Opinion
03-02-2017
In re KRAMER LEVIN NAFTALIS & FRANKEL LLP, et al., Petitioners–Respondents, v. Michael C. CORNELL, et al., Respondents–Appellants.
Jeffrey A. Jannuzzo, New York, for appellants. Davis Polk & Wardwell LLP, New York (Paul Spagnoletti of counsel), for respondents.
Jeffrey A. Jannuzzo, New York, for appellants.
Davis Polk & Wardwell LLP, New York (Paul Spagnoletti of counsel), for respondents.
FRIEDMAN, J.P., ANDRIAS, FEINMAN, KAPNICK, GESMER, JJ.
Order, Supreme Court, New York County (Anil C. Singh, J.), entered July 15, 2016, which granted the petition to permanently stay arbitration, and denied respondents' motions to dismiss the proceeding and to seal the record, unanimously affirmed, with costs. Respondents failed to demonstrate that the parties agreed to arbitrate the subject dispute (see Matter of Cammarata v. InfoExchange, Inc., 122 A.D.3d 459, 460, 996 N.Y.S.2d 266 [1st Dept.2014] ). The potential future benefit, if any, flowing to petitioners from the attorney release in the separation agreement containing the arbitration clause is "too attenuated ... to justify ... an exception to the usual rule that nonsignatories cannot be compelled to arbitrate" (Matter of Belzberg v. Verus Invs. Holdings Inc., 21 N.Y.3d 626, 634, 977 N.Y.S.2d 685, 999 N.E.2d 1130 [2013] ; compare Matter of SSL Intl., PLC v. Zook, 44 A.D.3d 429, 843 N.Y.S.2d 264 [1st Dept.2007] [nonsignatory to license agreement appropriately compelled to arbitrate where it marketed products using technology covered by agreement]; HRH Constr. LLC v. Metropolitan Transp. Auth., 33 A.D.3d 568, 823 N.Y.S.2d 140 [1st Dept.2006] [nonsignatory received monetary benefit under agreement] ). There is no evidence that petitioners "knowingly exploit[ed]" the benefits of the agreement (see Belzberg, 21 N.Y.3d at 631, 977 N.Y.S.2d 685, 999 N.E.2d 1130 ). The allegations against petitioners show, if anything, that they "may have ‘exploit[ed] the contractual relation of the parties, but not the agreement itself’ " (Cammarata, 122 A.D.3d at 460, 996 N.Y.S.2d 266, quoting Belzberg, 21 N.Y.3d at 631, 977 N.Y.S.2d 685, 999 N.E.2d 1130 ).Nor is there evidence to support respondents' contention that petitioners "used the signatories as their agents to obtain [the attorney] release." Moreover, while an agent may bind its nonsignatory principal to an arbitration agreement where the nonsignatory seeks to compel arbitration with another signatory (see Merrill Lynch Inv. Mgrs. v. Optibase, Ltd., 337 F.3d 125, 130–131 [2d Cir.2003] ; Hirschfeld Prods. v. Mirvish, 88 N.Y.2d 1054, 1056, 651 N.Y.S.2d 5, 673 N.E.2d 1232 [1996] ), this is not a case in which a nonsignatory seeks to compel arbitration with a signatory.
Respondents failed to show that the record contains material "so confidential or sensitive" that the record should be sealed (Mosallem v. Berenson, 76 A.D.3d 345, 350, 905 N.Y.S.2d 575 [1st Dept.2010] ).