Ratner v Davison

[*1] Ratner v Davison 2006 NY Slip Op 51543(U) [12 Misc 3d 1192(A)] Decided on August 7, 2006 Supreme Court, Nassau County Phelan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 7, 2006
Supreme Court, Nassau County

Scott J. Ratner, M.D., individually and on behalf of EDWARD T. DAVISON, M.D. and SCOTT J. RATNER, M.D., P.C., Petitioner,

against

Edward T. Davison, M.D., Respondent.



8378/06



Russ & Russ, P.C.

Attorneys for Petitioner Scott J. Ratner, M.D.

543 Broadway

P. O. Box 149

Massapequa, NY 11758

Meyer, Suozzi, English & Klein, P.C.

Attorneys for Respondent

1505 Kellum Place

P. O. Box 803

Mineola, NY 11501-0803

Thomas P. Phelan, J.

Application by petitioner for an order confirming an arbitrator's opinion and order dated December 19, 2005 and directing respondent to deposit $103,476 plus interest and $1,054,731.49 plus interest into a Joint Escrowee Account maintained by the Joint Trustees is denied.

The parties to this action are former equal shareholders in a professional corporation specializing in cardiology. In 1997, respondent terminated petitioner's interest in the professional corporation, which resulted in dissolution of their practice. The shareholder and employment agreements of the parties indicated that the party responsible for causing dissolution of the professional corporation would be subject to a $250,000 penalty, and that the party causing dissolution would be subject to an additional $250,000 penalty if his motivation for causing dissolution fell into any one of several contractually enumerated categories. A lengthy arbitration ensued, in which each [*2]party sought to penalize the other for the dissolution of the practice, to obtain his share of the professional corporation's accounts receivable and to recover attorney's fees.

After years of arbitration, the arbitrator issued an opinion and order dated February 9, 2005, which settled all issues of liability resulting in an award of damages favorable to petitioner. In March 2005, the arbitrator amended his opinion and order of February 2005 to correct certain figures used in the calculation of damages and to order respondent to disgorge $99, 020.16 to cover the difference between the balance of the Joint Escrowee Account containing the corporation's accounts receivable and the award due petitioner. The arbitrator declined, however, to calculate an award for attorney's fees at that time and thus refused petitioner's request for respondent to deposit funds to securitize the pending counsel fees award into the Joint Escrowee Account.

On June 30 2005, the arbitrator issued his final award and order. In that order, respondent was directed to pay petitioner $983,979.84 for the value of petitioner's share of the practice, $250,000 in additional severance and $1,024,452.18 in attorney's fees plus interest. The arbitrator did not direct respondent to deposit the funds owed into the Joint Escrowee Account, but instead directed that payment be remitted no later than June 1, 2005. The arbitrator's final award was subsequently confirmed by this court in an order dated March 13, 2006 [Phelan, J.].

On July 6, 2005, counsel for both parties consented in writing to the provisions of a court order of same date [Phelan, J.], which explicitly stated that further applications to the court to vacate or modify any award of the arbitrator would be presented to the court rather than the arbitrator.

On July 29, 2005, petitioner moved before the arbitrator to request that respondent be ordered to disgorge funds pursuant to the final award and to deposit the amount of attorney's fees owed to petitioner into the Joint Escrowee Account. Subsequently, on December 19, 2005 the arbitrator issued an opinion and order directing respondent to deposit $1,158,207.56 into an escrow account and to disgorge $104,476.07 and deposit same in escrow. Petitioners now seek to have this opinion confirmed and enforced.

The arbitrator does not possess authority to amend or modify his prior award, aside from the authority vested in him by CPLR §7509 (see, Hanover Ins. Co. v. American Int'l Underwriters Ins. Co., 2656 AD2d 545 [2d Dep't., 1999]; Matter of Mole, 14 AD2d 1 [4th Dep't., 1991]; Herbst v. Hagenaers, 137 NY 290 [1893]). While petitioner purported to move before the arbitrator pursuant to CPLR §7509, petitioner's motion was not timely as it was made more than twenty days after delivery of the final award. Although petitioner contends that there was a delay in receiving the award, he submits no proof as to the date of receipt of said award. Even assuming arguendo that petitioner's motion was timely, the relief requested therein is not predicated on any of the grounds stated in CPLR §7511(c), and thus modification pursuant to CPLR §7509 is unavailable to him (see, CPLR §7511[c]).

While both the arbitrator and petitioner insist that the arbitrator reserved jurisdiction in his March [*3]2005 order, and that the issue was raised by petitioner but not adjudicated, these assertions must fail. In the March 2005 order and opinion, the arbitrator merely stated that he would not order a deposit to secure a future attorney's fees award, as doing so would be "premature" because such an award had not yet been calculated. In and of itself, this language does not constitute a reservation of jurisdiction in this matter (compare, Meisels v. Uhr, 79 NY2d 526 [1992]). Moreover, it certainly does not leave the door open for a modification of the June 2005 final award because the arbitrator did, in fact, decide the issue by directing respondent to remit payment to petitioner rather than deposit the funds in escrow in his final award. In issuing his final order, the arbitrator had every ability to direct respondent to deposit funds in escrow but declined to do so. The arbitrator's description of how the award was to be tendered was sufficiently definite such that it effectively settled the issue of how the execution of the award was to be carried out (see, In the Matter of Civil Service Employees Ass'n. Inc., 284 AD2d 532 [2d Dep't., 2001]).

Petitioner's reliance on cases stating that an arbitrator has the inherent power to fashion equitable remedies as the circumstances may dictate (see, Matter of Silverman, 61 NY2d 299 [1984]), is misguided. While the arbitrator does, in fact, have the power to fashion equitable remedies, he may only do so in the process of reaching his final award. Petitioner fails to cite any cases that remotely suggest that an arbitrator has the authority to revisit matters resolved by the final award and fashion remedies anew without prior agreement of the parties or a prior express reservation of jurisdiction.

Moreover, counsel for each party consented to the July 6, 2005 court order stating that all applications to confirm, vacate or modify the arbitrator's award would be made before this Court. Therefore, after that date, any application made before the arbitrator for a modification of the final award was improperly brought. The parties are bound to this court order, and therefore must bring all future applications before this court as described in that order.

Accordingly, petitioner's request for the confirmation of the arbitrator's opinion and order, which amounts to nothing more than a modification of the relief provided in the arbitrator's final award, is denied. The arbitrator's opinion and order dated December 19, 2005 is vacated (see, Belli v. Matthew Bender & Co., 24 AD2d 72 [1st Dep't., 1965]).

Respondent is directed, pursuant to the final award of the arbitrator as confirmed by this court, to remit payment of $983,979.84 for the value of petitioner's share of the practice, $250,000 in additional severance and $1,024,452.18 in attorney's fees, plus interest, to petitioner within twenty (20) days of receipt of this order from any source.

If petitioner requires assistance in the collection of his award, he must bring proceedings before this court to enforce the confirmed judgment of the arbitrator.

This decision constitutes the order of the court.

Dated: AUGUST 7, 2006 THOMAS P. PHELAN

J.S.C.