Ercoli v Empire Professional Soccer, LLC

[*1] Ercoli v Empire Professional Soccer, LLC 2005 NY Slip Op 52284(U) [11 Misc 3d 1065(A)] Decided on September 30, 2005 Supreme Court, Monroe County Fisher, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 30, 2005
Supreme Court, Monroe County

Pat A. Ercoli, Plaintiff,

against

Empire Professional Soccer, LLC, Defendant.



2005/06089

Kenneth R. Fisher, J.

This action relates to the termination of plaintiff, Pat A. Ercoli ("Ercoli"), as head coach of the Rochester Raging Rhinos ("the Rhinos"), a professional soccer team in the United Soccer Leagues.[FN1] The Rhinos are run by defendant, Empire Professional Soccer, LLC ("Empire"). Empire moves for an order pursuant to CPLR §§2201, 3211, and/or 7503(a) dismissing and/or permanently staying plaintiff's the action. Ercoli's complaint seeks damages for breach of contract, as well as a declaratory judgment that the Rhinos breached the contract of employment when they terminated him. Empire alleges that this action is inappropriate insofar as the same relief was sought by Ercoli in an arbitration, and that the arbitrator ruled against Ercoli because he failed to timely file his demand for arbitration.

Ercoli was employed as the head coach of the Rhinos from 1995 through November 2004. Ercoli did not have, originally, a contract of employment with the Rhinos. Plaintiff alleges that the parties verbally agreed upon a salary. See Affidavit of P. Ercoli dated September 14, 2005, ¶2. In 1997, when it came time to renew his status as head coach, Ercoli requested that the parties enter into a formal contract of employment. Ercoli's father-in-law, Pat Dinolfo, Esq., prepared the initial contract that was entered into by the parties on January 1, 1997. Mr. Dinolfo was the only attorney involved in the transaction; the Rhinos did not hire independent counsel with respect to entering into the contract. The parties subsequently entered into another contract of employment, dated May 1, 2001. It is this contract which is the basis of the dispute before the court. Pursuant to

Section III of the 2001 employment agreement, the parties agreed that the contract would remain in effect until its termination on April 30, 2003. Section III further provided that the contract would be automatically extended if plaintiff achieved certain performance incentives, which plaintiff alleges he met. [*2]

After the 2004 Rhinos season ended, however, the Rhinos began discussing changing Ercoli's role with the team. Shortly thereafter, Ercoli states that he received the November 16, 2004 letter terminating his employment. With respect to termination, the contract of employment states as follows:

Section IV

Termination of Contract The employer shall have the right to terminate this contract during its duration including any extensions thereof under the following circumstances:...2.Any action by the employee, which is determined to be harmful to the image, reputation or success of the team, (other than statistical standings). If the employer makes such determination, employee shall have the right to appeal said decision to arbitration pursuant to the terms and conditions of Section XII of this agreement.

On November 16, 2004, the Rhinos terminated Ercoli's employment, alleging that Ercoli had acted in an manner harmful to the Rhino's image, reputation and/or success. The contract of employment further stated the following with respect to disputes between the parties:

Section XII

Future disputes subject to arbitration Unless otherwise indicated, all disputes, claims, and questions regarding the rights and obligations of the owner and employee under the terms of the contract documents are subject to arbitration. In case of dispute, the owner or the employee may make a demand for arbitration by filing such demand in writing with the other party. The demand shall be made within ten days after the dispute first arises or, in the case of objection to a decision by the owner, within ten days after receipt of such decision.If the owner and the employee agree on a selection, there shall be one arbitrator. If no agreement is reached within five days after demand for arbitration, there shall be three arbitrators, one names in writing by the owner and a second by the employee within ten days after demand for arbitration, and a third chosen by the two who are appointed. If there is one arbitrator, his or her decision shall be binding; if there are three arbitrators, the decision [*3]of any two of them shall be binding. No one shall act as an arbitrator who is in any way financially interested in the work or in the business affairs of either the owner or the contractor.Should either the owner or the employee refuse or neglect to appoint an arbitrator or to furnish the arbitrators with any necessary papers or information, they are empowered by both parties to proceed ex parte. The decision of the arbitrators shall be a condition precedent to any right of legal action that either party may have against the other... (Emphases supplied)

Ercoli served a demand for arbitration on December 4, 2004. Through counsel, the Rhinos immediately raised a timeliness issue.

On March 21, 2005, the parties proceeded to an arbitration proceeding. The submission of the matter to the arbitrator was upon the parties' "stipulat[ion] that the issue to be resolved in the instant proceeding is whether the instant dispute is arbitrable, and if so, whether the employee was discharged for one of the reasons set forth in the agreement, and if not, what shall the remedy be?" Arbitrator's Opinion and Award, at p. 2. Thereafter, at that hearing, the parties further agreed to bifurcate the proceeding and to resolve the issue of timeliness before proceeding to the merits of the dismissal and any appropriate remedy. On April 11, 2005, the arbitrator issued a decision dismissing the demand for arbitration in its entirety on the grounds that it was untimely. Thereafter, on May 31, 2005, Ercoli commenced this action seeking declaratory relief and damages for breach of the employment contract.

The bulk of the parties' submissions concern whether the contract language, "are subject to arbitration," is sufficiently mandatory to make arbitration the exclusive remedy under the contract. See Riverdale Fabrics Corp. v. Tillinghast-Stiles, 306 NY 288 (1954). Taking into account the agreement as a whole, the court finds that Section XII is sufficiently mandatory. But even if this provision was explicitly "permissive," as for example the words "may be subject to arbitration" would be, the cases uniformly hold that such an agreement "should be interpreted to limit the aggrieved party to a choice between arbitration and abandonment of the claim." Egol v. Egol, 68 NY2d 893, 896 (1986). Whether an agreement "is framed in mandatory language is not necessarily of paramount importance in determining whether the provision in question is in fact mandatory or permissive." Matter of Elliott v. City of Binghampton, 94 AD2d 887, 889 (3d Dept. 1983), aff'd "for reasons stated," 61 NY2d 920 (1984). Thus if Ercoli "intends to pursue his claim . . . , he must do so by filing . . . [in this case for arbitration]." Id. 94 AD2d at 889 (emphasis in original). "To hold otherwise would require construing the word may' out of the context of the provision as a whole." Id.

To be sure, Matter of Elliott concerned a statute or regulation, but the same reasoning applies to arbitration agreements, as the Egol case makes clear. New York courts consistently follow Local 771, I.A.T.S.E., AFL-CIO v. RKO General, Inc. WOR Division, 546 F.2d 1107, 115-16 (2d Cir. 1977) in this regard. See Triangle Equities Inc. v. Listokin, 13 AD3d 269, 270 (1st Dept. 2004)("any choice implicit in the word may' would not be between arbitration and litigation but between arbitration and abandonment of the claim; to hold otherwise would be [*4]treat[ing] the arbitration agreement as a useless gesture.'")(quoting Local 771, 546 F.2d at 1116); Lovisa Construction Co., Inc. v. MTA, 225 AD2d 740, 741 (2d Dept. 1996)(same); Hawkeye Funding, Limited Partnership v. Duke/Floor Daniel, N.Y.L.J. vol. 228, December 4, 2002, p.18 col.4 (Sup. Ct. NY Co.)(Cahn, J.)(collecting cases), aff'd as modified on other gr., 307 AD2d 828 (1st Dept. 2003), lv. denied, 1 NY3d 538 (2003). See also, United States v. Bankers Ins. Co., 245 F.3d 315, 320-21 (4th Cir. 2001)(quoting the leading cases on the subject). Accordingly, even if the agreement had been explicitly "framed in permissive terms," id. 245 F.3d at 320, defendant should prevail. A fortiori, defendant's motion should be granted in view of the arguably mandatory language used this agreement, which, the court points out, plaintiff's transactional counsel drafted. See also, Island Cash Register, Inc. v. Data Terminal Systems, Inc., 244 AD2d 117, 119-20 (1st Dept. 1998).

In any event, and quite separate from the above analysis, Ercoli waived any objection to the arbitrability of the dispute by submitting the matter himself to the arbitrator, even though he indicated that the submission was without prejudice. See Matter of National Cash Register Co. [Wilson], 8 NY2d 377 (1960).

The only issue then is whether the authority of the arbitrator was limited to issuing an advisory opinion only. Citing Matter of Silverman [Benmor Coats], 61 NY2d 299, 307, the Third Department has held that such a limitation must be expressly set forth in the arbitration agreement. American States Ins. Co. v Sorrell, 258 AD2d 782 (1999). It wasn't here; thus, the litigation should be dismissed pursuant to CPLR 7803(c).

Additionally, even if the terms of the agreement mandated that the award be advisory only, that limitation was waived by submission of the controversy to the arbitrator to fashion a remedy to resolve the issue. See Benjamin Rush Employees United v McCarthy, 76 NY2d 781, 782 (1990) interpreting Board of Educ. v Yonkers Fedn. of Teachers, 46 NY2d 727 (1978).

SO ORDERED.

______________________

Kenneth R. Fisher

Justice Supreme Court

DATED:September 30, 2005

Rochester, New York Footnotes

Footnote 1: Specifically, the Rhinos compete in the American Professional Soccer League.