Opinion
2012-12-6
SSM REALTY GROUP, LLC, Plaintiff–Appellant, v. 20 SHERMAN ASSOCIATES, LLC, et al., Defendants–Respondents.
Fred L. Seeman, New York, for appellant. Altschul & Altschul, New York (Mark M. Altschul of counsel), for respondents.
Fred L. Seeman, New York, for appellant. Altschul & Altschul, New York (Mark M. Altschul of counsel), for respondents.
GONZALEZ, P.J., SWEENY, RICHTER, ROMÁN, CLARK, JJ.
Order, Supreme Court, New York County (Carol R. Edmead, J.), entered March 5, 2012, which, to the extent appealed from, denied plaintiff's motion for summary judgment striking defendants' eighth, ninth and tenth affirmative defenses and declaring that Article 9.5 of defendant 20 Sherman Associates, LLC's Operating Agreement is null and void and that plaintiff is the manager of the LLC, unanimously affirmed, with costs.
The Operating Agreement states, “Any controversy or claim arising out of or relating to this Agreement shall be finally resolved by arbitration.” Contrary to plaintiff's claim, defendants did not waive the right to arbitrate by merely serving an answer and opposing plaintiff's motion ( see e.g. Stark v. Molod Spitz DeSantis & Stark, P.C., 9 N.Y.3d 59, 67, 845 N.Y.S.2d 217, 876 N.E.2d 903 [2007];Braun Equip. Co. v. Borelli Assoc., 220 A.D.2d 311, 632 N.Y.S.2d 550 [1st Dept.1995];Two Cent. Tower Food v. Pelligrino, 212 A.D.2d 441, 442, 622 N.Y.S.2d 701 [1st Dept.1995] ).
Plaintiff does not contend that public policy precludes arbitration of whether it is the manager of the LLC; hence, at a minimum, the second cause of action should be arbitrated. The first cause of action (seeking a declaration that Article 9.5 of the Operating Agreement is null and void) must be arbitrated because it “go[es] to the validity of the substantive provisions of [the] contract” ( see Two Cent. Tower, 212 A.D.2d at 442, 622 N.Y.S.2d 701). The issue whether an anti-dissolution provision in an LLC's operating agreement violates public policy does not fall into the categories of matters that cannot be arbitrated ( see generally Maross Constr. v. Central N.Y. Regional Transp. Auth., 66 N.Y.2d 341, 345–346, 497 N.Y.S.2d 321, 488 N.E.2d 67 [1985];Matter of Sprinzen [Nomberg], 46 N.Y.2d 623, 630–631, 415 N.Y.S.2d 974, 389 N.E.2d 456 [1979];Merrill Lynch, Pierce, Fenner & Smith v. Benjamin, 1 A.D.3d 39, 44, 766 N.Y.S.2d 1 [1st Dept.2003] ).
Having correctly declined to strike defendants' arbitration-related affirmative defenses and having found that the arbitration clause in the Operating Agreement applies to the instant dispute, the motion court should not have discussed the merits of the dispute after declining to make the declarations sought by plaintiff ( see Sprinzen, 46 N.Y.2d at 632, 415 N.Y.S.2d 974, 389 N.E.2d 456;Merrill Lynch, 1 A.D.3d at 43, 766 N.Y.S.2d 1;CPLR 7501).