Opinion
No. 504184/12.
2013-05-30
Shmuel MULLER, Petitioner, v. Yiddy WERTZBERGER; a/k/a, Yiddy Werzberger a/k/a, Yuddy Wertzberger, a/k/a, Yehuda Wertzberger, a/k/a, John Doe Wertzberger; Royal Trading Marketing Company, Inc.; Royal Water Marketing Company, LLC, Respondents.
Reuven J. Epstein, Law office of Reuven J. Epstein, Spring Valley, for Petitioner's. Yiddy Werzberger, pro se.
Reuven J. Epstein, Law office of Reuven J. Epstein, Spring Valley, for Petitioner's. Yiddy Werzberger, pro se.
DAVID I. SCHMIDT, J.
Petitioner Shmuel Muller moves by verified petition pursuant to CPLR 7510 and CPLR 7514 to confirm the arbitration award, dated September 20, 2012, issued by the Rabbinical Court of Mechon L'Hoyroa (the Beth Din) against respondents Yiddy Werzberger, Royal Trading Marketing Company, Inc. (Royal Trading), and Royal Water Marketing Company, LLC (Royal Marketing) (collectively, respondents). Respondent pro se Yiddy Werzberger (Werzberger) opposes.
I. Background
On August 26, 2009, petitioner provided a $400,000 loan to Werzberger. See affirmation of Reuven J. Epstein in support of petition, dated December 10, 2012 (Epstein aff.) ¶ 3. An additional loan of $100,000 was provided on October 19, 2010. Id. Werzberger is alleged to have failed to pay back the loans despite numerous requests for payment. Id., ¶ 4. The parties agreed to submit their dispute to the Beth Din for binding arbitration and entered into an arbitration agreement to that effect. Id., ¶ 5. The arbitration agreement consists of a Hebrew version and a corresponding English version. See reply affirmation, Exs. A and C. On June 20, [Slip Op. 2]2012, the Beth Din issued a Rabbinical Court Ruling, awarding Petitioner $493,000. Epstein aff., ¶ 7 and Ex. C. The ruling provides, in relevant part, that:
“[a]fter hearing the arguments of the parties and their evidence, an analysis of their statements and deliberations amongst us, the following Rabbinical Court Ruling was issued by us:
1.[Werzberger (on his own behalf and on behalf of Royal Trading and Royal Water) ] is required to pay the amount $493,000; and after he pays this amount the Rabbinical Court will consider how much he still owes for the principal and interest.”
Id., Ex. C.
Subsequent to this ruling, Werzberger asked the Beth Din for the opportunity to provide additional information and arguments. Id., ¶ 8. The request was granted and the Beth Din convened again and heard additional testimony. Id. After considering the additional evidence and arguments introduced by Werzberger (the respondent claimed that the monies were given to him for investment purposes, and therefore, he could not be held personally liable for any losses that occurred), the Beth Din, on September 20, 2012, issued a second Rabbinical Court Ruling: (i) confirming the June 20, 2012 ruling and the Beth Din's prior award to petitioner; (ii) stating that the award was a personal obligation; and (iii) specifically authorizing petitioner to confirm the arbitration award and to have judgment entered. Id., ¶ 9 and Ex. A.
On this application, petitioner seeks to have the arbitration award confirmed.
II. Discussion
CPLR 7510 provides that a “court shall confirm an 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.” CPLR 7510. An award will not be vacated “unless it is violative of a strong public policy, is totally irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power.” Hausknecht v. Comprehensive Med. Care of New York, P.C., 24 AD3d 778, 779 (2d Dept 2005). Where no such grounds exist, a “judgment shall be entered upon the confirmation of an award.” CPLR 7514(a). Relevant to this discussion, an arbitration award may be set aside on the ground that the arbitrator “exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made.” CPLR 7511(b)(1)(iii).
Petitioner moves to confirm the award, primarily on the ground that the application is timely, as it has been made within one year of the Beth Din's September 20, 2012 ruling. In opposition, respondent Werzberger raises a number of arguments against confirmation of the award. See affidavit of Yiddy Werzberger, sworn to February 21, 2013 (Werzberger aff.).
First, respondent claims that the Beth Din's June 20, 2012 award was issued prior to the conclusion of the hearing, and that alleged ex parte communications the Beth Din had with petitioner (or his representative) resulted in a premature ruling that did not consider all of the evidence—demonstrating, according to Werzberger, that the Beth Din was biased against him. Id., ¶¶ 13–15. Second, respondent contends that the Beth Din's September 20, 2012 ruling was irrational and against the weight of evidence submitted. Id., ¶ 24. Third, respondent claims that the Beth Din exceeded its authority by imposing liability on Royal Water, an entity Werzberger claims was not a party to the arbitration. Id., ¶¶ 4–5, 17. Finally, respondent argues that the award is not ripe for confirmation. In this connection, Werzberger asserts that the award is incomplete and non-final because the Beth Din has left the case open for a future determination as to the amount of principal and interest still owed to Petitioner. Id., ¶¶ 26–27. The court will examine the merit of each of these arguments in turn.
Werzberger's first argument, i.e., that the Beth Din exhibited its bias by issuing a premature ruling favoring petitioner, cannot succeed because it is not supported by evidence, and instead, is entirely based on inadmissible hearsay statements. See Werzberger aff., ¶¶ 13–15. Werzberger's claim of bias is further weakened by his own acknowledgment that the Beth Din agreed to reconvene for a second time to consider additional evidence and arguments that purportedly were not considered by the panel prior to the issuance of the June 20, 2012 ruling. Id., ¶ 19.
Consequently, Werzberger has failed to sustain his burden of demonstrating the existence of any misconduct prejudicing his rights or the integrity of the arbitration process. See Hausknecht v. Comprehensive Medical Care of NY, 24 AD3d 778, 780 (2d Dept 2005) (a party has the burden of presenting “clear and convincing evidence” of the impropriety of an award); see also Scollar v. Cece, 28 AD3d 317, 317 (1st Dept 2006) (award cannot be vacated on the ground of speculation that it was improperly based).
In an affidavit submitted in further opposition to the motion, Werzberger states additional reasons as to why he believes—without proof rising to the level of clear and convincing evidence—that the Beth Din's rulings in favor of petitioner was a result of bias. See further affidavit of Yiddy Werzberger, sworn to April 10, 2013 (Werzberger supp. aff.), ¶¶ 4–14.
Werzberger's claim that the award is irrational and against the weight of evidence, must also be rejected. It is well settled that judicial review of arbitration awards is extremely limited Wien & Malkin LLP v. Helmsley–Spear Inc., 6 NY3d 471, 479 (2006). Consistent with this principle, a court, reviewing an award, may not substitute its own interpretation of the contract for that of the arbitrator or decide the merits anew. See Matter of Albany County Sheriff's Local 775 of Council 82, AFSCME, AFL–CIO (County of Albany), 63 N.Y.2d 654, 656 (1984). Even where an arbitrator misinterprets the contract or commits errors of law, the arbitrator's award stands. See Matter of Silverman (Benmor Coats), 61 N.Y.2d 299, 308 (1984). “In short, an arbitration award cannot be vacated if there exists any plausible basis for it.” Matter of Brown & Williamson Tobacco Corp. v. Chesley, 7 AD3d 368, 372 (1st Dept 2004). Finally, the party moving to vacate an arbitrator's award as irrational has the heavy burden of establishing its irrationality by clear and convincing evidence. See Muriel Siebert & Co., Inc. v. Ponmany, 190 A.D.2d 544, 544 (1st Dept 1993).
Here, Werzberger, as the party opposing confirmation, bears the burden of substantiating the propriety of setting aside the Beth Din's award. However, the Beth Din's full record is not before the court, making it impossible for the court to review the rationality of the arbitrators' decision. Moreover, based on the language contained in the loan agreements, i.e., the “Heter Iska” contracts under which, among other things, Werzberger acknowledged his receipt of $500,000 from petitioner (both contracts are annexed as an exhibit to respondent's affidavit), there is a “plausible basis” for the Beth Din's award. Matter of Brown & Williamson Tobacco Corp., 7 AD3d at 372.
To illustrate, pursuant to the March 16, 2010 contract, Werzberger agreed that:
In a footnote to its ruling, the Beth Din defines a Heter Iska contract as a “loan structured in a certain way under Jewish law that allows interest.” See Werzberger aff., Exs. C and D.
“If I return the above-mentioned principal [$400,000] to [Petitioner] together with an additional $5,3550.00 per month, starting from April 1, 2010 as payment for his share of the profits which are generated, then I will be not be required to make any further payment nor will I be required to make an oath.”
See Werzberger aff., Ex. B. The October 19, 2010 contract contains similar language with respect to the additional $100,000 sum Werzberger received from petitioner. Id.
In light of this language, it cannot be said that the manner in which the Beth Din interpreted the contracts, requiring Werzberger to return $493,000 to petitioner, is irrational. See Eighty Eight Bleecker Co., LLC v. 88 Bleecker St. Owners, Inc., 51 AD3d 507, 508 (1st Dept 2008) (affirming confirmation of award where lease agreement could have been reasonably construed as arbitrator construed it). The mere fact that a different construction could have been given to the terms of the contract and a different conclusion reached (as Werzberger contends), does not empower the court to set aside the award. Matter of Natl. Cash Register Co. (Wilson), 8 N.Y.2d 377, 383 (1960).
In any event, Werzberger cannot satisfy his burden of establishing the award's irrationality by clear and convincing evidence given the Beth Din's attestation that it considered respondent's new arguments and evidence before rendering its September 20, 2012 ruling, and “specifically rejected it.” See affirmation of Mordechai Badad, Abraham Yitzchak Braunstein and Moshe Elyakim Fleishman, dated March 14, 2013 (Beth Din aff.) (annexed to petitioner's reply affirmation), ¶ 7; see Matter of David Moran v. New York City Transit Authority, 2006 WL 6102968 (Sup Ct, New York County 2006) (Kornreich, J.) (finding that a party challenging an award did not meet his burden of showing by clear and convincing evidence that the arbitrator slept through portions of the proceeding, given the contradicting affirmation submitted by other party to the proceeding).
Werzberger's third argument, namely that the Beth Din exceeded its authority by imposing liability on an entity, Royal Water, that was not a party to the arbitration, also fails. Pointing to the English version of the arbitration agreement, Werzberger argues that he only signed the arbitration agreement on behalf of himself and Royal Trading. Werzberger aff., Ex. A. However, documentary evidence in the form of the corresponding Hebrew version of the arbitration agreement (presumably signed at the same time as the English version) demonstrates that Werzberger signed the agreement on behalf of Royal Water as well. See petitioner's reply affirmation, Ex. C.
To deal with this difficulty, Werzberger argues that he did not know what he was signing when he signed the Hebrew version of the arbitration agreement on behalf of Royal Water because he “was not proficient in Hebrew.” Werzberger supp. aff. ¶ 7. Even so, it is well established that, in the absence of fraud, a signer is responsible for his signature and is bound to read and know what he signed. See Beattie v. Brown & Wood, 243 A.D.2d 395, 395 (1st Dept 1997). Indeed, to have failed to read the agreement in its entirety when possible or to have failed to arrange to have it read to him or her, is considered gross negligence; and in either case the agreement remains binding on the signer. See Gillman v. Chase Manhattan Bank, N.A., 135 A.D.2d 488, 491(2d Dept 1987), affd73 N.Y.2d 1(1988).
Furthermore, Werzberger did not object to the Hebrew version of the arbitration agreement once he understood, from his reading of the corresponding English version, that he was signing (or had already signed), a binding agreement to arbitrate on behalf of Royal Water. Therefore, based both on the law and the evidence before the court, this court concludes that the Beth Din did not exceed its authority by imposing liability on Royal Water.
However, Werzberger raises a valid argument when he states that the Beth Din imperfectly executed its power because “a final and definite award upon the subject matter submitted was not made.” CPLR 7511(b)(1)(iii). Specifically, the award at issue provides that “[Werzberger (on his own behalf and on behalf of Royal Trading and Royal Water) ] is required to pay the amount $493,000; and after he pays this amount the Rabbinical Court will consider how much he still owes for the principal and interest.” Epstein aff., Ex. A (emphasis added). Werzberger contends that the award, to the extent that it requires a future adjudication by the Beth Din of what additional amounts are owed under the contracts, cannot be considered either final or definite, and does not fully resolve the submitted dispute. Significantly, petitioner completely avoids this argument, despite having two opportunities to address it.
Besides his initial reply papers, Petitioner was given leave to submit a supplemental reply.
An award is deficient and subject to vacatur “only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted, or if it creates a new controversy.” Bd. Of Educ. Of Amityville Union Free School Dist. v. Amityville Teacher's Ass'n, 62 AD3d 992, 993–94 (2d Dept 2009). Also, “[a]n award is final and definite if the computation of the award is “so clear and specific that the determination of the amounts owing is merely an accounting calculation.” Civil Service Employees Ass'n. v. County of Nassau, 305 A.D.2d 498, 496 (2d Dept 2003) (inner quotation marks and citation omitted).
The award in this case, requiring, as it does, a future determination as to the amount of principal and interest still owed to petitioner, fails to completely determine the parties' rights and obligations with respect to what monies were owed under the contracts. Thus, the award cannot be confirmed. Adelstein v. Thomas J. Manzo, Inc., 61 A.D.2d 933, 933 (1st Dept.1978) (“In the absence of a final award, there is no authority for judicial intervention and the petition for confirmation must be dismissed”).
That is not to say that an interim or partial award cannot be final if it fully resolves a separate and independent claim or the liability of a particular party. See Cotugno v. Bartkowski, 37 Misc.3d 1206(A), 2012 N.Y. Slip Op 51906(U), *2 (Sup Ct, Suffolk County, 2012) citing Universitas Educ., LLC v. Nova Group, Inc., 2012 WL 2045942, * 2 (SD N.Y.2012). However, in the case at bar, the Beth Din's arbitration award does not purport to be a final decision as to any one claim or party.
As it stands, given that the principal amount borrowed was $500,000 and the award was for $493,000, the court cannot discern whether the amount awarded was a determination only as to what was owed by Werzberger under the March 16, 2010 contract (for the principal amount of $400,000), leaving the only issue left to be resolved by the Beth Din the amount still owed under the October 19, 2010 contract (for the principal amount of $100,000)—or, whether the award represented a determination of the minimum amount owed under both contracts, leaving for a later determination the total amount owed under the contracts. Should the former be the case, the award could be said to have fully and finally resolved a separate and independent claim ( i.e., the amounts owed under the March 16, 2013 contract) and could be confirmed as a final interim award. See Cotugno, supra. On the other hand, if the latter is what occurred, the award, which leaves for a future date a final determination by the Beth Din as to what additional amounts, including principal, are owed under both contracts, does not fully resolve the parties' claims, and is non-final.
Despite the above, the court will confirm the award, if, within 30 days of the date of this decision, petitioner accepts the amount awarded by the Beth Din in full settlement of all of his claims against respondents and stipulates accordingly. Upon submission of such stipulation, the court will grant the instant petition and confirm the award.
Otherwise, the matter is remitted to the Beth Din of Mechon L'Hoyroa for a final ruling that resolves all of the claims submitted to it by the parties. If a rehearing is necessary, the parties are directed to appear before the Beth Din, pursuant to their arbitration agreement. The parties shall make themselves available within four weeks of notification of this Order at the Bet Din's convenience. At the time that a final award is made and submitted to the court, the court will schedule a hearing on the matter.
The forgoing is the decision and order of the court.