Cach, LLC v Bailey

[*1] Cach, LLC v Bailey 2009 NY Slip Op 50940(U) [23 Misc 3d 1125(A)] Decided on May 13, 2009 Canandaigua City Court Aronson, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 13, 2009
Canandaigua City Court

Cach, LLC, Plaintiff,

against

Kim Bailey, Defendant.



CV-001736-07



Plaintiff by:

Daniels & Norelli, P.C., Brian J. Kellogg, Esq., of counsel

Defendant by: No appearance

Arbitrator: Laurence M. Karz, Esq.

Stephen D. Aronson, J.

This is a case of first impression. Following a case referral from City Court to a court-annexed arbitrator, can the referring court entertain a motion for summary judgment while the arbitration case is pending?

The plaintiff seeks $5,424.13 based on the defendant's failure to pay a credit card balance. This case was referred from Canandaigua City Court to arbitration pursuant to Court Rule 22 NYCRR § 28, which provides for the referral of City Court claims to arbitration where the recovery sought is less than $6000. Laurence M. Karz, Esq. was appointed as arbitrator. He had at least three scheduled arbitration hearings and requested that plaintiff produce documentary evidence to support its claim. Instead of producing the documentary evidence requested by the arbitrator, and while the case was pending before the arbitrator, the plaintiff moved for summary judgment on the "account stated" cause of action in Canandaigua City Court, the same court that referred the case to arbitration. The arbitrator then moved to dismiss the plaintiff's motion for summary judgment and requested an order directing that the plaintiff be compelled to submit the documentation supporting its claim. A request for attorneys fees and sanctions was withdrawn. [*2]

The plaintiff seeks summary judgment on the "account stated" cause of action. The motion for summary judgment has gone unanswered by the defendant. The arbitrator pointed out that mail sent to the defendant has come back as "undeliverable." In response to the plaintiff's motion, the arbitrator claims that the summary judgment motion must be dismissed because the court does not have authority or jurisdiction to hear the motion as long as the arbitration is pending. The arbitrator also contends that by attempting to avoid producing relevant documentation at the arbitration and by bringing on its motion for summary judgment, plaintiff is attempting to circumvent the arbitration procedures.

The plaintiff contends that it has followed normal and statutory procedure, that the arbitrator has no standing to make the instant motion, and that the arbitrator should be disqualified if the motion for summary judgment is denied.

Before 1920, an agreement to submit a case to arbitration was considered an attempt to oust the courts of their jurisdiction and was held void as against public policy. Meacham v Jamestown, 211 NY 346 (1914). New York law was amended to recognize and enforce agreements to arbitrate, and in 1921 the Civil Practice Act (predecessor to the CPLR) was amended to reflect those changes. L. 1920, c. 275. In the same year, the Court of Appeals ruled that the arbitration process neither deprived litigants of access to the courts nor divested them of jury trial rights because these rights were waivable. Berkovitz v Arbib & Houlberg, 230 NY 261 (1921). "From that moment on, New York became and has remained an enthusiastic supporter of the arbitral process." New York Practice, 4th Edition, David D. Siegel, § 586, p. 1021.

Extrajudicial arbitration is a procedure available under Article 75 of the CPLR. The extrajudicial arbitration process is distinguishable from the court-annexed arbitration process: Equally unrelated to Article 75 is the court-annexed arbitration, a semi-compulsory kind used within the court system for money claims not exceeding a certain figure. It was at first inaugurated on an experimental basis in some lower courts as a way to expedite the disposition of cases too big for the Small Claims part but still of modest dimension. It is now standardized under CPLR 3405, but it applies in a given court only if so directed by the court's administrators. The procedure is officially denominated the "Alternative Method of Dispute Resolution by Arbitration," and is implemented by rules.

New York Practice, 4th Edition, David D. Siegel, § 586, p. 1024.

CPLR 3405 (enacted in 1978) authorizes the Chief Judge of the Court of Appeals to promulgate rules for the arbitration of claims for the recovery of a sum not exceeding $6000. According to CPLR 3405, the rules "... must permit a jury trial de novo upon demand by any party following the determination of the arbitrators ... and shall also provide for all procedures necessary to initiate, conduct and determinethe arbitration." The rules governing court-annexed arbitration are set forth at 22 NYCRR § 28. [*3]

The most significant portion of the rules as it pertains to this case is 22 NYCRR § 28.14 "General Power of Court":

The court where the action was commenced or, if the action was transferred, the court to which it was transferred, shall hear and determine all collateral motions relating to arbitration proceedings.

Once the action is transferred, there is no provision of law which permits the referring court to exercise concurrent jurisdiction of matters other than "collateral motions relating to arbitration proceedings." Therefore, the issue is whether a motion for summary judgment constitutes a "collateral motion relating to arbitration proceeding."

It is the holding of this court that a motion for summary judgment does not constitute a collateral motion relating to the arbitration proceeding.

A summary judgment motion is addressed to the court and can be dispositive of the case on the merits by the court. Although it may have certain advantages, it skirts the arbitration process entirely. Judicial interference with the process and outcome of arbitration is discouraged. Waehner v. Frost, 1 Misc 3d 893 (Supreme Court, Saratoga County, 2003); Dowleyne v. New York City Transit Authority, 309 AD2d 583 (1st Dept., 2003). Once commenced, arbitration proceedings are supervised solely by the arbitrator, and a court has no jurisdiction to intervene. City of Newark v. Law Dept. of the City of New York, 194 Misc 2d 246 (Supreme Court, New York County, 2002). There may be a policy developed in some courts to sidestep the arbitration referral by entertaining motions for summary judgment; however, in the absence of a court rule specifically authorizing the motion, there is no authority for the practice. When a case has been referred to arbitration, a summary judgment motion should not be entertained without court leave. Here, there was no application to obtain leave of the court in order to proceed with a summary judgment motion. Therefore, the plaintiff's motion for summary judgment is denied, without prejudice.

The arbitrator's application to compel plaintiff to produce certain documents must also be denied. The arbitrator's powers, as enunciated in the court rules, do not authorize the arbitrator to seek documents. The arbitrator should decide the case on the evidence presented.

I have considered the remaining contentions of the plaintiff. In my view, the arbitrator has standing to bring this motion by necessity as there is no other way the issue can be raised.

Finally, the issue about whether the arbitrator should be disqualified cannot be reached because it was not raised by formal motion.

Arbitrator to submit order.

Dated: May 13, 2009_______________________

Canandaigua, New YorkStephen D. Aronson

Canandaigua City Court Judge