Matter of Broadcast Music Inc. v Borinquen Broadcasting Co. Inc.
Annotate this CaseDecided on October 5, 2006
Supreme Court, New York County
In the Matter of the Arbitration Between Broadcast Music, Inc., Petitioner, and
against
Borinquen Broadcasting Co., Inc. d/b/a WVJP-AM/FM, Respondent.
111473/05
Herman Cahn, J.
Petitioner Broadcast Music, Inc. ("BMI") moves to confirm an arbitration award and to direct that judgment be entered thereupon, against respondent Borinquen Broadcasting Co., Inc. ("Borinquen"), CPLR 7510. Borinquen opposes and seeks to vacate the award, CPLR 7511.
For the reasons set forth herein, the award is confirmed.
BACKGROUND
BMI is a corporation that licenses the public performance rights of copyrighted musical compositions, to broadcasters and other users of music.
Borinquen operates radio station WVJP-AM/FM and negotiates with companies such as BMI to obtain performance rights for its stations.
On January 1, 1994, BMI entered into a license agreement with Borinquen giving it permission to perform certain copyrighted musical compositions licensed by BMI between January 1, 1992 and December 31, 1996. The parties later entered into an interim license agreement on July 10, 1997 to extend the prior agreement. The license agreement called for arbitration in the event there were any disputes resulting under its terms and conditions. The agreement called for: (1) all claims to be submitted to the American Arbitration Association (the "AAA") in New York for arbitration under its rules; (2) the arbitration award to be binding and conclusive; and (3) judgment could be entered in any court having jurisdiction.
BMI alleges that Borinquen breached the license agreement by failing to pay license fees. BMI claims that Borinquen owes $46,031.85 for license fees past due through May 2005.
BMI served a Demand for Arbitration ("Demand") on January 31, 2005. In its Demand, BMI informed Borinquen that under the provisions of the license agreement that called for compliance with the AAA rules and procedures, Borinquen was entitled to select an arbitrator. Borinquen failed to do so. Thereafter, an arbitrator was appointed by the AAA. A hearing was [*2]held before arbitrator Elizabeth Gilbert, in which she considered documents submitted by BMI. Borinquen did not submit any documents. The arbitration award, dated June 5, 2005, provided: (1) Borinquen was to pay BMI $46,031.85 with interest, at the rate of 9% per annum, accruing from the date of the award until payment; (2) Borinquen was to pay BMI $800.00 for its attorneys' fees and costs; (3) Borinquen was to pay BMI $450.00 for Borinquen's share of the administrative fees and compensation for the arbitrator, which BMI had advanced to the AAA; and (4) Borinquen was to pay the AAA $75.00 for fees still due.
The AAA sent a copy of the award to BMI and Borinquen on June 6, 2005. Due to an error of the name of Borinquen in the award, the AAA sent a copy of the Disposition For
Application of Modification of Award to BMI and Borinquen on August 1, 2005.
BMI thereupon initiated this proceeding, to confirm the arbitration award. Borinquen failed to appear to oppose the petition and the motion to confirm the award was granted on default on November 7, 2005. Borinquen then moved to set aside the default judgment and submitted papers in opposition to the petition to confirm the arbitration award, arguing that the Demand was defective and never properly served. BMI also submitted papers in further support of its petition to confirm the arbitration award, stating the Demand was not defective for lack of certain language and that it was properly served. The court notes that the papers submitted in opposition to the motion to confirm were an attorney's affidavit and not an affidavit by a party. Nevertheless, the motion to vacate the default judgment was granted and the motion to confirm the arbitration award was reinstated.
DISCUSSION
New York public policy strongly favors arbitration. Hackett v. Milbank, Tweed, Hadley & McCloy, 86 NY2d 146, 154 (1995); Maross Constr., Inc. v. Cent. NY Reg'l Transp. Auth., 66 NY2d 341, 345 (1985). Because the purpose of arbitration is to allow final, binding resolution of parties' claims without resorting to the courts, the scope of review of an arbitration decision is extremely limited. As a result, great deference is given to an arbitration award. In re N.Y.C. Transit Auth., 6 NY3d 332, 336 (2005).
Demand for Arbitration
Borinquen alleges that it did not receive proper notice because the Demand was defective. It relies upon CPLR 7503(c), which describes the procedure of how a party should effectively notify of its intention to arbitrate. The section provides that a party who serves a notice of intention to arbitrate or a demand for arbitration must include the following
information: (1) the name and address of the party seeking arbitration; (2) the agreement that calls for arbitration; and (3) language "stating that unless the party served applies to stay the arbitration within twenty days after such service he shall thereafter be precluded from objecting that a valid agreement was not made or has not been complied with . . . ." NY C.P.L.R. 7503(c) (2006). Borinquen claims that the correspondence it received from BMI lacked this language and, therefore, the Demand was insufficient to constitute notice under CPLR 7503, thus requiring that the award be vacated.
BMI acknowledges that it did not include the requisite language in its notification. However, it claims that omission of that language alone does not warrant vacatur. BMI argues [*3]that the omission of the 20-day notice language only renders the Demand ineffective to preclude Borinquen from raising threshold issues after that time.
Borinquen's reliance on 7503(c) is misplaced. Instead, CPLR 7511 governs whether an award can be vacated and specifies that vacatur is only allowed under very specific circumstances. When the party seeking to vacate an award neither participated in the arbitration nor was served with a notice of intention to arbitration, the only grounds for vacating an award are if: (1) the rights of the party were prejudiced by one of the grounds referenced, such as corruption in procuring the award, impartiality of the arbitrator, or the arbitrator exceeded his power; (2) a valid agreement to arbitrate was not made; (3) the arbitration agreement had not been complied with; or (4) the underlying claim was barred by the statute of limitations. See id. at 7511(b)(2). Absent one of these specific grounds, the arbitration award should not be vacated.
Borinquen relies on Albert Bialek Assocs. Inc. v. Northwest-Atlantic Partners Inc., 251 AD2d 145 (1st Dep't 1998) in support of its proposition that an arbitration award should be vacated for the mere noncompliance with the information requirement in CPLR 7503(c). While the court therein did grant the motion to vacate, it only did so because the underlying agreement specifically called for the procedural rules in CPLR 7501-7514 to govern the validity of any arbitration disputes. Absent particular language that makes "formal notice of CPLR 7503(c) a condition precedent to arbitration, . . . [n]oncompliance with CPLR 7503(c) . . . is not ordinarily an independent ground for vacatur." Vincent C. Alexander, Practice Commentaries, NY C.P.L.R. 7511, at 2 (McKinney 1999); see also Cooper v. Bruckner, 21 AD3d 758, 759 60 (1st Dep't 2005). Instead, if a party fails to include the language specified regarding the deadline to stay the arbitration, the respondent is only entitled to raise threshold arbitration issues past the 20-day limit. See Cooper, 21 AD3d at 759 60. Omission of that language does not render the Demand invalid for all purposes. See id. at 760.
Borinquen is not entitled to vacate the arbitration award based solely on the lack of notice for the 20-day limit to stay arbitration without also arguing a basis found in CPLR 7511. Because Respondent has not made any such arguments, the award will not be vacated.
Service of the Demand for Arbitration
Borinquen's second argument for vacatur rests on improper service of the Demand. Borinquen argues that BMI's Demand was not properly served because it was delivered to the offices of Borinquen via Federal Express only.
BMI alleges that it served the Demand both via Federal Express and by certified
mail, return receipt requested, in compliance with CPLR 7503(c).
In order for a notice of intention to arbitrate to be considered properly served, it must be served in the same manner as a summons or by registered or certified mail, return receipt requested. NY C.P.L.R. 7503(c). BMI has provided documentary proof of delivery that the Demand was also sent via certified mail, return receipt requested, to Borinquen's office. Therefore, vacatur of the award will not be granted on this ground.
Therefore, it is
ORDERED that the petition to confirm the arbitration award is granted and the Award is confirmed; and it is further
ORDERED that the cross-motion to vacate the Award is denied; and it is further [*4]
ORDERED that the clerk shall enter judgment for the amount awarded by the arbitrator in the decision, together with interest from the date of the award, and the costs and disbursements of this proceeding; and it is further
ORDERED that the clerk shall enter judgment accordingly.
Dated: October 5, 2006
E N T E R :
_____________/s/_______________
J.S.C.
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