Opinion
2822, 2823.
Decided March 2, 2004.
Judgment, Supreme Court, New York County (William Wetzel, J.), entered January 29, 2003, which, upon confirming an arbitration award in a dispute between shareholders of a small housing cooperative, inter alia, voided the parties' shareholders agreement, fashioned new mechanisms of corporate governance and directed respondents to pay petitioners' attorneys' fees, unanimously modified, on the law, to vacate the award of attorneys' fees, and otherwise affirmed, with one bill of costs to petitioners payable by respondents-appellants. Appeal from order, same court and Justice, entered December 2, 2002, which granted petitioners' application to confirm the arbitration award and denied respondents' cross motion to vacate the award, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
Justin Y.K. Chu, for Petitioners-Respondents.
Leonard Lorin, for Respondents-Appellants.
Before: Tom, J.P., Andrias, Sullivan, Lerner, JJ.
The arbitrators did not exceed their authority by voiding a shareholders agreement that authorized them to decide any controversy or claim arising out of or relating to it, and then, in effect, writing a new shareholders agreement for the parties ( see Matter of Silverman [Benmor Coats], 61 N.Y.2d 299, 307-308; Integrated Sales v. Maxwell Corp., 94 A.D.2d 221, 225). Such remedy rationally addresses the deadlocks caused by an agreement that required shareholder unanimity with respect to all matters of management, impeding even normal operations, and none of the award's provisions violates a strong public policy ( see Silverman, 61 N.Y.2d at 308). Moreover, respondents, who participated in what was an extensive arbitration proceeding, and who themselves affirmatively sought to arbitrate the effect of the agreement on the corporation's governance, will not be heard to argue that the arbitrators were without authority to grant any relief that rationally determined that issue, including rescission of the shareholders agreement ( see id. at 309, citing, inter alia, Rochester City School Dist. v. Rochester Teachers Assn., 41 N.Y.2d 578, 583; see also Matter of Shannon [Liberty Mut. Ins. Co.], 236 A.D.2d 231). The award of attorneys' fees should be vacated given an arbitration clause that does not expressly provide therefor. We have considered and rejected respondents' other arguments.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.