| Mark Ross & Co., Inc. v XE Capital Mgt., LLC |
| 2007 NY Slip Op 09687 [46 AD3d 296] |
| December 6, 2007 |
| Appellate Division, First Department |
| Mark Ross & Co., Inc., et al., Appellants, v XE CapitalManagement, LLC, Respondent. |
—[*1] Quinn Emanuel Urquhart Oliver & Hedges, LLP, New York City (Peter E. Calamari ofcounsel), for respondent.
Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered May 2, 2007,which denied petitioners' motion for a preliminary injunction staying the underlying arbitrationand dismissed the petition, unanimously affirmed, with costs.
The court properly rejected petitioners' attempts to stay the underlying arbitration on the basisthat they were nonsignatories to the subject agreement that contained an arbitration clause(Agreement). The Agreement was executed by respondent XE Capital Management, LLC (XE),and R 2004, LLC (R 2004), a company formed by petitioner Mark Ross & Co, Inc. (MRC), andits principals, including the individual petitioner, to enter into a joint venture with XE. Althoughnonsignatories to the subject Agreement, petitioners participated in the preliminary stages of thearbitration for approximately seven months without objection, and during this time, and inresponse to another lawsuit brought by XE and its affiliate, petitioners sought to compel XE andthe affiliate, a nonparty to the Agreement, to arbitrate related claims. MRC is also estopped fromseeking a stay of arbitration because it derived direct benefits from the Agreement, via a ServicesAgreement, that provided that MRC was to receive a monthly service fee (see HRH Constr. LLC v MetropolitanTransp. Auth., 33 AD3d 568, 569 [2006]). Because petitioners have failed to establishthe likelihood of success on the merits, the denial of the preliminary injunction was proper, andthe court's dismissal of the petition seeking, inter alia, to permanently enjoin XE from proceedingwith the underlying arbitration was appropriate inasmuch as a motion seeking preliminaryinjunctive relief "opens the record and gives the court authority to pass upon the sufficiency ofthe underlying pleading" (Guggenheimer v Ginzburg, 43 NY2d 268, 272 [1977]).[*2]
We have considered petitioners' remaining contentionsand find them unavailing. Concur—Tom, J.P., Saxe, Friedman, Gonzalez and Catterson,JJ.