Opinion
27286/10
09-12-2011
In the Matter of the Arbitration of Certain Controversies Between Edward Wydra, MARTIN WYDRA, ARDYW LLC a/k/a ARDYW, DAHILL LLC, HEWES LLC, 250 EAST 30TH ST. REALTY CORP. a/k/a 250 EAST 30TH STREET REALTY CORP., 2M DEVELOPMENT LLC, SOUTHWOODS DRIVE ESTATES LLC, SOUTHWOODS OWNERS LLC a/k/a SOUTHWOODS LLC, 4 PAN a/k/a PAN PLACE LLC, J & H REALTY LLC, JOHAR EQUITY LLC and MEW EQUITY LLC, Petitioners, v. Mendel Brach, MOSHE ROTH a/k/a MOZES ROTH, NEW HEWES TENANT LLC, HEWES STANDING LLC, HEWES STANDING LLC and LODGE ROAD LLC, a joint venture, HEWES STANDING 2 LLC, HEWES VIEWS LLC, 4217-4223 NU, LLC a/k/a NEW UTRECHT LLC, CIMARRON LAKE ESTATES LLC, QUALITY ESTATES, LLC, FRANSKILL DEVELOPMENT LLC, FLUSHING PLACE INC. a/k/a FLUSHING PLACE, L.L.C., BEDFORD PLACE, INC. a/k/a BEDFORD PLACE L.L.C., 405 BEDFORD AVENUE DEVELOPMENT CORP., HEWES VIEWS INC., 222 SKILLMAN LLC, 222 SKILLMAN 1 LLC, 652 PARK LLC, 420 MARCY LLC a/k/a 420 MARCY AVENUE, LLC, FRANKWINK PROPERTIES, LLC, 189 SPENCER LLC, 416 BEDFORD AVENUE, L.L.C. a/k/a 401 BEDFORD LLC and 519 MARCY LLC a/k/a 519 MARCY AVENUE, LLC, Respondents.
Petitioners were represented by Perry Balagur, Esq. Respondents were represented by J. Michael Gottesman, Esq.
Petitioners were represented by Perry Balagur, Esq. Respondents were represented by J. Michael Gottesman, Esq.
, J.
Recitation in accordance with CPLR 2219(a) of the papers submitted on the Verified Petition of Edward Wydra et al. for a judgment, pursuant to CPLR 7510, confirming an arbitration award; and the "cross petition" of Mendel Brach for an "order," pursuant to CPLR 7511 (b), vacating the arbitration award:
-Notice of Petition
Verified Petition
Exhibits A-C
-Notice of Cross Petition to Vacate Arbitration Award
Respondent Moshe Roth's Affirmation in Support of Cross Petition to Vacate the Arbitration Award and in Opposition to Petition to Confirm Award
Respondent Mendel Brach's Affirmation in Support of Cross Petition to Vacate the Arbitration Award
Exhibits A-M
-Memorandum of Law in Support of Motion to Confirm Arbitration Award and in Opposition to Motion to Vacate Arbitration Award
-Respondents' Memorandum of Law in Opposition to the Petition to Confirm the Award and in Support of the Cross Petition to Vacate the Award
-Affirmation of Perry Balagur
Exhibits A-AA
-Reply Memorandum of Law in Support of Motion to Confirm Arbitration Award and in Opposition to Motion to Vacate Arbitration Award
-Reply Affirmation of Respondent Mendel Brach
Exhibits A-D
-Respondents' Reply Memorandum of Law in Opposition to the Petition to Confirm the Award and in Support of the Cross Petition to Vacate the Award
-Supplemental Affirmation of Perry Balagur
-Respondents' Attorney's Affirmation
The Verified Petition seeks a judgment, pursuant to CPLR 7510, confirming an arbitration award of The Beth Din Kollel HaRabbonim Rabbinical Court, designated Decision of the Bais Din and "dated as of September 22, 2010" according to the Petition (see ¶ 40.) The arbitration award includes a monetary award of $15,850,145.71. A so-called "cross petition" seeks to vacate the arbitration award pursuant to CPLR 7511 (b).
The Verified Petition is made by two individuals, Edward Wydra and Martin Wydra, together with at least 10 limited liability companies and one corporation (the "Petitioner Entities.") The named Respondents are two individuals, Mendel Brach and Moshe Roth a/k/a Mozes Roth, together with 19 limited liability companies and two corporations (the "Respondent Entities.") Neither the Petition nor the "cross petition" initially provided any information about any of the Petitioner Entities or any of the Respondent Entities, except as to juridical status and business address.
Moreover, neither the Verified Petition nor the so-called "cross petition," nor any document attached in support, contained a description of the relationship(s) between or among the individual Petitioners and Respondents and the 31 Petitioner and Respondent Entities. There was no description of the disputes between or among them, or of the proceedings conducted, or of the provisions of the Decision - - most importantly, what obligation(s) and default(s) led to the award of $15,850,145.71 and how it was computed.
Most importantly, as initially submitted, the Verified Petition did not prove the arbitration agreement that yielded the arbitration award that Petitioners seek to confirm. According to the Verified Petition (¶ 37), the parties agreed to arbitration in an Agreement dated as of October 29, 2007 among petitioners Martin Wydra, Edward Wydra, and ARDYW and respondents Mendel Brach and Moshe Roth a/k/a Mozes Roth (the "Master Agreement.") The Master Agreement includes within its General Provisions an agreement among the parties to arbitrate "any dispute that may arise in connection with this Agreement" before the Beth Din (see id. ¶ 12.) Other than ARDYW, none of the Petitioner Entities or Respondent Entities is a party to the Agreement, and none was shown to have otherwise agreed to arbitrate, or to benefit from or be bound by, the arbitration award that Petitioners seek confirmed.
Moreover, the Decision of the Bais Din states,"the parties having submitted by written arbitration agreement (signed Feb. 26, 2009) that the Bais Din of Kollel Harabonim adjudicate all disputes, including all claims and counter claims [sic] between them" (the "Contract of Arbitration".) The arbitration agreement pursuant to which the arbitration proceeded, and which as described appears broader than the provision in the Master Agreement, was not included with the Verified Petition or even mentioned. With the exception of Dahill LLC and Hewes LLC, none of the Petitioner Entities and none of the Respondent Entities is named anywhere in the Decision of the Bais Din.
Particularly because the ownership of numerous parcels of real property is at issue, the Court deemed it inadvisable, if even possible, to render any determination based upon the papers then before it. In an Interim Decision and Order dated May 20, 2011, the Court ordered supplemental submissions by a specified date.
Petitioners and Respondents have each submitted a supplemental affirmation of counsel. The Supplemental Affirmation of Perry Balagur, Petitioners' counsel, is treated as an amended petition, and Respondents' Attorney's Affirmation is treated as an amended answer. (See CPLR 7502 [a], 402.)
First, despite the so-called "cross petition," there is only one proceeding before this Court. The "cross petition" does not carry its own index number, and was not served in the manner required to commence a special proceeding (see CPLR 403 [c].) It is not necessary that a respondent in an Article 75 proceeding for confirmation of an arbitration award commence a separate proceeding, or even make an affirmative application, to vacate or modify the award; any alleged grounds for vacatur or modification of the award may be interposed in the respondent's answer to the petition. (See David D. Siegel, New York Practice, §601 at 1094 [5th Ed].)
The Petitioner Entities are ARDYW LLC a/k/a ARDYW ("ARDYW"); Dahill LLC ("Dahill"); Hewes LLC ("Hewes"); 250 East 30th St. Realty Corp. a/k/a 250 East 30th Street Realty Corp. ("250 East 30th Realty"); 2M Development LLC ("2M Development"); Southwoods Drive Estates LLC ("Southwoods Drive"); Southwoods Owners LLC a/k/a Southwoods LLC ("Southwoods Owners"); 4 Pan LLC a/k/a Pan Place LLC ("4 Pan"); J & H Realty LLC ("J & H Realty"); Johar Equity LLC ("Johar Equity"); and Mew Equity LLC ("Mew Equity".) According to Petitioners' counsel, all of the Petitioner Entities are owned by both petitioner Edward Wydra and petitioner Martin Wydra.
The Respondent Entities are New Hewes Tenant LLC ("Hewes Tenant"); Hewes Standing LLC (" Hewes Standing"); Hewes Standing LLC and Lodge Road LLC, a joint venture ("HL Joint Venture"); Hewes Standing 2 LLC ("Hewes Standing 2"); Hewes Views LLC ("Hewes Views"); 4217-4223 NU a/k/a New Utrecht LLC ("4217-4223 NU"); Cimarron Lake Estates LLC ("Cimarron Lake"); Quality Estates, LLC ("Quality Estates"); Frankskill Development LLC ("Frankskill Development"); Flushing Place Inc. a/k/a Flushing Place, LLC ("Flushing Place"); Bedford Place, Inc. a/k/a Bedford Place, LLC ("Bedford Place"); 405 Bedford Avenue Development Corp. ("405 Bedford"); Hewes Views Inc. ("Views Inc."); 222 Skillman LLC ("222 Skillman"); 222 Skillman 1 LLC ("222 Skillman 1"); 625 Park LLC ("625 Park"); 420 Marcy LLC a/k/a 420 Marcy Avenue, LLC ("420 Marcy"); Frankwink Properties, LLC (" Frankwink Properties"); 189 Spencer LLC ("189 Spencer"); 416 Bedford Avenue, L.L.C. a/k/a 401 Bedford LLC ("416 Bedford"); and 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC ("519 Marcy".)
According to Petitioners' counsel, most of the Respondent Entities are or were owned by both respondent Mendel Brach and respondent Moshe Roth a/k/a Mozes Roth; 4217-4223 NU is owned only by Brach; Hewes Standing and Hewes Standing 2 are owned only by Roth. Again according to Petitioners' counsel, Hewes Standing 2 was "unformed"; Views, Inc., 405 Bedford, Flushing Place, and Bedford Place have been dissolved; and 519 Marcy was merged into 222 Skillman, although 519 Marcy is said to be owned by non-parties B & R Partners LLC and Shlomo USA LLC, whereas 222 Skillman is said to be owned by Brach and Roth. No information is provided as to status or ownership of Lodge Road LLC.
This recitation reveals a business practice, engaged in by both the individual Petitioners, Edward Wydra and Martin Wydra, and the individual Respondents, Mendel Brach and Moshe Roth, to use separate juridical entities, primarily limited liability companies, to hold title to various parcels of real property. Also, as will appear, the separate juridical entities and the real property owned by each were pressed into service by the individual Petitioners and Respondents to serve the purposes of broader business transactions or relationships.
As stated previously, the only parties to the Master Agreement, and its arbitration clause, are Martin Wydra, Edward Wydra, and ARDYW among Petitioners, and Mendel Brach and Moshe Roth among Respondents. They agreed to arbitrate before the Beth Din "any dispute that may arise in connection with this Agreement" (see Master Agreement ¶ 12.) At the instance of Martin Wydra, and explicitly pursuant to the arbitration provision in the Master Agreement, Mendel Brach and Moshe Roth were summoned before the Beth Din specified in the Agreement as the arbitration forum (variously also referred to as the "Beth Din" and "Bais Din".)
At the first scheduled appearance before the Beth Din on February 26, 2009, those appearing were presented with a Contract of Arbitration, known as a Shtar Bayrurin in Jewish Law, which authorized the tribunal, comprised of three rabbis, "to adjudicate all disputes, including all claims and counter claims [sic] between us; according to the [Rabbinical] Court's understanding of Torah Law and/or to impose a compromise based on the Court's understanding concerning what is just and proper." As to Petitioners here, the Contract of Arbitration was signed by Martin Wydra twice, on his own behalf and "on behalf of all LLC's mentioned in the Agreement dated 10/29/07 over which I have the power to sign." Edward Wydra did not sign the Contract of Arbitration.
As to Respondents here, Moshe Roth appeared by his Rabbinic Advocate, Rabbi Ben Zion Mandel, who signed the Contract of Arbitration on behalf of Roth. Respondents maintain that Rabbi Mandel's signature on behalf of Roth was limited to Roth's individual capacity, and not for any LLC's "mentioned" in the Master Agreement for which Roth had the power to sign, but that is not evident from the document itself. Mendel Brach acknowledges having signed the Contract of Arbitration "on behalf of all LLC's mentioned in the Agreement dated 10/29/07 over which I have the power to sign," but maintains that, after the document was returned to the tribunal, a second, forged signature was added with the words "on my own behalf and." In any event, as will appear more fully below, Respondents contend that the signatures of Rabbi Mandel and Mendel Brach were coerced.
The Decision of the Bais Din, rendered by a tribunal consisting of Rabbi Chaim Malinowitz, Rabbi Refael Armon, and Rabbi Shlome Zalman Kaufman, designates the "Plaintiffs" in the caption as "Edward Wydra and/or Martin Wydra, each on his own behalf and on behalf of all LLC's mentioned in the Master Agreement dated 10/29/07 over which Martin Wydra has power to sign," and designates "Defendants" in the caption as "Mendel Brach and/or Moshe Roth each on his own behalf and on behalf of all LLC's mentioned in the Master Agreement dated 10/29/07 over which each have power to sign." A first "Whereas" clause, however, states, "Mr. Edward Wydra and/or Mr. Martin Wydra (hereinafter referred to as Plaintiffs') and Mr. Mendel Brach & Mr. Moshe Roth (hereinafter referred to as Defendants') having appeared . . . regarding all issues between them"; and a second "Whereas" clause states, "the parties having submitted by written arbitration agreement (signed February 26, 2009) that the Bais Din . . . adjudicate all disputes, including all claims and counterclaims between them, . . . and the parties having obligated themselves to carry out the Rabbinical Court's decision without change or delay."
Putting aside for the moment any issue about enforcement of the award, the Decision of the Bais Din appears to recognize that petitioner Edward Wydra did not sign the Contract of Arbitration, and that, therefore, any LLC "over which" petitioner Martin Wydra does not have "power to sign" is not a party to the arbitration. Nowhere in the Decision is there an identification of the "LLC's mentioned in the Master Agreement . . . over which Martin Wydra has power to sign," or the "LLC's mentioned in the Master Agreement . . . over which [Mendel Brach and/or Moshe Roth] each have power to sign." The Decision also makes provision with respect to "any of the properties mentioned in the 10/29/07 agreement" and "any property or entity referred to in the 10/29/07 Agreement."
The operative language of the Decision of the Bais Din is found in 18 numbered paragraphs, 13 of which consist of a single sentence. Among the provisions, "Each of the Defendants are [sic] found to be in material default concerning multiple issues including matters pertaining to the 10/29/07 Agreement," and "the total sum due Defendants to Plaintiffs is $15,850,145.71." In a communication dated October 7, 2010, Rabbi S.Z. Kaufman "on behalf of the Bais Din," states, "The Bais Din finds Mr. Brach to be in default of all of the Mortgages and they are therefore currently due," and, "The Bais Din does not want to disclose the formula/method it used to arrive at the dollar award."
Petitioners' counsel has described extensive, complex, and overlapping business transactions and relationships between and among the individual Petitioners, individual Respondents, Petitioner Entities, and Respondent Entities, reflected in more than 38 documents, including agreements, notes, mortgages, and deeds. (See Supplemental Affirmation of Perry Balagur ["Petitioners' Supplemental Submission"] and Exhibits.) Extensive description and review of this history is not necessary, however, to determine that the Decision of the Bais Din, and particularly its monetary award, is not based only on the Master Agreement.
Prior to execution of the Master Agreement, petitioner Johar Equity loaned $750,000 to respondent Roth and several of the Respondent Entities, and petitioner Mew Equity made three separate loans, totally $5,400,000, to respondents Brach, Roth, and several of the Respondent Entities (collectively, "Four Loans.") Initially, and by reason of one or more Mortgage Spreader Agreements and Mortgage Modification, Extension and Spreader Agreements, repayment of the loans was secured by mortgages on real property located in Brooklyn and in Monticello, Sullivan County (collectively, "Four Loans Mortgages.") The mortgaged properties in Brooklyn include one or more parcels (i.e., some condominium units) located at 405 Bedford Avenue, 414-416 Bedford Avenue, 727 Bedford Avenue, 169-173 Franklin Avenue, 175 Franklin Avenue, 322 Hewes Street, 460 Flushing Avenue, 154 Skillman Avenue, 222 Skillman Avenue, 189 Spencer Street, 420 Marcy Avenue, 519 Marcy Avenue, and 1650 East 52nd Street.
As to the Four Loans and Four Loans Mortgages, the Court would note at this point that most, but not all, of the Respondent Entities are represented as borrowers or mortgagors on these transactions. (The Respondent Entities that are not included are Hewes Tenant, Hewes Standing, Hewes Standing 2, Lodge Road, HL Joint Venture, 4217-4223 NU, 222 Skillman 1, and 625 Park.) Also, the borrowers on the $2,000,000 loan include Solomon Reichman and Sara Roth, non-parties, and the security included real property located at 426 South 5th Street, Brooklyn, which does not appear to be owned by any of the Respondents.
In addition to the Four Loans totaling $6,150,000, petitioners Edward Wydra, Martin Wydra, ARDYW, and Mew Equity made eight loans pursuant to the Master Agreement to or on behalf of one or more of Respondents. These loans, in the separate amounts of $3,400,000 $500,000, $977,426.90, $1,300,000, $536,957.37, $93,556.23, $44,500, and $19,748.91, total $6,872,239.41 (collectively, the "Master Agreement Loans.")
According to Petitioners' counsel, there was an unpaid principal balance due one or more of Petitioners of $13,022,239.41, i.e., the total principal amount of the Four Loans and the Master Agreement Loans. It seems quite clear, therefore, and the parties appear to assume, that the monetary award of $15,850,145.71 included in the Decision of Bais Din was based upon consideration of claims and disputes with respect to the Four Loans, as well as the Master Agreement Loans.
The greater significance, of course, is that to the extent, if at all, the parties' agreement to arbitrate was limited to the Master Agreement Loans and other disputes "that may arise in connection with [that] Agreement" (see Master Agreement ¶ 12), and did not extend to any claim or dispute between or among the parties with respect to the Four Loans or Four Loans Mortgages, or other "disputes, including all claims and counter claims [sic] between them" (see Contract of Arbitration), the award made in the Decision of Bais Din may have exceeded the scope of the agreement to arbitrate.
In the first instance at least, CPLR Article 75 establishes that mechanisms for court confirmation, vacatur, modification, and enforcement of arbitration awards. "The court shall confirm an award upon application of a party . . . , unless the award is vacated or modified upon a ground specified in section 7511." (CPLR 7510.) "A judgment shall be entered upon the confirmation of an award." (CPLR 7514 [a].)
CPLR 7511 establishes different grounds for vacating an award depending upon whether or not the party seeking vacatur "participated in the arbitration or was served with an intention to arbitrate." (See CPLR 7511 [b] [1], [b] [2].) The ground that "a valid agreement to arbitrate was not made" is only available where the party seeking vacatur "neither participated in the arbitration nor was served with a notice of intention to arbitrate." (See CPLR 7511 [b] [2] [ii]; see also CPLR 7503 [b] [Application to stay arbitration].) However, whether or not the party participated in the arbitration, an award "shall be vacated . . . if the court finds that the rights of [the] party were prejudiced by . . . 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." (See CPLR 7511 [b] [1] [iii], [b] [2] [ i].)
Perhaps because respondents Mendel Brach and Moshe Roth participated in the Beth Din proceedings, at least in some capacity, Respondents seek to vacate the award on the ground that the arbitrators exceeded their authority by making an award that covered Respondent Entities that were not signatories to the Master Agreement, and that covered Brach and Mendel in their individual capacities on claims not connected to the Master Agreement. But as Respondents' caselaw citations demonstrate (see Respondents' Attorney's Affirmation ["Respondents' Supplemental Submission"] ¶¶ 91, 92), Respondents' contention is essentially that "a valid agreement to arbitrate was not made" (see CPLR 7511 [b] [2] [i].)
"A party to an agreement may not be compelled to arbitrate its dispute with another unless the evidence establishes the parties' clear, explicit and unequivocal agreement to arbitrate." (See Matter of Jalas v Halperin, 85 AD3d 1178, 1182 [2d Dept 2011] [internal quotation marks and citations omitted]; see also Matter of Fiveco Inc.. v Haber 11 NY3d 140, 144 [2008].) There is, however, a "bright line rule" that "once a party participates in an arbitration proceeding, without availing itself of all reasonable judicial remedies, it should not be allowed thereafter to upset the remedy emanating from that alternative dispute resolution forum." (See Matter of Commerce & Indus. Ins. Co. v Nester, 90 NY2d 255, 262 [1997].)
Specifically, "a party seeking to avoid arbitration on the ground of no agreement to arbitrate can raise such objection only when it has not participated in the arbitration." (See id. at 263; see also Matter of Jandrew v County of Courtland, 84 AD3d 1616, 1618 [3d Dept 2011]; Matter of Laurie v Sobus, 289 AD2d 578, 579 [2d Dept 2001]; Matter of County of Suffolk v Faculty Assn. of Suffolk County Community Coll., 247 AD2d 472, 472 [2d Dept 1998].) Respondents do not contend that an application to stay arbitration was not available to them. (See CPLR 7503 [b]; Matter of Silverman [Benmor Coats], 61 NY2d 299, 309 [1984]; Zachariou v Manios, 68 AD3d 539, 540 [1st Dept 2009].)
Respondents contend, rather, that they were coerced into signing the Contract of Arbitration, and that they did not voluntarily participate in the arbitration, except to the extent that they were signatories to the Master Agreement (and none of the Respondents Entities were signatories); or, in the case of the individual respondents Brach and Roth, except to the extent that the arbitration addressed claims and disputes connected to the Master Agreement. In an affirmation submitted to the Court, Mendel Brach asserts that he and Moshe Roth's Rabbinic Advocate, Rabbi Ben Zion Mandel, were ordered by the Rabbinic Court to sign the Contract of Arbitration, i.e., the Shtar Bayrurin, and they objected to signing any new document. And further:
After we made that objection, the Rabbinic Judges left the hearing room to deliberate elsewhere. After a while, they came back into the hearing room and stated that they had power over the case and the parties under the Master Agreement and that they were issuing a ruling or order that I must sign the additional document or documents. They made that an order of the Rabbinic Court. They said that I had no right not to sign the document. They also stated that if I continued to refuse to sign the document, they could and would take the case under the Master Agreement alone and would treat me as one who refuses to comply with the orders of Rabbinic Judges (referred to as a Mesarev' or one who refuses), that they would immediately issue a contempt citation (known as a Siruv') against me and that that would affect the arbitration.
A Siruv or a contempt citation wold have put me in an untenable position in the arbitration. Under Jewish Law, one who is the subject of a Siruv is treated as an outcast from the community, is shunned by other members of the Orthodox Jewish Community and his believability is undermined. If they had issued a Siruv against me, it would have been difficult for me even to have participated at the Rabbinic proceeding. By threatening to treat me as a Mesarev' and to issue a Siruv,' which they would take into account in the arbitration, the Rabbinic Judges made it crystal clear that we would not have a chance of prevailing if we refused to sign the Shtar Bayrurin. I did not believe that we had a chance of receiving a fair hearing and a fair and balanced award if I refused to sign the Shtar Bayrurin. I believe that I ultimately yielded after they repeatedly assured me that Shtar Bayrurin was just a formality for the internal purposes of the Rabbinic Court which would not be furnished to the litigants. I signed what was put in front of me. I do not have a copy of it I do not know what it provides.
...
The Wydras presented personal claims to the Kollel Harabbonim which did not come within the Master Agreement. I objected to the Rabbinic Court hearing such claims. The Rabbinic Court ruled that it was going to hear all claims and all disputes between the parties and resolve them. We objected to what the Rabbinic Court said it was going to do. Once the Rabbinic Court announced its position, there was little else that we could do about it." (Respondent Mendel Brach's Affirmation in Support of Cross Petition to Vacate the Arbitration Award and in Opposition to Petition to Confirm Award ¶¶ 8, 9, 12.)
Rabbi Mandel, Roth's Rabbinic Advocate, also submitted an affirmation that essentially confirms Brach's account, and adds:
"After Brach signed the document, the Rabbinic Judges directed me to sign on behalf of Roth. I objected on the ground that Roth was not present, to which they repeated what they had previously said, namely, that this was just confirming their power and that it was not adding or subtracting anything and that I was required to comply with their ruling. I did not wish to risk issuance of a Siruv against Roth or myself and I signed the document on behalf of Roth, believing what the Rabbinic Judges said, specifically, that the document was simply confirming their power under the October 29, 2007 Agreement." (Affirmation of Rabbi Ben Zion Mandel ["Mandel Affirmation"] ¶ 10.)
Petitioner Martin Wydra has submitted an affirmation that neither confirms nor denies the accounts of Mandel Brach and Rabbi Mandel with respect to the siruv, but does confirm that the Beth Din "advised the parties that they wold not be given a copy of the 2009 Arbitration Contract until the Beth Din's Award was delivered." (See Affirmation of Martin Wydra ¶¶ 35-39.)
The Court notes that the affirmations submitted by persons not described in CPLR 2106 are affirmed under penalty of perjury by the affiants for religious reasons. (See Jacov K. v United Lubavich, Inc., 30 Misc 3d 1213 [A], 2011 NY Slip Op 50060 [U], * 2- *3 [Sup Ct, Kings County 2011].)
"The threat' of a siruv, which entails a type of ostracism from the religious community, and which is prescribed as an enforcement mechanism by the religious law to which [each of the individual Respondents presumably] freely adheres, cannot be deemed duress." (See Berg v Berg, 85 AD3d 950, 952 [2d Dept 2011] [quoting Matter of Greenberg v Greenberg, 238 AD2d 420, 421 [2d Dept 1997].) As Respondents correctly point out, here there was the additional pressure that might be expected from a justifiable concern that the refusal to sign the Contract of Arbitration would reflect unfavorably on Respondents as the arbitration proceeded in any event pursuant to the Master Agreement. But, in any event, Respondents' concern necessarily flows from the consequences of the siruv, a religious matter of the type expected and accepted when parties elect Beth Din arbitration.
"A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of his free will." (Austin Instrument v Loral Corp., 29 NY2d 124, 130 [1971].) "[R]epudiation of an agreement on the ground that it was procured by duress requires a showing of both (1) a wrongful threat, and (2) the preclusion of the exercise of free will." (Duane Morris LLP v Astor Holdings Inc., 61 AD3d 418, 418-19 [1st Dept 2009] [quoting Fred Ehrlich, P.C. v Tullo, 274 AD2d 303, 304 (1st Dept 2000)].) "A threat to do that which one has a legal right to do does not constitute duress." (Matter of Garvin, 210 AD2d 332, 333 [2d Dept 1994].)
Respondents make no showing that the Beth Din's demand that the Contract of Arbitration be signed was "wrongful" under Article 75 or other secular law, or that it was "wrongful" for the arbitrators to take account of a refusal to comply with an appropriate demand. Execution of a Shtar Bayrurin is not unknown in beth din practice (see Matter of Meisels v Uhr, 79 NY2d 526, 532 [1992]; Fein v Fein, 160 Misc 2d 760, 763 [Sup Ct, Nassau County 1994]), even when there is a pre-existing agreement to arbitrate (see Matter of Meisels v Uhr, 79 NY2d at 532.) Indeed, it appears that the document may have been required by Jewish law. (See Matter of Mikel [Sharf], 105 Misc 2d 548, 551 [Sup Ct, Kings County 1980], aff'd 85 AD2d 604 [2d Dept 1981].)
That the Contract of Arbitration is not voidable for duress (nor for fraud, unconscionability, or lack of consideration, also alleged by Respondent) does not mean that it binds and benefits all of the Petitioner Entities and all of the Respondent Entities as to all claims and disputes. Here, as will appear, individual Petitioners or Respondents may have participated in the arbitration in an individual capacity, or a representative capacity with respect to one or more of the Entities, or in both capacities, and the Court is not aware of any authority that participation in one capacity precludes a challenge to the existence of an agreement to arbitrate in another capacity. At least in this case, moreover, the best, if not the only, evidence as to the capacity or capacities in which any individual participated is found in the Contract of Arbitration and Decision of the Bais Din. Here, therefore, the question of the party's participation becomes near indistinguishable from any question as to the party's agreement to arbitrate.
In any event, determinations as to the parties that were before the Rabbinic Court are essential to an understanding of the disputes and claims that were resolved by the award, and ultimately as to the meaning and effect of the award.
The most glaring omission from the Contract of Arbitration is any signature for petitioner Edward Wydra. Petitioners submit an Affidavit of Edward Wydra, but he takes no note of it. An Affirmation of Martin Wydra states that he "signed the 2009 Arbitration Contract on behalf of the Petitioners" (¶38), but there is no indication of that in the Contract of Arbitration, and, in any event, no evidence that Martin Wydra was authorized to sign for Edward Wydra (see Matter of Jalas v Halperin, 85 AD3d at 1182.) Petitioners' Supplemental Submission, 93 pages and 378 paragraphs, does not address the issue at all.
On this record, therefore, it does not appear that Edward Wydra is a party to any "written agreement" for arbitration (see CPLR 7501), except the provision in the Master Agreement calling for arbitration of "any dispute that may arise in connection with this Agreement" (Master Agreement ¶ 12.) The Court has noted Petitioners' cursory and conclusory contentions that disputes about the Four Loans and Four Loans Mortgages that preceded the Master Agreement are nonetheless covered by the later Agreement's arbitration clause (see Petitioners' Supplemental Submission ¶¶ 283-285), but finds no citation to any paragraph of the 23 page Master Agreement or further explication, and, in any event, the Contract of Arbitration is broader than the Four Loans, Four Loans Mortgages, and the Master Agreement, in that it covers without limitation "all disputes, including all claims and counter claims [sic]."
Continuing with Petitioners, Martin Wydra signed the Contract of Arbitration twice, once apparently on his own behalf and once "on behalf of all LLC's mentioned in the Agreement dated 10/29/07 over which I have power to sign." There is nothing in the Decision of the Bais Din that identifies the limited liability companies "mentioned in the . . . [Master Agreement] over which [Martin Wydra] [has] power to sign."
As to the "mentioned" limited liability companies, apparently included are Dahill, which owns real property located at 886-894 Dahill Road/4909 19th Avenue, Brooklyn, which is addressed in the Decision of the Bais Din; Hewes, which owns real property located at 426-432 South 5th Street/332 Hewes Street, Brooklyn, which is addressed in the Decision; 2M Development and Southwoods Drive, which own real property located in Monticello, which is addressed in the Decision; and Southwoods Owners. Three other Petitioner Entities, 4 Pan, Johar Equity and Mew Equity, would be included if the limited liability companies "mentioned in the . . . Agreement" include those identified only in one of the Exhibits. J & H Realty is not "mentioned" anywhere, but property located 220-226 East 29th Street, Manhattan, is identified in the Master Agreement, and the Decision addresses "any of the properties mentioned in the 10/29/07 Agreement" (¶ 4) and "any property or entity referred to in the 10/29/07 Agreement" (¶ 10.) 250 East 30th Realty, a corporation and not a limited liability company, is apparently not included, although it is an owner of property in Monticello, and the Decision addresses "Monticello Property/Properties" (¶ 7.)
Beyond that, there is nothing in the Decision of the Bais Din that identifies the limited liability companies "over which" Martin Wydra had "power to sign." Petitioners make no such showing, nor would any such showing in this proceeding appear to be appropriate. The arbitrators are required to know which parties are before them, and specifically here would be required to know "over which" limited liability companies Mr. Wydra had "power to sign," as the arbitrators intended and understood the qualification.
The same, of course, must be said as to Mendel Brach's signature "on behalf of all LLC's mentioned in the agreement dated 10/29/07 over which I have power to sign." As to those "mentioned," although not identified in the Decision of the Bais Din, apparently included are Hewes Tenant, HL Joint Venture, 4217-4223 NU, Bedford Place, 405 Bedford, 416 Bedford; and Cimmaron Lake and Quality Estates, two signatories to the Master Agreement with respect to one specified provision only. If Exhibits qualify, Hewes Views, Franskill Development, Flushing Place, 222 Skillman, 420 Marcy, Frankwink Properties, 189 Spencer, and 519 Marcy would be included. The limited liability companies 221 Skillman 1 and 625 Park would not be included.
Here again, there is nothing in the Decision of the Bais Din that identifies the limited liability companies "over which" Mendel Brach had "power to sign." Two Respondent Entities, Hewes Standing and Hewes Standing 2, which Petitioners assert are owned solely by Moshe Roth, presumably would not be included.
Separate juridical existence is respected in determining the parties to an agreement to arbitrate. (See JMT Bros. Realty, LLC v First Realty Bldrs., Inc., 51 AD3d 453, 455 [1st Dept 2008]; Matter of Metamorphosis Constr. Corp. v Glekel, 247 AD2d 231 [1st Dept 1998]; Matter of Kummerfeld [Sakai], 186 AD2d 90, 90 [1st Dept 1992]; Johnston v Silverman, 167 AD2d 284, 285 [1st Dept 1990].) Petitioners correctly point out that "courts have created an alter ego' exception, compelling the alter ego' of a signatory to arbitrate." (See TNS Holdings v MKI Sec. Corp., 92 NY2d 335, 339 [1998]; see also Glasser v Price, 35 AD2d 98, 101-02 [2d Dept 1970].)
"Akin to piercing the corporate veil to prevent fraud or to achieve equity' . . . , this exception applies as well in determining whether a nonsignatory to an arbitration agreement should be bound by it." (TNS Holdings v MKI Sec. Corp., 92 NY2d at 339 [quoting International Aircraft Trading Co. v Manufacturers Trust Co., 297 NY 285, 292 (1948)].) "Those seeking to pierce a corporate veil of course bear a heavy burden of showing that the corporation was dominated as to the transaction attacked and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences." (Id.) "Evidence of domination alone does not suffice without an additional showing that it led to inequity, fraud or malfeasance." (Id.; see also Matter of Katz v Albert, 82 AD3d 588, 589 [1st Dept 2011]; Williams v Lovell Safety Mgt. Co., LLC, 71 AD3d 671, 671-72 [2d Dept 2010].)
Assuming that an alter ego inquiry is appropriate after the fact in a proceeding to confirm, vacate, or modify an award (see CPLR 4510, 4511), rather that before arbitration in a proceeding to compel or stay the arbitration (see CPLR 7503 [a], [b]), Petitioners have not made a sufficient showing here. The Court has noted Petitioners contention that "Brach and Roth made a practice of creating multiple entities whose names were similar or misleading and of intentionally misrepresenting the correct names of entities which owned an asset being offered as security for" loans. (See Petitioners' Supplemental Submission ¶ 52; see also id. ¶¶ 30, 39, 40), but the allegations are not supported by evidence in admissible form, and it is not shown how the particular instances alleged relate to the claims and disputes resolved in the arbitration. Moreover, the Beth Din apparently established its own formula for casting its net beyond the signatories to the Master Agreement, i.e., limited liability companies "mentioned" in that Agreement "over which" one or more of the specified individual Petitioners or Respondents had "power to sign."
The Court noted above the extensive, complex, and overlapping business transactions and relationships between and among the Petitioners and Respondents, but "interrelatedness, standing alone, is not enough to subject a nonsignatory to arbitration." (See TNS Holdings v MKI Sec. Corp., 92 NY2d at 340; see also Matter of Colonial Coop. Ins. Co. [Muehlbauer], 46 AD3d 1012, 1013 [3d Dept 2007]; Mionis v Bank Julius Baer & Co., 301 AD2d 104, 111 [1st Dept 2002].) Moreover, the 38 Agreements and other documents that are part of Petitioners' Supplemental Submission demonstrate a consistent practice of attending to the corporate form.
Similarly, accepting Petitioners' contention that "[s]ome form of arbitration clause designating" this particular beth din "to arbitrate any disputes was included in almost every loan or agreement Petitioners had with the Respondents" (see Petitioners' Supplemental Submission ¶ 262), only the arbitration provision in the Master Agreement is cited as a basis for this arbitration (with, of course, the Contract of Arbitration), and there is no reference in the Decision of the Bais Din to any of the other agreements, or any indication that any party or property that is the subject of any other agreement was the subject of any dispute or claim considered here. Indeed, not all of the parties to the prior loans and agreements is among the Petitioners and Respondents. (See id. ¶ 78.)
Continuing with the signatories to the Contract of Arbitration, as noted above, respondent Mendel Brach acknowledges signing of behalf of certain limited liability companies, but denies signing in his individual capacity. Specifically:
"[S]omeone other than myself wrote one of my signatures on the February 26, 2009With respect to the language under my signature that I was signing on behalf of all LLC mentioned in the agreement dated 10/29/07 over which I have the power to sign,' I believe that I wrote that language in at the direction of the Rabbinic Judges to conform to what Wydra had written. However, the purported signature to the right of my name is not my signature and the words squeezed in further to the right on my behalf and' are not in my handwriting and I did not write that language in and it was not on the February 26, 2009 Contract of Arbitration when I signed the Contract of Arbitration. Accordingly, I committed to arbitrate on behalf of LLC' mentioned in the Master Agreement over which I had power to sign but I did not personally commit to arbitrate under the February 26, 2009 Contract of Arbitration." (Reply Affirmation of Respondent Mendel Brach ¶¶ 28-30.)
Contract of Arbitration and added words to the document. . . . [T]here are words written under my name to the effect that I was signing on behalf of LLC' mentioned in the Master Agreement over which I had power to sign. There are also words squeezed in that I was signing on my behalf and.'
...
I recall signing the Contract of Arbitration and the signature under my name appears genuine. However, the signature that appears to the right of my genuine signature is not my signature and it is not genuine.
Martin Wydra asserts that he "signed the 2009 Arbitration Contract on behalf of the Petitioners and Mendel Brach signed it for himself and on behalf of the Respondents over which he had the power to sign and R. Mandel signed it on behalf of Roth and Roth's entities as Roth's attorney-in-fact'," referring to a "recently obtained copy" of the 2009 Arbitration Contract. (See Affirmation of Martin Wydra ¶ 38.) It is not at all clear whether Mr. Wydra is recalling his observation of what took place on February 26, 2009, or simply reciting his reading of the document, which, all agree, was not provided to the parties until after the award was delivered. Mr. Wydra's assertions are not directed to refutation of Mr. Brach's contentions, and, as will appear, are inaccurate as a description of Rabbi Mandel's signature on the document.
There is no other evidence that might contradict Mr. Brach's contentions, and on this record his contentions must be accepted as true. (See Matter of Brody [Owen], 259 AD 720, 720 [2d Dept 1940].)
As to respondent Moshe Roth, Rabbi Mandel's signature appears with words in Hebrew that are translated in a certified translation as "as authorized representative of Mr. Moshe Roth." Unlike certain of the signatures of Martin Wydra and Mendel Brach, which were accompanied by statements as to capacity, Rabbi Mandel's signature on its face does not indicate whether he was signing on behalf of Moshe Roth in his individual capacity or in a representative capacity for certain limited liability companies, or both. In an Affirmation, Rabbi Mandel states that he does not recall words written below his signature "when I signed it or I may not have noticed them," and "I would not have understood that I was increasing the power of the Rabbinic Judges and/or lessening Roth's rights." (See Mandel Affirmation ¶¶ 13, 14.)
In the absence of any other evidence on the question, and particularly the language as to capacity accompanying two nearby signatures, in two cases with respect to limited liability companies, on this record Rabbi Mandel's signature must be understood as having committed Moshe Roth in his individual capacity only.
In sum, petitioner Edward Wydra only agreed to arbitrate in his individual capacity "any dispute that may arise in connection with" the Master Agreement, because he did not sign the Contract of Arbitration; petitioner Martin Wydra agreed to arbitrate in his individual capacity, and in his representative capacity for certain undetermined limited liability companies, "all disputes, including all claims and counter claims [sic]", because he signed the Contract of Arbitration in both capacities; respondent Mendel Brach agreed to arbitrate in his individual capacity "any dispute that may arise in connection with the" Master Agreement, and in his representative capacity for certain undetermined limited liability companies "all disputes, including all claims and counter claims [sic]," because he signed the Contract of Arbitration only in his representative capacity; and respondent Moshe Roth agreed to arbitrate in his individual capacity "all disputes, including all claims and counter claims [sic]," because Rabbi Mandel signed the Contract of Arbitration on Roth's behalf only in his individual capacity.
The Court will not pretend that this makes practical business sense, but the Court did not draft the Master Agreement or the Contract of Arbitration, or supervise their execution. With millions of dollars at stake and numerous parcels of real property, the Court cannot rewrite the parties' agreements to what would make sense to the Court.
Although, in other cases, a determination that only one or more parties agreed to arbitrate, but that one or more others did not, would not necessarily be fatal to an award, particularly given the court's authority, albeit limited, to modify the award (see CPLR 7511 [c].) But, as previously noted, the statute provides that an award "shall be vacated . . . if the court finds that the rights of that party were prejudiced by . . . an arbitrator . . . 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].)
"When an award does not appear on its face to be definite and final and does not in itself contain the data or means of working out a definite and final determination of the whole controversy submitted, the powers conferred upon the arbitrators have not been fully executed and the provisions of [predecessor to CPLR 7511] are imperative that it must be set aside." (Herbst v Hagenaers, 137 NY 290, 296 [1893].)
"An award is subject to vacatur as indefinite or nonfinal only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted, or if it creates a new controversy'." (Matter of Bd. of Educ. of Amityville Union Free School Dist. v Amityville Teacher's Assn., 62 AD3d 992, 993 [2d Dept 2009] [quoting Matter of Meisels v Uhr, 79 NY2d 526, 536 (1992)].) "Arbitrators are not required to provide reasons for their decisions." (Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 63 AD3d 1149, 1150 [4th Dept 2009], aff'd 15 NY3d 530 [2010]; see also Matter of Sobel [Charles Schwab & Co., Inc.], 37 AD3d 877, 879 [3d Dept 2007]; Matter of Hausknecht v Comprehensive Med. Care of NY, P.C., 24 AD3d 778 [2d Dept 2005]; Matter of Nationwide Mut. Ins. Co. v Steiner, 227 AD2d 563 564 [2d Dept 1996].) "[T]he clarity of the arbitrators' reasoning process is simply not a matter of concern." (Purpura v Bear Stearns Cos., 238 AD2d 216, 216 [1st Dept 1997].)
As previously noted, whether or not a party has participated in the arbitration, the award "shall be vacated" if it is not "final and definite . . . upon the subject matter submitted." (CPLR 7511 [b] [1] [iii], [b] [2].) Here, therefore, the award must be vacated on that ground even if all the parties described in the Decision of the Bais Din as "Plaintiffs" or "Defendants," i.e., "Edward Wydra and/or Martin Wydra, each on his own behalf and on behalf of all LLC's mentioned in the Master Agreement dated 10/29/07 over which Martin Wydra has power to sign" and "Mendel Brach and/or Moshe Roth each on his own behalf and on behalf of all LLC's mentioned in the Master Agreement dated 10/29/07 over which each have power to sign," agreed to arbitrate all of their disputes and claims, and participated in the arbitration.
The Decision of the Bais Din is not "final and definite," and cannot serve as the basis for a judgment on the award (see CPLR 7514 [a].) As to the parties described as "Plaintiffs," the Decision does not identify the individuals or entities that are to benefit from the award, and, therefore, does not identify which of Petitioners in this proceeding are entitled to judgment on the award. At the least, it cannot be determined from the Decision which of the Petitioner Entities met the qualifications established by the Beth Din for Plaintiffs.
As to the parties described as "Defendants," the Decision of the Bais Din does not identify the individuals or entities that are bound by the award in whole or in part, and, therefore, does not identify which of Respondents in this proceeding are subject to entry of judgment against them. At the least, it cannot be determined from the Decision which of the Respondent Entities met the qualifications established by the Beth Din for Defendants. The problem is compounded by including limited liability companies as "Defendants" in the caption, but defining "Defendants" in the body of the Decision as the individual Respondents.
As to the Defendant limited liability companies in particular, the Decision of the Bais Din does not indicate whether the liability of a particular entity, if any, flows from that entity's breach of an agreement to which it is a party, or a determination by the Beth Din, if such was made, that each Defendant is liable for the obligations of each other Defendant, regardless of separate juridical status, e.g., as limited liability companies. The issue exists as well as to the individual Defendants, but is of somewhat greater concern as to the limited liability companies because they collectively hold title to numerous parcels of real property, and because, as will appear, those properties may become subject to foreclosure proceedings based upon the award.
"The judgment to be entered on this award cannot possibly without some other proceeding, be any more definite than the award itself and thus would not definitely or finally determine the rights and interests of the parties." (Herbst v Haglnaers, 137 NY at 295.) Since the docketing of a money judgment in itself creates a lien upon any interest of the judgment debtor in real property (see CPLR 5203 [a]), the entry of judgment on this award has the potential of making much mischief, whether or not intended by the judgment creditors, and whether or not mortgage foreclosure proceedings are commenced against the real property. Indeed, none of the other creditors of any of the Respondents, or any other holders of mortgages or liens on the real property owned by the Respondent Entities, were parties to the arbitration.
Substantial additional litigation seems inevitable, and this Court is at a loss in seeing how it will be resolved in light of this award. Indeed, Petitioners themselves had serious questions about the meaning and effect of the award, as evidenced by a communication from Rabbi Moshe Gobioff, Petitioners' Rabbinic Advocate, to the Beth Din:
"I have five questions.Can we know the breakdown of the calculations that brought the psak to the amount of $15,850,145.71"
1) Are we allowed to file the Psak for a judgment?
2) Bais Din did not write, whether Brach is in default of all themortgages, and therefore they shall all be due, and if so, Wydrashall be allowed to pursue collection of these mortgages incourt?
3) What is considered Defendants cooperate' mean? If they payimmediately? If they pay in 90 days? Or something else.
4) Bais Din did not write, what happens if they don't cooperate,meaning that they shallow [sic] continue to run the Iska, and on what rate, and what is the amount to date that they owe?
The Beth Din's response, which Respondents challenge as an impermissible modification of the award in violation of CPLR 7509, was made the same day as Petitioners' inquiry by "Rabbi S.Z. Kaufman on behalf of the Bais Din":
"The Rabbinical Court would like to take this opportunity to respond to the enclosed fax that was received 10/7/10 allegedly from Rabbi Moshe Gobioff.
1-The arbitration panel's ruling may be entered in secular court and the Plaintiffs may file for a judgment as per the ruling.
2-The Bais Din finds Mr. Brach to be in default of all Mortgages and they are therefore currently due. Mr. Wydra etal may pursue collection of these mortgages in court. However, as explicitly written in the ruling, the Bais Din is holding in abeyance as to decide the issue of discovery.
3 & 4- The Bais Din intentionally left open these items so that it can properly evaluate
and monitor the willingness and/or the ability of the Defendants to comply.
5-The Bais Din does not want to disclose the formula/method it used to arrive at the dollar award. Suffice to say, the figure was determined after much thought and extensive deliberation."
"It would generally be considered improper to remand for the purpose of having arbitrators set forth the calculations they employed." (Matter of Hennesy [MVAIC], 26 AD2d 521 [1st Dept 1966].) But the immediate problem with the Decision of the Bais Din is not the method of calculation, but the lack of clarity as to the source[s] of the obligation to pay, and, therefore, the person[s], entity, or entities so obligated. A remittal to the arbitrators for clarification is appropriate where necessary to allow "intelligent judicial review of the award" (see Matter of Beleggingsmaatschappij Wolfje, B.V. v AES Ecotek Europe Holdings, B.V., 21 AD3d 858, 859 [1st Dept 2005]; Corning Firefighters, Local 932 v City of Corning, 97 AD2d 975, 975 [4th Dept 1983]); or "when the award is ambiguous and not sufficiently explicit" and "cannot be harmonized or interpreted without speculation as to the panel's intent" (see Hamilton Partners Ltd. v Singer, 290 AD2d 316, 316-17 [1st Dept 2002]; see also Matter of Otto C. Prellwitz & Son [12-10 Thirtieth Ave. Corp.], 24 AD2d 1030 [2d Dept 1965]; Matter of Jolson [Forest Labs.], 15 AD2d 901, 902 [1st Dept 1962].)
Here, the tribunal's "clarification," as Petitioners would have, may actually exacerbate the problem with the original award. The Decision of the Bais Din states, "Each of the Defendants are found to be in material default concerning multiple issues including matters pertaining to the 10/29/07 Agreement." It is not clear whether the "Defendants" referenced are all those described in the caption, including the limited liability companies, or only "Mr. Mendel Brach & Mr. Moshe Roth" as the term is defined in the first "Whereas" clause. But six of the 18 numbered provisions of the Decision speak of "[n]either of the Defendants," which suggests the latter.
Answering Petitioners' specific inquiry, Rabbi Kaufman states, "The Bais Din finds Mr. Brach to be in default of all of the Mortgages and they are therefore currently due," and "Mr. Wydra etal [sic] may pursue these mortgages in court." Not only does this "clarification" beg the question of which other "Defendants" are found to be in default of "all of the Mortgages," but introduces "the Mortgages" into the award, a word that appears nowhere in the Decision of the Bais Din, and which relates to properties held by limited liability companies and not the individuals Brach and Roth. Nor is it clear who may "pursue these mortgages in court," since the tribunal does not indicate which of the LLCs are "etal."
"Upon a motion on an arbitration award, a court is restricted to confirming the award (CPLR 7510), vacating the award (CPLR 7511) or modifying the award to correct a ministerial defect or other matter not affecting the merits of the controversy (CPLR 7511 [c])." (Sawtelle v Waddell & Reed, Inc., 21 AD3d 820, 822 [1st Dept 2005].) Modification is not authorized in this case where the deficiencies of the award relate to matters at the center of the controversy. (Compare Matter of Halouvas v Pagan, 6 AD3d 707 [2d Dept 2004].)
"Upon vacating an award, the court may order a rehearing and determination of all or any of the issues either before the same arbitrator or before a new arbitrator appointed in accordance with this article." (CPLR 7511 [d].) Here, the issues are complex and the arbitration extended over 14 months (in part because one of the arbitrators resides in Israel), and there is no indication that a transcript or other complete record is available that any new panel might review (see Sawtelle v Waddell & Reed, Inc., 21 AD3d at 822.) If at all practicable, rehearing should, therefore, proceed before the same panel.
Before that determination can be made, however, it is necessary to address Respondents' contention that "the Rabbinic Judges were partial to the Wydras and beholden to them," since "the Wydras had contributed monies to Kollel Harabbonim since 2000" (see Respondents' Supplemental Submission ¶ 10.) Specifically, Respondents contend that Martin Wydra "has been a contributor to the Kollel Harabbonim for approximately ten years" with monthly contributions of $25.00, and that "Brach and Roth did not learn of the contributions until after issuance of the Award" (see id. ¶ 57.)
An arbitration award may be vacated "if the court finds that the rights of [a] party were prejudiced by . . . partiality of an arbitrator appointed as a neutral" (see CPLR 7511 [b] [1] [ii], [b] [2].) "[I]t is incumbent upon an arbitrator to disclose any relationship which raises even a suggestion of possible bias." (Matter of Weinrott [Carp], 32 NY2d 190, 200 [1973].) "[T]he [arbitrator's] failure to disclose . . . [a] substantial relationship [with one of the parties] is grounds to vacate the award under CPLR 7511." (Matter of Stevens & Co. [Rytex Corp.]. 34 NY2d 123, 127 [1974].) "The type of relationship which would appear to disqualify is one from which it may not be unreasonable to infer an absence of impartiality, the presence of bias or the existence of some interest on the part of the arbitrator in the welfare of one of the parties." (Matter of Cross Props. [Gimbel Bros.], 15 AD2d 913, 914 [1st Dept], aff'd 12 NY2d 806 [1962]; see also Matter of Siegel [Lewis], 40 NY2d 687, 690 [1976] ["an existing or past financial, business, family or social relationship . . . as is likely to affect the arbitrator's impartiality"].)
"[A] fully known relationship between an arbitrator and a party, including one as close as employer and employee . . . or attorney and client . . . , will not in and of itself disqualify the designee." (Id.) And "[i]f a party goes forward with arbitration, having actual knowledge of the arbitrator's bias, or of facts that reasonably should have prompted further, limited inquiry, it may not later claim bias based upon the failure to disclose such facts." (Matter of Stevens & Co. [Rytex Co.], 34 NY2d at 129.)
First, there is no evidence of any direct relationship between any Petitioner and either one of the two arbitrators Respondents did not designate. Respondents do not dispute that they designated Rabbi Chaim Malinowitz (see Petitioners' Supplemental Submission ¶ 208), nor do they dispute that Petitioners did not designate either of the other two arbitrators (see id. ¶ 209.)
Nor is there evidence of any financial relationship between any of the arbitrators, other than as a member of this tribunal or other tribunals sponsored by Kollel HaRabbonim (described by Rabbi Malinowitz as a Halachic research institute), and to the extent that the latter served as a conduit of payment to the arbitrators for their services. As stated by Respondents, "the Kollel Harabbonim actually billed the parties for the Rabbinic Court proceedings and the parties issued their checks to the Kollel Harabbonim for such services and the Kollel Harabbonim paid the Rabbinic Judges." (Respondents' Supplemental Submission ¶ 66.)
Petitioners submit copies of nine agreements, signed by one or more Respondents before execution of the Master Agreement, all of which provide for arbitration before the Beth Din of Kollel HaRabbonim. (See Petitioners' Supplemental Submission ¶¶ 58, 63, 64, 66, 71, 73, 76, 78, 82.) Four of the agreements bear the dates, respectively, of March 12, 2001; August 26, 2002; August 22, 2003; and July 21, 2005; and four bear the date May 10, 2006. Assuming that, contrary to Petitioners' assertions, Respondents did not learn of Martin Wydra's $25.00 monthly contributions to Kollel HaRabbonim until after the Beth Din made its award, Mr. Brach and Mr. Roth could not have been surprised.
"The very purpose of arbitration is to have a dispute resolved by a person knowledgeable in a given area." (Matter of Herry Quentzel Plumbing Supply Co. v Quentzel, 190 AD2d 678, 679 [2d Dept 1993].) "Therefore, if the courts were to disqualify every arbitrator who has had professional contacts with a party or witness, it would be difficult to maintain the arbitration system." (Id.) Similar considerations caution pragmatism in the context of arbitration within a tightly-knit religious community.
In any event, given the circumstances here, the Court finds the $25.00 monthly contributions "too remote and speculative" to provide a basis for vacating the award in its entirety (see Matter of Weinrott [Carp], 32 NY2d at 201; Elias Eleni Rest. Corp. v 8430 New Utrecht Corp., 282 AD2d 705 [2d Dept 2001]), and not "likely to affect the . . . impartiality" of the arbitrators (see Matter of Siegel [Lewis], 40 NY2d at 690; compare Fein v Fein, 160 Misc 2d 760, 760 [Sup Ct, Nassau County 1994] [interest free-loans up to $5,000 several occasions each year over a 10-year period for operation of yeshiva].)
Respondents have asserted other grounds for vacating the Decision of the Bais Din, but hopefully they will be resolved by the rehearing being ordered, or resolution will at least be aided by further consideration by the Beth Din. Recognizing that Rabbi Chaim Malinowitz resides in Israel, the Court will not in the first instance specify any time period for the rehearing or the arbitrators' award (see CPLR 7506 [b], 7507, 7511 [d].)
Judgment on the Petition shall be entered in favor of Respondents, vacating the arbitration award represented by the Decision of the Bais Din, and the matter is remitted to the Beth Din of Kollel HaRabbonim for rehearing as to the issues raised in this Decision, Order, and Judgment, and any other issues the Beth Din may deem appropriately addressed as within the scope of agreed-upon arbitration. The rehearing shall be held before the same tribunal, except as a member might be replaced on agreement of the parties or in accordance with the rules or practices of the Beth Din. The Court retains jurisdiction only as to any issue related to the rehearing.
____________________
Jack M. Battaglia
Justice, Supreme Court