Opinion
0104560/2007.
October 9, 2007.
DECISION AND ORDER
On March 21, 2007, an arbitrator (the "Arbitrator") designated by the American Arbitration Association rendered an arbitration award (the "Award") in favor of RAE Realty Holdings, LLC ("RAE") and East Village Dental Associates, PLLC ("Dental"), against 645 East 11th Street Associates Condominium (the "Condominium").
On April 2, 2007, the Condominium, by Notice of Petition, commenced a proceeding (New York County Index No. 104560/07) (the "First Proceeding") against RAE, Dental and Jeffrey Krantz ("Krantz"), a principal of Dental, pursuant to Civil Practice Law and Rules ("CPLR") Article 75, to vacate and set aside the Award. On April 16, 2007, RAE and Dental commenced, by Notice of Petition, a separate proceeding, (New York County Index No. 104946/07 (the "Second Proceeding"), against the Condominium, pursuant to CPLR Article 75, to confirm the Award.
Subsequently, the parties to both proceedings stipulated on May 30, 2007 that the two proceedings should be consolidated for all purposes. Because the two proceedings were initially assigned to separate part of the Court, this Court did not receive the motion to vacate or the stipulation to consolidate until September 11, 2007, at which time the proceeding not before this Part was transferred to this Part.
RAE, the owner of condominium Unit 1C of the Condominium (the "Unit"), in which Dental operates its dental practice through Krantz, a dentist, objected to the placement of refuse dumpsters and a spiked metal fence in front of the Unit, and commenced an arbitration proceeding, allegedly pursuant to the bylaws of the Condominium (the By-Laws), to remedy the situation and for prior damages as a result of the Condominium's alleged actions. The Condominium advised RAE, Dental and the AAA, that the Condominium was not required to arbitrate and declined to participate in the arbitration. The Arbitrator ruled in its interim order dated October 13, 2006, that "the proper forum in which to 'contest' the jurisdiction of the AAA and the Arbitrator would be in a Court of competent jurisdiction," and that absent a stay by such court, the Arbitrator would proceed with the arbitration. The Condominium did not apply for such stay, and the arbitration proceeding continued, with the Condominium not participating. At the end of such proceeding the Award was issued.
While the Condominium interposed a series of procedural objections to the arbitration, most of such issues could be properly addressed by the Arbitrator. The only matters which are to be addressed by a Court are the "three threshold questions; whether the parties made a valid agreement, if so whether they complied with the agreement; and whether the claim sought to be arbitrated is barred by the statute of limitations." Cooper v. Bruckner, 21 AD3d 758 (1st Dept. 2005).
The Condominium raises one of these three threshold questions, i.e., whether the parties had agreed to arbitrate. RAE, Dental and Krantz base their claim that the Condominium had agreed to arbitrate in Section 10.1 of the By-Laws which provides:
"Any matter required or permitted to be determined by arbitration pursuant to the terms of the Condominium Documents shall be submitted for resolution by a single arbitrator in a proceeding held in the City of New York in accordance with the then existing rules of the American Arbitration Association or any successor organization thereto."
The Condominium argues that such provision does not constitute an agreement to arbitrate and that, "aside for Article 10 of the By-Laws there is absolutely no reference to arbitration anywhere in the Condominium Documents" (First Proceeding, Gordon Aff. Par. 26). Accordingly, the Condominium argues that no agreement may be found by implication that Section 10.1 is generally applicable to all disputes.
Apparently, neither counsel for the Condominium nor its president, who verified the petition, read the portion of the By-Laws relating to condemnation, which expressly provides in Section 5.5(H) that:
RAE, Dental and Krantz also apparently failed to read the By-Laws, and did not comment or dispute Gordon's affidavit.
"Any dispute that may arise under this Section 5.5 between Unit Owners or between any Unit Owner(s) and the Condominium Board shall be resolved by arbitration pursuant to the terms of Article 10 hereof." (First Proceeding, Petition Ex. F).
Thus, under generally applicable cannons of contract construction the inclusion of the specific reference to Article 10 in one portion of the By-Laws and the failure to require arbitration elsewhere in the By-laws requires the conclusion that for other matters, arbitration was not agreed to. Accordingly, this Court finds that the parties did not agree to arbitrate this dispute.
Because RAE and Dental failed to include in their Demand for Arbitration (See First Proceeding, Petition Ex. A), the required statutorily recitation under CPLR § 7503(c) "stating that unless the party served applies to stay the arbitration within twenty days after such service he shall thereafter be precluded from objecting that a valid agreement was not made," the Condominium was not precluded from raising the "threshold issue" as to whether there had been an agreement to arbitrate at this time. Cooper v. Bruckner, supra, Blamouski (Munson Transp.), 91 NY2d 190 (1997). While the "threshold question" whether an arbitration agreement existed may also be waived by participation in the arbitration proceeding, the Condominium did not participate and thus did not so waive its right to claim in this proceeding that it had not agreed to arbitrate.
Had the statutory notice been given, the Condominium would have been required to raise the claim there was no agreement to arbitrate by a motion under CPLR Art. 75 to stay arbitration, or waive such claim.
While the construction of contract terms, including whether the parties had agreed to arbitrate is ordinarily a matter for the Court to determine, had the Notice of Arbitration included the statutory notice or had the parties agreed to arbitrate after the dispute arose or waived their objections to arbitration by participation, the finding of the Arbitrator in the Award that the By-laws required the parties to arbitrate would have bound the Court. A decision of an arbitrator who errs in a matter of law or fact in an arbitration properly before it is nonetheless enforceable absent rare circumstances. Because this Court finds that the issue of whether an agreement to arbitrate which is initially for a court to determine has been preserved for this Court's consideration at this time, the finding of the Arbitrator that the parties agreed to arbitrate does not bind this Court.
Although the Award may not stand, such decision does not by itself preclude RAE, Dental or Krantz from proceeding in an appropriate court to assert its claims against Condominium, as it appears to be doing at this time.
Accordingly, the Condominium's motion to set aside the Award and stay any arbitration of the issues which are the subject matter of this proceeding is hereby granted and such Award is hereby set aside and such arbitration is hereby permanently stayed and RAE, Dental and Krantz's motion to confirm the Award is denied, and their petition is hereby dismissed.
This the Decision and Order of the Court.