Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Degraw Construction Group, Inc. v. McGowan Builders, Inc.

Supreme Court of New York, Second Department

July 12, 2017

Degraw Construction Group, Inc., respondent,
v.
McGowan Builders, Inc., et al., appellants, et al., defendants. Index No. 6096/13

          Law Office of Joseph J. Hocking, LLC, New York, NY, for appellants.

          Zisholtz & Zisholtz, LLP, Mineola, NY (Stuart S. Zisholtz of counsel), for respondent.

          REINALDO E. RIVERA, J.P., SANDRA L. SGROI, ROBERT J. MILLER, VALERIE BRATHWAITE NELSON, JJ.

          DECISION & ORDER

         In an action, inter alia, to foreclose a mechanic's lien, the defendants McGowan Builders, Inc., Patrick McGowan, Patrick J. Monahan, Emmet Friel, Martin McGowan, and A. Forte Maldonado appeal, as limited by their brief, from so much of an order of the Supreme Court, Queens County (Dufficy, J.), dated February 3, 2016, as denied that branch of their motion which was to compel arbitration of the fourth, fifth, and sixth causes of action insofar as asserted against them.

         ORDERED that the order is reversed insofar as appealed from, on the law, with costs, and that branch of the motion of the defendants McGowan Builders, Inc., Patrick McGowan, Patrick J. Monahan, Emmet Friel, Martin McGowan, and A. Forte Maldonado which was to compel arbitration of the fourth, fifth, and six causes of action insofar as asserted against them is granted.

         The plaintiff commenced this action against, among others, the defendant McGowan Builders, Inc. (hereinafter McGowan Builders), to foreclose a mechanic's lien. The plaintiff contended that it entered into an agreement with McGowan Builders to perform certain construction work and that it had not been adequately paid for the work it had performed pursuant to the agreement.

         The complaint also included causes of action sounding in tort against McGowan Builders and the defendants Patrick McGowan, Patrick J. Monahan, Emmet Friel, Martin McGowan, and A. Forte Maldonado (hereinafter collectively the individual defendants). The complaint alleged that the individual defendants were all officers or employees of McGowan Builders and that they were liable for conversion, unfair competition, and tortious interference.

         McGowan Builders and the individual defendants interposed an answer and subsequently moved, among other things, to compel arbitration of the causes of action alleging conversion, unfair competition, and tortious interference insofar as asserted against them (the fourth, fifth, and sixth causes of action, respectively). The moving defendants argued that the agreement that the plaintiff and McGowan Builders had entered into contained a binding arbitration clause which required arbitration of these causes of action.

         In the order appealed from, the Supreme Court determined that the individual defendants were not signatories to the agreement and that they were therefore unable to enforce the arbitration provision against the plaintiff. Accordingly, the court denied that branch of the motion of the moving defendants which was to compel arbitration of the fourth, fifth, and sixth causes of action insofar as asserted against them. We reverse the order insofar as appealed from.

         "A written agreement to submit any controversy... to arbitration is enforceable without regard to the justiciable character of the controversy and confers jurisdiction on the courts of the state to enforce it and to enter judgment on an award" (CPLR 7501). "A party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration" (CPLR 7503[a]). "If an issue claimed to be arbitrable is involved in an action pending in a court having jurisdiction to hear a motion to compel arbitration, the application shall be made by motion in that action" (id.). With limited exception not applicable here, "[w]here there is no substantial question whether a valid agreement was made or complied with, ... the court shall direct the parties to arbitrate" (id.; see Sutphin Retail One, LLC v Sutphin Airtrain Realty, LLC, 143 A.D.3d 972, 973).

         Accordingly, on a motion to compel or stay arbitration, a court must determine, "in the first instance... whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement" (Sisters of St. John the Baptist, Providence Rest Convent v Geraghty Constructor, 67 N.Y.2d 997, 998; see Brown v Bussey, 245 A.D.2d 255, 255; cf. Green Tree Financial Corp.-Ala.v Randolph, 531 U.S. 79, 90). "When deciding whether the parties agreed to arbitrate a certain matter... courts generally... should apply ordinary state-law principles that govern the formation of contracts" (First Options of Chicago, Inc. v Kaplan, 514 U.S. 938, 944; see Arthur Andersen LLP v Carlisle, 556 U.S. 624; Perry v Thomas, 482 U.S. 483, 492).

         Here, there is no dispute that the agreement between the plaintiff and McGowan Builders contained a broad arbitration clause whereby McGowan Builders was entitled to demand binding arbitration with respect to "[a]ll claims, disputes and other matters arising out of or relating to [the agreement], or the breach thereof." The question raised on this appeal is whether the individual defendants, who were not signatories to the agreement, were entitled to enforce the arbitration provision so as to require the plaintiff to submit the tort causes of action to arbitration.

         "Arbitration is a matter of contract... grounded in agreement of the parties'" (Matter of Belzberg v Verus Invs. Holdings Inc., 21 N.Y.3d 626, 630, quoting County of Sullivan v Edward L. Nezelek, Inc., 42 N.Y.2d 123, 128). Inasmuch as an arbitration clause is a contractual right, "the general rule is that only a party to an arbitration agreement is bound by or may enforce the agreement" (1 Domke on Comm. Arb. § 13:1 [2016]; see Matter of Belzberg v Verus Invs. Holdings Inc., 21 N.Y.3d at 630; Oxbow Calcining USA Inc. v American Indus. Partners, 96 A.D.3d 646, 648-649; Estate of Castellone v JP Morgan Chase Bank, N.A., 60 A.D.3d 621, 623).

         However, "[a] nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to arbitrate the signatory's claims against the nonsignatory despite the fact that the signatory and nonsignatory lack an agreement to arbitrate" (1 Domke on Comm. Arb. § 13:1 [2016]). "A non-party to an arbitration agreement may compel a party to arbitration if the relevant state contract law allows the non-party to enforce the arbitration agreement" (1 Domke on Comm. Arb. § 13:1 [2016]; see Hirschfeld Prods. v Mirvish,88 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.