy before the arbitrators, and did not create a new controversy; therefore, the arbitration award was not indefinite or nonfinal for purposes of CPLR 7511 … . The respondent’s obligation to pay maintenance continued because he failed to arrange for issuance of a Get and termination of the marriage—not because the terms of the arbitration award were not definite. Matter of Rokeach v Salamon, 2021 NY Slip Op 02393, Second Dept 4-21-21

April 21, 2021/by Bruce Freeman

Arbitration, Contract Law

THE CONTRACT WAS BETWEEN CORPORATIONS IN DIFFERENT STATES, THEREFORE INTERSTATE COMMERCE WAS IMPLICATED AND THE FEDERAL ARBITRATION ACT (FAA) APPLIED; THE CONTRACT PROPERLY PROVIDED THAT THE ARBIRTRATOR, NOT A COURT, WILL DECIDE GATEWAY ISSUES OF ARBITRABILITY (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the Federal Arbitration Act (FAA) applied to the contract between corporations from different states and the contract properly provided that gateway issues of arbitrability are to be decided by the arbitrator, not the court:

Where “a contract containing an arbitration provision ‘affects’ interstate commerce, disputes arising thereunder are subject to the FAA” … . The surety agency agreement here between corporations from different states gave rise to a finding of interstate commerce and was subject to the FAA … . Although “a New York court, applying the Federal Arbitration Act, limits its inquiry to whether there is a valid agreement to arbitrate the particular dispute” and all other questions are for the arbitrator … , the parties can agree to arbitrate gateway issues of arbitrability … .

Applying principles of New York state contract law, based on the choice of law provision governing the surety agency agreement … , and reading the contractual clauses together in context … , the provision that “[i]f a dispute or disagreement arises in connection with this Agreement, including a dispute or disagreement as to its formation or validity, such dispute or disagreement shall be submitted to arbitration,” refers any disputes over the validity or formation of the arbitration provision in question to arbitration. Accordingly, the matter here should proceed to arbitration. Matter of Bergassi Group LLC v Allied World Ins. Co., 2021 NY Slip Op 02265, First Dept 4-13-21

April 13, 2021/by Bruce Freeman

Arbitration, Attorneys, Civil Procedure, Legal Malpractice, Negligence

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

April 8, 2021/by Bruce Freeman

Arbitration, Civil Procedure, Contract Law, Employment Law

CPLR 7515, ENACTED IN 2018, DOES NOT APPLY RETROACTIVELY TO PROHIBIT MANDATORY ARBITRATION OF SEXUAL HARASSMENT CLAIMS (FIRST DEPT).

The First Department, reversing Supreme Court, determined CPLR 7515, enacted in 2018, should not be applied retroactively to prohibit arbitration of a sexual harassment claim:

The provisions of CPLR 7515 relied on by plaintiff are not retroactively applicable to arbitration agreements, like the one at issue, that were entered into preceding the enactment of the law in 2018, so that plaintiff’s argument that this law prohibits arbitration of her claims is unavailing … . Newton v LVMH Moet Hennessy Louis Vuitton Inc., 2021 NY Slip Op 01558, First Dept 3-18-21

March 18, 2021/by Bruce Freeman