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In re Proceeding by Shalik

February 4, 2009

IN THE MATTER OF THE PROCEEDING BY EUGENE SHALIK AND JAMES DEVITA, AS PRELIMINARY CO-EXECUTORS OF THE ESTATE OF PEARL B. KALIKOW, DECEASED. TO DISQUALIFY DENNIS A. KONNER FROM SERVING AS ARBITRATOR IN RESPECT OF CERTAIN CLAIMS BROUGHT FORTH BY EDWARD M. KALIKOW AND LAURIE PLATT IN A DEMAND AND NOTICE OF INTENTION TO ARBITRATE DATED SEPTEMBER 24, 2008.


The opinion of the court was delivered by: John B. Riordan, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

The court has before it a petition and supplemental order to show cause dated November 19, 2008, wherein Eugene Shalik and James DeVita, the preliminary co-executors of the Estate of Pearl B. Kalikow, deceased (hereafter "Petitioners"), seek an order disqualifying Dennis A. Konner ("Konner") from serving as arbitrator with respect to a notice of arbitration dated September 24, 2008 (the "Current Arbitration Demand"). The petition is opposed by the decedent's children, Edward M. Kalikow ("Kalikow") and Laurie Platt ("Platt", Kalikow and Platt will be sometimes referred to collectively as "Respondents"). The order to show cause contains a temporary restraining order staying Respondents from taking any steps in connection with the arbitration on the Current Arbitration Demand pending determination of the disqualification motion. The stated ground for the requested disqualification is that the arbitrator is to be called as a material witness with respect to the facts and circumstances surrounding the subject matter of the arbitration "whose testimony will be vital to Petitioners' defense of the claims set forth in Respondents Arbitration Demand." For the reasons hereinafter set forth, Petitioners' motion is denied without prejudice to any claims of arbitrator misconduct that Petitioners might assert when the arbitration is complete and an award presented to the court for confirmation or vacatur. The temporary restraining order is also vacated.

PRIOR PROCEEDINGS

In June of 2006, Respondents served their first demand to arbitrate on Petitioners and Petitioner Shalik moved for a stay of arbitration. Petitioners thereupon moved to disqualify Konner based, inter alia, on his personal and professional relationship with Kalikow and entities controlled by Kalikow and such motion was granted by decision dated December 13, 2006 (Decision No. 904).*fn1 Respondents moved to renew and reargue and by decision dated March 20, 2007 (Decision No. 116),*fn2 the motion to renew was denied and the motion to reargue granted with the effect that Petitioners' first motion to disqualify Konner was denied. An order to that effect was entered on March 29, 2007. Petitioners appealed from the order of March 29, 2006 and such order was affirmed (Matter of Kalikow, ___ AD3d ___, 2009 WL 202460, 2009 NY Slip Op. 00540 [2d Dept 2009]).

By decision dated October 13, 2006 (Decision No. 632),*fn3 the court ruled that the dispute was subject to arbitration. A decree to that effect was entered on November 22, 2006 and Petitioner Shalik appealed from such decree and it was affirmed (Matter of Kalikow, ___ AD3d ___, 2009 WL 202461, 2009 Slip Op. 00539 [2d Dept 2009]).

By notice of motion dated April 30, 2007 and amended notice of motion dated May 8, 2007, Petitioners again moved to disqualify Konner. Following an evidentiary hearing on June 26, 2007, this second disqualification motion was denied by decision dated November 9, 2007 (Decision No. 773) and order dated January 3, 2008. Petitioners have appealed from the order of January 3, 2008 and this order was affirmed (Matter of Kalikow, ___ AD3d ___, 2009 WL 202460, 2009 NY Slip Op. 00540 [2d Dept 2009]).

Konner conducted a hearing with respect to the first arbitration demand on April 9, 2008 and issued a decision/award dated April 29, 2008. Respondents moved to confirm the award and Petitioners cross-moved to vacate. This court confirmed the award by decision dated September 26, 2008 (Decision No. 429) and order dated October 10, 2008.

Meanwhile, on February 28, 2007, Petitioners commenced an action in Supreme Court against Hewlett Associates L.P. ("Hewlett"),*fn4 Kalikow and Platt (the "Hewlett Action"). That action was transferred to this court by stipulation of the parties effective May 9, 2007. Prior to the transfer, Respondents and Hewlett had moved to stay the Hewlett Action and compel arbitration of the dispute. By decision dated March 27, 2008 (Decision No. 65) and order dated May 12, 2008, this court granted Respondents' motion to stay the lawsuit and compel arbitration.

Petitioners have communicated their intention to appeal from the orders of May 12, 2008 and October 10, 2008.

CURRENT MOTION

As previously noted the current motion seeks to disqualify Konner from serving as arbitrator because, according to Petitioners, his "testimony will be vital to Petitioners' defense of the claims set forth in Respondents Arbitration Demand." More specifically, Petitioners contend that Konner's testimony is critical with respect to two issues. The first is a demand for "[a] declaration that Hewlett Associates did not terminate and instead continued as a partnership under the terms of its limited partnership agreement and under applicable New York law ... after the deaths of Sidney Kalikow and Pearl Kalikow and that Edward Kalikow is the sole general partner of Hewlett Associates as of this date." The second is a request for a declaration that Hewlett and/or Respondents do not owe decedent's estate in excess of $9,573,125 plus interest representing previously undistributed cash from Hewlett.

Konner and Respondents filed answers to the petition together with affidavits from Konner and Kalikow asserting, inter alia, that Konner did not have any personal knowledge of relevant and material facts and an affirmation by counsel Thomas J. McGowan. Respondents' answer lists four denominated affirmative defenses*fn5 and a counterclaim seeking sanctions on the basis that the petition is frivolous.

Andrew M. Cuomo, the New York State Attorney General, has filed a notice of appearance but has not taken a ...


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