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Bernstein Family Limited Partnership v. Sovereign Partners

July 14, 2009

IN RE BERNSTEIN FAMILY LIMITED PARTNERSHIP, ET AL., PETITIONERS-RESPONDENTS,
v.
SOVEREIGN PARTNERS, L.P., ET AL., RESPONDENTS-APPELLANTS.



Respondents appeal from the order and judgment (one paper) of the Supreme Court, New York County (Kibbie F. Payne, J.), entered August 7, 2007, which granted petitioners' motion pursuant to CPLR 7510 to confirm an arbitration award.

The opinion of the court was delivered by: McGUIRE, 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 Official Reports.

Luis A. Gonzalez, P.J. James M. McGuire, Karla Moskowitz, Leland G. DeGrasse, Helen E. Freedman, JJ.

601638/07

Petitioners commenced this proceeding pursuant to CPLR article 75 to confirm an arbitration award rendered in their favor against respondents. In opposition to the petition to confirm, respondents contended that they had complied in full with the award -- a contention vigorously disputed by petitioners -- and that the petition thus was moot. We hold that the parties' dispute over compliance is itself academic and that Supreme Court correctly granted the petition to confirm the award.

Supreme Court rejected respondents' contention that the petition was moot on two grounds. First, Supreme Court found that respondents "have not satisfied the award entirely." Although respondents advance several arguments in support of their position that this finding of fact was erroneous, if the other, legal ground on which Supreme Court relied is valid, then the factual finding was unnecessary and we need not address respondents' arguments challenging it. Second, Supreme Court concluded that the petition was not moot "[i]n any event, [as] petitioners are entitled to confirmation of the award despite complete compliance" (citing Matter of Allstate Ins. Co. v Dental Health Care, P.C., 24 AD3d 437, 438 [2nd Dept 2005])." Although petitioners correctly argue that Matter of Allstate Ins. Co. supports Supreme Court's determination that they are entitled to a judgment confirming the award even if respondents have complied completely with the award, respondents correctly argue that Supreme Court's determination is inconsistent with our decision in Organization of Staff Analysts v City of New York (277 AD2d 23 [2000]). For the reasons stated below, we conclude that we should not follow Organization of Staff Analysts.

CPLR 7510 states that the court "shall confirm an award ... unless the award is vacated or modified upon a ground specified in section 7511" (emphasis added); mootness is not one of the grounds specified in CPLR 7511. Accordingly, petitioners argue that the Legislature has mandated confirmation of an award under all circumstances --including those in which the petition is academic or is otherwise moot -- where, as here, the award is not vacated or modified.

Geneseo Police Benevolent Assn., Council 82, Am. Fedn. of State, County & Mun. Empls., AFL-CIO v Village of Geneseo (91 AD2d 858 [1982], affd for reasons stated 59 NY2d 726 [1983]), supports petitioners' position. In Geneseo Police, Supreme Court refused to confirm the arbitration award because the petition was premature. The Fourth Department reversed and confirmed the award. After noting that the "only purported ground ... for resisting confirmation of the arbitration award was that it was premature," the Court stated that "[o]nly those grounds for resisting confirmation of an award specified in CPLR 7511 may be the basis for vacating or modifying an arbitration award ... Since the application to confirm the award was made within one year (CPLR 7510), and none of the grounds set forth in CPLR 7511 was advanced to vacate the award, Special Term erroneously refused to confirm the award" (id.). The Court of Appeals affirmed the Fourth Department's order for the reasons stated.

Respondents argue that Geneseo Police is distinguishable in that Supreme Court refused to confirm the arbitration award not because the petition was moot but because it was premature. As respondents argue in their reply brief, "[b]ecause the respondent in [Geneseo Police] had not yet satisfied the arbitration award, an open controversy still existed." We are thus invited to conclude that the possibility of compliance with an award does not render a petition to confirm premature, but the actuality of compliance does render such a petition moot. Respondents elaborate with argument that is of constitutional dimension. Indeed, their main brief begins with the assertion that "[t]his appeal concerns the trial court's failure to adhere to the fundamental principle of jurisprudence prohibiting courts from hearing a case in the absence of an actual controversy." When an arbitration award has been complied with in full, respondents argue that judicial confirmation of the award is pointless, i.e., academic (citing, among other cases, Matter of Hearst Corp. v Clyne, 50 NY2d 707, 713-714 [1980]). As the "principle[] which forbids courts to pass on academic, hypothetical, moot or otherwise abstract questions[] is founded both in constitutional separation-of-powers doctrine, and in methodological strictures which inhere in the decisional process of a common-law judiciary" (id.), respondents essentially argue that the word "shall" in CPLR 7510 should not be construed as a legislative mandate to the judicial branch to exercise its powers and confirm an award even when the petition is academic.

Regardless of whether the Court of Appeals might confine Geneseo Police to its particular facts (see Matter of Seelig v Koehler, 76 NY2d 87, 92 [1990], cert. denied 498 US 847 [1990]), we should not. The rationale of the Court of Appeals in Geneseo Police -- "[o]nly those grounds for resisting confirmation of an award specified in CPLR 7511 may be the basis for vacating or modifying an arbitration award" -- applies with equal force to this case. So, too, do the terms of CPLR 7510, which state that the court "shall confirm an award ... unless the award is vacated or modified upon a ground specified in section 7511" (emphasis added). Giving the word "shall" its ordinary meaning, we are directed unequivocally by CPLR 7510 to confirm an arbitration award if a timely application is made whenever the award is not vacated or modified under CPLR 7511.

In Matter of Allstate Ins. Co. (24 AD3d 437), the Second Department, cited Geneseo Police, among other precedents, in reversing an order that dismissed a petition to confirm an arbitration award. After stating that the petition to confirm was timely and that the respondent had not advanced any of the grounds specified in CPLR 7511 for vacating or modifying the award, the panel held that "the court should have granted the petition to confirm the arbitrator's award, notwithstanding that the petitioner has already has paid the amount awarded" (id. at 438; citing, among other cases, Matter of Ricciardi [Travelers Ins. Co.], 102 AD2d 871 [2d Dept 1984] [petition to confirm an arbitration award granted "notwithstanding the fact that respondent has already paid the amount awarded"]).*fn1

As noted above, our decision in Organization of Staff Analysts (supra) comes to a different conclusion. In that case, we held that Supreme Court correctly granted a motion to dismiss a petition to confirm an arbitration award as academic because "respondents had fully and completely satisfied the arbitration award" (277 AD2d at 23). As the record on appeal shows, we so held even though the petitioner-appellant relied on the provisions of CPLR 7510 and 7511 in arguing that the petition could not be dismissed as moot. We cited CPLR 3211(a)(7) and 404(a) in rejecting that argument (id.). The latter provision states that a respondent in a special proceeding "may raise an objection in point of law by setting it forth in [the] answer or by a motion to dismiss the petition"; its evident purpose is to permit a motion to be made on all grounds available in an action under CPLR 3211 (see McLaughlin, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C404.1, at 644 [1990]). The clear import of our citations to CPLR 3211(a)(7) and 404(a) is that the broad authority to raise an objection in point of law in either an answer or in a motion to dismiss is inconsistent with construing the word "shall" in CPLR 7510 to mandate confirmation whenever the petition is not modified or vacated in accordance with CPLR 7511. On this appeal, petitioners make the same argument based on CPLR 7510 and 7511 that we rejected in Organization of Staff Analysts.*fn2

We decline to follow our decision in Organization of Staff Analysts. First, the parties in that case did not alert this Court to the fact that the Court of Appeals had affirmed in Geneseo Police. Second, our reliance on CPLR 404(a) was misplaced. The directive to confirm in CPLR 7510 is not qualified by the broad terms of CPLR 404(a) allowing the respondent in a special proceeding to raise an objection in point of law. CPLR 404(a) is a general provision applicable to all special proceedings while the directive of CPLR 7510 is one that applies specifically to petitions to confirm an arbitration award. That specific directive, accordingly, trumps the general provision (see Matter of Brusco v Braun, 84 NY2d 674, 681 [1994]). Third, CPLR 7510 does not require confirmation of an award only upon the application of a party who prevails in whole or in part in an arbitration; rather, it directs the court to confirm an award "upon application of a party" (emphasis added). Indeed, in Matter of Allstate Ins. Co., the record on appeal reveals that the appellant, Allstate, brought the petition to confirm the award even though it was the respondent in the arbitration and the award was in favor of the respondent on the appeal, Dental Health Care, P.C., the petitioner in the arbitration (Brief for Petitioner-Appellant at 2; see 24 AD3d 438). In its brief, Allstate both noted that Dental Health Care (which, presumably because it got the money, did not file a brief in opposition to Allstate's appeal) had "seemingly objected" to confirmation of the award on the ground that Allstate had not explained why it was seeking to confirm an award that it had paid (id. at 7), and argued that it "was under no obligation to include any explanation for the petition in its ...


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