Opinion
515092/2020
01-04-2021
In the Matter of the Arbitration of Certain Controversies Between NRT NEW YORK LLC d/b/a The Corcoran Group, Petitioner v. Jeffrey ST. ARROMAND, Respondent
Attorney for Petitioner: Errol F. Margolin, Esq., Margolin & Pierce, LLP, 110 W 40th Street, Suite 303, New York, NY 10018 Respondent Jeffrey St. Arromand, Pro Se
Attorney for Petitioner: Errol F. Margolin, Esq., Margolin & Pierce, LLP, 110 W 40th Street, Suite 303, New York, NY 10018
Respondent Jeffrey St. Arromand, Pro Se
Francois A. Rivera, J.
Recitation in accordance with CPLR 2219 (a) of the papers considered on the notice of petition and petition filed on August 17, 2020, under motion sequence one, by petitioner NRT New York, LLC., d/b/a The Corcoran Group (hereinafter petitioner or Corcoran) for an order, pursuant to CPLR 7511 (b) (1), vacating and setting aside the arbitration award dated July 24, 2020 and directing that judgment be entered.
Notice of Petition
Petition
Exhibit A to I
Response to Petition
Exhibits A, C, E and F
BACKGROUND
On August 17, 2020, Corcoran commenced the instant special proceeding against respondent Jeffrey St. Arromand (hereinafter respondent or St. Arromand), by electronically filing a notice petition, verified petition and annexed exhibits (hereinafter the commencement papers) with the Kings County Clerk's office (KCCO).
On September 15, 2020, St. Arromand, acting pro se, filed an answer to the commencement papers.
The commencement papers allege the following salient facts. On November 17, 2017, Corcoran, a real estate brokerage firm, entered into a written agreement, referred to as the Independent Contractor Agreement (hereinafter the ICA) with St. Arromand, a licensed associate real estate broker. Corcoran's policy manual (hereinafter the manual) governs its relationship with associate brokers such as the respondent. According to the manual, associated brokers receive a certain percentage of commissions collected by Corcoran on broker's sales, based upon the prior year's gross commissions. The ICA and the manual describe the respondent's percentage of commissions, as well as, the terms for reimbursement to Corcoran should the respondent disassociate from Corcoran.
On or about February 7, 2019, the respondent disassociated from Corcoran. Accordingly, Corcoran made a demand for repayment in the sum of $51,226.90, representing $27,971.62, for split repayment, $17,119.25 for marketing expenses and $23,333.33 for repayment of the enhanced advance commission, and credited St. Arromand $17,197.30 for a sale that subsequently closed. The respondent refused and failed to pay the balance due.
Thereafter, Corcoran commenced an arbitration proceeding. Due to the pandemic, an arbitration hearing was not conducted, rather the parties were given an opportunity to submit simultaneous hearing memorandums and then allowed to submit replies. However, due to law office failure, Corcoran failed to submit its hearing memorandum in support of its claims and the arbitrator mistook its reply brief as the initial hearing memorandum.
On May 29, 2020, the arbitrator, in a final arbitration award, found that the petitioner did not make a prima facie case and is entitled to nothing from the respondent (hereinafter the final arbitration award).
On July 9, 2020, Corcoran wrote a letter to the arbitrator to reconsider the final arbitration award. The letter explained the law office's failure of Corcoran's counsel and requested that its initial hearing memorandum, which included a sworn affidavit by the petitioner, be considered. The respondent opposed Corcoran's request for reconsideration by email.
On July 24, 2020, Caroline Antonacci, JAMS Arbitrator (hereinafter the arbitrator) issued Procedural Order 4 (hereinafter Order 4) which declined Corcoran's request to consider its initial hearing memorandum filed after the final arbitration award.
THE PLEADINGS
Petitioner's commencement papers consist of a notice of petition, a petition and nine annexed exhibits labeled A through I. Exhibit A is a copy of an eighteen-page document titled Independent Contractor Agreement. Exhibit B is a copy of a document titled Corcoran Brooklyn Policy Manual and Resource Guide, revised December 5, 2018. Exhibit C is a copy of a JAMS Demand for Arbitration Form. Exhibit D is described as the claimant's Hearing Memorandum submitted to JAMS. Exhibit E is the respondent St. Arromand's response to the demand for Arbitration. Exhibit F is the Final Arbitration Award dated May 29, 2020 by Caroline M. Antonacci, JAMS Arbitrator. Exhibit G is a letter to Caroline Antonacci, JAMS Arbitrator from Errol F. Margolin, Esq., dated July 9, 2020. Exhibit H is an email from St. Arromand dated July 15, 2020. Exhibit I is titled Procedural Order 4 by Caroline M. Antonacci, JAMS Arbitrator, dated July 24, 2020.
The respondent's answering papers consist of four annexed exhibits labeled A, C, E, and F. Although labeled exhibit A in the NYSCEF system, the exhibit is St. Arromand's pro se response to NRT's petition. Exhibit C is the Final Arbitration Award dated May 29, 2020, by Caroline M. Antonacci, JAMS Arbitrator. It is an exact duplicate of NRT's exhibit E. Exhibit E is described as the respondent's post JAMS Arbitration decision email. It is an exact duplicate of NRT's exhibit H. Exhibit F is described as the post judgment decision from the JAMS Arbitrator. It is an exact duplicate of NRT's exhibit I.
LAW AND APPLICATION
By the instant special proceeding, Corcoran is seeking an order, pursuant to CPLR Article 7511 (b) (1), to vacate the arbitration award denying its claims against St. Arromand.
CPLR 7511 (b) states in pertinent part as follows:
(1) The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by:
(i) corruption, fraud, or misconduct in procuring the award; or
(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or
(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or
(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.
CPLR Article 75 codifies the limited role for the judiciary in arbitration ( Am. Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 35 NY3d 64, 70 [2020] ). It is well established that the courts are bound by an arbitrator's factual findings, interpretation of a contract and judgment concerning remedies ( Piller v Eisner , 173 AD3d 1035, 1036 [2nd Dept 2019] ). Moreover, courts are obligated to give deference to the decision of the arbitrator ( Matter of New York City Tr. Auth. v Transp. Workers' Union of Am., Local 100, AFL-CIO , 6 NY3d 332, 336 [2005], citing Matter of Sprinzen [Nomberg], 46 NY2d 623, 629 [1979] ["An arbitrator's paramount responsibility is to reach an equitable result, and the courts will not assume the role of overseers to mold the award to conform to their sense of justice"]).
An application to vacate an arbitration award may only be granted in narrow circumstances including misconduct, bias, excess of power and procedural defects ( see id.) "The party seeking to vacate an arbitration award bears a heavy burden of proving by clear and convincing evidence that impropriety by the arbitrator prejudiced that party's rights or impaired the integrity of the arbitration process ( Verille v Jeanette , 163 AD3d 830, 830-31 [2nd Dept 2018], citing Matter of Denaro v Cruz , 115 AD3d 742, 743 [2nd Dept 2014] ).
Corcoran seeks vacatur on the following two grounds. Firstly, pursuant to CPLR 7511 (b) (1) (iv), on the grounds that the arbitrator failed to follow the due process requirements in CPLR Article 75 by refusing to allow Corcoran to present its case and evidence. Lastly, pursuant to CPLR 7511 (b) (1) (iii), on the grounds that the arbitrator's decision was violative of public policy.
Petitioner's Claim of Procedural Defect
The parties to an arbitration are "entitled to be heard, to present evidence and to cross-examine witnesses" and to be represented by counsel ( Gassman Baiamonte Gruner, P.C. v Katz , 164 AD3d 790, 791 [2nd Dept 2018], citing CPLR 7506 [c] [d] ). To prevail on the basis of procedural defects, the petitioner must demonstrate by clear and convincing evidence that the party's rights were prejudiced by the failure to follow the procedure of CPLR Article 75. Upon such a showing the court may vacate the award, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection ( Gassman Baiamonte Gruner, P.C , 164 AD3d at 791, citing CPLR 7511 [b] [1] [iv] ).
Corcoran's submission included, among other things, the Final Arbitration Award and the Order 4 issued by the arbitrator. In the Final Arbitration Award, the arbitrator makes the following findings of fact. On April 6, 2020, a telephonic Status Conference was held with the parties where they elected to have their disputes resolved by written submissions. The parties also agreed to submit their reply briefs on the same day after each side had the opportunity to review their opponent's brief. The arbitrator issued Procedural Order 3, which directed that: "[w]ritten Arbitration Briefs containing all exhibits and legal authority relied upon are to be exchanged and filed with JAMS on May 6, 2020. Additionally, Written Arbitration Reply Briefs containing all exhibits and legal authority relied upon are to be exchanged and filed with JAMS on May 20, 2020."
On May 12, 2020, Corcoran filed a reply brief. By email correspondence, dated May 12 and 13, 2020, St. Arromand objected to the fact that Corcoran's brief was delivered after the May 6, 2020 deadline. St. Arromand questioned whether the arbitrator had given Corcoran an extension. On May 13, 2020, Corcoran's counsel responded to St. Arromand by asserting that "we have a right to reply and this is our evidence." The arbitrator responded to the parties stating, "[n]o request for an extension of time beyond the filing dates agreed to by the [p]arties and embodied in Procedural Order 3 was made and no extension has been granted." No objection was made by either side following the arbitrator's email and neither side submitted a reply by the May 20, 2020 date.
In Order 4, the arbitrator articulates her reasoning for denying Corcoran's request to have to arbitrator consider its post Final Award submission as follows. The arbitrator references Corcoran's letter dated July 9, 2020 where it admits that on May 4, 2020 it had notice that the arbitration brief or hearing memorandum failed to transmit. On May 12, 2020, Corcoran was again noticed by St. Arromand's email that there was a submission issue but failed to make any attempt to ask for any extensions prior to the May 20, 2020 deadline.
Consequently, Corcoran has failed to meet its burden of proving by clear and convincing evidence that its rights were prejudiced by the arbitrator's failure to follow procedure ( see Gassman Baiamonte Gruner, P.C , 164 AD3d at 791 ). The arbitrator's Final Arbitration Award was rendered based upon the evidence submitted to the arbitrator at the time of the final submission deadline ( see generally Verille v Jeanette, 163 AD3d 830, 832 [2nd Dept 2018] ). The arbitrator's conclusion in Order 4 was that Corcoran had constructive notice of the issue with the submission of its hearing memorandum.
Petitioner's Claim of Public Policy Violation
The scope of the public policy exception to an arbitrator's power to resolve disputes is extremely narrow and is exercised sparingly ( Matter of Santer v Bd. of Educ. of E. Meadow Union Free School Dist., 23 NY3d 251, 261 [2014], quoting Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of NY, 1 NY3d 72, 80 [2003] ). "An arbitration award violates strong public policy only where the court can conclude, without engaging in any extended fact finding or legal analysis, that a law prohibits the particular matters to be decided by arbitration, or where the award itself violates a well-defined constitutional, statutory or common law of this state" ( Zar v Yaghoobzar , 161 AD3d 815, 817 [2nd Dept 2018], citing Matter of Reddy v Schaffer , 123 AD3d 935, 937 [2nd Dept 2014] ; Denson v Donald J. Trump For President, Inc., 180 AD3d 446, 450 [1st Dept 2020] ). An award will be found violative on public policy grounds only where such policy prohibits, in the absolute sense, particular matters being decided or certain relief being granted by the arbitrator ( Denson, 180 AD3d at 450 ).
Corcoran contends that New York public policy favors resolving cases on the merits. Nevertheless, it is well established that the courts are bound by an arbitrator's factual findings, interpretation of the contract and judgment concerning remedies ( Kotlyar v Khlebopros , 176 AD3d 793, 795 [2nd Dept 2019] ). "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" ( Kotlyar , 176 AD3d at 795, citing Matter of New York State Correctional Officers & Police Benevolent Assn. v State of New York, 94 NY2d 321, 326 [1991] ).
Applying the aforementioned facts, Corcoran's contention that the arbitrator violated public policy by failing to consider its hearing memorandum is without merit. Corcoran has failed to demonstrate that public policy precluded matters being decided or relief being granted by the arbitrator ( see Denson, 180 AD3d at 450 ; see also Zar , 161 AD3d at 817 ).
CONCLUSION
It is the Decision, Order and Judgment of this Court that the petition of NRT New York, LLC., d/b/a The Corcoran Group for an order, pursuant to CPLR 7511 (b) (1), vacating and setting aside the final arbitration award is denied.
The award which found that the petitioner is entitled to nothing from the respondent Jeffrey St. Arromand is confirmed, and the petition is dismissed.