Opinion
Index No. 655585/2018
04-10-2019
Paul Ryan Association d/b/a Ryan Associates, Petitioner, v. Susan Hayden, Colt Contracting Corp., Deerfield Millwork, Inc., Lido Stone Works, LLC, Felix Lorenzoni Studio Inc., Z. Carpentry, Inc., Respondents.
NYSCEF DOC. NO. 155
DECISION and ORDER
Mot. Seq. 1 & 2 HON. EILEEN A. RAKOWER, J.S.C.
Motion Sequence 1
Petitioner Paul Ryan Associates d/b/a Ryan Associates ("Petitioner") has commenced a special proceeding, pursuant to CPLR § 7510, to confirm the Final Arbitration Award of Robert A. Rubin, Kalvin Kamien, and Ira M. Schulman (the "Panel") duly signed and affirmed on October 26, 2018, in Susan Hayden v. Ryan Associates, et al. AAA Case No. 01-16-0003-1958 (the "Award"). Respondent Susan Hayden ("Ms. Hayden") cross moves for an Order vacating the Award.
Motion Sequence 2
Ms. Hayden moves for an Order pursuant to CPLR § 2214 granting her leave to file a sur-reply to Petitioner's Answer to her Cross-Petition. Petitioner opposes.
Background/Factual Allegations
On or about March 28, 2014, Petitioner and Ms. Hayden entered into a contract, where Petitioner agreed to act as a general contractor for the construction of Ms. Hayden's private residence (the "Contract"). General Conditions Article 15.4 of the Contract requires Petitioner and Ms. Hayden to submit all claims and controversies to binding arbitration at the American Arbitration Association ("AAA"). General Conditions Article 15.4.4 of the Contract allows Petitioner or Ms. Hayden to join additional parties to the arbitration. Petitioner entered into subcontracts with several parties, including Respondents Colt Contracting Corp., Deerfield Millwork, Inc, Lido Stone Works, LLC, Felix Lorenzoni Studio, Inc., and Z. Carpentry Inc. (collectively, "subcontractors").
On or about December 7, 2016, Ms. Hayden alleged a breach of the Contract by Petitioner and alleged defective work by Petitioner and its subcontractors. Ms. Hayden commenced arbitration at AAA against Petitioner and the Panel was selected and accepted by Petitioner and Ms. Hayden. On or about March 3, 2017, Petitioner joined the subcontractors as Third-Party Respondents. The Panel conducted a hearing on the following dates: April 18, 2018; April 19, 2018; May 22, 2018; May 23, 2018; May 29, 2018; June 5, 2018; June 6, 2018; June 7, 2018; June 12, 2018; June 13, 2018; June 14, 2018; and June 19, 2018. On October 26, 2018, the Panel rendered a unanimous decision and Award that, inter alia, stated:
1. Claimant Susan Hayden's claims are hereby denied with the sole exception of the proved costs and damages for the completion attributable to the subcontractors, totaling US$350,385, which are hereby set off.
2. Within thirty (30) days of the transmittal of this Award, Claimant Susan Hayden shall pay to Respondent Ryan Associates the sum of $765,114.00 with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment.
3. Within thirty (30) days of the transmittal of this Award, the Third-Party Respondents shall pay Respondent Ryan Associates as follows:
a. Third-Party Respondent Colt Contracting Corp. shall pay to Respondent Ryan Associates the sum of US$46,800.00 with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment;
b. Third-Party Respondent Z Carpentry Inc. shall pay to Respondent Ryan Associates the sum of US$47,030.00, with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment;
c. Third-Party Respondent Lido Stone Works, LLC shall pay to Respondent Ryan Associates the sum of US$57,996.00, with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment;
d. Third-Party Respondent Deerfield Millwork, Inc. shall pay to Respondent Ryan Associates the sum of US$27,020.00, with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment;
e. Third-Party Respondent Felix Lorenzoni Studio, Inc. shall pay to Respondent Ryan Associates the sum of US$50,469.00, with interest thereon at the rate of 9% per annum from August 9, 2016, to the date of payment;
4. The administrative fees and expenses of the American Arbitration Association/International Centre for Dispute Resolution, totaling US$50,437.50, and the compensation and expenses of the arbitrators, including the in camera review arbitrator, totaling US$199,373.81, shall be borne equally by Claimant Susan Hayden and Respondent Ryan Associates. Therefore, within thirty (3) days of the transmittal of this Award:
a. Claimant Susan Hayden shall reimburse Respondent Ryan Associates the sum of US$4,178.74, representing that portion of said fees and expenses in excess of the apportioned costs previously incurred by Respondent Ryan Associates, upon demonstration by Respondent Ryan Associates that those incurred costs have been indeed paid.
b. Claimant Susan Hayden and Respondent Ryan Associates shall reimburse Third-Party Respondent Deerfield Millwork the sum of US$1,000.00 each, representing that portion of said fees and expenses in excess of the
apportioned costs previously incurred by Third-Party Respondent Deerfield Millwork.
5. This Award is intended to be a final award, in full settlement of all claims, defenses, offsets and counterclaims submitted to the Arbitrators. All claims not expressly dealt with herein are hereby denied;
6. This Final Award may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute together one and the same instrument.
Petitioner commenced this action on November 9, 2018 by filing a petition as a special proceeding to confirm the Award.
Ms. Hayden filed her cross-motion on December 6, 2018, seeking an Order to: (1) vacate the Award pursuant to CPLR § 7511(b)(1)(iii) except in so much as it awards Ms. Hayden $350,385 towards her corrective costs; (2) award damages for Ms. Hayden in the amount of $6,372,435 or, in the alternative, remand the matter to arbitration for further proceedings consistent with this Court's opinion; and (3) reduce, at a minimum, the amount awarded to Petitioner for "unpaid sums for work performed to the date of termination," from $980,913.00 to $246,967.10.
Parties' Contentions
Motion Sequence 1
In Ms. Hayden's cross-motion to vacate the Award, Ms. Hayden contends that "the Panel exceeded its authority and acted with manifest disregard of the law and the parties' agreements". Ms. Hayden argues that the Panel ignored the provision in the Contract that required Petitioner to document any delay and request an extension of the substantial competition date and New York law which holds that a party cannot excuse its delay based on the conduct of others where that party did not follow notice procedures from the contract. Moreover, Ms. Hayden contends that the Panel disregarded the liquidated damages provision and the March Amendment to the Contract.
In opposition to Ms. Hayden's cross-motion, Petitioner argues that Ms. Hayden's argument is flawed and her interpretation of the law is overreaching. Petitioner contends that the Panel's alleged "manifest disregard of the law" is a doctrine of last resort and is only applied by the Courts where there is an "apparent egregious impropriety" by the arbitrators, which has not happened in this proceeding. Petitioner asserts that the record demonstrates that for each alleged governing principal Ms. Hayden claims to have been ignored or disregarded, there is a countervailing legal principal or interpretation that supports the Panel's Award.
Motion Sequence 2
Ms. Hayden asserts that the reason for seeking permission to submit a sur-reply is to address the Panel's Disposition of Hayden's Application of Award, decided on December 17, 2018 (the "Disposition"). Ms. Hayden contends that the Disposition was not decided when she filed her Cross-Petition on December 6, 2018. Ms. Hayden argues that the sur-reply is not "belated" and is in the interest of all parties to the proceeding to have a complete record of the Panel's determination.
In opposition, Petitioner argues that the sur-reply should not be granted because it allows Ms. Hayden to continue to argue the same issues that were argued in her Cross-Petition.
Legal Standard
"It is well settled that judicial review of arbitration awards is extremely limited." Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471, 479 [2006]. "An arbitration award must be upheld when the arbitrator 'offers even a barely colorable justification for the outcome reached.'" Wien, 6 N.Y.3d at 470-480 (internal citations omitted). CPLR §7510 states, "[t]he 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 §7511 provides that an arbitration award shall be vacated upon the motion of a party to the arbitration "if the court finds that the rights of that party were prejudiced by" certain enumerated grounds, including, "corruption, fraud or misconduct in procuring the award;" or "partiality of an arbitrator appointed as a neutral" and "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." CPLR § 7511[b][1][iii]. It is well settled that a party seeking to vacate an arbitration award bears the "heavy burden" of demonstrating that the award "violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on an arbitrator's power under CPLR §7511(b)(1)." Scollar v. Cece, 2006 NY Slip Op 2814 [1st Dep't 2006].
"Assessment of the evidence presented at an arbitration proceeding is the arbitrator's function rather than that of the court." Fitzgerald v. Fahnestock & Co., Inc., 48 A.D.3d 246, 247 [1st Dep't 2008] (quoting Peckerman v. D & D Assoc., 165 A.D.2d 289, 296 [1st Dep't 1991]). "Absent provision to the contrary in the arbitration agreement, arbitrators are not bound by principles of substantive law or rules of evidence." Lentine v. Fundaro, 29 N.Y.2d 382, 385 [1972]. Nor can an arbitration award "be overturned merely because the arbitrator committed an error of fact or law." Matter of Motor Veh. Accident Indem. Corp., 89 N.Y.2d at 223.
Discussion
Here, Ms. Hayden fails to meet her heavy burden of demonstrating that the Panel's Award violates a strong public policy, is totally irrational or is in violation of any of the grounds enumerated under CPLR § 7511(b). The record shows that the Panel weighed all relevant evidence and based their decision upon the evidence presented at the hearing that took place over twelve separate days. Ms. Hayden therefore fails to meet her burden of demonstrating the Award should be disturbed by the Court. Ms. Hayden's Cross-Motion to vacate the Award is therefore denied. Petitioner's Petition to confirm the Award is granted.
Ms. Hayden's motion for leave to file a sur-reply to Petitioner's Answer to her Cross-Petition is denied.
Wherefore, it is hereby,
ORDERED that Petitioner Paul Ryan Associates d/b/a Ryan Associates petition to confirm the Final Arbitration Award of Robert A. Rubin, Kalvin Kamien, and Ira M. Schulman duly signed and affirmed on October 26, 2018 is granted; and its further
ORDERED that Petitioner Paul Ryan Associates d/b/a Ryan Associates is directed to submit a Proposed Order incorporating the terms of the Final Arbitration Award within 10 days of the date of this Order; and its further
ORDERED that Respondent Susan Hayden's cross-motion is denied; and its further
ORDERED that Respondent Susan Hayden's motion for leave to file a sur-reply to Petitioner Paul Ryan Associates d/b/a Ryan Associates' Answer to Cross-Petition is denied.
This constitutes the decision and order of the court. All other relief requested is denied.
Dated: April 10, 2019
/s/_________
Eileen A. Rakower, J.S.C.