Opinion
December 18, 1961
In an action in which the complaint pleads the following four separate causes of action: (1) to rescind a written contract containing an arbitration clause, on the ground of fraud in its inducement; (2) by reason of the fraud and defendant's consequent unjust enrichment, to impress a constructive trust on all of defendant's assets to the extent to which defendant has been unjustly enriched; (3) to recover damages by reason of defendant's fraudulent breach of the contract; and (4) to recover the unpaid balance owing to plaintiff by the defendant pursuant to the said contract for property delivered thereunder by plaintiff to defendant, the defendant appeals from an order of the Supreme Court, Kings County, dated August 24, 1961, denying in all respects its motion to dismiss the complaint and each cause of action therein, or staying the action pending arbitration of the controversy between the parties, or consolidating this action with an arbitration proceeding between the parties in the Supreme Court, New York County. Order modified by striking out the decretal paragraph, and by substituting therefor a paragraph providing: (1) that the motion to dismiss the complaint is denied; (2) that the motion to consolidate the action is denied; and (3) that the motion to stay the action pending arbitration is granted as to the third and fourth causes of action only, and denied as to the first and second causes of action. As so modified, order affirmed, without costs. Defendant's time to answer the complaint with respect to the first and second causes of action is extended until 20 days after entry of the order hereon. Since the third and fourth causes of action are based upon the contract, it is our opinion: (a) that the prosecution of such causes should be stayed pending arbitration of the issues and disputes arising from the contract; and (b) that the first and second causes of action should be tried prior to the arbitration, as such causes involve the issue of fraud in the inducement of the contract (cf. Matter of Big W. Constr. Corp. [ Horowitz], 278 App. Div. 977). Nolan, P.J., Ughetta, Christ, Pette and Brennan, JJ., concur.