Matter of FIA Card Servs. N.A. v Thompson

[*1] Matter of FIA Card Servs. N.A. v Thompson 2008 NY Slip Op 50450(U) [18 Misc 3d 1146(A)] Decided on March 10, 2008 Nassau Dist Ct Engel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 10, 2008
Nassau Dist Ct

In the Matter of the Arbitration Between FIA Card Services, N.A. f/k/a MBNA America Bank, N.A., Petitioner,

against

David F. Thompson, Respondent.



42749/07



Attorneys for plaintiff: Wolpoff & Abramson, LLP

Defendant pro se:David F. Thompson

Andrew M. Engel, J.

The Petitioner commenced this special proceeding, pursuant to CPLR § 7510, seeking confirmation of an arbitration award dated November 28, 2006, in the sum of $6,787.90, and the entry of a judgment in the amount of $6,287.90. The Respondent neither appeared at the arbitration nor herein.

The Petitioner alleges that the parties entered into a credit card agreement which included a provision requiring that any controversy or claim arising thereunder shall be resolved by arbitration held in accordance with the rules of the National Arbitration Forum. The Petitioner further alleges that following such a dispute the Respondent was served with a notice of claim in accordance with the rules of the National Arbitration Forum and CPLR § 7506(b), but failed to respond to same. It is further alleged that a hearing was held on submission within thirty (30) days of service of the notice of claim and that on November 28, 2006 the arbitrator issued a written award in the Petitioner's favor in the sum of $6,787.90. The award bears a certificate of service indicating that it was delivered to the parties on November 29, 2006 by first class mail. The Petitioner indicates that thereafter the Respondent made a payment to the Petitioner in the sum of five hundred ($500.00) dollars.

In further support of this proceeding, the Petitioner has submitted a letter dated July 13, 2006 from a Senior Licensing Analyst in the office of the Comptroller of the Currency Administrator of National Banks, a document entitled "Credit Card Agreement Additional Terms and Conditions," an undated Notice of Arbitration accompanied by counsel's undated affirmation and a Summary of Account Information, a delivery notification from the United Parcel Service, an incomplete copy of the rules of the National Arbitration Forum, and a copy of the arbitration [*2]award.What constitutes a petitioner's prima facie burden upon bringing a special proceeding to confirm an arbitration award appears to be in flux. The reported nisi prius decisions addressing this issue generally require a petitioner to demonstrate, through someone with knowledge, and in evidentiary form, (1) the timely commencement of the special proceeding, (2) the existence of a written agreement to arbitrate, submitted with the petition; (3) proof that the respondent agreed to arbitration in writing or by conduct; and (4) proper service of notice of the arbitration hearing and of the award. MBNA America Bank, NA v. Straub, 12 Misc 3d 963, 815 NYS2d 450 (Civ. Ct. NY Co. 2006); Worldwide Asset Purchasing, LLC v. Karafotias, 9 Misc 3d 390, 801 NYS2d 721 (Civ. Ct. Kings Co. 2005); MBNA America Bank, N.A. v. Nelson, 15 Misc 3d 1148, 841 NYS2d 826 (Civl Ct. Richmond Co. 2007); Asset Acceptance, LLC v. Sisson, 15 Misc 3d 796, 832 NYS2d 797 (S.C. Yates Co. 2007) As recently as eight (8) months ago, the appellate decisions addressing the issue were consistent with the foregoing. See: MBNA America Bank, N.A. v. Walls, 15 Misc 3d 142, 841 NYS2d 821 (App. Term, 2nd and 11th Jud. Dists. 2007); MBNA America Bank, N.A. v. Calciano, 15 Misc 3d 142, 2007 NY Slip Op. (App. Term, 2nd and 11th Jud. Dists. 2007); MBNA America Bank, N.A. v. Turull, 1 Misc 3d 67, 842 NYS2d 146 (App. Term, 2nd and 11th Jud. Dists. 2007); MBNA America Bank, N.A. v. DaSilva, 16 Misc 3d 128, 2007 NY Slip Op. 51275 (App. Term, 2nd and 11th Jud. Dists. 2007); MBNA America Bank, N.A. v. DaSilva, 16 Misc 3d 128, 2007 NY Slip Op. 51276 (App. Term, 2nd and 11th Jud. Dists. 2007)

On January 11, 2008, however, the Appellate Term for the Second and Eleventh Judicial Districts reversed field, expressly indicating that the court's earlier rulings in MBNA America Bank, N.A. v. Turull, supra . and MBNA America Bank, N.A. v. Calciano, supra . "should no longer be followed[,]" MBNA America Bank, N.A. v. Stehly, __ AD3d __, __ NYS2d __ , 2008 NY Slip Op. 28010 (App. Term, 2nd and 11th Jud. Dists. 2007) and effectively discrediting the other similar decisions sub silentio. In so doing, quoting from Matter of County of Rockland (Primiano Constr. Co.), 51 NY2d 1, 431 NYS2d 478 (1980), the court recognized that "questions as to whether there has been compliance with procedural stipulations to be observed in the conduct of the arbitration proceeding itself, i.e., conditions in arbitration, .... are for resolution by the arbitrator as incidental to the conduct of the arbitration proceeding' (citation omitted)." [emphasis in original] MBNA America Bank, N.A. v. Stehly, supra . at 1 No longer, at the time of an uncontested proceeding to confirm an arbitration award pursuant to CPLR § 7510, is the court to concern itself with questions involving the validity of the arbitration agreement or whether the respondent was properly served with a notice of arbitration or with a copy of the arbitration award, as long as the award "bears the certification that [it] has been duly delivered to the parties in accordance with the terms of the arbitration agreement[.]" MBNA America Bank, N.A. v. Stehly, supra . at 2, See also: MBNA America Bank, N.A. v. Cividanes, 15 Misc 3d 142, 841 NYS2d 821, (App. Term, 2nd and 11th Jud. Dists. 2007); MBNA America Bank, N.A. v. Lahav, 2008 NY Slip Op. 50092 (App. Term, 2nd and 11th Jud. Dists. 2008); MBNA America Bank, N.A. v. Campos, 2008 NY Slip Op. 50093 (App. Term, 2nd and 11th Jud. Dists. 2008); MBNA America Bank, N.A. v. O'Connor, 2008 NY Slip Op. 50094 (App. Term, 2nd and 11th Jud. Dists. 2008); MBNA America Bank, N.A. v. Holland, 2008 NY Slip Op. 50095 (App. Term, 2nd and 11th Jud. Dists. 2008) The time for a respondent to raise these issues is "either pursuant to an application to stay arbitration (CPLR 7503[b]), at the arbitration itself or, if respondent has [*3]neither participated in the arbitration nor was served with an arbitration notice, by an application to vacate or modify the award (CPLR 7511[b][2])." MBNA America Bank, N.A. v. Stehly, supra . at 1

This position is supported by the apparent mandatory language of CPLR § 7510: "The court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511[,]" as well as the Court of Appeals' decisions in United Nations Development Corporation v. Norkin Plumbing Co., Inc., 45 NY2d 358, 363, 408 NYS2d 424, 429 (1978) ["Where the agreement contains a broad clause, compliance with contractual notice provisions as well as time requirements in the grievance procedure are issues to be determined by the arbitrator (citations omitted)."] and Kingsley v. Redevco Corporation, 61 NY2d 714, 715, 472 NYS2d 610, 611 (1984) ["Inasmuch as this rule was incorporated by reference into the parties' agreement via a broad provision providing for arbitration of all disputes and controversies, the question whether the rule was complied with is one for the arbitrators to decide and is not subject to review by this court."]

These clear statements of limitation upon the court's supervisory authority in proceedings to confirm arbitration awards are consistent with "the announced policy of this State [which] favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties." Nationwide General Insurance Company v. Investors Insurance Company of America, 37 NY2d 91, 95, 371 NYS2d 463, 466 (1975); See also: Schreiber v. K-Sea Transportation Corp., 9 NY3d 331, __ NYS2d __ (2007); Stark v. Molod Spitz DeSantis & Stark, P.C., 9 NY3d 59, 845 NYS2d 217 (2007); Smith Barney Shearson Inc. v. Sacharow, 91 NY2d 39, 666 NYS2d 990 (1997) They do not, however, relegate the court to a mere bystander or mean "that the court's function on petitioner's motion to confirm [is] simply to rubber-stamp the award." Carty v. Nationwide Insurance Company, 149 AD2d 328, 330, 539 NYS2d 374, 375 (1st Dept. 1989) In fact, it is "[p]recisely because arbitration awards are subject to such judicial deference, it is imperative that the integrity of the process, as opposed to the correctness of the individual decision, be zealously safeguarded." Goldfinger v. Lisker, 68 NY2d 225, 230, 508 NYS2d 159, 161 (1986); See also: Uniformed Firefighters Association, Local 287 v. City of Long Beach, 307 AD2d 365, 762 NYS2d 819 (2nd Dept. 2003); In Re Motors Insurance Corporation (Lewis), 221 AD2d 634, 634 NYS2d 189 (2nd Dept. 1995) In so doing, the Court of Appeals has recognized that "procedural stipulations that the parties may have laid down to be observed in the conduct of the arbitration" Matter of County of Rockland (Primiano Constr. Co.), supra . at 8, 431 NYS2d at 482 are for the arbitrator's determination, whereas issues such as conditions precedent to arbitration, limitations of time and other statutory proscriptions are for the court to determine. In this regard, it is clearly for the court, not the arbitrator, to determine if the procedural and evidentiary

requirements of a proceeding to confirm an arbitrator's award, have been satisfied, before the award will be confirmed. [*4]

As noted in MBNA America Bank, N.A. v. Nelson, supra ., at 5[FN1] "it is not uncommon for confirmation of arbitration awards submitted to this court to include 3 or 4 separate assignments of the same debt[.]" It is likewise not uncommon for the arbitration award to be rendered in favor of the alleged creditor and for the petition seeking confirmation of that award to be brought by a different entity. The court should be loath to confirm such an award and enter a judgment without a proper explanation for this change of identity, supported by evidentiary proof. TPZ Corp. v. Dabbs, 25 AD3d 787, 808 NYS2d 746 (2nd Dept. 2006); Citibank (South Dakota), N.A. v. Martin, 11 Misc 3d 219, 807 NYS2d 284 (Civ.Ct. NY Co. 2005); Rockland Lease Funding Corp., Inc. v. Waste Management of New York Inc., 245 AD2d 779, 666 NYS2d 50 (3rd Dept. 1997)

The court must also review and determine issues of jurisdiction, both personal and subject matter. If no prior action or special proceeding relating to the arbitration is pending, an application to confirm an arbitration award must be brought by a special proceeding, CPLR § 7502, commenced in the same manner as a plenary action. CPLR § 304 The proceeding must be commenced within one (1) year after delivery of the award to the applicant CPLR § 7510; Teachers Associationn of Tarrytowns v. Tarrytown Board of Education, 59 AD2d 890, 399 NYS2d 45 (2nd Dept. 1977); Salamon v. Friedman, 11 AD3d 700, 783 NYS2d 651 (2nd Dept. 2004); Moye v. Thomas, 153 AD2d 673, 544 NYS2d 675 (2nd Dept.1989); and, service shall be made in the same manner as a summons. CPLR § 403(c) Additionally, "the parties in their agreement [must] have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration[.]" 9 U.S.C. § 9; Oklahoma City Associates v. Wal-Mart Stores, Inc., 923 F.2d 791 (10th Cir. 1991); The Home Insurance Company v. RHA/Pennsylvania Nursing Homes, Inc., 113 F. Supp. 2d 633 (S.D.NY 2000)

Similarly, CPLR § 7501 provides, in pertinent part, "A written agreement to submit any controversy thereafter arising or any existing controversy to arbitration ... confers jurisdiction on the courts of the state to enforce it and to enter judgment on an award." Clearly, proof of the existence of an agreement to arbitrate is a jurisdictional predicate to a special proceeding to confirm an award and to enter a judgment pursuant to CPLR § 7510. Although the court in MBNA America Bank, N.A. v. Stehly, supra . left the determination of compliance with the procedures to be followed in an arbitration proceeding to the arbitrator, the court also unequivocally recognized, that "a written arbitration agreement that bound respondent to submit the instant dispute to arbitration is necessary to confer subject matter jurisdiction on the court (citation omitted)[.]" The Court of Appeals has also made it clear that, the arbitration award notwithstanding, "[i]t is for the courts to determine whether the parties agreed to submit their dispute to arbitration[.]" Matter of County of Rockland (Primiano Constr. Co.), supra . at 4, 431 NYS2d at 480 [*5]

Additionally, CPLR § 7507 provides, in pertinent part, "the award shall be in writing, signed and affirmed by the arbitrator[.]" Without a proper affirmation, the award cannot be enforced. Abreu v. Nationwide Mutual Insurance Company, 87 AD2d 572, 447 NYS2d 744 (2nd Dept. 1982); MBNA America Bank, N.A. v. Anastasio, 35 AD3d 474, 824 NYS2d 724 (2nd Dept. 2006); MBNA America Bank, N.A. v. Nelson, supra .

Where a respondent has defaulted in a proceeding to confirm an arbitration award, the petitioner must also submit a proper military affidavit "establish[ing] the following factors: 1. the respondent is not in the military service of either the United States or an ally; 2. The investigation was done after the default occurred; 3. The investigation was performed shortly before it was submitted; 4. The facts are put forth in a manner sufficient for the court's evaluation." New York City Housing Authority v. Smithson, 119 Misc 2d 721, 464 NYS2d 672 (Civ. Ct. NY Co. 1983), see also: Palisades Acquisition, LLC v. Ibrahim, 12 Misc 3d 340, 812 NYS2d 866 (Civ. Ct. NY Co. 2006) A military affidavit contained solely withing the petition's affidavit of service is insufficient. National Bank of Far Rockaway v. Van Tassel, 178 Misc. 776, 36 NYS2d 478 (Sup. Ct. Queens Co. 1942); Atrium Funding Corporation v. McRoberts, 10 Misc 3d 1077(A), 814 NYS2d 889 (S. C. Suffolk Co. 2006)

In evaluating the proof offered by a petitioner in support of the foregoing, it must be kept in mind that "the standards governing motions for summary judgment are applicable to special proceedings generally (Matter of Port of New York Auth. [62 Cortlandt St. Realty Co.], 18 NY2d 250, 255, 273 NYS2d 337, 219 NE2d 797, cert denied sub nom. McInnes v. Port of New York Auth., 385 U.S. 1006, 87 S. Ct. 712, 17 L.Ed.2d 544)[.]"Brusco v. Braun, 199 AD2d 27, 31, 605 NYS2d 13, 16 (1st Dept.1993) aff'd 84 NY2d 674, 634 NYS2d 22 (1994); See also: CPLR § 409(b); Friends World College v. Nicklin, 249 AD2d 393, 671 NYS2d 489 (2nd Dept.1998); Bahar v. Schwartzreich, 204 AD2d 441, 611 NYS2d 619 (2nd Dept. 1994). Accordingly, to prevail, a petitioner must submit proof in evidentiary form. Friends of Animals, Inc. v. Associate Fur Manufacturers, Inc., 46 NY2d 1065, 416 NYS2d 790 (1979) A petitioner's failure to do so will result in the denial of the petition, regardless of the sufficiency of any papers in opposition. Winegrad v. New York University Medical Center, 64 NY2d 851, 487 NYS2d 316 (1985); Delgado v. Butt, __ AD3d __, __ NYS2d __, 2008 NY Slip Op. 01698 (2nd Dept. 2008); Martinez v. 123-16 Liberty Ave. Realty Corp., 47 AD3d 901, 850 NYS2d 201 (2nd Dept. 2008)

Turning to the matter before this court, the Petitioner's application is supported by nothing more than a petition verified by counsel. Such a petition, and/or counsel's affirmation, along with their attachments, however, are insufficient to support the application. Simpson v. King, __ AD3d __, __ NYS2d __, 2008 NY Slip Op. 01740 (2nd Dept. 2008); Cauthers v. Brite Ideas, LLC, 41 AD3d 755, 837 NYS2d 594 (2nd Dept. 2007); Jeune v. O.T. Trans Mix Corp., 29 AD3d 635, 815 NYS2d 182 (2nd Dept. 2006) For this reason alone, the Petitioner's application must be denied.

The above notwithstanding, the Petitioner has failed to demonstrate, with any evidence in admissible form, that it is a proper party to this proceeding. There is no question that the arbitration award was obtained by MBNA America Bank, N.A. and not by FIA Card Services, N.A. Nevertheless, it is the latter, not the former, which seeks confirmation of the arbitration award. The only reference to this change of identity contained in the Petition is the annexation of what purports to be a letter from the Comptroller of Currency, Administrator of National Banks [*6]regarding an alleged name change from MBNA America Bank, N.A. to FIA Card Services, N.A. This letter does not confirm a name change for the award recipient, but merely makes reference to a separate letter from Bank of America and alleged revised Articles of Association for MBNA America Bank, N.A., purportedly to that effect, which are not submitted to the court.

Moreover, the letter upon which the Petitioner relies is being offered for the truth of the statements made therein; and is, by definition, hearsay. Spensieri v. Lasky, 94 NY2d 231, 701 NYS2d 689 (1999); Nucci v. Proper, 95 NY2d 597, 721 NYS2d 593 (2001); Stern v. Waldbaum, Inc., 234 AD2d 534, 651 NYS2d 187 (2nd Dept. 1996); Winant v. Carras, 208 AD2d 618, 617 NYS2d 487 (2nd Dept. 1994) lv. den. 85 NY2d 812, 631 NYS2d 288 (1995) It may only be considered if it falls within one of the recognized exceptions to the hearsay rule. People v. Nieves, 67 NY2d 125, 501 NYS2d 1 (1986); Tyrell v. Wal-Mart Stores Inc., 97 NY.2d 650, 737 NYS2d 43 (2001); Alvarez v. First National Supermarkets, Inc., 11 AD3d 572, 783 NYS2d 62 (2nd Dept. 2004) The Petitioner has failed to make any effort to lay an appropriate foundation for the reliability and consideration of this letter; and, such "venerable rules of evidence should not be casually discarded to accommodate convenience and speed in the gathering and presentation of facts or evidence." Wagman v. Bradshaw, 292 AD2d 84, 739 NYS2d 421 (2nd Dept. 2002)

Similarly lacking from the papers submitted by the Petitioner is sufficient proof that the parties entered into a written agreement to submit their dispute to arbitration. The only proof of such an agreement offered by the Petitioner is a copy of what is labeled "Credit Card Agreement Additional Terms and Conditions." This document is undated, does not make reference to any particular account or card holder and is not signed by any party. The Petitioner has not offered any proof that these terms and conditions, which include an arbitration provision, were ever actually accepted by the Respondent, either in writing or by his use of the credit card. See: Chase Manhattan Bank (National Association), Bank Americard Division v. Hobbs, 94 Misc 2d 780, 405 NYS2d 967 (Civ. Ct. Kings Co. 1978); Citibank (South Dakota), N.A. v. Martin, supra .; Citibank (S.D.) N.A. v. Roberts, 304 AD2d 901, 757 NYS2d 365 (3rd Dept. 2003); Tsadilas v. Providian National Bank, 13 AD3d 190, 786 NYS2d 478 (1st Dept. 2004) lv. den. 5 NY2d 702, 799 NYS2d 773 (2005) Counsel's bald conclusory statements to this effect are of no value. In the absence of such proof, the Petitioner has not adequately demonstrated that this court is possessed of the necessary subject matter jurisdiction to hear this Petition. CPLR § 7501; MBNA America Bank, N.A. v. Stehly, supra .

Finally, the arbitration award which the Petitioner seeks to confirm has not been properly affirmed. As noted in MBNA America Bank, N.A. v. Nelson, supra . at 9, "Black's Law Dictionary defines an affirmation as a solemn declaration made under penalty or perjury.'" This requirement is echoed in CPLR § 2106, which refers to affirmations being "subscribed and affirmed ... to be true under the penalties of perjury[.]" The award before this court states nothing more than

"Entered and Affirmed in the State of New York." This statement is insufficient. While the absence of a proper affirmation "[does] not invalidate the award, [it is] necessary in order for it to be enforced (citation omitted)." Abreau v. Nationwide Mutual Insurance Company, 87 AD2d 572, 447 NYS2d 744, 745 (2nd Dept. 1982)

Based upon all of the foregoing, the Petitioner's application is denied. Recognizing, however, that none of the aforementioned deficiencies invalidate the award and may be cured, [*7]the Petitioner is granted leave to renew upon the submission of proper papers.

This constitutes the decision and order of this court.

Dated: Hempstead, New York

March 10, 2008

___________________________

ANDREW M. ENGEL

J.D.C. Footnotes

Footnote 1: While the those portions of the decision in MBNA America Bank, N.A. v. Nelson, supra . relating to certificates of conformity and a petitioner's compliance with the procedural rules of the arbitration forum have been called into question by Stehly and the other similar decisions issued by the Appellate Term on January 11, 2008, Nelson remains an extremely well researched and reasoned explanation of some of the remaining prima facie requirements to be met before a petition to confirm an arbitration award may be granted.