Opinion
No. 2014–0685.
07-13-2016
TROMBLEY PAINTING CORPORATION, Plaintiff, v. GLOBAL INDUSTRIAL SERVICES, INC., Defendant.
Law Office of James M. Brooks, Lake Placid (James M. Brooks of counsel), for plaintiff. Briggs Norfolk LLP, Lake Placid (Matthew D. Norfolk of counsel), for defendant.
Law Office of James M. Brooks, Lake Placid (James M. Brooks of counsel), for plaintiff.
Briggs Norfolk LLP, Lake Placid (Matthew D. Norfolk of counsel), for defendant.
ROBERT J. MULLER, J.
The facts of this matter are set forth more fully in the Decision and Order of this Court dated February 27, 2015. As relevant here, the parties entered into an “Agreement for Services” (hereinafter the Agreement) in June 2005 whereby plaintiff was to provide janitorial, lawn care and snow removal services to defendant at certain specified locations in Clinton, Jefferson, Essex, Franklin, St. Lawrence and Warren Counties. Defendant subsequently terminated the Agreement, effective May 31, 2008. On June 11, 2008 and June 12, 2008, plaintiff sent defendant two separate invoices in the amounts of $27,819.17 and $12,691.00, respectively, both of which pertained to work done prior to termination of the Agreement. These invoices went unpaid, as the result of which plaintiff commenced this action to recover the amounts due and owing. Presently before the Court is defendant's motion to dismiss the complaint for failure to state a cause of action (see CPLR 3211[a][7] ).
“On a motion to dismiss for failure to state a cause of action, [the Court] must afford the pleadings a liberal construction, accept the facts alleged therein as true, accord the plaintiff the benefit of every possible inference and determine whether the facts alleged fit within any cognizable legal theory' “ (Nelson v. Capital Cardiology Assoc., P.C., 97 AD3d 1072, 1073 [2012], quoting Matter of Upstate Land & Props., LLC v. Town of Bethel, 74 AD3d 1450, 1452 [2010] ).
Here, defendant contends that it is entitled to dismissal of the complaint because plaintiff failed to comply with the dispute resolution provision in the Agreement. This provision states as follows:
“The parties desire to resolve certain disputes, controversies and claims arising out of this Agreement without litigation. Accordingly, except in the case of (i) a dispute, controversy or claim relating to a breach or alleged breach on the part of either party of the provisions of [s]ection 11, CONFIDENTIAL INFORMATION,' (ii) a suit, action or proceeding to compel [plaintiff] to comply with its obligations to indemnify [defendant] and [its c]ustomers pursuant to [s]ection 18, INDEMNIFICATION' ..., or (iii) a suit, action or proceeding to compel either party to comply with the dispute resolution procedures set forth in this [s]ection 26, DISPUTE RESOLUTION,' the parties agree to use the following alternative procedure as their sole remedy with respect to any dispute, controversy or claim arising out of or relating to this Agreement or its breach....
“At the written request of a party, each party shall appoint a knowledgeable, responsible representative to meet and negotiate in good faith to resolve any [d]ispute arising under this Agreement. The parties intend that these negotiations be conducted by nonlawyer, business representatives. The discussions shall be left to the discretion of the representatives. Upon agreement, the representatives may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations.....
“If the negotiations do not resolve the [d]ispute within sixty (60) days of the initial written request, the parties may pursue their available remedies in law or equity.”
It is by now well established that “this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties' “ (Matter of Smith Barney Shearson v. Sacharow, 91 N.Y.2d 39, 49 [1997], quoting Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95 [1975] ; accord Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d 59, 66 [2007] ). “Therefore, New York courts interfere as little as possible with the freedom of consenting parties to submit disputes to arbitration' “ (Matter of Smith Barney Shearson v. Sacharow, 91 N.Y.2d at 49–50, quoting Matter of 166 Mamaroneck Ave. Corp. v. 151 E. Post Rd. Corp., 78 N.Y.2d 88, 93 [1991] [internal quotation marks and citations omitted]; accord Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d at 66 ).
With that said, “[l]ike contract rights generally, a right to arbitration may be modified, waived or abandoned' “ (Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d 59, 66 [2007], quoting Sherrill v. Grayco Bldrs., 64 N.Y.2d 261, 272 [1985] ). “Accordingly, a litigant may not compel arbitration when its use of the courts is clearly inconsistent with [its] later claim that the parties were obligated to settle their differences by arbitration' “ (Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d at 66, quoting Flores v. Lower E. Side Serv. Ctr., Inc., 4 NY3d 363, 372 [2005] [citations and internal quotation marks omitted] ). As the Court of Appeals has explained,
“[t]he crucial question ... is what degree of participation by the defendant in the action will create a waiver of a right to stay the action. In the absence of unreasonable delay, so long as the defendant's actions are consistent with an assertion of the right to arbitrate, there is no waiver. However, where the defendant's participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case, his actions are then inconsistent with a later claim that only the arbitral forum is satisfactory' “ (Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d at 66–67, quoting De Sapio v. Kohlmeyer, 35 N.Y.2d 402, 405 [1974] [citation omitted]; see Matter of Zimmerman (Cohen), 236 N.Y. 15, 19 [1923] ).
The instant action was commenced by the filing of a summons and complaint on May 15, 2014. On June 18, 2014, defendant served its verified answer, together with a motion to change venue to Nassau County. This motion—based upon the forum selection clause in the Agreement—was denied by Decision and Order dated February 27, 2015. Counsel for the parties thereafter appeared for a preliminary conference on June 5, 2015 and agreed upon a discovery schedule. In accordance with this schedule, defendant served its discovery demands and demand for a bill of particulars on July 8, 2015. Defendant then served its deposition notice on July 29, 2015, setting a deposition date of August 21, 2015. On August 7, 2015, plaintiff served its discovery responses and bill of particulars, together with a cross-notice to take depositions. Defendant subsequently canceled the depositions on August 14, 2015 and filed this motion to dismiss on August 17, 2015, approximately 15 months after commencement of the action.
Under the circumstances, the Court finds that defendant has waived its right to compel arbitration under the dispute resolution provision of the Agreement. Defendant clearly reviewed the Agreement upon commencement of the action and—rather than proceeding with a motion to dismiss based upon plaintiff's failure to comply with the dispute resolution provision—defendant moved to change venue under the forum selection clause. Then, when that motion was denied, defendant participated in a preliminary conference, exchanged discovery and established a date for depositions. The instant motion was not filed until one week prior to the scheduled date of depositions. These actions are not consistent with an assertion of the right to arbitrate. Rather, defendant's participation in this litigation manifests its affirmative acceptance of the judicial forum (see Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d at 67 ; Masson v. Wiggins & Masson, LLP, 110 AD3d 1402, 1406 ; see also Matter of Waldron v. Mosdos Bobov, Inc., 72 AD3d 983, 983–984 [2010], lv denied 15 NY3d 715 [2010] ).
Inasmuch as defendant contends that the right to arbitrate cannot be waived as a result of the non-waiver provision in the Agreement, the Court finds this contention to be without merit (see Diagnostic Mobile Imaging v. Salamanca Dist. Hosp., 191 A.D.2d 974, 975 [1993] ). Indeed, defendant has failed to cite any case law whatsoever in support of this contention.
Based upon the foregoing, defendant's motion to dismiss is denied in its entirety.
Counsel for the parties are hereby directed to appear for a status conference on August 19, 2016 at 9:30 A.M. at the Clinton County Courthouse in Plattsburgh, New York.
Therefore, having considered the Affirmation of Matthew D. Norfolk, Esq. with exhibits attached thereto, dated August 14, 2015; Memorandum of Law of Matthew D. Norfolk, Esq., dated August 17, 2015; Affirmation of James M. Brooks, Esq. with exhibits attached thereto, dated September 11, 2015; Affidavit of Patricia Whalen with exhibits attached thereto, sworn to September 10, 2015; Memorandum of Law of James M. Brooks, Esq., dated September 11, 2015; Reply Affirmation of Matthew D. Norfolk, Esq. with exhibit attached thereto, dated September 14, 2015; Memorandum of Law of James M. Brooks, Esq., dated February 19, 2016; and Memorandum of Law of Matthew D. Norfolk, Esq., dated March 7, 2016, and oral argument having been heard on February 2, 2016 with Matthew D. Norfolk, Esq. appearing in support of the motion and Allison M. McGahay, Esq. appearing in opposition thereto, it is hereby
ORDERED that defendant's motion to dismiss is denied in its entirety; and it is further
ORDERED that counsel for the parties shall appear for a status conference on August 19, 2016 at 9:30 A.M. at the Clinton County Courthouse in Plattsburgh, New York.
The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated August 17, 2015 and the submissions enumerated above. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon defendant in accordance with CPLR 5513.