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Piller v. Tribeca Development Group LLC

Supreme Court of New York, Third Department

December 28, 2017

ABRAHAM PILLER, Individually and on Behalf of NEW PINES VILLAS LLC, Appellant,
v.
TRIBECA DEVELOPMENT GROUP LLC et al., Respondents.

          Calendar Date: November 13, 2017

          Asher Fensterheim, PLLC, White Plains (Kelly P. Peters of counsel), for appellant.

          Kalter, Kaplan, Zeiger & Forman, Woodbourne (Ivan Kalter of counsel), for Tribeca Development Group LLC and others, respondents.

          Drew Davidoff & Edwards Law Offices, LLP, Monticello (Brian T. Edwards of counsel), for Tribeca Sullivan LLC and others, respondents.

          Perry E. Meltzer, Monticello, for Abraham Eisner, respondent.

          Law Office of Randall V. Coffill, Port Jervis (Randall V. Coffill of counsel), for Tribeca Upstate LLC, respondent.

          Montalbano, Condon & Frank, PC, New City (Brian J. Quinn of counsel), for Tribeca Fallsburg LLC, respondent.

          Before: Garry, J.P., Clark, Mulvey, Aarons and Rumsey, JJ.

          MEMORANDUM AND ORDER

          MULVEY, J.

         Appeals (1) from an order of the Supreme Court (LaBuda, J.), entered April 15, 2016 in Sullivan County, which, among other things, granted defendants' cross motions to dismiss the complaint, and (2) from an order of said court, entered May 10, 2016 in Sullivan County, which canceled the notice of pendency.

         In April 2006, plaintiff entered into a nominee agreement with defendant Abraham Eisner (and another party) to develop 178.5 acres of plaintiff's real property located in Sullivan County. Pursuant to that agreement, plaintiff conveyed the subject property to New Pines Villas LLC, of which Eisner was the sole owner. Plaintiff apparently remained the beneficial owner of the property, as Eisner agreed to hold title to and develop the property "as trustee and for the benefit of [plaintiff]" and, in return, Eisner was entitled to certain specified profits from its development. Disputes arose and a prior action by plaintiff (and others) against Eisner and New Pines for, among other things, breach of contract (related to the agreement) was discontinued with prejudice when, in 2013, Eisner and plaintiff entered into a settlement agreement. The settlement agreement provided that plaintiff is the beneficial owner of the property and that the parties thereto would litigate all issues that arise under the nominee agreement before an independent arbitrator. The settlement agreement contemplated that plaintiff and Eisner would cooperatively market and sell the subject property and, in the event that they did not agree on the sale terms, they would engage in arbitration of "any and all disputes" with regard to the property. During ensuing arbitration meetings, the parties were unable to reach an agreement regarding the property and Eisner ultimately disclosed that he had sold a 41-acre parcel of the property without plaintiff's consent.

         Plaintiff thereafter commenced this declaratory judgment action alleging that, in October 2015, Eisner caused New Pines to convey 41 acres of the property to defendant Tribeca Fallsburg LLC (sued as John and Jane Does 1-10), without plaintiff's permission or authorization. Plaintiff alleged that Eisner entered into agreements with Gamble Construction Group, Inc. (sued as Tribeca Development Group LLC), Eli Brezel and Yitzchok Brezel (members of Tribeca Development) and others to develop the 41-acre parcel, that Gamble was retained to perform construction work on that parcel and that the Brezels arranged for Gamble to finance the development project [1] through defendants Tribeca Sullivan LLC and Tribeca Upstate LLC. Plaintiff alleged that Eisner breached various contractual and fiduciary obligations to him. In addition to Eisner, plaintiff's complaint named as defendants Gamble, the Brezels, Tribeca Sullivan, Tribeca Upstate and Tribeca Fallsburg (hereinafter collectively referred to as the remaining defendants). Plaintiff sought a declaration that he has a 100% beneficial ownership interest in the subject property (including the 41-acre parcel) and in New Pines, and that his consent was required before any portion of it could be conveyed or developed and for any transactions that affected his ownership interest, and requested an order declaring New Pines' sale of the 41-acre parcel null and void. Plaintiff also sought monetary damages for trespass, private nuisance, breach of contract and breach of fiduciary duties, moved for injunctive relief, and filed a notice of pendency with regard to the subject property.

         Eisner cross-moved to dismiss the complaint based upon the terms of the agreements (see CPLR 3211 [a] [1]) and to compel arbitration (see CPLR 7503). In separate motions, the remaining defendants made or joined in cross motions to dismiss the complaint, which plaintiff opposed. Supreme Court granted Eisner's cross motion to compel arbitration and the cross motions of the remaining defendants to dismiss the complaint. The court held that all issues regarding the subject property must be arbitrated pursuant to the settlement agreement and that Tribeca Fallsburg, in any event, was a good faith purchaser of the 41-acre parcel. Supreme Court, which had declined to grant temporary injunctive relief, also declined to stay the action pending arbitration and, in a separate order, discharged the notice of pendency. Plaintiff now appeals from both orders.

         Supreme Court improperly dismissed the action against Eisner, rather than staying the action. Initially, there is no dispute on this record that plaintiff and Eisner, in the settlement agreement, consented to arbitrate any and all disputes regarding, among other things, the subject property. However, under established law, "[a]n agreement to arbitrate is not a defense to an action" and, thus, "may not be the basis for a motion to dismiss" (Allied Bldg. Inspectors Intl. Union of Operating Engrs., Local Union No. 211, AFL-CIO v Office of Labor Relations of City of N.Y., 45 N.Y.2d 735, 738 [1978]; see Hui v New Clients, Inc., 126 A.D.3d 759, 759-760 [2015]; Matter of Birchwood Vil. LP v Assessor of the City of Kingston, 94 A.D.3d 1374, 1375-1376 [2012]). Eisner's cross motion to dismiss based upon CPLR 3211 (a) (1), premised upon the agreement to arbitrate, does not entitle him to dismissal of this action (see Hui v New Clients, Inc., 126 A.D.3d at 759-760; Matter of Birchwood Vil. LP v Assessor of the City of Kingston, 94 A.D.3d at 1375-1376). Rather, where, as here, there is a valid arbitration clause in an agreement and the party sued (here, Eisner) moves to compel arbitration, the court should stay the judicial action rather than dismiss it (see CPLR 7503 [a]; Allied Bldg. Inspectors Intl. Union of Operating Engrs., Local Union No. 211, AFL-CIO v Office of Labor Relations of City of N.Y., 45 N.Y.2d at 738; Matter of Birchwood Vil. LP v Assessor of the City of Kingston, 94 A.D.3d at 1376). By statute, the order granting Eisner's motion to compel arbitration "operate[s] to stay [the] pending or subsequent action" (CPLR 7503 [a]). Accordingly, the complaint is reinstated against Eisner and this action is ...


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