Opinion
7431/12
01-30-2015
In the Matter of the Arbitration of Certain Controversies Between, Menachem Gansburg (a/k/a MENDEL GANSBURG), Petitioner, v. Eli Blachman (a/k/a ELIAS M. BLACHMAN, ELIAS BLACKMAN), Respondent.
Petitioner Sol Antar, Esq. Brooklyn NY Respondent Law Offices of Mitchell Shapiro, Esq.
Petitioner
Sol Antar, Esq.
Brooklyn NY
Respondent
Law Offices of Mitchell Shapiro, Esq.
NY NY
Arthur M. Schack, J.
In this CPLR Article 75 proceeding to confirm an arbitration award, respondent ELI BLACHMAN (BLACHMAN) cross-moves to: dismiss the first amended verified petition to confirm the arbitration award of petitioner MENACHEM GANSBURG (GANSBURG), pursuant to CPLR Rule 3211 (a) (10), for failure to join a necessary part, Aaron Minkowitz (Minkowitz), as a petitioner; grant leave to respondent BLACHMAN to take discovery from petitioner GANSBURG and non-party Minkowitz, pursuant to CPLR § 408, relating to respondent BLACHMAN'S counterclaim against petitioner GANSBURG for alleged violations of Real Property Law (RPL) §§ 441 and 442-e (3); and, grant related relief. Petitioner GANSBURG opposes respondent BLACHMAN's cross-motion to dismiss the amended petition and the counterclaim of respondent BLACHMAN, as well as seeking confirmation of the February 13, 2012 arbitration award for $67,500.00, pursuant to CPLR § 7510, and directing the Kings County Clerk, pursuant to CPLR § 7514, to enter judgment for petitioner for $67,500.00, plus interest from the date of the award, costs and disbursements.
The Court, for the reasons to follow, denies respondent BLACHMAN's cross-motion in its entirety and grants petitioner GANSBURG confirmation of the February 13, 2012 arbitration award and judgment for $67,500.00, plus interest from the date of the award, costs and disbursements.
Background
This proceeding arises from the nonpayment of a real estate broker's commission to petitioner GANSBURG, a licensed New York State real estate broker, for the sale of the premises at 1460 Carroll Street, Brooklyn, New York. It is disputed whether non-party Minkowitz, who is not a licensed real estate broker, was a co-broker with GANSBURG or an employee of GANSBURG. On February 12, 2012, GANSBURG, BLACHMAN and Minkowitz submitted their broker's commission dispute to a Beth Din, the Rabbinical Court of Givas Hamorah, to resolve their dispute. The three rabbi panel of Rabbi Shia Gluck, Rabbi Efraim Goldstein and Rabbi Abraham Moshe Gold issued their ruling on February 13, 2012, which states, in the certified translation from the original Hebrew to English:
After much debate in terms of the facts of the case and Jewish law, the following Rabbinical Court ruling was issued by us:
1.Party B [BLACHMAN] must pay Party A [GANSBURG and MINKOWITZ] the sum of $67,500, for brokerage of Party A, and we made for him the following payment arrangement: beginning on March 1, 2012 until Feb. 1, 2015 inclusive, he shall pay the sum of $1875 on every first of the civil month; he has to give the entire aforementioned amount in head dated checks (i.e. 36 head checks) before March 1, 2012.
2.In the event Party B fails to pay in the aforementioned time, or he fails to give all the checks in the aforementioned time, Party B must pay the full debt immediately, and Party A may sue him in secular court for aforementioned sum plus the fees for his contempt, attorney, etcetera.
On April 6, 2012, Petitioner GANSBURG and then petitioner Minkowitz filed with the Kings County Clerk, their notice of petition, verified petition and request for judicial intervention, pursuant to CPLR § 7510, to confirm the February 13, 2012 arbitration award of the Beth Din. Respondent BLACHMAN, on May 14, 2012, filed with the Kings County Clerk, a pre-answer CPLR Rule 3211 (a) (7) motion to dismiss. The motion alleged: petitioners failed to state a claim upon which relief can be granted; Minkowitz was not a real estate broker and was in violation of RPL § 442-d because he could not demonstrate that he was a licensed real estate broker or real estate salesman on the date of the alleged transaction; the arbitration award cannot be confirmed because it illegally split a real estate commission between a real estate broker and a non-broker; and, the Court should sanction petitioners and their counsel for filing a frivolous proceeding.
On July 30, 2012, I heard oral arguments by both sides and issued a short-form order denying respondent's motion to dismiss and confirming the arbitration award. I held in my order, in relevant part:
The parties dispute whether or not Minkowitz is a licensed real estate broker was raised at the arbitration. This is irrelevant to the findings of the Beth Din. "Judicial review of arbitration awards is extremely limited." (Wien & Malkin, LLP v Helmsly-Spear, Inc. 6 NY3d 471, 479 [2006]). An arbitration award may be vacated if "it is clearly violative of a strong public policy, if it is totally or completely irrational, or if it manifestly exceeds a specific, enumerated limitation on the arbitrator's power." (Matter of Erin Constr. & Dev. Corp. v Meltzer, 58 AD2d 729, 729, [2d Dept 2009]). An "arbitrator's award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice" (Wien & Malkin at 479-480).
Therefore, even if Minkowitz is unlicensed as a real estate broker and the arbitrators overlooked this, the Court is powerless to set aside the arbitration award because the parties freely entered into their arbitration agreement and the Beth Din is "not bound by principles of substantive law" and "may do justice as he sees fit, applying his own sense of law and equity to the facts and he finds them to be." (Matter of Silverman [Benmor Coats], 61 NY2d 299 at 308 [1984]). With respect to the branch of the motion to sanction Petitioners and their counsel, it is clear that their motion and action are not frivolous. . . . The Court grants Petitioner's request to file and serve an amended petition. Respondent has 30 days to answer the amended petition.
Subsequently, petitioner GANSBURG filed and served an amended petition without Minkowitz as a petitioner. Then, respondent BLACHMAN answered.
Also, respondent BLACHMAN appealed my July 30, 2012 order. On October 8, 2013, the Appellate Division, Second Department, in Matter of Gansburg v Blachman (111 AD3d 935), unanimously affirmed my July 30, 2012 order, holding in part, at 935-936:
The parties voluntarily proceeded to arbitration by agreement. The evidence before the arbitrators indicated that, although the petitioner Menachem Gansburg was a licensed real estate broker, the petitioner Aaron Minkowitz was not. However, the question of whether Gansburg should be denied a real estate broker's commission because Minkowitz was not licensed was not raised at the arbitration proceeding. The arbitration award directed the appellant to pay Gansburg and Minkowitz a real estate commission in the sum of $67,500. . . .
A proceeding to enforce an arbitration award may be denied on the ground that the arbitration award is "violative of a strong public policy, or is totally irrational, or exceeds a specifically enumerated limitation" of power (Matter of Silverman [Benmor Coats], 61 NY2d 299, 308). In order to find that an arbitration award may not be enforced because it violates public policy, " the courts must be able to examine an arbitration agreement or an award on its face without engaging in extended factfinding or legal analysis, and conclude that public policy precludes its enforcement'" (Matter of New York City Tr. Auth. v Transport Workers Union of Am., Local 100, AFL-CIO, 99 NY2d 1, 7, quoting Matter of Sprinzen [Nomberg], 46 NY2d 623, 631 [emphasis in original]; see Matter of Estate of Baron v Harley-Davidson of Suffolk, Inc., 94 AD3d 885; Matter of DiNapoli v Park Automotive, Inc., 34 AD3d 674, 675 Matter of Kuchar v Baker, 261 AD2d 402, 402).
There is no indication that the appellant's allegation of an illegal fee- splitting agreement between Gandburg [sic] and Minkowitz was supported by evidence submitted to the arbitrators (see Matter of Hirsch Constr. Corp. [Cooper], 181 AD2d 52). Further, the arbitration award does not violate public policy on its face. The appellant's remaining contentions are without merit.
Accordingly, the Supreme Court properly denied the appellant's motion to dismiss the proceeding and impose a sanction on the petitioners, and properly granted the petitioners' application for leave to serve and file an amended petition deleting Aaron Minkowitz as a petitioner and instead demanding a judgment in favor of the petitioner Menachem Gansburg only.
Respondent BLACHMAN, on March 25, 2014, filed the instant cross-motion to dismiss the first amended verified petition to confirm the arbitration award and grant leave to depose petitioner GANSBURG and non-party Minkowitz. The cross-motion to dismiss the amended petition is denied. The amended petition is granted. The branch of the cross-motion seeking leave for discovery is denied on the grounds of res judicata and collateral estoppel.
Discussion
Respondent BLACHMAN argues that the arbitration award must be vacated for its violation of public policy, because the arbitrators awarded a shared real estate brokerage commission to a licensed and unlicensed broker and the alleged agreement between petitioner GANSBURG and non-party Minkowitz is void for illegality. However, I rejected these arguments in my July 30, 2012 order, which was unanimously affirmed by the Appellate Division. (Matter of Gansburg v Blachman, 111 AD3d 935 [2d Dept 2013]). This Court is bound by the finding of the Second Department, at 936, that "the arbitration award does not violate public policy on its face . . . Accordingly, the Supreme Court properly denied the appellant's motion to dismiss the proceeding and impose a sanction on the petitioners."
It is a basic principal of our legal system that when parties agree to submit a dispute or disputes to arbitration, that the scope of any judicial review of an arbitration award is extremely limited. (Wien & Malkin, LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006]).
CPLR § 7510 requires a court to confirm an arbitration award, "upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511." Petitioner GANSBERG and then petitioner Minkowitz timely commenced the instant special proceeding within weeks of receiving the arbitration award.
The Appellate Division, Second Department, in Aftor v Geico Ins. Co. (110 AD3d 1062, 1064 [2013]), instructed:
" An arbitration award must be upheld when the arbitrator "offer[s] even a barely colorable justification for the outcome reached" ' " (Matter of Allstate Ins. Co. v GEICO [Govt Empls. Ins. Co.], 100 AD3d 878, 878 [2012], quoting Wien & Malkin, LLP v Helmsley-Spear, Inc., 6 NY3d 471, 479 [2006]), quotin Matter of Andros Campania Maritima, S.A. [Marc Rich & Co., A.G.], 579 F2d 691 [2d Cir 1978]). In addition, an "arbitrator's award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice" (Wien & Malkin, LLP v Helmsley-Spear, Inc., 6 NY3d at 479-480). "An arbitrator is not bound by principles of substantive law or rules of evidence, and may do justice and apply his or her own sense of law and equity to the facts as he or she finds them to be" (Matter of Erin Constr. & Dev. Co., Inc. v Meltzer, 58 AD3d 729 [2009]). Insofar as is relevant to the instant proceeding, pursuant to CPLR 7511 (b) (1) (iii), a court may only vacate an arbitration award if the rights of the party moving to vacate the award were prejudiced by the arbitrator "exceed[ing] his [or her] power or so imperfectly execut[ing] it that a final and definite award upon the subject matter submitted was not made." "Such an excess of power occurs only where the arbitrator's award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power" (Matter of New York City Tr. Auth. v Transport Workers' Union of Am. Local 100, AFL-CIO, 6 NY3d 332 [2005]). (See Reddy v Schaffer, 123 AD3d 925 [2d Dept 2014]; Vintage Flooring & Tile, Inc. v DCM of New York, LLC, 123 AD3d 721 [2d Dept 2014]; Professional Firefighters Ass'n of Nassau County v Village of Garden City, 119 AD3d 803 [2d Dept 2014]; Gaymon v MTA Bus Co., 117 AD3d 735, 736 [2d Dept 2014]; Town of Babylon v Carson, 111 AD3d 951, 953 [2d Dept 2013];
The Court of Appeals, in Matter of Silverman [Benmor Coats] (61 NY2d 299, 308 [1984]), held: absent provision in the arbitration clause itself, an arbitrator is not bound by principles of substantive law or by rules of evidence (Lentine v Fundaro, 29 NY2d 382 [1972]). He may do justice as he sees it, applying his own sense of law and equity to the facts as he finds them to be and making an award reflecting the spirit rather than the letter of the agreement, even though the award exceeds the remedy requested by the parties (citations omitted).
"In general, except where prohibited by the plain and express terms of the submission, an arbitrator is empowered to grant any relief reasonably fitting and necessary to a final determination of the matter submitted to him, including legal and equitable relief [citations omitted]." (Matter of Board of Education of Dover Union Free School District v Dover-Wingdale Teachers' Association. 95 AD2d 497, 501 [2d Dept 1983]).
In the instant proceeding, respondent BLACHMAN argues that the award is irrational. To satisfy the irrationality ground for vacatur of the award respondent has to show that the award is arbitrary and capricious. However, there is a plausible basis for the arbitration award and the award is supported by the evidence. This Court cannot second-guess the Beth Din's choice of remedy or substitute its own judgment for that of the
Beth Din. Further, respondent BLACHMAN argues that the procedure used by the arbitrators was improper. However, respondent BLACHMAN ignores that the parties in their February 12, 2012 arbitration agreement agreed that the Arbitrators had the authority to "make their award based upon . . . any other way they wish to reach a decision" and "the Arbitrators may follow any procedure as they decide."
Respondent's answering papers argues for the third time: the defense of illegality; that the arbitration award violates public policy; and, that a contract for a commission does not exist between petitioner and respondent. In light of this Court's prior denial of respondent's motion to dismiss on identical arguments and the Second Department's affirming of this, these findings are "law of the case" and not subject to review for a third time. "The doctrine of the law of the case' is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined, that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned." (Martin v City of Cohoes 37 NY2d 162, 165 [1975]). Further, the "decisions of the Appellate Division made in a case, whether correct or incorrect, are the law of the case until modified or reversed by a higher court. The trial court to which we remit a case for trial is bound by what is decided here. It may not depart from our decisions because of what it may view as error in light of subsequent decisions in other similar cases." ( Bolm v Triumph Corp., 71 AD2d 429, 434 [4d Dept 1979], lv dismissed 50 NY2d 928 [1980]).
Respondent BLACHMAN, in his May 12, 2014 notice of cross-notice and his counsel's affirmation in support of the cross-motion, moved, inter alia, to dismiss the petition on grounds that the award is void for illegality, violates public policy and fails to allege that petitioner Gansburg and Minkowitz have any express or implied contract for the payment of a real estate commission by respondent Blachman. As stated above, on July 30, 2012, I denied respondent's original motion to dismiss in its entirety and the Appellate Division unanimously affirmed my denial of respondent's motion to dismiss in Matter of Gansburg v Blachman (111 AD3d 935), holding, as cited earlier, at 936:
There is no indication that the appellant's allegation of an illegal fee- splitting agreement between Gandburg [sic] and Minkowitz was supported by evidence submitted to the arbitrators (see Matter of Hirsch Constr. Corp. [Cooper], 181 AD2d 52). Further, the arbitration award does not violate public policy on its face.
Therefore, this Court cannot review again, under "law of the case" doctrine what has already been decided. "Law of the case" "expresses the practice of courts generally to refuse to reopen what has been decided." (People v Evans, 94 NY2d 499, 503 [2000]). (See Messenger v Anderson, 225 US 436, 444 [2012]).
The denial of a pre-answer motion to dismiss or for summary judgment is not law of the case. (Moses v Savedoff, 96 AD3d 466, 468 [1d Dept 2012). However, where the denial of the motion, as in the instant proceeding, was based on law, as opposed to facts, such disposition is law of the case. (See Brownrigg v New York City Housing Authority, 29 AD3d 721, 722 [2d Dept 2006]). The law of the case doctrine is designed "to preclude
the defendant from relitigating an issue which was previously addressed in an order of the same court." (Haibi v Haibi, 171 AD2d 842, 843 [2d Dept 1991]). "Summary judgment having been denied to the plaintiff by a prior order of the court, and that determination
having become the law of the case, it was improper for the court, as a court of coordinate jurisdiction, to grant the plaintiff's subsequent motion for the identical relief based on identical facts" [emphasis added]. (Riccardi v Adinolfi, 168 AD2d 442, 443 [2d Dept 1990]).
In the instant proceeding, seeking dismissal on grounds that Minkowitz, now removed from the proceeding as a party, does not possess a real estate broker's license and that a contract is lacking between petitioner GANSBURG and respondent BLACHMAN has been disposed by this Court as a matter of law, not fact, in my July 30, 2012 order, and affirmed by the Appellate Division. Therefore, this Court and the Appellate Division have previously rejected respondent BLACHMAN's arguments that the February 13, 2012 arbitration award violated public policy and is void for illegality.
Although not identified as such, respondent BLACHMAN's answering papers, arguing that the arbitration award is void for illegality and violative of public policy, is essentially a motion to reargue. Alternately, respondent BLACHMAN attaches an alleged newly discovered transcript of what transpired before the arbitrators that was not previously offered. This could constitute a motion to renew. (See CPLR §§ 2221 [d] and [e]). There is no need to consider this alleged transcript as the cross-motion is denied under the law of the case doctrine. Further, this is an improper motion to reargue and/or renew, because a motion to reargue and/or renew "shall be identified specifically as such." (CPLR §§ 2221
[d] [1] and [e] [1]). Moreover, the newly discovered transcript, consisting of alleged taped statements made during the arbitration proceeding is inadmissible. It is unsworn and unauthenticated. "A transcript of an alleged telephone conversation that a nonparty witness had . . . which is not authenticated, certified, or sworn, was inadmissible and insufficient to raise a triable issue of fact." (Garcia v Lenox Hill Florist III, Inc., 120 AD3d 1296, 1297 [2d Dept 2014]). (See Dan's Supreme Supermarkets. Inc. v Redmont Realty Co., 261 AD2d 353, 354 [2d Dept 2014]).
With respect to respondent BLACHMAN's contention that the arbitration award must be vacated for irrationality, a litigant who invokes "irrationality" for vacatur of an award must meet the "heavy burden of establishing by clear and convincing evidence that the award was tainted by corruption, fraud, misconduct, partiality, indefiniteness, an overreaching of power or irrationality." (Muriel Siebert & Co., Inc. v Ponmany, 190 AD2d 544, 544 [1d Dept 1993]). The standard for vacatur of an arbitration award for irrationality "has been interpreted as the equivalent of the "arbitrary and capricious" standard of article 78 review." (Vago v Country Wide Ins. Co., 145 AD2d 553, 555 [2d Dept 1988]. "Where as here the evidence is conflicting and room for choice exists,' this Court may not weight the evidence or reject the choice'" made by the arbitrator. (Matter of Berenhaus v Ward, 70 NY2d 436, 444 [1987]). "A court cannot examine the merits of an arbitration award and substitute its judgment for that of the arbitrator simply because it believes its interpretation would be the better one. Indeed, even in circumstances where an arbitrator makes errors of law or fact, courts will not assume the role of overseers to conform the award to their sense of justice." ( Matter of New York State Correctional Officers & Police Benevolent Assn v State of New York , 94 NY2d 321, 326 [1999]). Therefore, "[s]ince there was evidence before the arbitrator to support [the] conclusion . . . it cannot be said to be irrational." ( County of Westchester v Doyle, 43 AD3d 1055 1056 [2d Dept 2007]).
Next, Respondent BLACHMAN's counterclaim against petitioner GANSBURG for allegedly splitting a brokerage commission, interposed in respondent's answer to the first amended petition, must be dismissed on grounds of res judicata and collateral estoppel."It is well settled that the doctrine of res judicata applies to arbitration awards with the same force and effect as it applies to judgments of the courts." (McNally International Corp. v New York Infirmary-Beekman Downtown Hospital, 145 AD2d 417, 417 [2d Dept 1988]). (See also Mahler v Campagna, 60 AD3d 1009, 1011 [2d Dept 2009]). In Mahler v Campagna, the Court instructed, at 1011:
The doctrine of res judicata operates to preclude the reconsideration of claims actually litigated and resolved in a prior proceeding, as well as claims for different relief against the same party which arise out of the same factual grouping or transaction, and which should have or could have been resolved in the prior proceeding . . . The doctrine of collateral estoppel bars relitigation of an issue which has necessarily been decided in a prior action and is determinative of the issues disputed in the present action, provided that there was a full and fair opportunity to contest the decision now alleged to be controlling. (See Bayer v City of New York, 115 AD3d 897, 898 [2d Dept 2014]; Ippolito v TJC Development, LLC, 83 AD3d 57, 71-72 [2d Dept 2011]; ADC Contracting & Const., Inc. v Town of Southhampton, 50 AD3d 1025, 1026 [2d Dept 2008]).
In the instant proceeding, respondent BLACHMAN attempts to re-litigate issues relating to the transaction brokered by petitioner GANSBURG, by alleging petitioner GANSBURG's conduct with non-party Minkowitz in enforcing an agreement to split a real estate brokerage commission violates RPL § 442. This falls within the scope of issues submitted to the Beth Din for arbitration and arises out of the same transaction upon which the arbitrators issued their February 13, 2012 award. "Once the controversy is heard and a decision arrived at either by the arbitrator or by the commissioner or by the judge, that is the end of the matter." (Board of Educ. of Union Free School Dist. No. 3 of Town of Huntington v Associated Teachers of Huntington, 30 NY2d 122, 132 [1972]).
Moreover, "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." ( O'Brien v City of Syracuse, 54 NY2d 353, 357 [1981]). Therefore, since respondent BLACHMAN's counterclaim arises from the same transaction before the arbitrators the counterclaim of respondent BLACHMAN against petitioner GANSBURG is dismissed.
Lastly, the subject arbitration award is confirmed, with interest granted from the date of the award, February 13, 2012, at the statutory interest rate of 9% per annum. "Upon confirmation of an arbitrator's award, interest should be awarded from the date of the award." (Shimon v Silberman, 92 AD3d 789, 790-791 [2d Dept 2012]). (See Board of Ed. of Central School Dist. No. 1 of Towns of Niagara, Wheatfield, Lewiston and Cambria v Niagara-Wheatfield Teachers Ass'n, 46 NY2d 553, 558 [1979]).
Conclusion
Accordingly, it is
ORDERED, that the cross-motion of respondent ELI BLACHMAN to: dismiss the first amended verified petition to confirm the arbitration award of petitioner MENACHEM GANSBURG, pursuant to CPLR Rule 3211 (a) (10), for failure to join a necessary part, Aaron Minkowitz, as a petitioner; grant leave to respondent BLACHMAN to take discovery from petitioner GANSBURG and non-party Aaron Minkowitz, pursuant to CPLR § 408, relating to respondent BLACHMAN'S counterclaim against petitioner GANSBURG for alleged violations of Real Property Law (RPL) §§ 441 and 442-e (3); and, grant related relief, is denied in its entirety; and it is further
ORDERED, that the February 13, 2012 arbitration award of petitioner MENACHEM
GANSBURG is confirmed, pursuant to CPLR § 7510; and it is further
ORDERED, that the Kings County Clerk is directed to enter judgment for petitioner MENACHEM GANSBURG for $67,500.00, plus interest from the date of the award, costs and disbursements.
This constitutes the Decision and Order of the Court.
ENTER
___________________________
HON. ARTHUR M. SCHACKJ. S. C.