Accessory Corp. v Capco Wai Shing, LLC

Accessory Corp. v Capco Wai Shing, LLC 2007 NY Slip Op 03199 [39 AD3d 344] April 17, 2007 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected through Wednesday, June 6, 2007

The Accessory Corporation, Respondent,
v
Capco Wai Shing, LLC, et al., Appellants.

—[*1] Baker & McKenzie, LLP, New York (Grant Hanessian of counsel), for appellants.

Goldberg Rimberg & Friedlander, PLLC, New York (Joel S. Schneck of counsel), for respondent.

Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered August 18, 2006, which denied defendants' motion to stay the action and compel arbitration, unanimously affirmed, with costs.

While arbitration is favored as a matter of public policy (see Matter of Smith Barney Shearson v Sacharow, 91 NY2d 39, 49 [1997]), and the license agreement between defendant Wai Shing Plastic Hangars (Wai) and plaintiff contained an arbitration clause pursuant to which there is a pending arbitration relating to Wai's purported wrongdoing under the contract, "a party will not be compelled to arbitrate and, thereby, to surrender the right to resort to the courts, absent evidence which affirmatively establishes that the parties expressly agreed to arbitrate their disputes" (Matter of Waldron [Goddess], 61 NY2d 181, 183 [1984] [internal quotation marks and citation omitted]; see also TNS Holdings v MKI Sec. Corp., 92 NY2d 335, 339 [1998]). Here, plaintiff never agreed to arbitrate with the individual defendants or defendant Capco Wai Shing, LLC, and the claims asserted in this action do not arise out of, or in any way relate to, the licensing agreement between Wai and plaintiff. Indeed, the allegations in this action primarily assert intentional torts occurring subsequent to the licensing agreement's termination.

In any event, even had defendants possessed a right to compel arbitration of this dispute, their participation in discovery would have constituted an affirmative acceptance of the judicial [*2]forum, with a concomitant waiver of any right to arbitration (see Sherrill v Grayco Bldrs., 64 NY2d 261, 272 [1985]; De Sapio v Kohlmeyer, 35 NY2d 402, 405 [1974]). Concur—Tom, J.P., Mazzarelli, Friedman, Williams and Sweeny, JJ.