Nissanoff v New York Diamond Dealers Club

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Nissanoff v New York Diamond Dealers Club 2024 NY Slip Op 32512(U) July 12, 2024 Supreme Court, New York County Docket Number: Index No. 652400/2023 Judge: Louis L. Nock Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 652400/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 07/12/2024 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART HON. LOUIS L. NOCK Justice ---------------------------------------------------------------------------------X ITZHAK NISSANOFF and NISSANOFF ITZHAK, INC., Plaintiffs, INDEX NO. MOTION DATE MOTION SEQ. NO. 38M 652400/2023 08/01/2023 001 -vNEW YORK DIAMOND DEALERS CLUB, WILLIAM ZEV LERNER, and SUHAIL GAYAL, DECISION + ORDER ON MOTION Defendants. ---------------------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 23, 24, 25, 26, and 27 were read on this motion to DISMISS . LOUIS L. NOCK, J.S.C. Upon the foregoing documents, the motion of defendants New York Diamond Dealers Club (“DDC”) and William Israel Lerner, sued incorrectly herein as William Zev Lerner,1 to dismiss the complaint pursuant to CPLR 3211 is granted, for the reasons set forth in the moving and reply papers (NSYCEF Doc. Nos. 4, 5, 26) and the exhibits attached thereto, in which the court concurs, as summarized herein. This action arises out of an arbitration before the DDC in which plaintiffs were parties. Defendant Lerner is the DDC’s former general counsel. Plaintiffs allege that the DDC and Lerner engaged in various acts demonstrating impropriety and bias against plaintiffs in the underlying arbitration. The prevailing parties at the arbitration, nonparties Umesh Shah and Khushi Diamonds, moved to confirm the arbitration award in the proceeding captioned Khushi Diamonds v Itzhak Nissanoff, et al., bearing Index No. 714392/2017, then pending in the 1 Defendant Suhail Gayal has not appeared in the action. 652400/2023 NISSANOFF, ITZHAK ET AL vs. NEW YORK DIAMOND DEALERS CLUB ET AL Motion No. 001 [* 1] 1 of 4 Page 1 of 4 INDEX NO. 652400/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 07/12/2024 Supreme Court of the State of New York, Queens County, before the Hon. Marguerite A. Grays. On May 29, 2020, Justice Grays granted Khushi Diamonds’ motion to confirm the arbitration award, and denied the cross-motion of plaintiffs’ herein to vacate the award (short form order, NYSCEF Doc. No. 12). Justice Grays noted that plaintiffs herein had argued that “the arbitrator was coerced into making findings against them, the arbitrators, the arbitrators promoted arguments for [Khushi Diamonds] to the Nissanoff defendants’ detriment, and the arbitrators were biased and engaged in various types of misconduct and violation of the By-laws of the [DDC]” (id. at 2). The court was not persuaded by these arguments, finding that “[d]efendants have failed to show by clear and convincing evidence a sufficient basis for vacating the award” and that the defendants’ remaining contentions were “without merit” (id. at 4). Plaintiffs herein now seek damages against DDC and Lerner for their conduct during the arbitration, raising the same claims of bias and impropriety that have previously been heard and rejected. “The doctrine of collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same” (Martinez v New York City Tr. Auth., 203 AD3d 87, 91 [1st Dept 2022]). “The doctrine applies if the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in an earlier action” (id.). The issue of arbitral bias or impropriety was clearly raised, decided against plaintiffs, and material in the proceeding to confirm the award, and plaintiffs are barred from relitigating it here (see John St. Leasehold, L.L.C. v Brunjes, 234 AD2d 26, 26 [1st Dept 1996] [“In any event, the District Court judgment confirming the results of arbitration is res judicata on the issues of arbitrator bias and misconduct that plaintiff seeks to raise herein”]). To 652400/2023 NISSANOFF, ITZHAK ET AL vs. NEW YORK DIAMOND DEALERS CLUB ET AL Motion No. 001 [* 2] 2 of 4 Page 2 of 4 INDEX NO. 652400/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 07/12/2024 the extent that plaintiffs asserted at oral argument that certain of their allegations were not placed before the court on the cross-motion to vacate (transcript of proceedings, NYSCEF Doc. No. 27 at 12), plaintiffs cannot establish that they lacked a full and fair opportunity to litigate the issue. Even were collateral estoppel not an issue, the allegations against DDC and Lerner implicate conduct that took place during a pending arbitration. As plaintiffs concede, acts by defendants in the context of an arbitration proceeding, or in Lerner’s case, his participation therein, are not subject to suit (Dowlah v American Arbitration Assn., 221 AD3d 426, 427 [1st Dept 2023], lv to appeal denied sub nom. Dowlah v American Arbitration Association (AAA), 2024 NY Slip Op 69730 [Ct App June 20, 2024]; Austern v Chicago Bd. Options Exch., Inc., 898 F2d 882, 886 [2d Cir 1990] [“Accordingly, we hold that arbitrators in contractually agreed upon arbitration proceedings are absolutely immune from liability in damages for all acts within the scope of the arbitral process”]). While plaintiffs assert that defendants’ obvious bias should preclude a claim of immunity, the cases they rely upon concern bias as a ground for vacating an award, not for a damages suit (see, e.g. J. P. Stevens & Co., Inc. v Rytex Corp., 34 NY2d 123, 125 [1974] [“We agree and hold that the failure of an arbitrator to disclose facts which reasonably may support an inference of bias is grounds to vacate the award under CPLR 7511”]; Matter of Seligman v Allstate Ins. Co., 195 Misc 2d 553, 557 [Sup Ct, Nassau County 2003] [“An arbitrator's failure to disclose any information that may reasonably support an inference of bias may be grounds to vacate the arbitration award so long as the relationship was not a trivial one”]). Plaintiffs fail to provide any authority to support an exception to arbitral immunity for claims of bias. Accordingly, it is hereby ORDERED that the motion is granted; and it is further 652400/2023 NISSANOFF, ITZHAK ET AL vs. NEW YORK DIAMOND DEALERS CLUB ET AL Motion No. 001 [* 3] 3 of 4 Page 3 of 4 INDEX NO. 652400/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 07/12/2024 ORDERED that the Clerk of the Court is directed to enter judgment in favor of defendants New York Diamond Dealers Club and William Israel Lerner, incorrectly sued herein as William Zev Lerner, dismissing the action against said defendants with prejudice, with costs and disbursements to said defendants upon submission of an appropriate bill of costs; and it is further ORDERED that the action is severed and continued as against defendant Suhail Gayal. This constitutes the decision and order of the court. ENTER: 7/12/2024 DATE $SIG$ LOUIS L. NOCK, J.S.C. CHECK ONE: CASE DISPOSED X GRANTED X DENIED NON-FINAL DISPOSITION GRANTED IN PART APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT 652400/2023 NISSANOFF, ITZHAK ET AL vs. NEW YORK DIAMOND DEALERS CLUB ET AL Motion No. 001 [* 4] 4 of 4 OTHER REFERENCE Page 4 of 4

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