JOHN v. ALTERNATIVE DESIGN, INC.

Thursday, February 21, 2002

Supreme Court

Nassau County

Justice Austin

JOHN v. ALTERNATIVE DESIGN, INC. ” Defendants Alternative Design, Inc. and Courtney Sloane move for an order pursuant to CPLR 7503 (a), compelling arbitration of the claims asserted in the instant action.

Plaintiff Daymond John and Defendant Alternative Design, Inc. (“Alternative”), entered into a contract pursuant to which Alternative was to provide design and decorating services at Plaintiff’s Sands Point residence. Co-defendant Courtney Sloane (“Sloane”) is Alternative’s president.

Significantly, the parties’ written agreement contains a broadly framed arbitration provision which states:

“Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration only in the City of Trenton, State of New Jersey, in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.”

After Alternative commenced work on the project, a dispute arose between the parties and Plaintiff terminated the contract. When Alternative refused to return Plaintiff’s down payment, Plaintiff commenced an action alleging that Alternative breached the parties’ contract (Index No. 7716/00).

It is undisputed that in light of the foregoing arbitration provision, and upon the parties’ written stipulation dated June 15, 2000, the above-referenced action was “discontinued without prejudice to Plaintiff’s right to commence an arbitration proceeding * * *.”

Thereafter, by summons and complaint dated May, 2001, Plaintiff commenced this action seeking a declaratory judgment to the effect that the parties’ underlying agreement, together with its arbitration clause, are void as a matter of law because Alternative allegedly was engaged in the unlicenced practice of architecture in violation of Education Law ?§7301. The complaint further asserts that Courtney Sloan “induced” Plaintiff to enter into the subject agreement, and that instead of hiring an architect ” as allegedly required by the agreement ” Sloane had an employee perform such services in violation of Education Law ?§7302 (Cmplt., ??25-28).

Notably, although the complaint avers that “[t]his is an action seeking a declaratory judgment” (Cmplt., ?1), Plaintiff nevertheless seeks money damages in the amount of $500,000.00 and further demands judgment indemnifying him as against third party vendors and/or contractors who dealt with Defendant on his behalf.

On this motion, Alternative and Sloane move to compel arbitration of the Plaintiff’s claims (CPLR 7503), asserting, in sum, that Plaintiff’s newly framed theories are no less subject to the comprehensive arbitration clause than those first advanced by Plaintiff in his original action. The Court agrees.

It is well settled that “[t]he policy of this State is to favor and encourage arbitration as a means of expediting the resolution of disputes and conserving judicial resources.” Rio Algom Inc. v. Sammi Steel Co. Ltd., 168 A.D. 2d 250, 251, 562 N.Y.S. 2d 486 (1st Dept. 1990). See also, Matter of Sprinzen [Nomberg], 46 N.Y. 2d 623, 629, 415 N.Y.S. 2d 974 (1979); Hirschfield Productions, Inc. v. Mirvish, 218 A.D. 2d 567, 568, 630 N.Y.S. 2d 726 (1st Dept. 1995 ), affd. 88 N.Y. 2d 1054, 651 N.Y.S. 2d 5 (1996); and Szabados v. Pepsi-Cola Bottling Co. of N.Y., Inc., 174 A.D. 2d 342, 343, 570 N.Y.S. 2d 553 (1st Dept. 1991 ). Moreover, that “policy precludes the parties to an arbitration agreement from simultaneously pursuing their claims before the Courts and thus playing one forum off against and another.” Avon Prods., Inc. v. Solow, 150 A.D. 2d 236, 238, 541 N.Y.S. 2d 406 (1st Dept.1989). Notably, the “arbitral forum” may be not avoided by the artifice of appending additional or incidental claims to a commercial dispute which is otherwise subject to arbitration. Horschfeld Productions, Inc. v. Mirvish, supra.

Here, and irrespective of how pleaded or styled, the principal claims of wrongdoing asserted in the complaint clearly arises out of, and relate directly to, the parties’ contract. Thus, Plaintiff’s claims fall within the broad provisions of the subject arbitration clause. Bogard v. Paul, 228 A.D. 2d 306, 643 N.Y.S. 2d 999 (1st Dept. 1996). See also, Matter of Poly-Pak Indust., Inc. v. Collegiate Stores Corp., 269 A.D. 2d 130, 131, 703 A.D. 2d 18 (1st Dept. 2000). It bears noting in this respect that Plaintiff has recognized the applicability of the subject arbitration clause to his substantive claims by voluntarily executing a stipulation discontinuing his previously commenced contract action.

Moreover, to the extent that a declaratory judgment action lies where, as here, Plaintiff is effectively seeking to defeat or stay arbitration (CPLR 7503 [b]; and 43 N.Y. Jur. 2d Declaratory Judgments ?§?§1, 4-8), the Court rejects Plaintiff’s assertion that there exists a public policy concern which voids the contract or which prohibits submission of the subject claims to an arbitrator.

“Judicial intervention in the arbitral process is only appropriate where the relevant public policy considerations ‘prohibit, in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator’.” Szabados v. Pepsi-Cola Bottling Co., supra, at 343 quoting, Matter of Wertlieb (Greystone Partnerships Group, Inc.), 165 A.D. 2d 644, 646, 569 N.Y.S. 2d 61; and Matter of Sprinzen [Nomberg], supra. See also, Matter of Town of Haverstraw v. Rockland Co. Patrolman’s Benevolent Assoc., 65 N.Y. 2d 677, 678, 491 N.Y.S. 2d 616 (1985); and 5 N.Y. Jur. 2d Arbitration and Award ?§209. Significantly, “[i]t is rare for the Court’s to intervene in arbitration proceedings* * * and rarer still to preclude parties from seeking resolution of a dispute in their chosen forum * * * unless the dispute involves” ‘a public policy of the first magnitude’.” Matter of Wertlieb (Greystone Partnerships Group, Inc.), supra. See also, Aimcee Wholesale Corp. v. Tomar Prods., Inc., 21 N.Y. 2d 621, 625, 289 N.Y.S. 2d 968 (1968 ); and Hirschfeld Productions, Inc. v. Mirvish, supra.

Contrary to Plaintiff’s contentions, the belatedly asserted contention that Defendants were engaging in the unlicenced practice of architecture, does not constitute a policy concern which “prohibit[s], in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator’.” Haverstraw v. Rockland Co. Patrolman’s Benevolent Assoc., supra at 678; Matter of Sprinzen [Nomberg, supra at 631; Bogard v. Paul, supra. In arbitration, Plaintiff can certainly assert the absence of licence as a basis for his claim.

Lastly, to the extent that the complaint viably articulates a distinct and separate claim against co-defendant Courtney Sloane in her individual capacity, such claims are inextricably interwoven with those interposed against the corporate Defendant. Thus, that claim is also properly subject to arbitration. See, PromoFone, Inc. v. PCC Management, Inc., 224 A.D. 2d 259, 260, 637 N.Y.S. 2d 405 (1st Dept. 1996).

Accordingly, and in conformity accord with the parties’ intent in agreeing to the subject arbitration clause, Plaintiff’s presently asserted claims must be relegated to the arbitral forum. It is,

ORDERED, that Defendants’ motion to compel arbitration is granted. The parties are directed to proceed to arbitration as soon as practicable.

This constitutes the decision and Order of the Court.