| Shah v Monpat Constr., Inc. |
| 2009 NY Slip Op 06132 [65 AD3d 541] |
| August 4, 2009 |
| Appellate Division, Second Department |
| Haresh D. Shah et al., Appellants, v Monpat Construction,Inc., et al., Respondents, et al., Defendants. |
—[*1] Rossi & Crowley, LLP, Douglaston, N.Y. (Thomas J. Rossi and Sally Sancimino ofcounsel), for respondents.
In an action, inter alia, to permanently enjoin arbitration and to recover damages for breachof contract, the plaintiffs appeal from so much of an order of the Supreme Court, Queens County(Kitzes, J.), dated September 16, 2008, as denied that branch of their motion which was topreliminarily enjoin the defendant Monpat Construction, Inc., from proceeding with thearbitration of a claim against the plaintiff Haresh D. Shah under a contract dated March 15,2001, and granted that branch of the cross motion of the defendants Monpat Construction, Inc.,RB Construction Management Corp., and Mihir B. Patel, which was pursuant to CPLR 7503 (c)to compel the plaintiffs to submit their claim against the defendants RB ConstructionManagement Corp. and Mihir B. Patel to arbitration and stay all proceedings in the actionpending arbitration.
Ordered that the order is modified, on the law, by deleting the provision thereof granting thatbranch of the cross motion of the defendants Monpat Construction, Inc., RB ConstructionManagement Corp., and Mihir B. Patel, which was to compel the plaintiffs to submit their claimagainst the defendants RB Construction Management Corp. and Mihir B. Patel to arbitration andsubstituting therefor a provision denying that branch of the cross motion; as so modified, theorder is affirmed insofar as appealed from, without costs or disbursements.
The individual plaintiff, Haresh D. Shah, a dentist, owned a property in the Glen Oakssection of Queens on which he wanted to construct a building. One of Dr. Shah's patients, the[*2]individual defendant, Mihir B. Patel, owned a constructioncompany, the defendant Monpat Construction, Inc. (hereinafter Monpat). In March 2001, Shahand Patel (as the representative of Monpat) signed an agreement that provided for construction ofthe building Shah envisioned. The agreement expressly incorporated by reference andenumeration various other documents, one of which, "General Conditions of the Contract forConstruction, AIA Document A201-1997" (hereinafter document A201-1997) contained a broadarbitration provision, and, together, the agreement and the other documents formed the contract(hereinafter the written contract).
Construction was delayed for reasons as to which the parties do not agree. In early 2002,Shah and Patel agreed that the building would be constructed by the defendant RB ConstructionManagement Corp. (hereinafter RB), a construction company that had been formed by Patel'swife. The parties disagree about whether the written contract was abandoned and replaced by anoral agreement between Shah and RB and Patel, or whether it continued in full force and effect,with the only difference being that RB would perform the work. The building was constructedand most of the contract price was paid, but there were disputes about various issues.
Monpat filed a demand for arbitration dated April 28, 2008, under the written contract. InJuly 2008, Shah and the two other plaintiffs, Glen Oaks Medical Building, LLC, and Glen OaksBuilding Corp., commenced this action, inter alia, to permanently enjoin the arbitration broughtagainst Shah by Monpat, to recover damages against RB and Patel for breach of the alleged oralagreement, and for a declaration that there was no agreement to arbitrate and that Monpatabandoned the written contract. The plaintiffs named as defendants Patel, Monpat, and RB(hereinafter collectively the defendants), as well as the American Arbitration Association(hereinafter the AAA) and an officer and a case manager of the AAA. The complaint, insofar asasserted against the AAA and its officer and case manager, has been dismissed.
The plaintiffs moved, inter alia, to preliminarily enjoin the arbitration brought against Shahby Monpat, and the defendants cross-moved, among other things, to compel arbitration of allclaims. In the order appealed from, the court, among other things, granted that branch of thedefendants' cross motion which was to compel arbitration of all claims, and denied that branch ofthe plaintiffs' motion which was for a preliminary injunction. The plaintiffs appeal, and wemodify.
Arbitration is favored in New York State as a means of resolving disputes, and courts shouldinterfere as little as possible with agreements to arbitrate (see Matter of Smith BarneyShearson v Sacharow, 91 NY2d 39, 49 [1997]; Matter of Miller, 40 AD3d 861, 861-862 [2007]). There is asubstantial countervailing consideration as well: "by agreeing to arbitrate a party waives in largepart many of his normal rights under the procedural and substantive law of the State" (Matterof Marlene Indus. Corp. [Carnac Textiles], 45 NY2d 327, 333-334 [1978]; see Matter ofMiller, 40 AD3d at 862). For that reason, "a party will not be compelled to arbitrate and,thereby, to surrender the right to resort to the courts, absent 'evidence which affirmativelyestablishes that the parties expressly agreed to arbitrate their disputes' " (Matter of Waldron[Goddess], 61 NY2d 181, 183 [1984], quoting Schubtex, Inc. v Allen Snyder, Inc.,49 NY2d 1, 6 [1979]; see TNS Holdings v MKI Sec. Corp. 92 NY2d 335, 339[1998]; Matter of Miller, 40 AD3d at 862). "The agreement must be clear, explicit andunequivocal" (Matter of Waldron [Goddess], 61 NY2d at 183; see God's Battalion of Prayer PentecostalChurch, Inc. v Miele Assoc., LLP, 6 NY3d 371, 374 [2006]; Matter of Miller,40 AD3d at 862). Once the court has determined the threshold issues of the existence of avalid agreement to arbitrate, that the party seeking arbitration has complied with the agreement,and that the claim sought to be arbitrated would [*3]not betime-barred were it asserted in state court (see CPLR 7502 [b]; Matter of SmithBarney, Harris Upham & Co. v Luckie, 85 NY2d 193, 201-202), the remaining issues are forthe arbitrator.
Here, the written contract was clear, explicit, and unequivocal and established a validagreement to arbitrate. The agreement expressly adopted document A201-1997 by reference, ineffect, listed it as one of the "Contract Documents" in article 1, enumerated it as one of the"Contract Documents" in article 8, and referred to it by document number throughout.Consequently, the arbitration provisions included in document A201-1997 are part of the writtencontract (see Matter of Level Export Corp. [Wolz, Aiken & Co.], 305 NY 82, 87 [1953]).Shah's contention that he never received document A201-1997 is unavailing, and his ignoranceof its provisions must be attributed to " 'negligence or inexcusable trustfulness' " (Matter ofLevel Export Corp. [Wolz, Aiken & Co.], 305 NY 82, 87 [1953], quoting Metzger vAetna Ins. Co., 227 NY 411, 416 [1920]).
The plaintiffs did not contend in the Supreme Court, either in support of their motion to stayarbitration or in opposition to the defendants' motion to compel arbitration, that Monpat had notcomplied with conditions precedent to arbitration. Consequently, that issue is not properly beforeus (see Matter of New York Cent. Mut. Fire Ins. Co. v Daley, 273 AD2d 315 [2000];Matter of County of Suffolk v Faculty Assn. of Suffolk County Community Coll., 247AD2d 472 [1998]). Indeed, had the issue been raised in the Supreme Court, Monpat may havebeen able to present evidence that it had in fact complied with conditions precedent (seeMatter of New York Cent. Mut. Fire Ins. Co. v Daley, 273 AD2d 315 [2000]; cf. Misicki v Caradonna, 12 NY3d511 [2009]; Weiner v MKVII-Westchester, 292 AD2d 597, 598 [2002]).
In general, where there is a broad arbitration clause, any issue with respect to changes in thesubstantive provisions of a contract or its termination are to be resolved by the arbitrator, unlessthe modification or termination relates to the arbitration clause itself (see Matter of Cassone,63 NY2d 756, 759 [1984]; Matterof All Metro Health Care Servs. Inc., v Edwards, 57 AD3d 892 [2008]; Matter ofMeetze [La Belle], 295 AD2d 991, 992 [2002]; Matter of Cantor Fitzgerald, L.P.[Ginsberg], 228 AD2d 591 [1996]). Here, the plaintiffs' contention that the written contractwas abandoned was not directly related to the arbitration provisions, so the issue of abandonmentshould be left for the arbitrator. The issue of the statute of limitations is so intertwined with theparties' substantive contentions and the contentions regarding abandonment that the issue of thestatute of limitations should be left to the arbitrator (see Matter of Corbo v Les ChateauAssoc., 127 AD2d 657, 658 [1987]). As well, issues regarding proper service of the demandfor arbitration should be determined by the arbitrator (see Matter of County of Rockland[Primiano Constr. Co.], 51 NY2d 1, 8 [1980]; Cooper v Bruckner, 21 AD3d 758, 759 [2005]; J. Castronovo,Inc. v Hillside Dev. Corp., 140 AD2d 585 [1988]).
Finally, the written contract was between Shah and Monpat, and there is no clear evidencethat the plaintiffs ever agreed to arbitrate any disputes with Patel and RB. Consequently, theSupreme Court should not have compelled the plaintiffs to arbitrate their claims against thosedefendants (see Estate of Castellone vJP Morgan Chase Bank, N.A., 60 AD3d 621, 623 [2009]). Dillon, J.P., Miller,Leventhal and Chambers, JJ., concur.