Fernandez v Cohen

Annotate this Case
[*1] Fernandez v Cohen 2012 NY Slip Op 51939(U) Decided on October 12, 2012 Supreme Court, New York County Ling-Cohan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 12, 2012
Supreme Court, New York County

Benito R. Fernandez, Petitioner,

against

Robert Cohen and HARVEY ROSS, Respondents.



111874/11



Plaintiff:

Adolph D. Seltzer

270 Madison Ave., Room 1410

New York, NY 10016

Defendant:

Shapiro, Croland, Reiser, Etal

411 Hackensack Ave, Plaza II

Hackensack, NJ 07601

Doris Ling-Cohan, J.



Petitioner Benito Fernandez commenced this special proceeding against respondents Robert Cohen (Cohen) and Harvey Ross (Ross) to permanently stay an arbitration on the grounds that: (1) there is no controversy to be arbitrated; (2) the necessary parties to the controversy have not signed the agreement to arbitrate; and (3) the claim to be arbitrated is barred by the statute of limitations. [*2]

Respondents jointly oppose petitioner's order to show cause arguing that: (1) the necessary parties have agreed to arbitrate; and (2) the arbitration is not time-barred.

BACKGROUND

Petitioner Fernandez, president of Warminster Investments Corp. (Warminster Investments) and Horizons Investors Corp. (Horizons Investors), both shareholders in Emerging Visions, Inc. (Emerging Visions), entered into a Rescission Agreement, on behalf of Horizons Investors, dated December 31, 2003, effective April 14, 2003[FN1], for, inter alia,the rescission, ab initio, of 6,821,160 shares of Emerging Visions stock in return for payment of a principal amount of $272,846.40. Thereafter, Horizons Investors declined to return the agreed upon shares of common stock.

On March 30, 2011, the shareholders of Emerging Visions entered into an agreement (Contribution Agreement) whereby the shareholders owning more than 90% of Emerging Vision's shares would contribute all of their shares to EMVI Acquisition Corp. (Acquisition) in exchange for an equal number of common stock of EMVI Holdings, LLC (Holdings) and to effectuate a short-form merger pursuant to New York Business Corporation Law § 905. Exhibit A of the Contribution Agreement lists the Emerging Vision shareholders, which included Horizons Investors, Ross Holdings, LLC (Ross Holdings), of which Ross is a manager, and numerous members of Cohen's family, along with the number of shares each shareholder contributed and the number of shares each shareholder will be issued. Exhibit A of the Contribution Agreement further refers to the Memorandum of Understanding, signed by petitioner and respondents, on March 30, 2011, which includes an arbitration provision.

The Memorandum of Understanding specifically sets forth the controversy which is at issue in this case, as follows: Horizons Investors contends that it owns 57,347,703 shares of Emerging Vision common stock, including Horizons Investors' shares and Warminster Investments' shares. However, Emerging Vision contends that Horizons Investors owns less shares than 57,347,703. The Memorandum of Understanding states that "in the interest of settling the dispute, Harvey Ross, Robert Cohen and Ben Fernandez agree to meet and discuss with Emerging Vision and the transfer agent to resolve the dispute." The Memorandum of Understanding further indicates that if the matter is not resolved by petitioner and respondents by June 30, 2011, the issue would be subject to arbitration. On or about September 30, 2011, petitioner received a Demand for Arbitration and Notice of Intention to Arbitrate (Arbitration Demand). This proceeding followed.

DISCUSSION

It is well settled that "on a motion to...stay arbitration, the court's role is...limited to deciding only three threshold questions: whether the parties made a valid agreement; if so, whether the parties complied with the agreement; and whether the claim sought to be arbitrated is barred by the statute of limitations". Cooper v Bruckner, 21 AD3d 758, 759 (1st Dep't 2005). See also Prinze v Jonas, 38 NY2d 570, 574 (1976); Gershen v Hess, 163 AD2d 17, 18 (1st Dep't 1990); Avon Products, Inc. v Solow, 150 AD2d 236, 238-239 (1st Dep't 1989). CPLR 7502(b) states that "[i]f, at the time that a demand for arbitration was made or a notice of intention to [*3]arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration on an application to the court".

In this proceeding, petitioner disputes the applicability of the alleged arbitration provision. Specifically, petitioner maintains that there is no controversy to be arbitrated, as he signed the Memorandum of Understanding in his individual capacity, not as president of Horizons Investors. Petitioner further claims that he, as an individual, was never party to the Rescission Agreement or the Contribution Agreement, and thus, cannot be compelled to arbitrate a dispute in which he was not involved. Petitioner also contends that the Memorandum of Understanding, containing the arbitration provision, was also signed by Cohen and Ross, in their individual capacities only. Petitioner further contends that the necessary parties, namely Horizons Investors, Warminster Investments, Ross Holdings, and each member of Cohen's family, did not agree to arbitrate.

Additionally, petitioner argues that the number of shares owned by Horizon Investors is not an issue which can be arbitrated, as it is barred by the statute of limitations. Petitioner maintains that since the statute of limitations for a breach of contract is six years, respondents had until December 31, 2009, based upon mutual mistake, to commence an action to compel the transfer of 6,821,160 shares of Emerging Visions stock pursuant to the Rescission Agreement. Petitioner's argument, however, that the six-year statute of limitations for the alleged breach of contract began to run upon the signing of the Rescission Agreement, on December 31, 2003, is unsupported.

In opposition, respondents argue that the arbitration should not be permanently stayed, as the necessary parties, as mentioned above, have agreed to arbitrate, and the arbitration is not time barred. Respondents contend that the statute of limitations for the claim to be arbitrated began to run on March 30, 2011, when a justiciable controversy first arose between the parties, as to the number of shares owned by Horizons Investors, together with Warminster Investments, and thus, is timely. Respondents claim that the Contribution Agreement, signed by petitioner and respondents, on behalf of their respective corporate entities or trusts, noted the disagreement as to the number of shares owned by Horizons Investors in Exhibit A, which states, in pertinent part, that: "[s]hares contributed and Units to be issued to Horizons Investors Corp. to be adjusted per Memorandum of Understanding, dated March 30, 2011, by and among Robert Cohen, Benito R. Fernandez and Harvey Ross." Respondents allege that the parties to the Contribution Agreement and the Memorandum of Understanding are effectively the same, as the two documents were entered into at the same time and both refer to each other.

"A cause of action for breach of contract accrues when the breach occurs". R.V.R. Realty, LLC v Tenants Alliance, 305 AD2d 289, 290 (1st Dep't 2003). Here, the Rescission Agreement, dated December 31, 2003, states, in pertinent part, that:

Section 1.2 Repayment of Original Subscription Amount. [Emerging Vision] shall...repay to [Horizons Investors] that sum equal to the product of (a) $.04, multiplied by (b) the total number of Rescinded Units that [Horizons Investors] is surrendering to [Emerging Vision] in connection with the rescission effectuated hereby... . The Rescission Amount shall be repayable, by [Emerging Vision], pursuant to the terms and conditions of a Promissory Note, in substantially the form annexed hereto as Exhibit A, given, contemporaneously herewith, by [*4][Emerging Vision] to [Horizons Investors]."

Notably, no such promissory note, which arguably would contain relevant information and/or terms, was submitted to the court by either party. Aside from petitioner's conclusory assertion that the statute of limitations for the breach of contract began to run on the date of signing of the Rescission Agreement, no documentary evidence is provided to support his claim. Moreover, respondents assert that Horizons and Warminster were paid, on or about April 18, 2007, for the shares rescinded pursuant to the Rescission Agreement. Despite this assertion, respondents submit a letter, dated April 18, 2007, from Horizons Investors, stating that Emerging Vision had not made the payment pursuant to the promissory note, and providing Emerging Vision with written notice of its default under the note. Petitioner fails to address this as no reply papers were submitted. Upon the within submissions, petitioner has failed to satisfy his burden to show that the statute of limitations on the underlying claim began to run on December 31, 2003, the date the Rescission Agreement was signed. Thus, petitioner's order to show cause to permanently stay arbitration, on the grounds that the six year statute of limitations for the breach of contract has run, is denied.

Furthermore, petitioner's argument that the necessary parties did not sign the Memorandum of Understanding, since it was not signed by Horizons Investors, Warminster Investments, Ross Holdings, and each member of Cohen's family, and, thus, he did not agree to arbitrate, is also not persuasive. "There is a strong policy favoring arbitration". Isaacs v Westchester Wood Works, Inc., 278 AD2d 184, 185 (1st Dep't 2000). Where, as here, plaintiff has not demonstrated his right to a stay of the arbitration based on statute of limitations, the court's only role is to determine whether a valid arbitration agreement exists and whether the arbitration agreement has been complied with. Prinze v Jonas, 38 NY2d 570, 574 (1976). The Appellate Division, First Department has held that "[i]n the absence of anything to indicate a contrary intention, instruments executed at the same time, by the same parties, for the same purpose, and in the course of the same transaction will be read and interpreted together, it being said that they are, in the eye of the law, one instrument." BWA Corp. v Alltrans Express U.S.A., 112 AD2d 850, 852 (1st Dep't 1985). Here, it is undisputed that the Memorandum of Understanding was signed on the same day, by the same persons. It is also uncontested that the Contribution Agreement refers to the Memorandum of Understanding, both of which were signed as part of the same transaction. Petitioner's contention that he signed the Memorandum of Understanding in his individual capacity, while signing the Contribution Agreement in his corporate capacity, is unavailing, and thus, Petitioner's order to show cause seeking a permanent stay of arbitration is denied in its entirety.

Accordingly, it is

ORDERED and ADJUDGED that the petition is denied and this proceeding is dismissed; and it is further

ORDERED that within 30 days of entry of this order, respondents shall serve a copy of this order with notice of entry, upon petitioner.

Dated:

DORIS LING-COHAN, J.S.C.

[*5] Footnotes

Footnote 1: While the Rescission Agreement was signed on December 31, 2003, the effective date for such agreement was backdated to April 14, 2003.



Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.