Opinion
Index No. 65221/2023
11-07-2023
Brian E. Park, Plaintiff, v. Ronald Blatt, RONALD BLATT, M.D., P.C., and EAST SIDE GYNECOLOGY SERVICES, P.C., Defendants.
Law Offices of Michael J.S. Pontone, Esq., P.C., New York, NY (Michael J.S. Pontone of counsel), for plaintiff. Ruskin Moscou Faltischek, P.C., Uniondale, NY (Adam L. Browser and Brian Passarelle of counsel), for defendants.
Unpublished Opinion
Law Offices of Michael J.S. Pontone, Esq., P.C., New York, NY (Michael J.S. Pontone of counsel), for plaintiff.
Ruskin Moscou Faltischek, P.C., Uniondale, NY (Adam L. Browser and Brian Passarelle of counsel), for defendants.
Gerald Lebovits, J.
In this action for breach of contract and fraud, brought by plaintiff, Brian E. Park, against defendants, Ronald Blatt, Ronald Blatt, M.D., P.C. (Blatt P.C.), and East Side Gynecology Services, P.C., defendants move under CPLR 7503 to compel arbitration, or in the alternative to dismiss. The motion to compel is granted.
DISCUSSION
CPLR 7503 (a) provides that where a party has sought to compel arbitration, and "there is no substantial question whether a valid agreement was made or complied with... the court shall direct the parties to arbitrate."
This provision contains an exception, not relevant here, where a party's initial request to arbitrate is barred on statute-of-limitations grounds. (See CPLR 7502 [b]; CPLR 7503 [a].)
The underlying contract at issue provides that "any controversy or claim arising out of or relating to this Agreement" or "any other issue related to Physician's employment with Employer" shall be subjected to "binding Arbitration." (NYSCEF No. 7 at 13 ¶ 38.0.)
Although the contract reflects that it is entered into between plaintiff and Blatt P.C., rather than between plaintiff and all defendants, plaintiff does not contend that his claims against Blatt P.C. can, or should, be separated from his claims against the other defendants for purposes of arbitration or determining arbitrability.
I. Whether the Contract's Arbitration Clause Encompasses Plaintiff's Claims
In opposing the motion to compel, plaintiff contends first that the contract's arbitration clause does not apply to some of the alleged "fraudulent actions of the Defendant"-presumably the alleged use by defendants of plaintiff's professional license and signature to execute medical records, prescriptions, bills, and the like-because those actions occurred "after the Plaintiff stopped working for the defendant." (NYSCEF No. 16 at ¶ 28; see NYSCEF No. 2 at ¶¶ 29-30 [verified complaint].) This contention is unpersuasive.
As an initial matter, it is unclear whether the conduct at issue came after the end of plaintiff's employment by defendants. Plaintiff represents that the conduct, which allegedly began in 2017, continued after "[p]laintiff was forced to go on disability" in 2019 "due to [his] deteriorating health." (NYSCEF No. 2 at ¶ 30; NYSCEF No. 17 at ¶ 18 [plaintiff's aff. in opposition].) But the underlying agreement provides only that "permanent disability"-as defined in great detail in the agreement (see NYSCEF No. 7 at 9 ¶ 20.0 [c]-will permit termination for cause of plaintiff's employment (see id. at 8 ¶ 19.0 [c] [xi]). Plaintiff does not represent that defendants did terminate his employment for cause; or that the disability he references otherwise ended their employment relationship.
Additionally, the contract's arbitration provision expressly applies to "any controversy... arising out of or relating to" the contract, or "any other issue related to Physician's employment with Employer." (Id. at 13 ¶ 38.0.) This broad language does not contain a temporal limitation. And the alleged misuse by defendants of plaintiff's license and signature, regardless of timing, relates to plaintiff's employment by employer, because the parties' employment relationship furnished the opportunity for that misuse. And plaintiff's fraud claim for alleged misuse of his license and signature relates to the employment agreement: That agreement represents that defendant Blatt P.C. is "fully committed to ensuring its compliance, and the compliance of its physicians and staff" with, among other things, "all rules, regulations, and laws relating to documentation, coding, and billing for services rendered." (See id. at 10 ¶ 22.0 [a].) This language is relevant, for example, to the scienter element of the misuse-related fraud claim.
There is no merit to plaintiff's reliance on the Appellate Division, First Department's decision in Fritschler v Draper Mgt., LLC (203 A.D.3d 623 [1st Dept 2022]). (See NYSCEF No. 16 at ¶¶ 31-34.) The issue in Fritschler was not whether the underlying dispute was arbitrable, but instead whether the issue of arbitrability was for the arbitrator or the courts. (See id. at 623.) And the language quoted in plaintiff's opposition papers is from the motion court's decision, not the First Department's ruling on appeal. (Compare NYSCEF No. 16 at ¶¶ 32-33, with Fritschler v Draper Mgt., LLC, 2020 NY Slip Op 34000[U], at *3 [Sup Ct, NY County 2020].) Regardless, the motion court in Fritschler held, and the First Department agreed, that the contract's incorporation-by-reference of the rules of the American Arbitration Association meant that, assuming that the arbitration clause was valid, issues of arbitrability questions in the case would be for the arbitrator to decide. (See id. at *4, affd 203 A.D.3d at 623.) Here, as in Fritschler, the arbitration provision in the underlying contract provides that any arbitration is to be held "in accordance with the procedures of the American Arbitration Association." (NYSCEF No. 7 at 13 ¶ 38.0.)
The contract's incorporation of AAA procedures might well alone defeat plaintiff's argument that this court should deny the motion to compel due to defendants' alleged fraudulent and tortious conduct (assertedly) falling outside the arbitration clause. But defendants do not raise this point in support of their motion, and this court need not resolve it here.
II. Whether the Arbitration Clause Requires Arbitration of Fraudulent-Inducement Claims within the Clause's Scope
Plaintiff also argues that the broad arbitration provision in the contract does not require arbitration of his fraud claims falling within the provision's scope. (NYSCEF No. 16 at ¶¶ 26-28.) This court disagrees. Although plaintiff's argument on this point is somewhat unclear, this court takes plaintiff to be arguing that he cannot be required to arbitrate his fraudulent-inducement claim because the alleged fraud itself rendered invalid the contractual provision requiring him to arbitrate. That alleged fraud does not preclude arbitration here.
A fraudulent-inducement claim will be for the court to decide in the first instance, rather than left to the arbitrator, only in two circumstances: the alleged fraud (i) relates to the arbitration clause, in particular, or (ii) "permeate[s] the entire contract." (Silverman v Benmor Coats, Inc., 61 N.Y.2d 299, 308 [1984].) Here, the alleged fraudulent inducement did not relate to the parties' rights to litigate versus arbitrate in the event of a dispute, but instead to plaintiff's compensation (both in direct salary and in payment of malpractice-insurance premiums). (See NYSCEF No. 2 at ¶¶ 14-25.) And although compensation is certainly an important term of any contract, alleged deception about that term alone is different from a "grand fraudulent scheme permeat[ing] the entire contract." (Ravel v Dirco Enters., Inc., 159 A.D.2d 564, 566 [2d Dept 1990]; cf. Adago v Sy, 205 A.D.3d 602, 603 [1st Dept 2022] [holding that plaintiff's allegations that the underlying contract was itself part of a con game run by defendant against plaintiff "raised a substantial question whether" the contract was "so permeated with fraud that the entire agreement, including the arbitration provision, is void"] [internal quotation marks omitted].)
In Fritschler, by contrast, plaintiff contended that defendant obtained his consent to the arbitration clause, specifically, by fraud. (See 2020 NY Slip Op 34000[U], at *4.)
Accordingly, it is
ORDERED that defendants' motion to compel arbitration is granted; and it is further
ORDERED that plaintiff shall arbitrate his claims against defendants in accordance with the contract; and it is further
ORDERED that all proceedings in this action are hereby stayed, except for an application to vacate or modify the stay; and it is further
ORDERED that either party may make an application by order to show cause to vacate or modify this stay upon the final determination of the arbitration.