Matter of Better Living Now, Inc. v Dwyer

[*1] Matter of Better Living Now, Inc. v Dwyer 2006 NY Slip Op 50441(U) [11 Misc 3d 1069(A)] Decided on February 8, 2006 Supreme Court, Suffolk County Spinner, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 8, 2006
Supreme Court, Suffolk County

IN THE MATTER OF BETTER LIVING NOW, INC., Petitioner,

against

JOHN DWYER, Respondent.



2003-29543



Pelletreau & Pelletreau, LLP

Attorneys for Petitioner

475 East Main Street, Suite 114

Patchogue, New York 11772

Jaffe, Segal, Ross & Light LLP

Attorneys for Respondent

880 Third Avenue

New York, New York 10022

Jeffrey Arlen Spinner, J.

Upon the following papers numbered 1 to 49 read on this Petition by Counsel for BETTER LIVING NOW, INC., for, inter alia, a Judgment, pursuant to CPLR § 7503(b), staying the arbitration filed by Respondent on the grounds that the Shareholders Agreement between Petitioner and Respondent does not provide for the arbitration of Respondent's proposed claims:

Petitioner's Notice of Petition and supporting papers - 1-23

Respondent's Verified Answer and supporting papers - 24-28

Respondent's Affirmation In Opposition and supporting papers - 29-34

Respondent's Memorandum of Law and supporting papers - 35-42

Petitioner's Reply Affirmation and supporting papers - 43-49

it is,

ORDERED, that said Petition is hereby denied in all respects for the reasons hereinafter set forth.

The Petitioner Corporation herein seeks to stay arbitration of a dispute between Petitioner Corporation and one of its Shareholders, with Petitioner Corporation alleging that the Shareholders Agreement entered into by the Petitioner Corporation's Shareholder does not provide for arbitration of the matter Respondent seeks arbitration of, that being his demand for: [*2]

1.An accounting of all profits and losses of the Petitioner Corporation;

2.All books, records and documents .

3.Reimbursement for legal fees and the costs and disbursements of these proceedings.

It is uncontroverted that Respondent is a Shareholder of the Petitioner Corporation, as well as an Officer and Director thereof. It is also uncontroverted that the Shareholder's Agreement contains the following language:

"8.Any dispute or controversy arising among the parties hereto regarding any of the terms of this Agreement or breach thereof, the determination of which is not otherwise provided by this Agreement, shall be submitted to and determined by Arbitration, on the written demand of any of the parties hereto. This shall be held in the City of New York in accordance with the rules then applying of the American Arbitration Association and in accordance with the laws of the State of New York applicable thereto. In any Arbitration, all Service and Notices shall be sent by Certified Mail, Return Receipt Requested, to the address of the parties set forth above. Copies of all said Service and Notices shall additionally be sent to:

Robert Silberglied, Esq.

10 East 40 Street

New York, New York 10016

Any Award or Decision made by the Arbitrators shall be conclusive, in the absence of fraud, and Judgment upon said Award or Decision may be entered into in any court having jurisdiction thereof."(emphasis added)

It is uncontroverted that Respondent properly served and notice his Demand For Arbitration, in compliance with the technical requirement set forth in the above language of the Shareholders Agreement. Still further, it is uncontroverted that the Shareholders Agreement contains a detailed Article 3 regarding disposition of stock by a Shareholder, and the manner for determining the value of the Shareholder's interest in the Petitioner Corporation, requiring the valuation of said stock "...in accordance with generally accepted accounting practice...".

In the opinion of the Court, there most certainly exists a dispute to be arbitrated between the parties to the Shareholders Agreement with the valuation of Respondent's stock in Petitioner Corporation, since Respondent is entitled to know whether said interest was properly valuated pursuant to generally accepted accounting procedures, or other applicable laws of the State of New York, including criminal statutes defining fraud, which would require an thorough examination of the records Respondent seeks.

Furthermore, no language set forth in the Shareholders Agreement could stand in direct conflict with the Laws of the State of New York, and all parties are referred to Business Corporation Law § 624 (Books and records; right of inspection, prime facie evidence). The Court is of the opinion that, absent arbitration, that denial of Respondent's request for access to the Petitioner Corporation's records, books, and accountings of profits and losses, could be easily resolved by a Court, especially in light of Petitioner Corporation's position that Respondent's request is beyond the arbitration provisions of the Shareholder Agreement, but that decision remains with Respondent, as it is [*3]currently beyond the jurisdiction of this Court to decide Respondent's request on the merits, unless he abandons his request for arbitration and brings the matter directly before the Court for determination..

For all the reasons stated herein above, it is, therefore,

ORDERED, Petition by Counsel for BETTER LIVING NOW, INC., for, inter alia, a Judgment, pursuant to CPLR § 7503(b), staying the arbitration filed by Respondent on the grounds that the Shareholders Agreement between Petitioner and Respondent does not provide for the arbitration of Respondent's proposed claims, is hereby denied in all respects, and this matter is therefore dismissed.

Dated: Riverhead, New York

February 8, 2006

____________________________________

HON. JEFFREY ARLEN SPINNER, J.S.C

FINAL DISPOSITION NON-FINAL DISPOSITION

SCAN DO NOT SCAN

TO: